Thursday, June 02, 2005

SK: Surreal responses to oil windfall

Saskatchewan's opposition Saskatchewan Party criticizing the government for "low-balling" oil and gas revenues and not cutting taxes and increasing social spending.

And Sask. Party finance critic Ken Cheveldayoff urged Finance Minister Harry Van Mulligen to spend that money eliminating income tax for low-income earners or commit to funding the province's share of the Canadian Agricultural Income Stabilization (CAIS) program for farmers.

First off, the spending. They're calling on the government to increase spending because of the one-time oil revenue. A pretty dangerous path to go down.

Second, the province has a spending problem like Kirsty Alley has an eating problem. In the most recent provincincial budget, spending was forecast to increase by 6.8 per cent while revenues will increase by only 6.3 per cent. The disporportionately high spending increases have been happening since Roy Romanow left office, and Lorne Calvert was elected leader.

In the last few years, through the worst drought in 100 years, grasshoppers and BSE, the province has steadily increased spending. While the province cries poor when it comes to tax cuts, the reality is quite different. Revenues are at or near historic highs.

Of course, the Saskatchewan Party is perfectly justifed in calling for tax relief, and raising the Basic Personal Exemption is something we've been advocating for a long time. The problem is that the Saskatchewan Party's stated policy is to divide surplus revenues in three, and distribute funds equally to tax relief, spending increases, and debt. A noble pursuit, no doubt, but it completely ignores the province's spending problem (which is akin to that of the Grant Devine era, in case you're keeping track).

As the old saying goes, you can't have your cake and eat it too. You can't increase spending and cut taxes at the same time.

And as for using one-time oil and gas revenues to fund ongoing social programs, we need to seriously re-think this (is Alberta listening?). As the Atlantic Institute for Market Studies' Brian Lee Crowley effectively argues, there are only two ethical uses of oil and gas revenues -- debt reduction or long-term savings.

Oil and gas are finite resources that are the birth right of all Saskatchewan residents. Once we extract the oil, it can never be put back in. We take the oil out of the ground, and we exchange it on the open market for cash. To use that money to fund programs that benefit the current generation while steadily increasing the debt for future generations is an historic injustice.

Chiming in on the issue is Karwacki the Cypher, the leader of the Saskatchewan Liberal Party that has no seats, and is on the verge of being de-listed as a registered political party:

Liberal Leader David Karwacki said "it's not a bad thing to be conservative in our (revenue) estimates" but agreed with the Sask. Party that the NDP government needs to produce a plan for spending the additional revenue.

However, Karwacki argued one-time money shouldn't go to annual program expenses like CAIS or income tax decreases. Instead, the oil windfall should go to specific one-time projects like a Health Sciences Centre at the University of Saskatchewan or value-added industries for agriculture.

Huh? In Karwacki's world, one-time expenditures include university expansion and agriculture subsidies. We think he has been sniffing too much bio-diesel.

There is only one way to get what everyone wants. We need to cut and prioritize spending, eliminate the debt, and cut taxes.

3 comments:

John Murney said...

Good points, David.
The Sask. government must decide what its priorities for spending are, and soon.
Debt reduction is urgent.
Tax cuts are welcome at any time; I would personally like to see more happen on the tax cutting front once the debt reduction is underway.

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