Saskatchewan's 'austerity budget' comes too late
Perspective needed on decisions affecting poor
A first glance at the Saskatchewan budget suggests that Finance Minister Kevin Doherty has looked everywhere for savings as he tries to hoist the province out the deep financial hole that's largely of the government's own creation.
Certainly, it's the case that Saskatchewan residents both urban and rural are being asked to share the pain of restoring balance to the province's books over a three-year period.
- Ministry of Agriculture will end Saskatchewan Pastures Program
- Taxing new home construction 'draconian', builders say
- Sask. restaurant industry bracing for '$140M' PST impact
However, with budgets having as much to do with political choices and ideology as they do with dealing with external factors that are beyond a government's control, Wednesday's effort by Doherty bears a closer look.
Their belated conversion to the gospel of living within the province's means comes after nearly a decade of squandering every last penny of resource revenues.
Faced with the reality that Saskatchewan will end fiscal 2016-17 with a deficit of $1.29 billion, marking the fifth time in nine budgets since 2007 that the books were awash in red ink, Doherty and Premier Brad Wall are seeking to get a handle on things by cutting spending and raising taxes by $900 million, and promising to move the province away from its over-reliance on resource revenues.
Their belated conversion to the gospel of living within the province's means comes after nearly a decade of squandering every last penny of resource revenues, depleting $2 billion in reserves and borrowing even more during a prolonged economic boom.
Doherty hiked the provincial sales tax to six per cent from five and broadened its base a bit without actually harmonizing the PST with the federal GST, as many provinces sensibly have done.
- How will the PST hike hit you in the pocketbook?
- Government redesigning welfare programs to get 'able-bodied' people off the dole
- 'It's going to be quite a nightmare': Passengers outraged by STC closure
Sin taxes for smokes and booze are up, and homeowners will see an overall education property tax hike of $54 million.
Meanwhile, schools trying cope with population growth are getting less.
The elimination of the provincial bus line will be a challenge for older rural residents.
Grant cuts of five per cent to post-secondary institutions come at a time when the knowledge economy and trades skills are the key to prosperity.
- Province slashing post-secondary funding by $30M, cutting student aid and scholarships
- Province will stop paying for funeral services for social assistance clients
- How much more you'll pay for alcohol and cigarettes
The axing or paring back of an array of employment preparation and support programs — from adult basic education to skills training to the apprenticeship commission — seems ill-considered, especially given that they help Indigenous people join the workforce.
There's still reason to question whether the government's plans will actually restore the budget to balance in three years.
While municipalities will continue to get their expected revenue from a share of the PST, they are losing $36 million of grants-in-lieu of property taxes paid by SaskEnergy and SaskPower.
Saskatoon will have to pick up the $409,000 Doherty cut from funding for the Meewasin Valley Authority even as the government takes over funding responsibility for the Wascana Authority in Regina.
- Province to take over management, operation of Wascana Centre
- Meewasin Valley Authority provincial funding cut in half
- Sask. budget expands and hikes sales tax to 6%
Then, of course, there's the $250 million in wage reductions the government wants to negotiate with public sector workers, most of whom didn't share in the boom but are among citizens now expected to ante up to tackle the deficits.
Despite the widespread pain inflicted on almost every sector, there's still reason to question whether the government's plans will actually restore the budget to balance in three years. While Doherty has built in $300 million in contingency funding, the vagaries of the resource market and the impact on the economy of increasingly unpredictable weather systems cannot be understated.
As for the assertion that families will save under the tax shift, it's dubious at best.
Doherty's assumption that oil prices, which averaged $44.88 last year, will be in the range of $55 during fiscal 2017-18 and rise to $60 for 2018-19 is optimism writ large. And even though he touts moving Saskatchewan away from the reliance on resource revenue toward consumption taxes, it very much appears resources will continue to remain the mainstay of spending.
There's not even a hint that the government plans to establish a sovereign wealth fund that will be kept out of the hands of politicians.
Meanwhile, the decision to cut personal and corporate tax rates and forgo $107 million this year while the PST hike garners $242 million makes little sense in the current dire circumstances. It only prolongs the agony and adds to the debt that continues to grow.
As for the assertion that families will save under the tax shift, it's dubious at best.
Consumption taxes can be a fairer way to pay for public services that all residents consume, but only if the impact on the poorest can be mitigated through timely rebates. While a case might be made for reducing income taxes for those on lower economic rungs, the budget decision to reduce the rates for all, including corporations, is more ideological than economic.
When the government is telling poor parents that it will no longer pay for kids' school supplies and it's telling the poorest of the poor that it will pick up the tab only to bury a loved one but not for a funeral service, it needs to take a step back and consider the message it sends.
Doherty's austerity budget might appear to spread the pain widely, but it appears that some are more equal than others when it comes to feeling the impact.
ABOUT THE AUTHOR
