Saskatchewan’s new government tabled their first budget today. They increased spending 9% and out of a $1.5 billion dollar surplus they spend a paltry 250 million on debt reduction. They are spending a boat load of cash on infrastructure. I imagine they assume we are the next Alberta and we should learn from their mistakes by ensuring the infrastructure keeps up with the growth. As much as I like Saskatchewan and our commodity driven boom I think it is foolish to assume it will continue as long as Alberta’s boom. There is a very good chance the bottom is about to fall out of the American economy. With that goes our commodity boom. The Fed has chosen inflation over recession which will continue to devalue to US currency. With that goes demand for Canadian good priced in Canadian dollars.
The Americans can’t continue to juice their economy with cheap credit without reaping the consequences. Eventually the mountain of consumer and government debt will have to be paid and it when does it means a lot of people will have a lot less cash to spend on personal consumption. No one seems to want to let that happen so they keep handing out cheap credit to keep people spending. It just delays the inevitable. If opec starts selling oil in Euros and a handful of Asian countries like China and South Korea decide to dump their massive reserves of US currency the US dollar will quickly become North America’s new Peso.
What do I think the Saskatchewan government should have done? Pay down more of the debt. Prepare our economy for very expensive oil and natural gas. I’m not sure why we need to invest so much in roads when the cost of transportation will increase so much it will force people to car pool or take public transit. In 10 years there will be less cars on the road. Invest in renewable energy now so we can eventually transition from coal and natural gas. Shift the property tax burden on to the provincial government given the cities and municipalities more room raise the revenue they need.
I’m really disappointed in this budget because it is essentially a modified NDP budget. They take a massive surplus and blow almost all of it.