HILL & DUNSTAN: Moe should follow Romanow’s lead on fiscal discipline

Tegan Hill and William Dunstan are analysts at the Fraser InstituteIn fiscal year 2024-25, the Moe government ran a budget deficit — its fifth in seven years since Scott Moe became premier in 2018. Budget deficits come with costs both for taxpayers and Saskatchewan’s economy. If the Moe government wants to avoid these costs, it should heed lessons from the Romanow government of the 1990s, which moved Saskatchewan out of the red and into the black.First, it’s important to understand that the Moe government’s record-high levels of spending are driving the recent deficits. In fact, according to a new study published by the Fraser Institute, Scott Moe is Saskatchewan’s highest-spending premier since 1965 (the earliest year of comparable data) on a per-person (inflation-adjusted) basis.Specifically, in 2021, 2022 and 2023 (the latest year of comparable data,) Premier Moe recorded the three highest years of per-person (inflation-adjusted) program spending on record, even after excluding COVID-related spending, peaking at $18,881 per person (or $17,471 excluding COVID-related spending) in 2021..This high spending has fuelled deficits and debt accumulation, and debt interest costs paid by taxpayers. The Moe government spent $951 million on debt interest payments in 2024-25 — more than the government spent on transportation ($700 million) that same year. Money spent on debt interest is money unavailable to maintain, expand or introduce new programs. Or to create the fiscal room for tax relief. To reduce Saskatchewan’s debt and bring down these interest payments, the Moe government should rein in spending. Again, Roy Romanow showed this can be done.When Romanow was elected premier in 1991, Saskatchewan had a mountain of government debt after years of deficits. He immediately cut spending — from $11,680 per person in 1991 to $7,930 in 1996, for an annual average decrease of 6.9 per cent.By reining in spending, Premier Romanow balanced the budget in 1994, reduced government debt levels and interest costs, and helped improve the business environment in Saskatchewan. Because government debt must be repaid, or at a minimum, financed by debt interest, high levels of government debt lead individuals and businesses to anticipate future tax increases, which discourages investment, entrepreneurship and job creation. By reducing spending and debt, the Romanow government eased these fears and helped usher in a period of strong economic growth in the province..In fact, Premier Romanow became an early leader in establishing a national consensus of balanced budgets, declining government debt, smaller and smarter government spending, and competitive taxes that lasted until the mid-2000s. This consensus helped fuel a period of economic prosperity in Canada.Instead of continuing to add to record spending levels, Premier Moe should replicate Roy Romanow’s pro-growth fiscal policy and make Saskatchewan a national leader in fiscal responsibility. This would save taxpayer money and support economic growth in Saskatchewan.Tegan Hill and William Dunstan are analysts at the Fraser Institute.

HILL & DUNSTAN: Moe should follow Romanow’s lead on fiscal discipline

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