There are many ways to assess the performance of a company or an economy for that matter. There's cash flow, asset evaluation and so on. Another that works well in the commercial world is comparative analysis, measuring a company's performance against one of its competitors to determine if it is a front runner, an also-ran or a laggard.
At this writing, ail but Newfoundland and Labrador have tabled their 2011/12 provincial budgets across Canada.Associate EditorTheir interest piqued my own, leading to an examination of the efforts produced by other finance ministers across the nation. Here are the findings.The litany of negative numbers flowing from most of the provinces is also an important factor in the federal government's deficit. It's simply the sum of its parts and Saskatchewan, while a stellar performer right now, doesn't have the bulk to offset the deficit delivered by an Ontario or Alberta.When TD made the statement, it was interesting because this development seemed little more than an incremental gain for Saskatchewan. We were headed that way, made it last year in fact, and this was just another step along the path to fiscal rebalancing. For those with a national perspective such as a bank, however, this was news. It was unusual.To put Saskatchewan's performance in context, consider the forecasts from other provinces. Ontario is expecting a deficit of nearly $17 billion this year. That's 50 per cent bigger than Saskatchewan's entire expenditure in the coming year. This is an economy in trouble and its government's financial condition is proof. Can you say "California"?So a government in a strong fiscal position generally is the steward of an economy in an equally strong position. In other words, Saskatchewan's economy is doing well at the moment and all indications are that it will not only continue but probably experience faster growth.Here's the first and most stark observation on provincial finances noted by TD Bank. Saskatchewan's new budget caught the bank's eye because it had a surplus. A true surplus, not one massaged with funds from the rainy day account. No, this one was a straight-up surplus. Revenues are forecast to exceed expenditures with some left over for debt reduction and savings.Saskatchewan today is uniquely positioned to choose between devoting its revenues to program spending as Alberta did or directing it towards renewing infrastructure to strengthen Saskatchewan's economic foundation even further.One key indicator underlying Saskatchewan's success is investment. After years of averaging roughly $7 billion in new investment - for plant and equipment - this province has yet to find a new benchmark. Totals in this category rose to $12 billion then $14 billion and this year is now forecast to set a new high watermark at $17 billion. This is critical, because investment today means commercial revenue and jobs tomorrow. Both of these translate into taxes tomorrow, a sign that the provincial government's fiscal position is likely to be strengthened, not diminished, in the years ahead.Using that particular test provides an interesting and unique insight into Saskatchewan's economic position and the skill of those charged with our fiscal management.Why is this important? Because a government's financial performance is a mirror of the broader economy's game. A jurisdiction generating significant tax revenue is usually doing well across the board, given that such a large percentage of public revenues flow from private income generation.As U of S economist Eric Howe put it, the growth industry of tomorrow is going to be government when all this investment turns into royalties and tax revenues. The challenge will be how that money gets used.Paul MartinSaskatchewan remains all alone with a surplus, although Newfoundland and Labrador, yet to table has a shot at making into the black with their newfound resource revenues. While we wait for St. John's to bring forward its budget, we will look at the fiscal condition of the others around us.Paul Martin is heard daily on News Talk 650 and News Talk 980 as well as on the radio stations of the Golden West broadcasting network in Saskatchewan.
Associate Editor
