As Saskatchewan tries to find a way to pay down a growing deficit, there are calls to start socking away some cash.
The Canadian Taxpayers Federation has released a new report calling for the province to establish a rainy day fund.
Prairie director Todd McKay authored The Saskatchewan Heritage Fund: Capture the Next Boom and Soften the Next Bust.
He said it’s time for the province to at least develop a plan going forward.
“It’s hard for a government to plan coherently what to do with money when they get a bunch of it,” he told Gormley. “We know these prices go up and down. Let’s build a good plan for it, even if we’re not saving that money right now. If and when we get that next boom, let’s make sure that this time — finally — we’re ready for it.
McKay’s plan would include a cap on spending money from non-renewable resource revenue. Anything above the cap would first go to debt reduction, then to the heritage fund.
“One of the most important things about a cap is that we control our spending. We never count on having more money than might be there,” he said. “Farmers out there know this: you never bank on a bumper crop. You pray for one, but you never bank on it and that’s what this would do. You never bank on more money than $1.5 billion in a heritage fund.”
McKay’s plan also includes a referendum that would endorse the heritage fund.
“We believe a referendum is necessary to ratify a heritage fund in Saskatchewan. This is going to require sacrifice from all of us in terms of controlling spending and even showing patience on future tax reductions that we desperately need,” he said.
“We all have to be on side with it, but most importantly, we need to send a signal, not just to this government and the next government, but all future governments that the only way you can touch the money in this fund is if you ask the people.”
This wouldn’t be Saskatchewan’s first heritage fund. Previously, the province had created one in 1978, before dissolving it after running deficits in the 1980s and 90s.
McKay said the previous plan was “built on a lot of good intentions but had some big flaws.”
“Ultimately the money fell out. You have to keep it in.”
McKay said he’d like to see the money in the heritage fund “invested intelligently.” He pointed to examples in Norway, which has a fund of $1.1 trillion, and Alaska, which saves much of its money to a fund that’s grown to $58 billion.