“Right now Saskatchewan is financially strong, but the provincial deficit is driving our debt up by nearly $2.7 million every day,” says Todd MacKay, prairie director for the Canadian Taxpayers Federation.
The CTF’s National Debt Clock, refitted to display the provincial debt of Saskatchewan, has been travelling around the province, with a brief stop in North Battleford Friday.
The constantly updating digital display could be seen from Highway 16 as it sat on the service road alongside the Frontier Centre.
Mackay says government spending is too high despite Saskatchewan’s strong economy.
“The good news is that we can get back on track with truly balanced budgets if we trim spending by a few percentage points.”
One of the concerns of the CTF is the borrowing of $700 million this year for infrastructure, forcing Saskatchewan taxpayers to pay interest dollars that cannot then go back into capital projects or tax relief.
But Minister of Finance Kevin Doherty had this to say to the News-Optimist Friday in response:
“We are not borrowing to pay the salaries of teachers or nurses or civil servants, we are borrowing money to invest in infrastructure like health care facilities, new schools, new highways and other infrastructure in the province. These are hard assets that go on our balance sheet that we have a sinking fund attached to that we will pay off in 30 years.”
Doherty said it’s like taking out a mortgage on a house.
“Most people I know have mortgages on their homes and add money every month to pay down their mortgage and they pay the interest on that, and that’s exactly what the province of Saskatchewan is doing.”
MacKay says, “Nobody is arguing that the Saskatchewan government shouldn’t be spending on roads and schools, but that’s not the reason we have a deficit,” said MacKay. “We have a deficit because we’re not reprioritizing unnecessary spending to pay for the things we need. Families and small businesses often have to tighten their belts by two or three per cent – it’s time for the government to do the same.”
The CTF says that if the Saskatchewan government trims projected spending by one per cent each year for three years for a total of three per cent it would save about $845 million – more than enough to pay for this year’s infrastructure investments.
The CTF is also worried about the province’s debt being projected to exceed $5.7 billion by the end of this fiscal year, but Doherty emphasizes how the Brad Wall government, since 2007, has reduced debt in this province on the operating side of government from $6.8 billion to $3.8 billion.
“We’ve paid off $3 billion worth of debt on the operating side that we inherited from the previous government.”
Doherty is also proud of Saskatchewan’s debt in percentage to its gross domestic product.
“I think it’s important to keep in mind that, when we came into office in 2007, the debt as a percentage of GDP ... was at 24 per cent, that’s what we inherited from the NDP,” said the minister. “Today it’s at 14 per cent, so we’ve paid down debt, our economy has grown, we have more people working in the province now, we’ve actually reduced debt as a percentage of GDP by 10 points over the last eight years. That puts us the second best in Canada, behind Alberta.”
Quebec is at 65 and Ontario is at 47 per cent of their GDP, he said.
“So relatively speaking, we’ve done a very, very good job of managing the debt in this province, so much so that the credit rating agencies that look at all the province’s financial statements including the country of Canada has given Saskatchewan a AAA credit rating. We are one of only three provinces in Canada that have a AAA credit rating, that’s the highest credit rating that you can get from these organizations.”
Doherty quoted a report released Oct. 8 by Standard and Poors: “We are affirming our ratings including our AAA long-term issuer credit rating on the province. This affirmation reflects our view of the province’s strong exceptional liquidity, very low tax-supported debt burden and very strong economy. The ratings also reflect the province’s strong financial management, strong budgetary flexibility and low contingent liabilities.”
He also said, “I’ll let Mr. MacKay speak to the purposefulness [of the debt clock]. I think it’s somewhat misleading with respect to the information he’s providing that our provincial debt is going up by $2.7 million a day. That’s simply not the case.”
