The Saskatchewan government released its budget update for 2020-21 on Thursday, in which they touted a smaller deficit than expected.
The deficit is forecast at $2.1 billion for the first quarter, an improvement of $296 million over what was forecast in the 2020-21 budget.
The province also is touting an improved medium-term outlook of “progressively smaller deficits” over the next three years, and a return to surplus of $125 million in 2024-25.
The provincial economic outlook is also better than projected in the budget. Instead of a 6.3 per cent decline, the latest forecast is for a contraction of 5.5 per cent in 2020. The economy is also projected to rebound with real GDP growth of 4.6 per cent in 2021.
“Saskatchewan’s fiscal foundation is solid and our province’s economy continues to re-open and recover from the effects of the global pandemic,” Finance Minister Donna Harpauer said at a news conference Thursday. Harpauer also said they were aware that certain sectors and industries “continue to face significant challenges.”
“The health and safety of Saskatchewan people are our highest priorities as we continue to meet the challenges of the pandemic,” Harpauer said. “Today’s update reflects Premier (Scott) Moe’s announcement that $40 million from the 2020-21 budget’s $200 million health and public safety contingency will be invested to ensure more resources are available for safe classrooms. A $160 million contingency remains.”
The province’s update also stated that at the first quarter, public debt is forecast to decrease by $455 million from budget, due to the improvement in the deficit forecast and lower Government Business Enterprise debt. As for revenue, Harpauer’s update indicated it will not return to pre-COVID-19 levels until 2022-23, with expense growth targeted at 1.5 per cent per year.
Deficits of $1.4 billion in 2021-22, $855 million in 2022-23 and $340 million in 2023-24 are being forecast, before the return to surplus in ‘’24-‘25.
“Our government has been the most financially transparent jurisdiction in Canada during the pandemic,” Harpauer said. “Moving forward, our government is focused on creating the right environment for our economic recovery to drive our revenue growth, continue to invest in the priorities of Saskatchewan and carefully manage spending to return our province to balance.”
In speaking to reporters Harpauer acknowledged the province was looking at what were described “austerity budgets” in the years ahead, but did not foresee cuts.
“We fully recognize we are going to have austerity budgets, but that doesn’t mean cutting. That just means minding spending, so can we have any large grandiose announcements probably for the next couple of years? I’m going to say not unless it’s going to stimulate further growth in the future.”
As for the upcoming election campaign, Harpauer said that the Sask Party would “present a platform and it will be fully costed. It will be costed based on the numbers you are seeing today.”
Asked about whether Saskatchewan people would want austerity budgets, Harpauer responded that she believed the public recognized the value of balanced budgets.
“Saskatchewan people do believe we should live within our means and that our budgets should be.... we should put our best efforts to balance the budget.”
Harpauer also was asked about whether she could rule out any potential tax increases in coming years. She responded “we are not projecting any tax increases.”
