Saskatchewan is the beneficiary of elevated pricing and improved long term prospects for nearly all of the many commodities it produces: grain, oilseeds, oil, gas, potash, uranium, and even gold, copper and forestry products. While this very good news for both its citizens and government, Saskatchewan cannot necessarily depend on such good fortune for its future prosperity.
Sadly, neither Canada’s federal government nor the United States can be relied upon to provide the regulatory stability and encouragement needed for the pipelines to transport oil and gas to markets. Geopolitical strife, as in the war in Ukraine, has curtailed exports of grain, potash and oilseeds, making Ukraine not a stable anchor for longer-term planning for the future pricing of commodities.
The recent re-ignition of enthusiasm for nuclear power in the European Union, and elsewhere, is a consequence of shortages of power supplies from intermittent and erratic wind and solar power generation. The attendant effective rationing of natural gas supplies has improved investor sentiment for uranium and the future pricing power for that energy metal.
Saskatchewan, with its farmers, miners, and the firms that serve them, should be able capitalize on all of the current hospitable resource conditions. However, to better ensure its future prosperity, its government should enact policies to reinvigorate its economy and encourage further investment.
Maintaining Saskatchewan as an attractive place to live and invest is crucial to its long-term economic growth. Housing needs to be affordable, as do taxes. High quality services, like education, will provide the provincial economy with what it needs to function smoothly and efficiently. Most of those developments appear to be on the right track, but providing assurance of permanence of constructive policies would best enhance investor and business confidence.
For example, Saskatchewan’s government could take a leaf from the Quebec government’s playbook by gradually reducing corporate income tax rates, at an affordable one half a percent per year, while declaring this policy will continue for many years. The government should also provide regulatory certainty, ensuring that new industry rules are few and straightforward (to follow), and seek to eliminate punitive, arbitrary, subjective or obsolete laws and policies.
Saskatchewan’s provincial sales tax should ultimately be harmonized with the federal GST – eliminating duplication while giving the business sector input tax credits – but in the meantime the PST, which falls most heavily on its lower income population, should gradually be lowered.
There is another thing that would further lure prosperity boosting capital to the province: sell off the Crown corporations. Currently, tens of billions of dollars are locked up in torpid, monopolistic, economically-stultifying SaskPower, SaskTel, SGI (Insurance), SaskEnergy and government liquor stores. The proceeds of such a divestment should be used to lower taxes, improve health care, cut provincial debt and debt servicing costs. The liberated industries would become more competitive and responsive.
Finally, the Saskatchewan government should take a leaf from resource-dominated states south of the border and proactively enact legislation that compels government agencies to not do business with financial firms or other corporate entities that discriminate against firms engaged in lawful activity in energy, mining, forestry, agriculture and related sectors, under the guise of a pernicious form of green social credit scoring called ‘ESG’: Environmental, Social and Governance standards created by outside, often anti-business and anti-growth interest groups.
While the province does not have many publicly listed firms in those industries, two such, Nutrien and Cameco, are dominant in fertilizer and uranium, respectively. Other companies that operate in Saskatchewan or might otherwise consider doing so could be discouraged from investment or operations in the province by ESG bullying. Legislation in states such as Louisiana, Kansas, Oklahoma, Arizona, Utah, Idaho and South Carolina should be examined and adapted for this purpose. Business- and investment-friendly conditions in the future could depend on it.
Saskatchewan remains and should become an even greater prime investment destination. Needed: only courage and initiative.
Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy