Saskatchewan election - results and local impact

As predicted, the Sask Party has taken the government and the new Premier is Brad Wall. This CP story says:

Throughout the campaign, Wall tried to look like a premier by communicating his party's plan clearly and without caveat. He wasn't overly negative and, for the most part, he stayed out of the gutter.

Those qualities won Wall - a fresh-faced, smooth talker who is quick on his feet and good with a joke - the job of party leader in 2003. His first step was to move the Saskatchewan Party toward the middle of the road. Now he must guide his province through an economic boom that is luring people home with the promise of jobs and a bright future.

This table provides the latest election results. Those who care about such things will note that the Liberals have been shut out again.

Party	Elected	Leading	Total	Vote Share
SP	37	0	37	50.6%
NDP	21	0	21	37.4%
LIB	0	0	0	9.5%

Although Premier Williams has expressed the hope that the new government will continue as a stalwart ally in the fight against the federal government on Equalization, he's likely just whistling in the dark. The subject was not raised in the election and it looks like it's been moved to the backburner. Besides, that new government has better things to do than indulge in fights it can't win.

So with Lorne Calvert gone and Rodney MacDonald cutting a side deal, it looks like the big cheese stands alone after all.

That leaves Premier Williams limited options: make new friends among the premiers (a vanishingly remote possibility), start a process of rapprochement with the Harper federal government (difficult in light of Williams' election night attack) or just keep up the war in the hopes that he will outlast Harper or wear him down; none of them are easy options.

Prairie winds of change

In yesterday's Globe and Mail were two interesting articles pointing to political upheaval in two otherwise politically stable provinces: Alberta and Saskatchewan.

In a CTV interview, Preston Manning predicts rocky times ahead for Premier Stelmach. His compromise on royalties may have been a perfect one thus pleasing nobody. Manning expresses doubts that the decades long Progressive Conservative regime will be reelected saying that:

I think it's becoming increasingly unlikely unless, say, the government demonstrates a capacity that it hasn't shown thus far. I don't see votes going to the Liberals or the NDP. I think their biggest danger is another 150,000 people staying home who voted Conservative the last time and then that puts dozens and dozens of seats up for grabs.

Meanwhile, in the adjacent province of Saskatchewan, another longtime government, this time NDP, is also in jeopardy.

In this column, Janice MacKinnon, a former NDP finance minister argues that the Calvert government is out of touch, tapped out of ideas and that it will cost them. She argues:

The lesson to be learned is that when designing future social policies, political parties cannot merely return to the traditional idea of universal social programs. Instead, they must be more imaginative. They should build upon targeted programs, such as the National Child Benefit, which links benefits to income and is affordable in the long-term.

Another point made was the dearth of discussion in the election over Equalization. She notes that:

Equally revealing in the campaign was the role played by equalization - or rather non-role. Saskatchewan Premier Lorne Calvert had been the most outspoken ally of Newfoundland Premier Danny Williams in attacking the federal Conservatives for breaking their promise on equalization. For several months before the campaign, the NDP government focused on how the province had been shortchanged in its equalization entitlements. Yet during the election, equalization was hardly mentioned. Why? In part, the call for $800-million more in equalization funding at a time when the province is booming is at the very least confusing. Just as important, many voters do not understand or care about equalization. It is not a program that affects them directly.

Her final observation has as much to do with this province as it does with Saskatchewan:

The final campaign development of note has been the very transformation of Saskatchewan itself. In the past the province was called "next year country," reflecting the eternal optimism of a province that has seen its share of tough times. But with high commodity prices, an extensive research infrastructure centring on national facilities like the Canadian Light Source synchrotron, and an influx of people from Alberta, there is a feeling the province is on the cusp of a new era. Rather than fighting with federal governments over entitlements rooted in the past, people in Saskatchewan want to take advantage of the tremendous opportunities of the future. They sense what economic forecasters have predicted: Saskatchewan is joining Alberta and British Columbia as a major economic force in Western Canada.

How far are we from that point?

Saskatchewan election update

Things are looking grim for Premier Lorne Calvert. With the election day only a week away on November 7th, his party is behind, most voters want a change in government and there is little enthusiasm for Calvert himself. So says a pair of new polls from Probe Research Inc.

The first poll, on voter ID indicates:

With the support of 50 percent of decided voters, the Saskatchewan Party is the province’s most popular political party. Well back, the governing New Democrats are currently supported by 35 percent while the Liberals are the party of choice for 10 percent of Saskatchewan adults. A modest two percent of voters each report they will cast ballots for either Progressive Conservative or Green Party candidates. Thirty-one percent of those surveyed were unwilling or unable to express their voting intentions.

And while things may change, voter intent points to a more likely shift to the Saskatchewan Party than to the NDP:

Looking at voter certainty, 64 percent of Saskatchewan Party supporters have fully committed to casting ballots for that party on November 7th compared with only 47 percent of NDP voters who say they are “very certain” they will actually mark NDP ballots. These findings suggest that any late campaign shifting that may occur would favour the Saskatchewan Party more than the NDP.

The second poll details voter views on leadership and government in general. It too bodes ill for Calvert's regime:

Across the province, more than one-half of adults (54%) agreed that “the NDP have been in power for too long and it is now time for a change”. This compares with only 26 percent who affirmed that: “The NDP, led by Lorne Calvert, deserve to be re-elected based on their record and accomplishments over the past years”. One in five respondents (20%) chose not to affirm either position.

As for Premier Calvert's personal standing, it seems to have suffered worse for wear:

When asked which of the three main party leaders they felt would make the “Best Premier” of Saskatchewan, the leader of the Saskatchewan Party, Brad Wall, beats out incumbent Premier Lorne Calvert. Thirty-seven percent of those surveyed pointed to Mr. Wall as the best candidate for Premier while 25 percent named current Premier Lorne Calvert. Twelve percent thought Liberal leader David Karwacki would make the best Premier, while nearly one in four citizens (26%) were uncertain as to who would be best suited to occupy the province’s highest political office.

As posted previously, this staunch Williams ally on the Equalization front will soon find himself unemployed leaving Williams with only Nova Scotia's Rodney MacDonald, himself in a precarious position.

Tom Courchene weighs in on equalization

From today's Globe and Mail. . . . . "Should a program intended to redistribute wealth be able to significantly erode the ability of provinces to exercise their constitutional powers over natural resources?"

He makes the case for Saskatchewan and raises the idea that maybe it's time to rejig equalization completely.

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For nearly a quarter century, the old adage Why drill for oil in the provinces when you can drill for cash in Ottawa? has arguably held sway, but never has it been so prominent as in the on-going energy/equalization tug of war. To be sure, the stakes are much higher when oil is $60-plus per barrel and when the underlying issues are masked by a series of complex bilateral deals and a set of multiple and none-too-transparent equalization options. In any event, the equalization program, long viewed as an integral component of our East-West glue, seems to be coming unstuck.

Put simply, the current dispute puts three provinces - Nova Scotia, Newfoundland and Saskatchewan - at odds with the federal government over how the provinces' revenues from oil and gas should be treated in the equalization formula.

Nova Scotia and Newfoundland cut separate accords with Ottawa in the 1980s and again in 2005 to compensate them for equalization payments that were reduced because of the rising revenues from their energy sectors. The 2007 federal budget offers a variety of different approaches to the treatment of energy.

At one extreme, the two Atlantic provinces can continue with the status quo option - that is, they can apply the accords within the pre-existing model (3.5-per-cent annual growth in overall equalization).

The new model embodies a 10-province standard for calculating average fiscal capacity, a calculation that counts only 50 per cent of resources and a "cap," or ceiling, to ensure that an equalization-receiving province does not end up with total per capita revenues in excess of those of the lowest "have" province (in this case, Ontario). Provinces can also choose to calculate their equalization under a formula that excludes all non-renewable resource revenues, subject also to the above cap. This option was presumably included to respect Prime Minister Stephen Harper's election promise that non-renewable resources would be excluded from the equalization formula, although the provinces were quick to point out that the cap was not part of that electoral commitment.

The basic concern of all three provinces is obviously with the confiscatory cap. And the Atlantic provinces also argue that the manner in which the offsets interact with the cap under the accords serves to violate their spirit, even their letter.

Beyond this, Nova Scotia's concern is that while the new formula would, currently, be better for the province, the status quo option may be preferred in future as its energy revenues grow. Therefore, it wants flexibility to move between the two approaches, rather than the no-return feature of the new formula.

Newfoundland's additional problem is that, at existing energy revenues, it is likely to join the ranks of the have provinces, which would then mean that the province would not only be ineligible for the offsets under provisions of the 2005 accord, but that the accord itself would not be renewed in 2012. This cannot blamed on Mr. Harper.

Saskatchewan's cause for concern is that the current cap is only the latest version of a series of measures that have left it with precious little of the revenues it collects from its energy patch. It was denied access to the generous Atlantic accords and even to the 70-per-cent maximum clawback that applied to Nova Scotia and Newfoundland. Indeed, in the early years of this decade, the equalization clawbacks on Saskatchewan's energy revenues were at or near 100 per cent. To be sure, at current energy prices, Saskatchewan is a have province, but the cap will become confiscatory if and when prices fall back to the $50-a-barrel range.

The impact of the cap would be that for several hundred millions of dollars of energy revenues, the equalization offset would be dollar for dollar. So where is the incentive for a province like Saskatchewan to collect royalties in the first place? It would be rather strange if the equalization program, intended to help provinces provide comparable public services, led to the situation where it made sense for a province to abandon royalties altogether, perhaps in return for a guarantee from the energy companies to maintain the province's expensive energy infrastructure and maybe build a few hospitals and schools.

Intriguingly, the Atlantic provinces are seeking redress through the court of public opinion (which has finally brought Ontario into the fray as counterweight), whereas Saskatchewan has accepted Mr. Harper's invitation to pursue a court challenge.

The prevailing wisdom is that the equalization program is not justiciable. However, the issue at stake here is not related to equity. Rather, it would appear to be a division-of-powers issue: Should a purposively redistributive program be able to significantly erode the ability of provinces to exercise their constitutional powers over natural resources?

But matters need not go this far. In the short term, why not set the clawback under the cap at, say, 70 per cent, rather than 100 per cent, so that there is always some fiscal reward for collecting energy rents. This might not be far off an estimate of the costs borne by the provinces to run their energy sectors.

Moreover, this may not be very costly since, at current prices, Saskatchewan, for example, might still qualify as a have province.

While this would completely satisfy none of the provinces, it would make significant improvements on both the equity and allocation fronts.

Over the longer term, it might be better to follow Australian practice and bring both horizontal transfers (such as equalization payments) and vertical transfers (such as health and social transfers) within the ambit of equalization. That would provide more instruments that can be drawn upon to achieve cross-province fiscal equity. Within this larger framework, the equalization formula would require less fine tuning, since the vertical transfers could accommodate any remaining provincial variations.

But first, we have to get to the longer term.

Economics professor, School of Policy Studies, Queen's University and Senior Scholar, IRPP