For the most popular premier in the country to tell reporters, even jokingly, that he’s not sure if he’ll be invited back to next year’s Saskatchewan Urban Municipalities Association convention, that’s saying something. His tough message to SUMA on Feb. 6 obviously wasn’t going to make him very popular.
“I’m not sure they’ll invite me back. I’m not presuming anything,” he said with a laugh.
“We’re not going to procrastinate. We’re not going to do what other jurisdictions are doing and what happened in the past in this country where the provinces and federal government said, ‘Ah, we’ll balance it somewhere down the road' and didn’t set a specific goal, didn’t have a basic plan. We all saw the results of that. And we’re not going to do that in Saskatchewan,” Wall told reporters after giving his tough love message to the SUMA delegates.
He noted that means revenue sharing with municipalities has to be on the table. It will go down.
A number of years ago, back when I covered City Hall in North Battleford, revenue sharing was a big deal for the urban municipalities. The cities eventually concocted a plan whereby revenue sharing would roughly equal the value of one per cent of the provincial sales tax, set at five per cent (in other words, 20 per cent of PST revenue). The proponents of this plan made it clear at the time there was an implicit understanding that when times were good, municipalities benefit, but when times are bad, they will accept the pain.
Well, revenue, including, presumably, PST is down, and now it’s time for revenue sharing to come down, too. It’s doubtful many SUMA delegates were happy to hear that, but that was the premier’s message.
Wall mentioned to reporters one budget option looked at involved 4,900 layoffs and closures of hospitals and long-term care homes, an option he didn’t seem eager to adopt.
“Again, I need to re-emphasize, we’re not going to punt on this. We’re not kicking the can down the road. We’re seeking to balance this year, and if it’s not this year, it has to be [a] very short term, very clear, transparent way to get there, because we all know what happens if you just procrastinate on deficits.”
It is apparent Brad Wall has had his “come to Jesus” moment in the same manner that Roy Romanow did early in his mandate, when things were looking bleak on the provincial finances. If we don’t do this, are we going to see serious credit downgrades otherwise?
He’s not apologetic for tax relief or spending money on highways. Asked about that, he said, “I think all of those investments have been important in building the quality of life that we have and we want to continue in the province and that’s what makes the deficit, obviously, that much more of a challenge.”
He doesn’t want municipalities to bear a disproportional share “of the duty,” but wants it to be fair, as revenue is down eight per cent.
As I’ve frequently pointed out, the revenue shortfall is almost entirely due to oil. The premier tacitly acknowledged this in his speech, whose opening focused on the downturn in oil, potash and uranium. He explained non-renewable resource revenue is down about $1.2 billion, and I know from my own analysis of the provincial finances, most of that is oil. The deficit? $1.2 billion.
Regarding the impact of oil prices, Wall said, “I think this lower, longer forecast has stretched longer than anyone thought. But there isn’t an immediate sign of relief. What’s happened in terms of shale oil in the United States has really been a game changer. We’ve seen the impact on supply. Analysts are saying now maybe $60 (per barrel of oil) is a new ceiling. At that point, there’s enough margin for shale players to get in the game, for more drilling to occur elsewhere and supply to take care of any upward pressure in price. So $60 is still good for the economy. People are going back to work. That’s arguably more important than the province’s budget. But it does impact the budget if $60 is the sort of the high for now.”
He’s not holding out for $100, $80 or even $70 oil. After three years of oil being in the dumps, Wall has realized we must now live with this new reality.
It’s going to hurt.
— Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected].
