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Sask. Budget 2023: One weird trick to underfund public services

Faced with a crisis in health care and underfunded schools, the government of Saskatchewan is using its huge surplus to pay down the deficit.

March 23, 2023

2-minute read

Given the extent of the crisis of healthcare in Saskatchewan—with city hospital emergency rooms on bypass and rural health centres struggling with service cuts and bed closures—one would think that repairing our public healthcare system would have been the number one priority of the government in this year’s budget. It wasn’t—the government’s priority yesterday was to use the entirety of its billion-dollar surplus yesterday to pay down debt.

The health system will be receiving a 6.7 percent bump in funding—but an increase that barely keeps up with inflation is hardly the kind of historic and transformative investment that our public health system urgently needs. It’s not like they don’t have the money—the province just received a massive cash injection from the federal government for health care, around a third of which came with no strings attached.

Public education was also hard hit by the pandemic, and is struggling with rising costs and record-high enrolments. It received a 6.2 percent increase—but with only a 2.5 percent increase in operational funding, the Saskatchewan Teachers Federation predicts further cuts to staff and services this year.

While it might not get as much media attention as opening a new school or hospital, operational funding—the day-to-day cost of operating and adequately staffing our public services—determines the quality of public services. As the pandemic has brutally demonstrated, even the most technologically-advanced hospital is rendered worthless without the expertise required to staff it.

The provincial government’s refusal to increase operational funding was behind their decision to devote the entire billion-dollar surplus to debt service.

“We have to be very careful as a government to not take one-time revenue and incorporate it and bake it into our year-over-year operational costs.” Finance Minister Harpauer said. Echoing his Finance Minister, Premier Scott Moe explained that “what we are trying to do is to lower our reliance on natural resource revenue that we have here in the province.”

That means that we can’t rely on potentially volatile resource revenues to be there to pay for things like the day-to-day funding of public services each year. You’ll recall that one of the reasons for the increase and expansion of the PST in the devastating 2017 austerity budget was to help “reduce our reliance on resource revenues.” Increased consumption taxes are stable and consistent, increased resource revenues are not.

Now, one could argue that a long-promised, but never delivered sovereign wealth fund that invested resource revenues to provide a stable year-to-year return would be a particularly wise investment right now, but it seems to be a prospect that is lamented only when we have already frittered away our resource wealth.

It is an open question why only increased consumption taxes seem to reduce our reliance on resource revenue. Increased corporate income taxes, high earner income taxes, higher royalty rates or other business taxes don’t seem to be able to reduce our reliance on resource revenue. Maybe that’s why the Saskatchewan Party has reduced all those taxes under its rule and only increased and expanded the sales taxes.

It’s part of the general trend of shifting the tax burden away from business and onto individuals. It is a clever trick—we can’t spend windfall resource revenues on things we need because then we will be reliant on resource revenues. Only the most regressive consumption taxes that disproportionately impact the poor can reduce our reliance on resource revenues.

Now excuse us while we send these billion dollars to Bay Street.

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