Saskatchewan blew the boom. Here’s how it can fix it

Saskatchewan had a shot at billions in savings but blew the windfall. It’s not too late to build a heritage fund and end the boom-and-bust cycle

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Saskatchewan keeps blowing its resource windfalls like there’s no tomorrow. Just like you wouldn’t count on a one-time bonus to pay your monthly bills, the province shouldn’t build its budget on volatile resource revenues. It’s time to break the cycle and start saving by setting up a heritage fund (a savings account for the province built from oil, potash and other non-renewable resource revenues).

Here’s how it works: when resource prices spike, the province sets aside some of the windfall in a fund instead of spending it all. That money grows over time and generates interest income, creating a reliable cushion for future spending or tax relief without relying on short-term booms. These revenues help pay for highways, hospitals and schools, but when governments build budgets on temporary resource windfalls, it leads to instability: cuts one year, overspending the next.

This isn’t a new idea. In fact, Saskatchewan had a chance to do this more than a decade ago.

Back in 2013, the province commissioned a report from former University of Saskatchewan president Peter MacKinnon, who recommended creating a heritage fund that “allows for one-time resource revenues to become a lasting source of wealth, while stabilizing government use of these volatile revenues.”

The government ignored the advice. And it’s been missing out ever since.

Had Saskatchewan followed that recommendation and begun setting aside resource revenues or used them to pay down debt, the province would be in a far stronger position today. Even setting aside debt repayment, a heritage fund launched in 2013 would be worth about $4.2 billion today and generate roughly $210 million in annual interest.

That interest income alone could allow the government to cut the 15-cent-per-litre fuel tax by six cents without losing revenue. For someone filling up a minivan weekly, that’s about $230 a year in savings.

Resource revenues are volatile. Oil and potash prices are driven by global markets and weather, things the province can’t control. One year, prices soar. The next, they collapse. That’s why building a budget around them is risky.

In 2023, the Saskatchewan government forecasted a $1-billion surplus in its budget. By year-end, that surplus had dropped to just $182 million. According to the province’s own report, “significant decreases in non-renewable resources revenue combined with higher crop insurance payments” caused the shortfall.

The lesson is clear: you can’t run a stable government on unstable income.

A smarter approach would be to cap how much of the annual budget comes from resource revenues—say, 13 per cent, the average over the last decade. Any revenue above that threshold could be automatically saved in a heritage fund. That would give Saskatchewan both stability and long-term financial security.

Other places are already doing this and reaping the rewards.

Last year, eligible Alaskans received $1,704 each in dividends from their state’s heritage fund. Norway’s fund, now worth more than $2.5 trillion, generates enough income to cover about 20 per cent of the national budget annually.

It pays to save.

If Saskatchewan had used its windfalls wisely since 2013, either by building a fund or paying down debt, its current debt wouldn’t be projected to hit $23.5 billion by the end of this year. It would be closer to $1.6 billion.

Twelve years ago, the province was told to prepare for the future. It didn’t listen. That mistake has already cost billions.

The government has another chance now. It must take it.

Gage Haubrich is the Prairie director for the Canadian Taxpayers Federation.