It’s interesting how this year’s season of provincial budgets is shaping up, especially for provinces that depend greatly on the oil patch for royalty revenues.
Alberta is running a 20 per cent deficit, to the tune of $10 billion, and not really caring too much about it. Oh, there’s plenty of carbon taxes, but no sales tax. No, no, no. Can’t have that. A sales tax of five per cent (like Saskatchewan’s) would be poison to Alberta! A 10-kilometre wide meteor might as well fall on Red Deer, since it would do less damage.
Yet such a sales tax would immediately halve the Alberta deficit and cut its dependence on oil and gas royalties.
Newfoundland and Labrador, on the other hand, is starting to look again like an economic basket case. As oil royalties made it a have province, their evaporation has left it prostrate. Their 2016 budget increases taxes on almost everything, including their sales tax. The provincial portion of the PST will go from eight to 10 per cent, double what some have suggested Alberta should adopt. They’re doubling their gasoline tax (does that make it a carbon tax?), hiking income and corporate taxes and applying a deficit levy.
Newfoundland’s budget sounds an awful lot like the early 1990s Saskatchewan budgets under the newly-elected NDP government led by Roy Romanow. Those budgets brought us back from the brink of disaster, and the Liberals in Newfoundland and Labrador apparently are trying to do the same.
What about the province that’s easy to draw, hard to pronounce? Saskatchewan has benefited greatly over the last decade from oil royalties. I won’t say gas royalties – since our gas royalties have shrunken to a rounding error. As Premier Brad Wall has continually said, our province’s economy is diverse these days.
But diverse may not be diverse enough. Government ministers (and the premier) have long told me in numerous interviews that when one of our resource sectors is down, another is usually up. But in the past week, Cameco laid off 500 workers, idling one of the largest uranium mines in the world. While K+S is still building its new Legacy mine north of Moose Jaw, Potash Corp. has shut down a mine in New Brunswick. Every so often we hear of layoffs and temporary shut downs in Saskatchewan potash mines.
And not much is being spoken these days about BHP Billiton’s Jansen project, which had been touted as the largest in the world. They’re spending $2.6 billion on the project, but as of February, they were going at a relatively slow rate, according to the Financial Post.
Potash prices are about a third of what they were in 2008. That’s strikingly familiar, since the president of Cameco also said uranium is down to around a third of where it was several years ago. For most of 2016, oil has floated between a quarter and 45 per cent of what it has been for most of the last five years preceding the crash.
So what will Saskatchewan do in its late spring, post-election budget? This is the same budget the NDP kept asking about during the campaign, and got little response. Will we hike our sales tax? Will income taxes rise? Will there be a carbon tax? (Not bloody likely, on that one.)
If we follow Alberta’s lead, with massive deficit spending, we will eventually find ourselves in Newfoundland and Labrador’s shoes, the same ones we were in 25 years ago.
No one likes paying more taxes. But they like hospital closures.
— Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected].
