Sask. deficit up $126.5M due to agricultural support spending

Province gives a fiscal update WATCH: The Saskatchewan government released its first quarter fiscal report. Mackenzie Read tells us how much the deficit will increase.

REGINA — Saskatchewans forecast provincial deficit is up $126.5 million due to an increase in spending on agricultural supports.

The Government of Saskatchewan is now projecting a $2.74 billion deficit in 2021-22, according to a fiscal update released Thursday morning.

“We are there for our producers and hopefully it’s just one year, and often it is just one year of high claims, and next year agriculture will be back on course,” said Deputy Premier and Finance Minister Donna Harpauer.

The province said it has spent over $700 million to help producers through drought conditions. The unexpected expenses are being offset by increased revenue from higher than expected oil and potash prices, and higher federal transfers.

"Recent commitments to help our farmers through the emerging drought, has affected the province's fiscal situation," Harpauer said. "However, higher oil and potash prices and increased federal transfers have helped to combat the increase in the projected deficit."

The provincial NDP said the help for producers is OK, but more needs to be done. NDP finance critic Trent Wotherspoon said the government needs to get money to producers in a timely fashion.

Wotherspoon added that government isn’t properly preparing for a fourth wave of COVID-19, which will have financial impacts on businesses and the province’s economy.

“The most devastating consequence is those who end up in ICUs, those who end up losing their lives,” said Wotherspoon.

Harpauer said the province put an additional $190 million into the budget when it was first introduced for COVID-19 expenses within the healthcare system, but it’s hard to project a hypothetical.

“We will be monitoring that close to see if there are pressures,” Harpauer said.

Revenue is expected to rise by $757 million, or 5.2 per cent, from the original budget forecast. The province said $360 million of that increased revenue is from non-renewable resources, primarily due to oil and potash prices.

Federal transfers are also up by around $401 million from budget forecast.

Total expense has also risen since the budget, up $884 million, or 5.2 per cent. The majority of the increase can be attributed to agricultural supports, including $588 million for crop insurance expense and $119 million for producers to help maintain breeding stock and address high costs created by drought conditions.

The province’s GDP is expected to grow by 5.6 per cent in 2021 and 3.8 per cent in 2022, according to private-sector forecasters.