VANCOUVER, BC-Saskatchewan could bolster its recent economic
success and usher in a new era of prosperity by implementing
policies that encourage investment and business development,
concludes a new report from independent research organization
the Fraser Institute.
The report, Saskatchewan Prosperity: Building on Success, examines the province's investment performance over the past
30 years and concludes that its poor economic performance and
out-migration of people during this time are largely the result
of a lack of investment and opportunity. It recommends
fundamental changes to the province's Crown corporations, tax
policy, labour market regulation, and barriers to
From 1978 to 2007, Saskatchewan ranked ninth among Canadian
provinces in terms of the amount of net business investment
accumulated per worker, with just 49.4 per cent of the national
average, 82.1 per cent of what was achieved in Manitoba and a
mere 22.7 per cent of that achieved in Alberta.
"While the province's investment performance has improved
and the exodus of working-age people has reversed in recent
years, much more is needed to secure ongoing economic success
and create a stronger foundation for the future," said Niels
Veldhuis, Fraser Institute director of fiscal studies and
primary author of the report.
Saskatchewan Prosperity: Building on Success
details the extensive role of Crown corporations in the
Saskatchewan economy. As a percentage of overall economic
output, Saskatchewan has more Crown corporation activity than
any other province.
But Veldhuis and his co-authors found that Saskatchewan's
Crown corporations don't stack up well when compared to the
private sector when it comes to investing in new capital such
as equipment and machinery. They examined in detail three of
Saskatchewan's four largest Crown corporations¬-SaskTel,
SaskPower, and SaskEnergy-and found all three were
out-performed by their private-sector counterparts in 17 of 20
comparisons, representing an 85 per cent failure rate.
For example, at SaskTel, average capital expenditures per
worker between 2003 and 2007 were $36,746 compared to $53,188
at MTS, $53,390 at Telus, and $104,816 at Bell Canada.
SaskEnergy had average capital expenditures per worker of
$83,376 between 2003 and 2007 while Union Gas spent $113,858
per worker, Terasen Gas spent $138,103 per worker and Enbridge
spent $198,160 per worker.
SaskPower had average capital expenditures per worker of
$122,930 between 2003 and 2007 while ATCO spent $125,823 per
worker and TransAlta spent $163,938 per worker. Only
Newfoundland Power's and Emera's capital spending trail that of
"The tendency of Crown corporations to under-invest means
their employees don't have access to better tools and
technologies. This loss in productivity translates into lower
wages and ultimately, a lower standard of living for workers,"
"The solution for the underinvestment of Crown corporations
is privatization. Privatizing the Crown corporations will
unleash and promote investment in these specific industries as
well as in other areas of the Saskatchewan economy."
The report points out that Saskatchewan has made progress in
reducing taxes in recent years, but more could be done to
harness the potential of the province by improving incentives
for hard work, investment, and entrepreneurial risk-taking. It
- Implementing a single personal income tax rate of nine
- Harmonizing the provincial sales tax (PST) with the
federal goods and services tax (GST) in a revenue-neutral
manner to end the taxation of business inputs;
- Reducing the general corporate income tax (CIT) rate to
nine per cent; and,
- Eliminating corporate capital taxes (CCTs) on the
financial services sector.
At the same time, the report notes that government needs to
rein in spending.
"Getting spending under control will give the province the
resources needed to implement the necessary tax relief,"
Labour Market Regulation
One deterrent to investment is Saskatchewan's long history
of labour laws that impede flexibility and are biased in favour
"If the province truly wants to capitalize on the
opportunities it faces today, it must reform its labour
policies," Veldhuis said.
The report recommends:
- Bringing labour relations laws more in line with other
provinces and U.S. states to focus more specifically on
o Prohibiting mandatory union membership and
dues-payment clauses in collective bargaining agreements;
o Removing successor rights, technological change laws,
and forced arbitration from labour relations laws.
- Freezing the minimum wage; and
- Addressing labour standards such as overtime requirements
which remain too prescriptive and biased.
The report's final key recommendation suggests that
Saskatchewan join the Trade, Investment and Labour Mobility
Agreement (TILMA), forged between British Columbia and Alberta
in 2006, to eliminate restrictions and impediments to trade and
Overall, the report's many recommendations show how
Saskatchewan can usher in an era of unprecedented prosperity
and wealth creation that would last for decades.
"Creating an improved economic environment for lasting
prosperity in Saskatchewan is critical-particularly now given
the current economic woes in many parts of Canada and the
uncertainty going forward," Veldhuis said.