Structural deficit today’s reality

We have cyclical resource revenues in Saskatchewan. Of this, there is no dispute.

How cyclical they truly are will again be demonstrated when Finance Minister Kevin Doherty presents today’s 2016-17 budget. Hopefully, he will not repeat the mistakes of his predecessors who consistently inflated revenue projections at budget time and wound up overseeing a deficit budget that year.

There may be a temptation to carry on with this game, with oil recently topping US$50 a barrel and Goldman Sachs, Bloomberg and the Saudi oil ministry now predicting oil will surpass US$60 a barrel by year’s end.

This is where the Saskatchewan budget follies tend to begin.

The biggest reason oil flirted with surpassing the psychological US$50 a barrel (it was at $49.82 at the time of writing) still had do with oilsands production outages after the Fort McMurray wildfire.

Also, the Libyan oil port of Marsa al-Hariga, closed for three weeks, has now reopened. Meanwhile, neither Russia nor Saudi Arabia are showing any signs of cutting production, and Iranian oil production has increased by 17 per cent since January and the removal of sanctions over its nuclear energy program.

In short, we are long removed from the 2008 days of US$145 a barrel oil, or even the more recent 2013 days of $100 a barrel oil. Moreover, the cyclical nature of uranium and potash prices and even farming revenue (although the income tax impact from a good or bad season is always delayed a year) means we cannot rely on windfalls to bail us out.

The good news today is Premier Brad Wall’s government may finally be coming around to recognizing this.

Wall said on Monday that the 2016-17 Saskatchewan budget will have $1 billion less revenue than last year.

This is obviously not comforting, because it translates into the Saskatchewan Party government’s third-straight deficit budget and sixth deficit in nine years.

But by acknowledging this problem at budget time — instead of playing the game of highballing resource revenues and presenting a deficit at year’s end — we at least are seeing early signs that the government gets that its deficits are no longer cyclical, but structural in nature.

So perhaps, for the first time in Sask. Party governance we will see serious measures taken to address our spending problem.

This does not mean things like the past slashing of the Film Employment Tax Credit for political reasons.

Nor does it mean simply tinkering with a health budget that’s increased to $5.6 billion annually, from $3.2 billion in the last year of previous NDP administration in 2006-07.

Hopefully, it has dawned on Wall’s government that something more than lip service to cost-cutting is required.

Hopefully, transformational change means better ways of delivering services — ways that challenge old ideas of what is necessary or maybe even some newer ideas that have been tried.

Sure, the government has privatized non-essential health laundry services. And it’s added a small, private component to deal with surgeries (although that appears to be more about quality health care and reducing wait times than about saving money).

But this government has got to get serious today about the affordability of long-term operations and infrastructure spending.

Consider how its supposed big cost-saver in health — the John Black and Associates lean model — has produced no tangible evidence of actual savings, but plenty of evidence that it has created a new bureaucracy within the already-bloated health bureaucracy.

In Regina, there are now no fewer than 36 government/ health region employees with the term “Kaizen” in their title — JBA’s lasting legacy of lean — including six Kaizen directors, 12 Kaizen specialists, lean specialists, workflow specialists, directors, Kaizen promotion office specialists, surgical Kaizen specialists, communication specialists, “Kanban” specialists, conference administrators, standard work and replication specialists, measurement specialists and certification and training specialists.

This, of course, is just Regina. There are as many if not more in Saskatoon, and proportional numbers throughout the province in other health regions.

Beginning today, it’s time to take a hard look at such unnecessary nonsense, figure out what Saskatchewan needs and what it can live without.

Beginning today, we need to address this structural deficit.