CALGARY, AB – Saskatchewan has delivered a do-no-harm budget in a challenging environment, with a promise to pursue an agenda of extracting greater value out of public sector spending.
Resource-dependent economies, like Saskatchewan’s, face hard times when revenues fall as dramatically as they have in the past year. It should be no surprise, then, that the province’s budget projects a deficit for the 2016-17 year.
Keeping the deficit to $434 million, less than half of the $968 million drop in resource revenues is no small accomplishment. This, while the province introduces no tax increases and no new taxes and embarks on an ambitious $3.5 billion in infrastructure spending, which includes taking on $1 billion in new debt.
Its projected return to balance by 2017-18 depends on a modest rebound in resource revenues, assuming a price per barrel of WTI oil of $44.18 for 2016-17 and general economic growth. Total revenue from potash, however, is still expected to be down by roughly one-third.
The Government of Saskatchewan has committed to “transformational change” in the way it does business, as its next door neighbour Manitoba also announced just a day earlier. The details are yet to come, but the questions raised are fundamental: Is a given program the role of government? Can similar programs be combined into one to improve services and cut costs?
That is what we expect of government, but the subtext is potential conflict with the province’s health regions and school boards. Health care administrative expenses have been cut by $7.5 million, and overall health spending is up just 1.5 per cent year over year, which is effectively holding the line.
On balance, this is a reasonable plan for challenging times. The lingering question is whether Saskatchewan, like Manitoba, has the resolve to deliver the type of change that will permanently reduce the cost of government while more effectively delivering services.