The Carillon, Vol. 52, Issue 23 | April 1 – 14, 2010
With the recent release of the Sask. Party government’s provincial budget, there has been a complicated debate about Finance Minister Rod Gantefoer’s claim that the budget is “balanced.” Many Saskatchewan residents may be left scratching their heads after facing a barrage of accounting-speak: general revenue, gross debt, sinking funds, business enterprise specific debt.
The budget summary is a monster document: 95 pages of definitions, tables, graphs, and large numbers. Most people don’t have the time to read the entire thing and make up their own minds about the issue, so they rely on the opinion columns and political debates. Unfortunately, without an understanding of the facts, it can seem as if politicians and commentators are speaking gibberish, or talking about two different things.
The controversy over whether the budget is balanced arises from different definitions of balance, since provincial finances are complicated and cover a broad range of revenues and expenditures. The Sask. Party points to the balance of the government’s budget, and argues that Crown corporation and government business enterprise deficits are the responsibility of those parties, and that withdrawals from the Growth and Financial Security Fund (GFSF) created by past surpluses are perfectly justified.
Critics, such as Leader-Post political columnist Murray Mandryk and provincial auditor Fred Wendel, argue that this limited definition glosses over disturbing trends of increasing debt in other areas. Pronouncing a balanced budget, through the use of obscurantist accounting, violates common-sense definitions of balance that imply a measure of sustainability.
Fortunately, we at the Carillon love to read long, complicated budget documents, so that we can bring back nuggets of knowledge from our foray into finance. For those who don’t have several hours and a pot of coffee to spend puzzling over the politics of high finance, we offer a rigorous deconstruction of key areas of controversy, including health, education, and transportation. A colourful mosaic of pie charts, graphs, and boxes reveal the content and context of the budget debate.
The core of the balanced-budget controversy, the Growth and Financial Security Fund (GFSF) is a fund established in 2008 in order to provide “for financial security of the Government of Saskatchewan from year to year” and to be a funding source for provincial programs that promote economic development. Funds can move back and forth between the GFSF and the General Revenue Fund (GRF), which is the province’s central operating account.
Since the GFSF’s creation, when it was endowed with $1.6 billion, the government has made large withdrawals: $418 million in 2008-09 and $510 million in 2009-10. For this budget, the government anticipates withdrawing $194 million from the GFSF, which will bring the closing balance down to $510 million. Almost $1.3 billion will have been withdrawn from the GFSF by 2011-12, after which the government plans to make payments back into the fund.
Critics of this strategy, such as provincial auditor Fred Wendel, charge the government with misusing accounting language to conceal what’s actually happening with provincial finances. By taking advantage of past surpluses and shifting money from one fund to another, the government can claim that the budget is balanced.
Full Feature Credits
Writers: Austin M. Davis, Peter Mills
Graphics by Alex Colgan