Saskatchewan Gov’t Can & Should Be Moving Faster On COVID-19 Financial Relief

You’re going to see a lot more headlines like this one in the Saskatoon Star Phoenix and Regina Leader Post.

In fact, this one, as shocking as it is, will probably be pretty mild in hindsight.

There is only so much the provincial government can do at this point to reverse the havoc the COVID-19 pandemic is wreaking on Saskatchewan on virtually every front…however there’s also so much more it could and should be doing right now.

The Saskatchewan government is no stranger to corporate welfare, handouts, money-losing initiatives and picking winners and losers. What they need to wrap their collective minds around now, however, is that they must extend that spirt of generosity to everyone in Saskatchewan, not just a select few.

And they must do it now.

Because despite recent oil price tumbles, stock market crashes and the massive amounts of money poured into projects that are growing more questionable in the historical context as each day passes, Saskatchewan is uniquely positioned to weather the incoming economic disaster (which it will be).

Don’t take my word for it, take it from the government officials in charge of trying to navigate this province through this nightmare.

Here’s Scott Moe, shortly after his party appointed him premier of Saskatchewan:

This quote from the premier takes on new meaning in a pandemic era.

Here’s Finance Minister Donna Harpauer on Saskatchewan’s fiscal capacity in her March 2019 budget speech (and you can be sure all of these exact same bloviations were in what was supposed to be her pre-election March 2020 budget speech):

The “controlling spending” bit is laughable, because this government has proven time and again that concept doesn’t apply to overbuilt vanity projects or enriching their friends. But “keeping taxes low” and “no new taxes or tax increases” is worth exploring.

On March 23, 2017, our Provincial Sales Tax (PST) was hiked from 5 to 6 per cent. When that increase was announced, the Saskatchewan government predicted it would raise an additional $242.1 million in revenue.

It didn’t. It raised $800 million in revenue.

I don’t know about you, but if it means COVID-19-crisis cash is injected into the Saskatchewan economy now, so it still exists later, when things return to normal, I’d be more than happy to pay an extra point in PST. Lifting it to 7 per cent would simply align us with BC and Manitoba, while still keeping our overall combined Goods & Services Tax (GST) and PST rates lower than Ontario, Quebec and all four Maritime provinces.

Anyway, this is just one mechanism, but when the time is right to do so (which isn’t right now), raising Saskatchewan’s PST by one per cent could conservatively (assuming we end up with a depressed economy and lowered consumer spending) increase government revenue by at least half a billion dollars in the twelve months after it is implemented.

As for corporate taxes and resource surcharges, here’s how that has looked over the last thirteen years:

I’m guessing raising corporate tax rates isn’t ideal now or in the future. Plus, we don’t have a ton of wiggle room, based on rates across Canada.

CAnnotation-2020-03-03-155304.jpg
Small biz in Sask can probably expect that $600,000 income limit, raised in 2018, to drop back down to parity with the rest of Canada.

As you can also see on the chart above, resource surcharge revenue has been all over the map. A surcharge is different than a resource royalty, but the premise is the same: cash paid to the Government of Saskatchewan for the resources that are extracted from our land for resale. Should the surcharge go up?

You tell me.

For example, consider an excerpt from Nutrien’s 2019 annual report.

Keep in mind that while Nutrien has definitely contributed to our province’s previous economic successes, more recently it exacerbated our economic woes by shutting down Saskatchewan mines and laying off our friends and neighbors – while still paying out billions of dollars in dividends to Nutrien shareholders.

Is it unreasonable for Nutrien to share a bit more love with Saskatchewan and a bit less with its shareholders? After all, without our resources, neither Nutrien nor its shareholders would collect a dime – so you tell me.

What about the Crowns?

From Sask Power’s 2019-20 third quarter results:

SaskPower sales to residential customers were $144-mil in the third quarter of 2019-20 (Oct, Nov and Dec), or approximately $48-mil per month. Commercial clients weren’t far behind at $44.6-mil per month. So including farm clients, let’s say SaskPower takes in $100-mil in revenue per month across those three client bases.

In other words, one of the fastest ways the Government of Sask could put $100-mil into the hands of businesspersons, farmers and residents is by waiving at least one month of SaskPower bills.

SaskPower can afford do to that for a month. In fact, it could do it for two months:

Pg. 4, SaskPower 3rd quarter report

SaskEnergy is in pretty decent shape with a 2018-19 net income of $197-mil. It would forego $48-mil if they waived one month of payments.

Pg. 8, SaskEnergy 3rd quarter report

SaskTel is a little bit different because it’s in a competitive market so Shaw, Access, Telus and Roger’s customers wouldn’t benefit.

Waiving SaskPower or SaskEnergy utility payments for a month would immediately put two or three-hundred dollars back into the pockets of Saskatchewan residents and businesses.

That would be a start, but still not nearly enough.

Saskatchewan must follow the lead of provinces like BC and Alberta and provide bridge funding immediately for people who have been laid off and won’t be receiving COVID-19-related federal benefits for at least another couple of weeks.

British Columbia is providing its residents with a $1,000 one-time payment in addition to those federal benefits. BC Hydro’s residential customers experiencing job loss, illness or lost wages due to COVID-19 will receive a credit for three times their average monthly bill over the past year to cover the next three months of their power bills. And the BC government is offering a $500 payment directly to landlords on behalf of residents who cant pay their rent.

Small businesses in BC that have been forced to close due will have their power bills forgiven by BC Hydro from April to June 2020, and education property tax has been cut in half for that province’s commercial properties.

Alberta isn’t quite as generous with its residents as BC is, but it’s still way better that what we’ve been offered in Saskatchewan. Our western neighbor is offering a one-time emergency payment of $1,146 to residents who are required to self-isolate or are the caregiver of someone in self-isolation and have no other source of pay or compensation. They do qualify, however, for the Alberta payment in addition to the federal benefits they’ll receive.

And that last bit is important, because its what renders Saskatchewan’s “Self-Isolation Program” completely useless. Our provincial government will provide Saskatchewan recipients with $900 over two weeks, but only if you do not qualify for federal benefits.

And since literally everybody qualifies for the federal benefits, it’s unclear precisely who the Saskatchewan government thinks its own relief program is going to help. In fact, given it was launched on March 20th, hopefully soon reporters will ask the provincial government 1) how many applications it has received and b) how many have been approved and received funding.

Bottom line: if you have a pulse and had a job you are eligible receive federal COVID-19 benefits (- Canada govt website)

Oh, and you know how Saskatchewan officials are so obsessed with protecting privacy that they haven’t been willing to share even the most basic information on COVID-19 diagnoses in our province?

Well, in order to qualify for the Saskatchewan cash benefit:

If you can actually get money from the Saskatchewan government, expect everyone who works there to know about it.

Unbelievable.

In this post I’m not going to get into the shocking inadequacies in the Saskatchewan government’s “plan” for its most vulnerable people – $171,000 for ten emergency homeless shelters to buy extra cleaning supplies – because that warrants its own post.

But here’s a couple of comparables to highlight how ludicrous $171,000 really is, in case its not painfully apparent:

  • Alberta, roughly four times the population of Saskatchewan, announced $30-million in additional, direct funding for its homeless shelters and community based organizations serving those clients.
  • Ontario provided $300-million in additional COVID-19 funding for its “shelters, food banks, emergency services, charities and non-profits continue to deliver their critical services, hire additional staff, and find ways to promote social distancing and self-isolation to keep clients safe and healthy.”

Yes, there were some small but decent measures included in Saskatchewan’s Minister of Social Services Paul Merriman’s announcement, including a moratorium on teens “aging out” of the social services system. Overall, however, it was a disgrace. And Merriman knows that too, because this is not the face of a politician (and former CEO of the Saskatoon Food Bank) who is proud of what he just announced:

Paul Merriman announcing his goldfish just died Ministry’s COVID-19 response on March 31, 2020.

Here’s the bottom line, my friends: Saskatchewan’s total COVID-19 response will cost at least $1-billion. Probably more. Alberta has committed $7.7-billion in new money to its overall response (though to be clear, there have also been questionable, even disturbing responses from Kenney’s government). Ontario has committed $17-billion in new funding. BC, $5-billion (including specifics like $3-million for its arts sector).

Saskatchewan? $171,000. Seriously. Nothing more for healthcare, the economy, long-term care, social services, manufacturing, renters, agriculture, income support, etc. etc.

All politically-motivated planning by the Sask Party on balanced budgets has to die, if it hasn’t already. Stick a fork in it. They must accept that and move on, because we will rack up at least a billion dollar deficit in 2020-21.

Honestly, that’s got to suck, because from a campaign position, every piece was sliding into place for their spring election. In fact, it’s growing abundantly clear that despite a fixed election date for October 2020, a “snap” election to ambush the Sask NDP (presumably to snare even more unopposed government power) was the plan all along, as evidenced by statements like this one from Finance Minister Donna Harpauer in March of 2019:

The “sooner than we think” comment probably should have been our first clue the fixed election date for this fall wasn’t going to happen.

A blatant political reference – in a speech from the floor of the Saskatchewan Legislature – to the province’s spending plans was wildly inappropriate, but a regular occurrence.

However it’s Harpauer’s last few sentences that are more important right now. How many times have we heard the government brag about that AAA credit rating? And rightly so, we’re one of the only two provinces in Canada to have one. Prior to the COVID-19 pandemic there were threats of it being downgraded because oil prices were collapsing, but as far as I’m aware it’s still intact.

That means we can borrow money easily and at low interest rates.

Which we have been doing consistently (even when potash was flying out the door and oil was over $100 per barrel) in Saskatchewan for the past 10 years.

Let’s go back to Harpauer in March 2019, when she said that “At March 31st, 2020,”:

So, assuming that the total provincial debt is $21.7-billion as of the end of last month, as Harpauer predicted, we’ll still have one of the lowest debt-to-GDP ratios in Canada – again, a fact the Sask Party has brought up repeatedly as a political talking point, and rightly so.

But now it has to be a COVID-19 response plan talking point.

Scott Moe, Donna Harpauer and anyone else in government who wants to tag along, must get their butts to the bank and borrow low-interest cash to inject immediately into our province through an actual, real-life COVID-19 fiscal response plan, asap.

Economists from across the world have been clear on COVID-19 fiscal response: Speed. Is. Everything.

Yes, I hear you when you say that there are those who, despite the pandemic, aren’t suffering financially and don’t need cash or a break. Landlords might not pass down savings to their tenants. There may be abuse of the benefits.

Whatever – it doesn’t matter anymore, because doing nothing will cost us far more than what we might hand out imperfectly.

Whether we borrow cash now or pay for it later (well, technically it will likely be both) financial relief in Saskatchewan must begin to flow immediately.

It makes zero sense for any resident or business in Saskatchewan to give their cash to the government right now, so Crown utility bills and other appropriate payments and fees must be waived, not deferred, and it must happen now before its too late for small-mid-sized businesses to save themselves.

Additionally, cash payments to strapped low-to-middle income residents must flow now, otherwise we can say goodbye to the goods and services consumer market.

The government’s reluctance to do so, combined with programs and forms full of red tape to prove loss of income in order to receive financial assistance, will do little more than ensure we all end up in administrative hell, waiting to apply for it.

Premier Scott Moe and the Saskatchewan government must move quickly now, because the cost of doing nothing for Saskatchewan businesses of any size, as well as its residents, will be astronomically higher than the alternative.

If beneficial political outcomes for themselves are still this government’s primary motivation, I guarantee that those outcomes can’t and won’t be worse than it will be if they don’t move now.

I’m Tammy Robert. I’m a writer, but pay the bills consulting in political strategy, media and public relations. Feel free to email me anytime at tammyrobert@live.ca.

To Share this post on social media, please scroll down to beneath the pesky ads that someday I will get around to removing.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s