LISTEN: Sask. finance minister says he’s optimistic about future despite higher deficit

Saskatchewan’s year-end deficit is expected to reach $427 million, despite the province budgeting for a $12 million surplus in the spring.

Finance Minister Jim Reiter delivered a midterm update on the budget on Tuesday, saying the major swing was largely due to the cost of the province’s intense wildfire season, spending on health care and a $1.4 billion decline in exports due to international tariffs and depressed energy prices.

Read more:

• Wildfires, tariffs and health care: Province expecting $427 million deficit
• ‘December to remember’: Winter will get off to an abrupt start, Weather Network says
• Mounties urge caution on Sask. roads after 11 fatal crashes in November

While the deficit represents a major change from the spring budget, the provincial government previously issued an update in August which projected a $349 million deficit.

Saskatchewan’s debt, meanwhile, is expected to reach $39.8 billion by the end of the fiscal year.

But despite the deficit and the global uncertainty caused by tariffs from China, India and the United States, Reiter said the province’s economy remains resilient.

The finance minister sat down for an interview on the Evan Bray Show on Wednesday morning to discuss the big deficit and the province’s financial situation. Despite the worsening financial picture, Reiter said there are plenty of reasons to be optimistic about Saskatchewan’s economic future.

Listen to the full interview with Reiter, or read the transcript below:

The following transcript has been edited for length and clarity.

EVAN BRAY: Maybe just give us the nuts and bolts to start the conversation. What is the number that we’ve gotten to in terms of a deficit?

JIM REITER: It’s largely unchanged from first quarter projections, Evan, but right now the projection is a $427 million deficit at the end of the fiscal year, which is the end of March.

I remember the conversation. You were in studio, actually, in March when we talked about the projected surplus of $12 million. I said “That’s pretty tight. Do you have hopes that we’re going to get there?” In hindsight, do you think maybe there’s something we should have done different there?

REITER: You know, it’s one of those things. Budgets are your best estimates at that point in time. A number of expenses came in higher than expected. For example, the forest fires – the wildfires – were significant costs, some health-care stresses that cost more, and then on the revenue side, revenues were up a bit, but some areas hit. The price of oil was lower than projected. Obviously that impacted Alberta much worse than us, but still. $427 million is a lot of money, but in in a 20-plus-billion-dollar budget, percentage wise, I would say that’s reasonable.

The wildfires are something that it’s tough to put a pin in what the cost is going to be. We have seen them be, fairly consistently, a challenge for us in the province. Are you looking back on that and thinking, “Yeah, we fell short in terms of of what we budgeted for”?

REITER: I’d say this year was unprecedented. Evan, you know, huge fires, it’s not the norm, and so it’s hard to budget for the anomalies. But we have been fairly steadily, I would say, increasing our wildfire budget, so that’s probably going to have an impact going forward. We’re already working on next year’s budget. That won’t surprise you, but it’ll probably have an impact on what we estimate for next year.

Recently, Saskatchewan’s auditor mentioned that she’s planning to look at the preparedness of the province’s public safety agency, and and some of that will include budget. Do you expect any surprises out of that audit, when it’s done?

REITER: No, we welcome that. Our folks would be looking internally at it anyway. It’s important that you constantly review services you provide and how effective you are at doing it.

Let’s talk about health care for a second. Minister Reiter, you mentioned that was one of the things that was unexpected in terms of the expenditures. What was it, specifically, in health care?

REITER: It’s kind of across the piece. A lot of it was, was acute care. It was stresses on the hospitals. So health care, obviously, as everybody knows, is the biggest portion of our budgets, the largest expense in our budget. We’re going to make sure it’s adequately funded.

There’s a report coming out tomorrow from the Canadian Institute for Health Information. It’s embargoed, so I can’t get into specifics in the report, but essentially it’s showing that health-care costs in the country are going up. Inflation is driving health-care costs up as well. Is there a point – and I realize this is outside of your ministry, but in your role as a senior leader with government – is there a point where there’s a need to just reassess the way we deliver and fund health care? Is that ever a topic that comes up?

REITER: Provinces are largely hamstrung because of the Canada Health Act. There’s federal legislation that governs it. There’s lots of ideas out there. People frequently suggest changes, but we’re limited to what we can do. But having said that, there’s constant work under being undertaken in health to try to find more efficient ways to do things, and try to streamline things. This isn’t unique to Saskatchewan. It’s a stress across the country. It’s the largest expense for every province in the country.

One other line item that I wanted to talk about is, again, going back to the discussion you and I had when the when this budget was first announced in March. There was the line item of the amount of money that would come in in the revenue category with regard to the output-based performance standards program, or the industrial carbon tax. There was a $400 million plus coming into the province. I think it was about a week after that that a release came out from the province saying “We will be the first province in Canada to be carbon tax free.” Yet I think that number is still on the books as revenue coming in. Am I correct?

REITER: Yeah, and the reason for that, Evan, is because accounting principles – which we’re obviously going to follow – require that, until there is some kind of conclusion between the province and the federal government. We recognize that that’s having a bit of an impact on the on the budget, but the fact of the matter is affordability is front-of-mind for everybody in the province. Inflation has been a pressure on everybody. People look to government for leadership in these cases, and I can’t think of a better affordability measure.

You don’t get an argument for me on that. Minister Reiter, I am supportive of the steps that the province has taken. I’m just more worried about debt. It’s something that really bugs me, and I worry that we’re becoming complacent with debt. And this is not a unique-to-Saskatchewan problem. God, look at what’s going on federally. Do you think we’re becoming complacent?

REITER: Our government is certainly not complacent on that. I do worry that society as a whole has become a bit complacent on it. That that is a big problem. It’s leaving bills to pay for future generations. Now a certain amount of debt, I think, is reasonable. I like comparing it to a teacher of our household budgets. If people have a mortgage payment, maybe a small car loan, but if you start into and you’re running up credit card debt, that becomes a problem. So it’s important, I think, that that we keep debt manageable. We still have to build infrastructure projects. We still have to build hospitals, schools, highways. So what I like looking at is the big picture in that, and I’ll just throw some numbers at you, Evan. Net debt is a percentage of GDP. We’re the second best in the country, behind only Alberta. And Canada is, frankly, near the worst as a country. You look at the deficits as a percentage of GDP, we’re the best in the country, actually. And deficit per capita Saskatchewan is the best. So I would echo your concerns. That is a serious concern. We’re going to be keeping an eye on it, because the debt’s increased a bit, but when you look at all the numbers, the factors that the bond rating agencies look at, we’re either the best or second best in the country.

As you know, Minister Reiter, you and I own part of this provincial debt. And even if we are, in some categories, the best in Canada, it’s still the best in a crappy category, and we add the federal debt on top of it. So it’s just this mounting pressure that I feel is going in the wrong direction. What is this topic like behind the scenes, when you’re sitting around with your colleagues in cabinet and you’re talking about the next few years? Is there a priority given on trying to not only balance the budget on an annual basis, but but actually dig into that debt?

REITER: Yeah, absolutely, there is. I am fortunate with the colleagues I have and the premier I have, who are very fiscally prudent. I am not arguing with a single thing you say, Evan. I’m concerned about that as well. I think ours is at a manageable level. Nationally, I don’t think it is, and many of the provinces, it’s not. We fully intend to keep it at a manageable level.

Let’s talk about a positive while I’ve got you as well, minister, because I know in the finance world, often it’s the negatives that you dwell on. What, in the financial outlook this year, has surprised you? Are there some some positives in there that have actually helped keep us in a better position than we planned?

REITER: There’s lots of positives. There’s lots of economic headwinds. The future looks really bright for Saskatchewan, if we can get by some of this silliness that’s going on in international trade right now, because we’re an export-based economy. The future looks bright in the ag sector. The future looks bright in mining. Future looks bright for uranium. Future looks very bright for potash. The list just goes on and on. There’s some geopolitical issues that are beyond the control of the province, but I’m optimistic that cooler heads will prevail in the long run, and Saskatchewan is very, very well positioned.

If we had a pie chart that showed the pressures, how big of a piece is the geopolitical the influence that’s happening from some of these trade challenges?

REITER: When you look at the deficit we have this year, again, it’s a lot of money, but it’s a small percentage of the overall budget. The unknown going forward is the geopolitical pressures. It’s the impact it potentially could have. It hasn’t had a huge impact on the budget so far, so that’s the concern going forward. But again, I would say there’s lots of reasons for optimism, all the reasons I just said. Plus, you can already see some signs coming out of the U.S. They’re starting to recognize putting tariffs on Canadian goods isn’t good for their citizens either. It’s driving inflation in the U.S. Our folks have been doing a very good job. I look at the canola issue, and our ag sector has been so resilient. We have to get that fixed, by the way, but in the meantime they found other markets. There’s been lots of speculation in the news that Prime Minister Carney and Premier (Danielle) Smith in Alberta might be making an announcement about a pipeline tomorrow. That’ll help with the economy, as well getting more oil to market. So there’s a lot of things that there’s headwinds, but there’s a lot of things that give me reason to believe we can be optimistic.

This report that you gave yesterday is just a midway report. Do you expect this number to move up down? Any projections there?

REITER: It’s hard to tell. It’s going to depend on what happens on some of those issues we’ve just discussed. It probably has a potential to get a bit worse. And again, we’re working on next year’s budget already, but I would just say Saskatchewan is very well positioned for the long run on this. We have no intentions of slashing costs anywhere. We continue to make sure that health care and education are well funded, as well as the other services, and we’ll be fiscally prudent along the way.