Tuesday, March 22, 2011

Saskatchewan budgets of bygone days

John Weidlich
March 22, 2011

Ken Krawetz, Saskatchewan's minister of finance, is set to deliver his first provincial budget Wednesday afternoon, nine months after assuming the crucial portfolio in the Saskatchewan Party government led by Brad Wall.

Homesteading in Saskatchewan, around 1905. Homesteading in Saskatchewan, around 1905. (Library and Archives Canada )

According to the most recent financial figures, Krawetz has about $11 billion of revenues to work with.

It wasn't always that way.

The earliest record of Saskatchewan's financial picture is found in the public accounts published for 1905, the year the former territory became, with Alberta, a province.

Revenues came from the federal government, officially the Dominion of Canada, which contributed $500,000 to the fledgling province. The liquidation of assets from the former North-West Territories generated another $80,000.

Saskatchewan's first budget was delivered May 17, 1906 by J.A. Calder who dedicated $100,000 to roads and $25,500 to health.

Overall spending was about $2 million.

According to accounts of the day, the most contentious budgetary item was a proposed annual stipend to members of the legislature of $1,000 each.

Opposition MLAs suggested the amount was too high and proposed $700 instead.
The matter went to a vote, and the government won the day.

1 cent per acre land tax

In 1907, Saskatchewan imposed its first broad based revenue tax: a one cent per acre levy on farmland.
In 1909, the province entered the telephone business, spending $126,000 on two take-overs to form what would eventually become SaskTel.

The first budget speech on hand at the legislature library is from 1919, when Charles Dunning spoke about the challenges of managing public funds.

"I know it is not enough," Dunning said about his plans to spend $1.4 million on highways. "Most people are more interested in spending money than in devising ways to getting it."
'Everything looks bright for Saskatchewan.'—Provincial Treasurer Charles Dunning, 1920
In 1920, Saskatchewan was spending a total of $7 million.

Not surprisingly, agriculture was a major focus of Saskatchewan politicians at budget time.

In 1920, the provincial budget noted that, after three seasons of drought, the outlook was better for the province thanks to a good winter of snow.

"Everything looks bright for Saskatchewan," Dunning announced in his budget under Premier William Martin. "Lots of snow, lots of crop."

In 1922, with Dunning now Premier and Provincial Treasurer, the province unveiled a budget deficit of $53,000 and an accumulated debt of $41 million.

It was quite a sum for a province with a population of 820,000.

It took several years — and profits from liquor sales — to return the books to a surplus position.

That happened in 1930, ironically just a few months after the stock market crash of October, 1929.
It did not take long for the effects of the crash to be felt in Saskatchewan and the 1931 budget, of Howard McConnell, recorded a deficit.

"We won the war," McConnell said. "We have survived former depressions. We shall survive this one."
In 1935, James Gardiner the new premier (although only for a few months), delivered the provincial budget. In that year, it was noted, the concept of a provincial tax on income was a non-starter in part because there was not much to tax. According to the province only 34 people had incomes of $10,000 or more.

Trucks taking men to work for relief projects in Saskatchewan, 1934. 
Trucks taking men to work for relief projects
in Saskatchewan, 1934. Library and Archives Canada 

The dominant themes of budgets in the 1930s were, not surprisingly, relief for the unemployed and federal assistance for the struggling province.

The tone changed with the outbreak of war.
"[Our] first concern must be winning the war," William John Patterson said in delivering the budget of 1941.
Patterson, a Liberal, was both premier and provincial treasurer for Saskatchewan in an era when it was common for the leader to assume the top financial portfolio.

Tommy Douglas broke that mold in 1944 when his CCF party assumed government and he appointed Clarence Fines to the treasury role, who continued in that role for the next 16 years.

In 1945, Fines declared the education and health tax — Saskatchewan's sales tax — a regressive form of taxation. He wanted to end it, but noted the province gave up some taxation authority during the war effort to the federal government and the sales tax was needed for provincial coffers.

Shoe factory for Regina


There was a flurry of economic activity in the provincial economy by the first CCF government, with Saskatchewan undertaking a number of businesses including a shoe factory in Regina, a wool mill to make blankets in Moose Jaw, fish plants in the north, a brick plant in Estevan and — in 1948 — a provincial inter-city bus company.

In 1949 many of the ventures were dropped on account of losing too much money.
The sales tax, in 1950, was set at 3 per cent and was generating about $9 million per year for the province — about one sixth of all revenues.

Fines' last budget was in 1960 when he announced a surplus of $2.75 million.

In 1961, Woodrow Lloyd unveiled a budget with a deficit of $2.6 million.

That was followed, in 1962, by an Allan Blakeney — as provincial treasurer — deficit of $4 million.
In 1964, Ross Thatcher was in the premier's seat and delivering budgets. He reduced the sales tax, which had climbed to five per cent, to four per cent. He also introduced a sales tax exemption for newlyweds buying household appliances.

Thatcher also reintroduced what was known as purple gas — fuel that was tax exempt for use in farming. For a time a purple dye was added to fuel to distinguish it.

It was under Thatcher that health spending in Saskatchewan broke the $100 million barrier.

While Thatcher claimed to produce surplus budgets, that was disputed. The NDP said Thatcher was borrowing heavily to balance the books and, when Allan Blakeney returned the NDP to government in the 1970's, he said Thatcher had produced "bogus budgets".

$2 billion in revenues


By 1980, Saskatchewan revenues were around $2 billion.

And the theme of "deficit or surplus" continued.

The new Progressive Conservative government of Grant Devine claimed the last NDP budget was a deficit.
Nevertheless, Devine and his three finance ministers generated repeated deficit budgets: deficits that were always larger than initially forecast.

His last stab at a budget predicted a shortfall of $265 million.

In 1991, when Roy Romanow took over and Ed Tchorzewski was (back) in the finance portfolio, the deficit was pegged at a whopping $850 million.

By the time the NDP handed power over to the Saskatchewan Party in 2007, the province was back to balanced budgets — depending on which accounting principles were used.

Indeed, the Saskatchewan Party has also produced budgets that, to be balanced, have relied on different accounting principles.

So, if there is one constant theme from budgets of the past it may be that while the overall numbers have grown the political rhetoric stays the same.

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