Saskatchewan has a plan to balance its budget, Alberta doesn’t
Alberta and Saskatchewan are energy-rich jurisdictions that fell on hard times as commodity prices fell. And both jurisdictions face significant fiscal challenges, with large budget deficits and substantial debt accumulation.
And yet, in their recent budgets the two governments took very different approaches to dealing with those challenges. While Premier Notley’s government in Alberta has continued down the path of dramatic spending growth, Saskatchewan’s budget signals that Premier Wall’s government will take seriously the need for spending restraint.
A couple key trends illustrate the differences between spending trajectories in the two provinces. Alberta’s budget forecasts that in 2017/18, program spending will be 11 per cent higher than when the government took power in 2015/16. By contrast, Saskatchewan’s program spending will decrease by 1.6 per cent over that same period.
In the later years of its fiscal plan, Alberta expects to continue increasing spending, albeit somewhat less briskly. Meanwhile, Saskatchewan’s budget calls for almost no spending growth, with a total spending increase of just 3.3 per cent between 2016/17 and 2020/21.
This spending restraint in Saskatchewan compared to the absence of restraint in Alberta helps contribute to the very different bottom lines in the two provinces. Saskatchewan’s plan will cut its deficit in half again next year before returning to balance in 2019/20. By contrast, Alberta plans for big deficits of at least $7 billion in every year of its fiscal plan.
The consequences of these different choices are clear. While Alberta will rack up tens of billions of dollars in debt with no end to the red ink in sight, Saskatchewan will add much less to its debt burden. The cost of the decisions being made by the Alberta government today will be paid, of course, by future generations who will be responsible for servicing this mountain of debt.
To be clear, Saskatchewan’s plan to eliminate its deficit is just that—a plan. The work of implementing it remains to be done and likely won’t be easy. Cost pressures from inflation and population growth will make it more challenging to keep nominal spending levels from creeping up. Achieving this worthwhile objective will require the government to actually find savings within departments, which will likely include real discipline on government wages and salaries.
Additionally, Saskatchewan’s fiscal plan (like Alberta’s) relies on optimistic revenue projections, largely from increased resource revenues. If those projections don’t come to pass, keeping the government’s balanced budget promise will require further spending discipline in the years ahead.
With these caveats noted, Saskatchewan’s budget lays out a generally realistic quick path to balance and future generations of Saskatchewanians will benefit from the reduced debt accumulation. This type of plan was conspicuously absent in the Alberta budget released a week before.
Simply put, Saskatchewan’s budget reflects an understanding that persistent deficits and ever-growing debt are problems that require a disciplined response on the spending side of the ledger. This contrasts sharply with in the situation in Alberta, which will see more spending growth and big deficits for many years to come.
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