Saskatchewan headed for austerity as it deals with $2.1B COVID-19 deficit

Pumpjack in Saskatchewan

Spending restraint is on the horizon in Saskatchewan as the province begins to dig itself out of a deficit Premier Scott Moe's government blames on the COVID-19 pandemic.

On Thursday, Finance Minister Donna Harpauer delivered the first-quarter update for 2020-21. It predicts $2.1 billion in red ink, down from the $2.4 billion initially expected in the June budget.

The government at the time said a fall in oil prices and economic shutdowns tied to the health crisis had led to a sharp decline in revenues and created a need for emergency spending.

The Ministry of Finance now forecasts revenues to sit around $14 billion, up nearly $400 million since the budget, mainly thanks to federal funding to provinces to help restart their economies after the COVID-19 shutdowns.

The province's expenses are expected to rise by $100 million because of spending on health, municipalities and a boost for the tourism industry – all factoring into a total expense line of roughly $16 billion.

Harpauer said she expects the provincial economy and its revenues to bounce back to pre-pandemic levels in the next two years. But the province isn't projected to squeeze out a surplus until 2024-25, which means running deficits in the meantime.

“We fully recognize that we're going to, yes, have austerity budgets, but that doesn't mean cutting. That just means minding spending,'' she said at a news conference.

“Can we have any large grandiose announcements probably for the next couple of years? I'm going to say not, unless it's going to stimulate further growth into the future.''

A provincial election is set for Oct. 26. Harpauer said the Saskatchewan Party's platform and costing will be based on the financial picture outlined Thursday.

“I believe the Saskatchewan people do believe that we should live within our means and that ... we should put our best efforts into balancing our budgets.''

Although she didn't rule out tax increases, the minister said it's not likely, because jurisdictional tax competitiveness is going to be more important than ever.

The Opposition criticized the update for lacking in details and proper scrutiny because it was presented when the legislature isn't sitting.

“It sort of baffles me when I heard the finance minister ... saying that it's time for austerity,'' said NDP finance critic Trent Wotherspoon.

“We have an economy that's in recession and people out of work. It certainty is not a time for more austerity and more cuts within Saskatchewan right now.''

© 2020 The Canadian Press