Sask. economists audit Moe's claims ahead of Wednesday's throne speech

Saskatchewan economists Joel Bruneau and Jason Childs are weighing in on some of Premier Scott Moe’s economic claims in advance of Wednesday’s throne speech.

Some of the claims hold water. Some, they say, do not.

The 24-page white paper the party released on Oct. 11 says “nine federal climate change policies are estimated to cost Saskatchewan households and industries $111 billion between 2023 and 2035.”

“The fact of the matter is they're the only numbers that are there,” said Moe.

“We've provided them through the Ministry of Finance, and I would put forward that they may be low. What we're seeing with the federal government over time is really a moving of the goalposts.”

Bruneau, the head of the economics department at the University of Saskatchewan, says the costing in the document was done in bad faith.

“There's all these carbon taxes that are collected by the federal government that white paper treats it as that money's gone. It goes to Ottawa and it disappears,” Bruneau said.

“But that money is rebated to Saskatchewan residents, and basically every dollar generated in Saskatchewan comes back to Saskatchewan.”

He says the difference is who’s getting that money back.

“That's a redistribution, but when we're talking about the province as a whole you would add back that money that comes here, because if you didn't you certainly would not say that oil revenues are good for the province, because I don't make any money from oil revenues. In fact, higher oil prices are costing me money.”

Bruneau says there is some merit to the “white paper,” and more sensitivity to Saskatchewan’s needs by the federal government could lower costs, but the logic taints the entire document.

“A second way to look at this is Saskatchewan talks in their “white paper” [about] different kinds of policies that Saskatchewan is hoping to engage in to reduce emissions,” he said.

“They haven't costed that. They haven't told us, ‘Saskatchewan’s policy costs us this, the federal policy costs us $111-billion, and so the difference in costs is this.’ They haven't done that. They're basing the difference in cost of 111 to zero, as if the Saskatchewan policies have zero cost, and that is nonsense.”

Childs, an associate professor of economics at the University of Regina, says it would be disingenuous to think of it as purely an economic document.

“It's going to be a political document,” he said.

“You're going to pick the numbers that make your case as strong as you can. On the federal government, if they were to do one they’d take the numbers that would make their case as strongly as they could. So in reading any of these things caution is well advised.”

 

BALANCING THE BUDGET AND PAYING DOWN DEBT

Moe says rising resource prices are leading to a financial windfall for the province, and the Sask Party will be able to balance the budget in this fiscal year and the next fiscal year, as well as pay down $1-billion in operation debt.

“It's plausible,” said Childs.

“That extra revenue coming through natural resource royalties and just a higher level of economic activity is going to mean that there's more money flowing in, and that based on those quick back-of-the-envelope calculations I often do with this kind of stuff, there's enough money to get us back to balance and probably have a little bit extra.”

Bruneau agrees that revenues are up and expenditures are down relative to the Covid-19 pandemic, so retiring debt and balancing the budget are possible.

“Perhaps some more tax cuts in there as well,” he said.

 

UNEMPLOYMENT RATE AND THE ECONOMY

The premier said that Saskatchewan has the lowest unemployment rate out of any province in the country as well as the fastest growing economy.

“Normally Alberta has a lower unemployment rate, but they've shot up and have not come down,” Bruneau said.

“Everybody's unemployment rate shot up, ours rebounded a little bit quicker.”

Childs agrees, with a caveat.

“Our participation rate is slipping, so we have fewer people out there looking for work as well, so some of that low unemployment rate is people leaving the job market, and so it's not all good news but it is overall good news,” he said.

While both agree Saskatchewan’s economy is growing, neither could be certain it was the fastest in the country.

“Fastest growing, it's hard to know until the numbers actually come in and the data is fully collected, but all the forecasts from all the major banks have us growing as quick or more quickly than anybody else for this year,” said Childs.

“Saskatchewan is one of the fastest growing because we got population growth, people are still moving into Saskatoon,” said Bruneau.

Moe says the Sask. Party will be pushing the federal government to sign the Saskatchewan-Canada Accord to give the province more control over immigration, and says the province projects to grow to 1.4 million people by the year 2030.

“Immigration lead growth is always a tricky question, because with more people, you need more infrastructure, and that shows up as economic growth, but it's expensive,” said Childs.

“Bringing that many people in that quickly you're going to likely see a building boom, but we're going to have to spend a lot of money on infrastructure — like water, sewer, housing, all that kind of stuff — it’s going to have to increase dramatically to accommodate all those people.”

 

PARALLELS TO THE EUROPEAN UNION

Moe also drew comparisons between the situation surrounding energy development in Canada and the European Union, where he says discussions are underway to reduce emissions, reduce oil and gas production, and reduce fertilizer use.

“In the case of the European Union as a group of nations, to push your emissions out of your national borders, but you have no plan on how you're going to replace those energy needs,” said Moe.

“What they did to replace those energy need was they bought their natural gas, their oil and their coal from Russia, and they continue to today. We're heading down that same policy path here in Canada.”

Bruneau confirmed Germany wanted to move away from coal and decommissioned its nuclear power plants while moving towards solar and wind every sources, and is now reliant on an “unreliable partner” in Russia for natural gas and energy.

“So how does that parallel into Saskatchewan, which is federal government policies say we want to get off of coal, and to get off a coal we need more solar, we need more wind, we need more natural gas, and potentially we need more nuclear,” Bruneau explained.

“But we're an exporter of energy. I don't exactly see where there's a problem here. If there's a war with the United States, we’ve got other problems, we don't have an energy problem. If we had a war with China, we have other problems. So I'm not sure where the parallels are coming up.”

Bruneau says any environmental policies handed down by the federal government would have to be severe in order to squash Saskatchewan’s oil and gas industry to the point where we’re reliant on outside sources.

Childs says the parallels between Canada and the EU fall apart, but domestic federal policies could have an affect on prices.

“If we need to rely on natural gas as their standby power and that's going to be taxed very, very heavily, energy is going to become very, very expensive,” he said.

“Energy is such a fundamental economic input, that when you increase the cost of energy, you increase the cost of pretty much everything.”