for economic freedom
Updates from the Prairie Centre Policy Institute from Regina, Saskatchewan.
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Don Baron's Jailhouse Justice and
web posted September 22, 2003
Saskatchewan needs a larger private sector
By Ken Ziegler
In an Action Saskatchewan newspaper feature put out by the Saskatchewan Chamber of Commerce, communications consultant Paul Martin makes a compelling argument for growing Saskatchewan’s private sector.
Saskatchewan Taxpayer Base – 1996
Population 1,000,000 100%
Total Tax filers 685,120 68%
Non Taxable 215,160 21%
Total Taxpayers 469,920 47%
Benefits exceed Tax Paid 227,530 23%
Government Employees 106,095 10%
Net Tax Contributors 136,295 13%
The article points out that only 136,000 taxpayers put more money into the government treasury than they take out. In other words the province has a small private sector and is highly dependent on a small percentage (13%) of the population for its social programs. He says, “This explains why Saskatchewan, even with higher personal tax rates than Alberta, can only squeeze only one-third of its government revenues from personal taxes while next door they get 51 percent.”
“Obviously Alberta enjoys the benefit of oil royalty income but, at just over half the government’s revenue stream, personal income tax is even more significant to the government, enabling Alberta to spend more on government services per capita than Saskatchewan,” states Martin.
Martin also points out that we have lots of kids and lots of seniors, but we have a shortage of those “working age folks” who pay for social programs. And, we are just beginning to feel the effect of an aging baby boomer generation. Projections suggest the number of wealth creators (the one-in-seven who contribute more to the treasury than they take out) could shrink to less than 60,000 over the next twenty years if nothing changes. The problem, of course, is that all those wealth generators can leave Saskatchewan for places that are more business friendly - and there will be no one left to pay for social programs.
In the article he quotes Fred Smith, a financial planner and former Chamber president, “I think the numbers are pretty scary. I think they demonstrate how dependent citizens of Saskatchewan are on people who create wealth. If I were a public worker, I’d be very concerned about my position. If I’m a teacher, I’m not going to get paid unless there’s wealth created out there.”
“There weren’t social programs 100 years ago. The only reason we have this many public servants is because there has been enough wealth creators – particularly in Alberta and Ontario. The only reason Saskatchewan can afford to pay its civil servants is because we get equalization from Alberta and Ontario. So, if we want better health and education, we have to have more wealth creators because that’s who pays for it,” Smith continues.
According to Martin, the Alberta government generates over 10% of its revenues from corporate income taxes, and Ontario gets about 20%. Saskatchewan, by contrast, hovers around 5%. “In other words, our private sector is less than half the size of Alberta’s in relative terms and a quarter of Ontario’s,” he states.
Martin goes on to suggest that the growing dependency ratio was the driving force behind moves in the past four years to lower personal income tax rates in Saskatchewan, to reduce the urge to move, and to build a stronger private sector base here.
“The need to create, retain or attract a new wave of wealth generators in Saskatchewan is clear if, – and that’s the key, - if we believe in things like social programs”, Martin concludes.
Ken Ziegler is a lawyer with Robertson Stromberg in Saskatoon, and President of the Prairie Centre Policy Institute.
web posted September 8, 2003
What you see is what you'll get!
By Ken Ziegler
On Tuesday Saskatchewan Premier Lorne Calvert unveiled the New Democratic Party's (NDP) "new vision" for the Province's Crown corporations – vowing to protect them at any cost. In their vision, they see the lowest utility rates in the country, outside scrutiny of government investments, and greater accountability to the public. Mr. Calvert then goes on to describe any public policy that limits government involvement in the economy as "extreme and ideologically driven".
Let's be very clear that the New Democrat's 21st century vision is neither new nor visionary. It's more like a recurring nightmare that has plagued the prairie region for over sixty years.
What makes the current situation really nightmarish is the fact that Saskatchewan has a 12 billion dollar debt, billions more in unfunded pension liabilities, and pays out $760 million annually in interest, and the NDP government thinks the $18 million it gets from Crown corporation profits is a good deal. I'm sorry, but your young people are leaving, your infrastructure is crumbling, your agriculture sector is lagging, your rural communities are in decline, your taxpayer base is shrinking, and you want to hang on to outdated dogma that is proven to be ineffective in creating wealth. Now, that sounds like "extreme and ideologically driven" economic policy.
The following excerpts from the Regina Manifesto, adopted by the CCF (the forerunner of the NDP) at their First National Convention in 1933, suggest there is nothing new or visionary in the NDP's current policies. In fact, with a few minor changes it could easily be mistaken for the Saskatchewan of today.
According to economist Dr. Graham Parsons, the scope and approach to the provision of public services in Saskatchewan hasn't changed much in the past fifty years. The size of government, however, has steadily grown and delivery through the state is nearly always the first preference. He contends that new models are required to support the provincial requirement for wealth creation and growth.
The point is - Socialism is an ideology that doesn't work. And the NDP are wrong to think that they can fix it. If Saskatchewan continues down the same rough and deteriorating road, nothing will change. You will not see your children come home. You will not see any growth in your economy. And you will not see improvements in your health care, your education system or your quality of life. What you see now is what you'll get.
Ken Ziegler is a lawyer with Robertson Stromberg in Saskatoon, and President
of the Prairie Centre Policy Institute.
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