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The budget that wasn't

March 18, 2020

2-minute read

Today, the Saskatchewan government was supposed to release its annual budget. Instead it will release only its spending plans, recognizing that its revenue numbers are—in the words of the Premier—"no longer relevant today."

This decision was somewhat overdue: the opposition NDP requested a delay in the budget more than a week ago, arguing that cratering oil prices and the impact of the COVID-19 pandemic made the budget "a work of fiction."

Certainly, COVID-19 will blow apart every economic assumption that all government budgets rest upon. On the revenue side, we've seen its impact on oil prices, but we have yet to see what a veritable national quarantine will do to employment, consumer demand and business output upon which so much of government revenue depends. Economist Jim Stanford estimates a worse-case scenario that could see a decline in second-quarter GDP of perhaps 10% (at annualized rates), and an enormous jump in unemployment (well into double digits). On the spending side, the federal government's $82 billion COVID-19 response package gives us a hint of the extraordinary spending measures all governments—Saskatchewan included—are going to need to institute in order to protect us from both the economic and health ravages of this virus.

Given this reality—that both revenues and spending are going to be drastically different than what the government estimated a few months ago —why is the government releasing outdated spending plans at all?

It is not controversial to speculate that this budget was always supposed to be a key plank in the Saskatchewan Party government's re-election plans; the election budget that would reward voters after three years of getting back to balance. Indeed, suspicions were that a snap election would have been called immediately after the budget dangled new spending promises in front of the electorate. Even in the wake of the decision to release only spending plans, the government continued to tease these promises, touting "spending increases in most areas, including a significant increase in health funding.”

But today, Finance Minister Harpauer signalled that the spending estimates likely won’t even be passed in the legislative assembly, which is expected to adjourn on Wednesday due to the crisis. In effect, it was all political theatre.

It appears the government wanted to have it both ways; to receive the accolades for the prospect of increased spending—even if that spending is fictitious—while not having to deal with the gloomy realities on the revenue side. It was a political manoeuvre by a government that, even when warned about the changing reality, seemed to be caught flat-footed; a government that has clung to its preferred status-quo, even as that status-quo exploded around them.

It was the budget they wanted, but it was the budget that wasn't.

Simon Enoch is Director of the Saskatchewan Office of the Canadian Centre for Policy Alternatives. 

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