The news that Premier Brad Wall is taking a 3.5-per-cent wage cut and is asking the public service to do the same might have come as some relief to some.
Cut back civil servants wages — problem solved, right?
Not quite.
It’s a matter of simple math that begins with that very big $1.2-billion deficit number — the largest we have seen since Progressive Conservative Gary Lane’s 1986-87 budget 30 years ago.
Saskatchewan’s budget is roughly $14 billion, which is really where the problem begins. It was close to $7 billion when Wall took office nearly a decade ago.
Think about that logically. Have civil servants wages doubled? Not by a long shot.
But in the case of nurses and doctors in health care, we have hired a lot more of them. We also have been building and repairing a lot more highways, by-passes and schools.
It all adds up to a doubling of expenditures — something that pretty much went unnoticed from 2007 to 2011 when revenue also doubled with oil prices hovering around $100 U.S. a barrel.
We could afford 36-plus-per-cent salary increases for nurses back then. But we still have to keep up with those salary costs when oil is at $50 U.S. a barrel or less.
Clearly, Wall and company have a spending problem that is largely of their own making. In fact, it’s one that took a year to make.
So let us a return to Wall’s little math problem.
Wall initially claimed that 60 per cent of government costs go to salaries. Later, he admitted that number is high. It’s actually 47.2 per cent and even that number is comparatively misleading because it includes high-paying jobs in Crown corporations that other provinces just don’t have.
Let’s say, for ease of calculation, that 50 per cent of government costs are due to wages. That would be $7 billion.
Of course, there’s reason to question whether Wall could actually pull this off without firing needed doctors, nurses, teachers, SaskPower linemen, etc. Many such public servants are working under existing collective bargaining agreements Wall just can’t break. (However, lay-offs are always an option for any employer.)
And then there is the problem of job action from the unions, who won’t take kindly to a having a wage cut imposed upon them.
The point being, even if Wall can somehow magically pull off a 3.5% reduction in wages in 2017, that would still only be about $250 million of the $1.2-billion deficit.
Admittedly, $250 million is no small chump change, but it`s only one-fifth of that $1.2-billion deficit.
Other measures will be required, so the rest of us — especially those in rural Saskatchewan — are not out of the woods yet.
The move to substantially reduce wages already has public servants (especially those in the cities) screaming for equity in these times of austerity.
What that generally means is a hard look at spending and revenue that benefits Wall’s base in rural Saskatchewan.
And there is a lot to look at.
Serious questions need to be asked whether we can continue to afford a $10-million-plus subsidy of the Saskatchewan Transportation Company.
The fuel tax exemption on agriculture fuel and sales tax exemptions on everything from machinery to fertilizers and pesticides have to be in play now. (That said, there are a tremendous number of sales tax exemptions that need to look at including on restaurant meals.)
Interestingly, a single percentage point increase on five-per-cent PST to six per cent would render $250 million — about the same as the wage cut.
And spending on municipalities, roads, etc. will also have to be curbed.
This budget will sting us all.
Murray Mandryk has been covering provincial politics for over 22 years.
