Dear Editor:
Re: Murray Mandryk’s opinion piece, Deficit a problem for Wall
Mr. Mandryk wrongly characterizes the up to $700 million the province will borrow for infrastructure this fiscal year as a deficit. This amount does not constitute a deficit according to generally accepted accounting principles in place across our country. Expense for capital and expense for debt charges are included in our budget and our forecast. Revenue and expense are the criteria that determine a surplus or deficit.
Now is the right time to invest in infrastructure. Interest rates are low and Saskatchewan has solid triple A-credit ratings.
Our province has one of the lowest tax-supported debt to-Gross Domestic Product ratios in the country, and we manage debt servicing costs carefully just as we do with all spending.
A useful example is that when a business is growing and needs to buy equipment or expand its presence to serve more customers, it is prudent for that business to borrow to build or improve capital when interest rates are low. When the business’s revenues cover expenses including the cost of borrowing, the business is in the black. The same holds true for the province.
Investment in infrastructure will show a return now and for future generations. Our capital plan will foster economic growth and create jobs. It will improve safety on our roads and expand and improve our transportation system, which is vitally important in an export driven province. It will create a better learning environment for children attending elementary and secondary schools and for those pursuing post-secondary education. And it will enhance health care and improve long-term care.
Saskatchewan is not alone in deciding to borrow to invest in needed infrastructure.
British Columbia is borrowing $1.7 billion to help finance its capital program. Alberta announced borrowing of $6.2 billion for infrastructure. Manitoba, Ontario and Quebec - jurisdictions across the country - borrow to invest in infrastructure.
When Mr. Mandryk references Alberta’s deficit in his commentary, and if his view is that borrowing for capital accrues to the province’s deficit, to be consistent he should characterize Alberta’s projected deficit as $12.2 billion. It is not the case, but at least Mr. Mandryk would be consistent in his erroneous view.
Borrowing to invest in capital is an approach endorsed by experts across the spectrum, including David Dodge, the former governor of the Bank of Canada, the Conference Board of Canada, the International Monetary Fund and the Broadbent Institute.
As our economy and revenue have grown over our government’s term we have made real investments in Saskatchewan people, in health care, in education and for those most vulnerable, while providing more than $5 billion in tax relief and reducing operational debt by $3 billion.
Our government has a strong track record of managing the province’s finances when faced with volatility. We are seeing volatility with lower oil prices and higher fire-fighting costs affect our finances, and we will rise to that meet that challenge again this year.
We will work hard to control spending, bring the province’s finances back to balance, and keep Saskatchewan strong.
Hon. Kevin Doherty, Minister of Finance
