At this time last year, Saskatchewan, of any province, was expected to come out on top in the economy. Potash would be the golden boy that would pull us all through.
The Leader-Post’s front page cried out that potash revenues were expected to be 1.927 billion. This year, the revenue is forecast to be a meagre $221 million.
Opposition finance critic Trent Wotherspoon. Photo: Leila Beaudoin.
One of the province’s dominant mineral exports was barely mentioned in the 2010 budget. Of the potash mined in Saskatchewan, two-thirds is exported to the United States. Much of the rest will go to countries in the Pacific Rim: China, Malaysia, Japan, Korea and Indonesia, with only five per cent left for use in Saskatchewan. Finance minister Rod Gantefoer said that international trade keeps Saskatchewan’s economy strong.
“International trade has also been a real success story in Saskatchewan,” he said in the budget address.
Yet, the mineral was only mentioned in passing as the budget was delivered. It was largely agricultural exports that went to China and India, exports such as peas and linseed. Saskatchewan accounts for 45 per cent of Canada’s total exports, some of that potash. Not enough to be mentioned by Gantefoer, however.
“It’s hundreds of millions of dollars of potash sales in a normal year to India,” said Bill Boyd, minister for energy and resources, a far cry from nearly $2 billion, the projected revenue that never materialized.
Sales of the mineral fell by 63 per cent last year, to a level that hasn’t been seen since 1971. Trent Wotherspoon, NDP critic for the opposition’s finance, described this year’s budget as “one that reflects a ‘fingers crossed, let’s try to get over the hump and let’s hope that revenues go beyond the records they’re at.’” Potash is out of the picture for a government that is cutting spending by $121.3 million, and is currently in a defecit of nearly $1 billion.
Now, it seems that the ambitious forecast of 2009-10 has helped the Sask Party step into the mire of deficit. The province now owes royalties back to potash companies. It is expected that the province will lose $203 million in revenue, due to its overcharging the companies for royalties. If these numbers are to be believed, Saskatchewan will barely make that back in revenue this year.
“Last year we had a government that went ahead with making revenue assumptions without the advice of their officials,” he said. Despite Gantefoer’s optimistic budget delivery, Saskatchewan’s finances are changing.
“These numbers are more than just numbers on a page. What they do is they directly impact the lives of Saskatchewan people,” said Wotherspoon.
The Sask Party’s budget this year is more modest, but can they stick to it? Instead of depending on fantastic potash revenue, the Sask Party will increase students’ tuition by five per cent. The tax on cigarettes has been increased by two cents a cigarette, and alcohol has been drawn from as well. For a government that spent last year projecting massive revenue where there was none to be had, dipping in different areas seems like the only choice.