Despite Tuesday’s Throne Speech highlighting the certainty and success of Saskatchewan’s fiscal state, a report card from an independent think tank suggests otherwise.
The MEI says the provincial government’s spending habits are leading the province ‘into a fiscal wall.’
Renaud Brossard is MEI’s Vice President of Communications. He says Saskatchewan’s current debt is projected to be $26.8 billion by year’s end, with interest payments on that debt totaling $1.2 billion. He says Saskatchewan’s debt to GDP ratio has shot up significantly in recent years and currently makes up 14 per cent of the province’s total GDP.
“When we look at some of the policy decisions the government has made in the last decade, a lot of the choices have increased government spending to a point where it’s above the sustainable level.”
Brossard adds that, if the Province doesn’t start practicing fiscal management, the rate will balloon from 14 per cent to 46 per cent in the next 25 years.
He adds that underlying economic conditions aren’t helping, such as an aging population and inflation.
“We saw the Bank of Canada change its policy rate today. That is not something that the government of Saskatchewan controls, but that is something that has an effect on the Saskatchewan budget.”
He warns that as the provincial debt increases, not only will taxes increase, but the quality and quantity of government services will also decrease. He notes that economic growth generated by private investment and the export of commodities will help, but “economic growth alone is not going to be enough to being the budget to a more sustainable level.”
However, it’s not all bad. Saskatchewan isn’t the worst off and has a relatively low debt to GDP ratio. For example, Newfoundland and Labrador’s debt ratio is 44 per cent of the province’s total GDP.
Brossard says the province that’s doing the best in terms of digging itself out of a debt hole is New Brunswick, and Alberta is the only province that will see a lower debt to GDP ratio in the next 25 years, which is expected to drop by 4 per cent thanks to money-conscious policy choices.
