NDP urges budget delay as oil prices plummet

As oil prices swing wildly and COVID -19 cases mount in Canada, the Saskatchewan NDP is calling on the premier to delay a provincial budget that could be out of date the moment it’s tabled.

In a news conference Tuesday, NDP Leader Ryan Meili said the budget will be “a work of fiction” if it’s released as scheduled on March 18. He warned that the premier is planning to campaign on a budget that ignores the toll lower oil prices and troubled markets will take on the province.

“Give us a platform that’s in the real world,” Meili urged Premier Scott Moe. “He wants to put out a budget, which we know is on fake numbers, and run on that budget. And, frankly, that would be irresponsible and dishonest.”

The budget document was finalized on Feb. 28, before oil prices lost roughly a quarter of their value and fears of a pandemic spread panic in financial markets. Oil royalties bring in about 4.5 per cent of provincial revenue, while a recession could devastate other revenue sources.

“If they put out a budget with the projections from last month, they’re lying to the people about what our finances look like,” said Meili.

Moe signalled that the government won’t be deterred from its March 18 budget date.

“We’re not going to make panicky decisions or knee-jerk reactions to what has, to date, been a couple of days of variable market forces,” said Moe.

“If those market forces continue to be variable and negative out into the next number of weeks and months, the appropriate time for us to realign our budget would be at the first quarter,” Moe added.

The first-quarter update would usually come in the summer or early fall. Meili said waiting that long makes no sense. He argued that a delay of two weeks would be “reasonable.” He’s also calling for the government to release the third-quarter update showing the existing state of the province’s finances for 2019-20.

He said the government should also release its pension liabilities, which Finance Minister Donna Harpauer previously said could increase by hundreds of millions of dollars in light of a recent interest rate cut.

“These are the steps that need to be taken to re-establish confidence among the Saskatchewan people,” said Meili, adding they will make sure the province is not getting a budget that is a “fiction,” or “a document that won’t be worth the paper it’s printed on.”

Harpauer called Meili “Dr. Doom” on Tuesday and accused him of panicking.

She noted that the government has reduced its dependence on oil revenues. The last oil crash created a $1.3-billion shortfall in the province’s finances for 2015-16. If oil stays at $30 per barrel for all of 2020, Harpauer said the impact would be far less.

But it would still cost the province about half a billion dollars.

Harpauer has expressed “optimism” that the downturn will be a short-term challenge. Oil did rebound slightly on Tuesday, with the benchmark West Texas Intermediate (WTI) reaching about US$34 a barrel.

Both Harpauer and Moe noted that budgeting relies on 12-month projections, not one-time prices. But private forecasters are already adjusting their 12-month estimates of where oil will be over 2020.

Barclay’s, a major British bank, cut its year-long forecast for WTI to just US$40 a barrel this week. That’s about $16 lower than its estimate from just weeks before, around the time the budget was finalized.

Harpauer said it would be possible to delay the budget, but she also suggested it would be pointless. Even if the markets remain troubled, she said she has no plans to change the government’s spending plans.

If an election is called for the spring, Meili said his party’s platform will make realistic economic assumptions.

“We’re willing to make sure that our platform is designed in the real world,” said Meili.