Oil, potash, and dollar volatility impacts provincial budget
- 23 Jul 2016
- C. FRASER
PROVINCIAL DEFICIT HITS $675M
2015-16 public accounts information reveals extent of deficit
We’re optimistic about that, but there’s no question there continues to be some challenges to the province’s finances.
It was originally dubbed as a balanced budget — a surplus even — but an updated look at the province’s 2015-16 finances shows Premier Brad Wall’s government finished the year with a deficit of $675 million.
“Obviously the price of oil, the price of potash and the volatility in the Canadian dollar continue to affect the province’s finances. We’ve seen a slowing down in the economy,” said Finance Minister Kevin Doherty.
Friday saw the release of the first round of the province’s 201516 public accounts information, revealing the extent of the deficit.
The $675 million shortfall is 58 per cent higher than what was forecast in February and not even close to the $107 million surplus government boasted of when the 2015-16 budget came down in March 2015.
Doherty said the government was structured at the time — and in a way, still is — to operate with higher resource revenues, even though significant drops in oil and potash prices mean that is no longer the case.
“That’s what can throw you from a $106 million surplus to a $675 million deficit in one year,” he said.
Provincial officials and Doherty still tried pulling threads of silver lining out of what appeared to be a fairly dark cloud hovering over the government’s finances.
Revenue from crops, according to the Agriculture Minister, is expected to be strong this year.
The price of oil is stabilizing somewhat, and it’s doing so in the range of the $44.88 per barrel the province pegged at the resource for the current fiscal year.
“We’re optimistic about that, but there’s no question there continues to be some challenges to the province’s finances.”
There is apparently also work being done behind closed doors.
Doherty gave the impression Friday the work being done to restructure government continues as tirelessly as the oft-used phrase being used for the effort: “transformational change.”
“What I’m optimistic about is the level of work going on behind the scenes with respect to transformational change,” said Doherty.
Reports from ministers and the civil service are starting to come into the committee tasked with leading the transformational effort, which has been played up heavily with government talk, but has been light on details as to what such change will actually look like.
What is known is Doherty and crew will be taking on the task of bringing together the public’s desire to continue receiving the same government services, have a balanced budget and not see taxes raised.
“There’s an incompatibility with those three things,” said Doherty, justifying the need for big change. “All things are on the table right now.”
The government’s plan to balance the next budget, according to Doherty, remains firmly intact.
For that to happen, Opposition NDP finance critic Cathy Sproule says Doherty will have to be “pulling rabbits out of a hat.”
She said debt is piling up at a record rate and said it’s outrageous how far off the budget was from actual spending.
“What’s really concerning is that they got it so wrong,” she said.