Barb Gustafson
Albertans are probably well aware of the financial situation of their provincial government. If it makes you feel any better, things are not good across the eastern border, either. This week, the Saskatchewan legislature begins sitting again and the Speech from the Throne will be delivered on Friday.
It’s not likely to be a happy speech, although there’s always a positive spin from the governing party, somehow.
Just like Alberta, Saskatchewan is highly dependent on resources. Resource-based industries drive our economy, our job figures, and our provincial government tax revenues. With the international recession that has been in play since about a year ago, plus the strong Canadian dollar (nice for those of us planning a southern vacation, but not so good for exporters), Saskatchewan is in a bit of slump.
The key resource that is affecting government revenue? Potash. The pink mineral that’s used as fertilizer exists in abundance under the surface of Saskatchewan and prices were going higher, higher, higher up until a year ago. Then, countries including the United States and China started reducing their purchases. It’s the economic balancing act we learned in Econ 101: reduced demand will lead to reduced prices.
The magnitude of the reduction shows in the provincial government figures released recently. The province will take in about $1 billion less in revenue due to the falling price of potash. One billion dollars – and that’s just the government’s share.
Not only has the government been affected, but there have been continuing layoffs from the potash mines. Still, there is a sense that this industry will rebound fairly quickly, with plans for new mines still in the works. When you have a product that’s important to food production, you’ve got to think demand, and prices, will come back.
In the meantime, however, the province has a big revenue shortfall to deal with. The “happy days” budgets of the past two years that increased funding to highway construction and health care unions, while cutting property taxes, will now be changed to much more sober-faced projections. So far, they’ve trimmed back travel and communications, and not filled vacancies, but there will have to be a lot more cuts to come to balance the books.
At the same time – and this is another parallel to Alberta’s situation – unions are either in negotiations or getting ready to go. The war of words is already on TV and in print. We haven’t seen our premier or cabinet take a cut in pay to set an example, the way Ed Stelmach has done in Alberta, but there are plenty of other signs that there are some battles on the way.
Adding to that mix is the recent introduction of several pieces of legislation that are seen as anti-union, including essential service legislation. If there are strikes in public services, this will be the first time this legislation will be tested. It will be interesting, to say the least. I expect several court challenges and a great deal of resistance from the government employees union, the nurses, and other health care unions.
Whatever the exact outcome of the Throne Speech, and then the budget, one thing is becoming clear. While Saskatchewan is not in the kind of trouble many other parts of the world and even Canada are in, we are not immune to economic ills. And two years after the Saskatchewan Party was elected, the honeymoon is definitely over.
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