BUSINESS ECONOMY

Devine’s tough talk

THERESA TEDESCO March 23 1987
BUSINESS ECONOMY

Devine’s tough talk

THERESA TEDESCO March 23 1987

Devine’s tough talk

The future has rarely looked so bleak since the dust-bowl 1930s. With winter slowly receding, the optimism that Saskatchewan’s farmers usually embrace as they look ahead to spring seeding has all but evaporated. The province’s economy is hobbling, the victim of an international grain-subsidy war and falling commodity prices. This year lower prices for agricultural products especially concern farmers. “At today’s prices, there isn’t a crop that will even pay your expenses,” said 64-year-old Thomas Wood, who owns a 425-acre farm near Yorkton. Added Brent McKen, a 28-year-old farmer who operates a 1,500-acre wheat farm eight kilometres southwest of Wood’s: “It used to be the oldtimers said, ‘Grow all the wheat you can and you’ll be all right.’ It’s not like that anymore.”

But Saskatchewan’s economic gloom reaches much further than the province’s farms. Prices for other provincial commodities, including oil, potash and uranium, are slumping, and revenues have plummeted. The price of oil, now hovering around $24 a barrel, is only half what it was two years ago. Potash prices have slid more than 25 per cent in

the past five years, while provincial royalties from uranium dropped 50 per cent last year. As a result, the Saskatchewan government faces a stiff financial crisis. The province’s deficit for the fiscal year ending on March 31 is expected to climb to $1.2 billion—more than three times the $389 million projected by Finance Minister Gary Lane in last year’s bud-

get. Since 1982, when the Conservative government of Grant Devine came to power, the province’s balance sheet has shifted from a surplus of $136 million to a deficit of $2.7 billion. This week Lane will meet with investment bankers in Toronto and New York to discuss the province’s deficit management program.

Meanwhile, the Devine government announced measures to attack the soaring deficit by slashing public-ser-

vice jobs and freezing wages. In a 16page financial statement, the government declared that it would cut spending by as much as $800 million in the coming fiscal year. In their costcutting measures, provincial officials say, they expect to eliminate 2,000 of 14,500 public-sector jobs and freeze wages for the next two years. As well, operating grants to schools, hospitals, municipalities and universities will remain static for the next two years.

Lane blamed the financial squeeze on a $500-million shortfall in revenues, particularly from the sale of resources. Although he acknowledged that government expenditures in the current fiscal year are $300 million higher than expected, more than one-third of that went to aid financially troubled farmers. Lane said that it is critical that Toronto and New York moneylenders understand the province’s deficit-fighting program. Indeed, the province’s credit rating with the international lenders has been downgraded four times in five years. Lane hopes to convince the bankers that his government’s austerity program will reduce expenditures and hold the line on the deficit. Declared Lane: “We need to show that we are getting our house in order.”

THERESA TEDESCO with DALE EISLER in Regina

Saskatchewan’s credit rating with international lenders has been downgraded four times in the past five years