Mid-year report forecasts $1.1-billion surplus for Saskatchewan in 2022-23

Saskatchewan’s economy continues to be on the upswing.

In the mid-year financial report issued Tuesday, the provincial government forecast a surplus of $1.1 billion for 2022-23. That’s up $50 million from the first-quarter forecast and $1.6 billion from the budget, which was forecasting a deficit of $463 million.

“Our province’s strong economy and resources that belong to all Saskatchewan people are contributing to the province’s bottom line,” Deputy Premier and Finance Minister Donna Harpauer said in a media release.

The province’s revenue is forecast to be $19.5 billion, up nearly $337 million from the first quarter and up $2.4 billion from the budget.

Non-renewable resources continue to push the economy. Revenue from that sector is expected to be up nearly $1.4 billion from budget to $4.3 billion, but that figure is down $460 million from first quarter.

While resource prices are still high, the forecast prices have been ratcheted back a bit since the first-quarter financial report. Harpauer said Tuesday she doesn’t expect the prices to stay this high forever and keep providing surpluses.

“If we only had that crystal ball, right? We are seeing oil already dropping significantly from where it peaked earlier in the year. Potash has been more steady but it still has had some softening,” Harpauer said during a media conference.

The finance minister said she has been doing this long enough that she has seen the up-and-down cycle of resource revenues.

“It always concerns me that we can’t become too reliant on … resource revenue and use it all for day-to-day operating because when (resource prices) go down, then you have to find where those dollars are going to come from to continue that operating,” said Harpauer.

According to the government, potash revenue is expected to increase by $834 million from budget and oil revenue is to be up $317 million from budget.

The report says the price of potash has risen $164 per tonne from budget to $571 per tonne at mid-year, but that’s down from the first-quarter forecast of $625. The price of oil has gone up $15 per barrel to $91 per barrel at mid-year, but that’s down from the forecast of $97.50 in the first quarter.

The province also is forecasting $1 billion more in tax revenue from budget, increasing the total to $9.1 billion, up $500 million from the first-quarter report.

Harpauer said there’s a delay in getting numbers from the Canada Revenue Agency and governments all over the country are finding the numbers they’re getting are stronger than predicted .

The total increase in taxation revenue includes $651 million more in corporate income tax, $249 million more in individual income tax, and $160 million more in provincial sales tax.

Other own-source revenue is expected to provide $2.4 billion in 2022-23, an increase of $237 million from budget and $147 million from the first quarter.

Taxes from vaping products are going up, now forecast to be $7 million higher than the province first anticipated. And revenue from tobacco sales is now set to be about $20 million lower than first budgeted.

Federal transfers are forecast to be $3.4 billion at mid-year, up around $155 million from budget and more than $90 million from the first quarter.

The government said those increases were offset by a drop in net income from Government Business Enterprises. The budget forecast that income at $742 million, but the mid-year report is forecasting $261 million.

That drop of $481 million includes a decrease of $280 million in the SGI Auto Fund due to lower investment income and higher claim expenses, and a decrease of $153 million from SaskPower due to increased fuel and purchased power costs.

The mid-year report says expenses are forecast at $18.4 billion, up $795 million from budget and up $287 million from the first quarter.

The increase in expenses from budget includes $450 million to cover the $500 affordability cheques being mailed to all residents 18 and over who filed a tax return in 2021, and $204 million in expected increases Crop Insurance Corporation indemnities and AgriStability benefits paid in 2021 and 2022.

There’s also $7.5 million to pay for the flights to Saskatchewan for Ukrainians fleeing the war in their home country and the supports when they get here.

The mid-year forecast says the public debt will be $27.9 billion, down from $30 billion at budget and $28.3 billion in the first-quarter report. Government called it a “significant” reduction in debt.

Harpauer said people should care about this because debt is generational — it rises over years and then interest rates can also rise.

“Suddenly your costs to service that debt through interest escalates at an alarming pace and that just erodes the revenues that should be available for health care, education, social safety nets, et cetera,” said Harpauer.

“So the more that you can bring down your debt, the less servicing charges are and those dollars can then be spent on services for the citizens.”

The mid-year report says the province’s real GDP is expected to grow 5.3 per cent in 2022, up from 3.7 per cent in budget. It’s expected to grow another 1.9 per cent in 2023, which is lower than was forecast at the first quarter update due in part to efforts to lower inflation.

The report says employment in the province is up 20,400 jobs from the same time last year, while wholesale trade has increased 53.7 per cent over the same time in 2021.

Moe bucks

Though the surplus is now forecast to be slightly higher than at the first-quarter report when government announced a four-point affordability plan, no new measures were announced Tuesday.

Harpauer gave an update on the $500 affordability tax rebate cheques.

She said as of Tuesday, about 600,000 of the 900,000 cheques had been sent out. She said most of the rest would be sent out in the coming week to 10 days, while those who just filed their 2021 taxes before the Oct. 31 deadline could have to wait a bit longer.

Harpauer said she’d heard there’d been a bit of a printer glitch because there were so many cheques to send out.

NDP: More help needed

While the Saskatchewan NDP thinks the surplus in the province’s budget is a good thing, the opposition party doesn’t agree on what government is doing with it.

Finance Critic Trent Wotherspoon said the surplus needs to be put in the context of the cost of living challenges people in the province are facing right now.

“(It’s) a generational cost of living crisis that’s creating incredible hardship and stress for households, for families, for people, for workers (and) for businesses across Saskatchewan,” he said.

He said the provincial government has this “buoyant” budget but isn’t doing enough to help people by not adding any measures in this fiscal update.

“We have a government that’s just simply not up to the test, not rising to the challenge that Saskatchewan people are facing,” said Wotherspoon.

Wotherspoon and the NDP are renewing their call to have the provincial government scrap the PST expansion announced in the spring budget, cancel the rate hikes for SaskPower and SaskEnergy that have already taken effect, and do some of the work to investigate affordability like striking a special committee on grocery and meat pricing.

There are also needs in Saskatchewan’s health-care sector that Wotherspoon thinks should be addressed with the surplus currently on the books.

— With files from 980 CJME’s Lisa Schick