WATCH ABOVE: Mike McKinnon explains why the province’s ‘piggy bank’ may sit empty for some time
REGINA – A savings account for Saskatchewan once again appears to be a distant dream.
Premier Brad Wall said Wednesday his Saskatchewan Party government may come up with a more structured plan to eliminate the province’s debt – and that will happen before any consideration of establishing a heritage fund.
“I don’t think we can have a credible or meaningful discussion on a Futures Fund unless we’ve taken care of the credit card,” Wall said.
A government-commissioned report in November 2013 recommended the Saskatchewan Futures Fund, a plan to save a portion of revenues from non-renewable resources such as oil, potash and uranium. The fund was expected to be established in time for the 2014-15 budget, after seemingly strong support for the plan developed by former University of Saskatchewan president Peter MacKinnon.
The report suggested three options for establishing the fund:
- one-time, 2014 budget allocation of $100 million
Or, when resources make up more than 26 per cent of all government revenues:
- only pay debt
- be split between debt repayment and contributing to a savings account.
Wall suggested at the time it may be smart to invest resource revenue soon. “While we’re very grateful for the natural resource strength of our economy and the bountiful resources we have … once we sell them, they’re gone,” he said.
Much of the province’s debt load dates back to the 1980’s – with historically high interest rates. In April 2013, the provincial auditor said Saskatchewan’s debt was expected to reach $19.1 billion. Wall said interest rates on debt are higher than the potential return on a savings account.
“I think that’s what most Saskatchewan families would do, that’s what most businesses would do,” Wall said. “Even though we have lower revenue this year, I think we need to start thinking about a structured way of (paying debt) going forward.”
The finance ministry confirmed in 2013, had the Futures Fund been in place over the previous five years, the total fund would have exceeded $501 million. The number was based on 2008-09 numbers where non-renewable resources made up 37 per cent of provincial revenues.
“These are the kinds of things you’d expect your government and your premier to do during the best times in the province,” said deputy NDP leader and finance critic Trent Wotherspoon. “The principle and the need to have a fund established is important.”
Wotherspoon didn’t have a particular dollar amount in mind for an initial investment to start the fund. “The sooner you start that, the better,” he said.
The idea isn’t new. In 1978, the Saskatchewan Heritage Fund was started with over $400 million – but the money was quickly spent and the fund was abolished by 1992.
One of the world’s most renowned sovereign wealth funds is in Norway, where an account established in 1990 is expected to be worth $1.1 trillion by 2020.
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