by Peter Mills
For the second year in a row, the definition of ‘balanced’ was at the forefront of political debate on budget day.
The Saskatchewan Party government has labeled this year’s budget “The Saskatchewan Advantage,” emphasizing lower taxes, a better quality of life, reduced debt and a balanced budget.
Ken Krawetz, in his first budget address since being appointed finance minister in June, is confident in the accounting practices used to produce the 2011-12 budget.
“It’s absolutely balanced. The summary financial statement takes into account the spending of Crown corporations and others. We have followed the practice of all other provinces and it is a balanced budget. There is a surplus,” said Krawetz.
Opposition NDP leader Dwain Lingenfelter disagrees with the government’s practices and said, “It’s not balanced.”
“We’re running an over $500 million deficit. And the projection is, over the next four years, the debt will increase another $2.5 billion – it is right in their document on page 61. How the minister gets up with a straight face and says the books are balanced when the document he’s reading from shows that there’s a massive increase is a little bewildering,” said Lingenfelter.
For the past two years, the idea of what constitutes a balanced budget has been passionately debated between the Sask. Party and NDP. The biggest areas of contention are regarding the Growth and Financial Security Fund, Crown corporation transfers and accounting principles.
Trent Wotherspoon, NDP finance critic, said the government hasn’t been able to manage its finances in this year’s budget.
“The Sask. Party has been blessed with historic revenues but has continually drawn down the reserves that should serve Saskatchewan well into the future, whether that is the rainy day fund or the Crown corporations that have been bled dry over the last four years,” said Wotherspoon.
The Growth and Financial Security Fund or “rainy day fund” will decrease by $325 million to $710 million. Krawetz said this was a responsible way to pay down the net debt to $3.81 billion.
“It’s a cushion and I think what we’ve shown this year is because the fund was at nearly $1 billion, there was a need to pay down debt … I think that’s what the fund is there for,” said Krawetz.
Lingenfelter disagrees with how the government views the rainy day fund and said, “It should be put away for future generations.”
The Crown corporations are also muddying the understanding of what constitutes a balanced budget.
SaskPower and SaskTel are both in need of significant infrastructure upgrades and the government said they are borrowing additional dollars to meet those infrastructure challenges.
“The dividends from Crowns have ranged significantly. Last year, the budget relied on a $266 million transfer from Crowns in the way of a dividend. This year it’s down to $110 (million) … Overall the practice that we are following is no different than what the former New Democratic Party (government) did,” said Krawetz.
Lingenfelter said he is upset with the government’s handling of Crown revenues because the Crowns are “doubling their debt at a time when they’re not growing.” He said stripping profits from Crowns to cover deficits may increase public debt and increased utility and power bills.
“I would just like to see an accounting system that was transparent and showed that what your total spending is across government and your total debt. If it were done in that manner it would show that there is a deficit this year of $548 million, not a surplus,” said Lingenfelter.
While the government is boasting the 2011-12 provincial budget for historically high revenues, reduced net debt and a balanced budget, the Opposition is pointing to a $540 million increase in public debt this year. With an upcoming provincial election in November, there will certainly be more debate over the validity of this year’s balanced budget.
Above: Opposition leader Dwain Lingenfelter
Photo by Deborah Shawcross