The most important speech of the year for a Yukon premier is the budget address, since in our system the premier is also the finance minister. The same is true of the opposition leaders, especially in an election year like this one, since they are auditioning for the job.
The speech from the throne at the start of a legislature may be full of grand talk, but few pay any attention to it. It is the budget speech where you can “follow the money” to see what the government really cares about.
Last week’s territorial budget was the Yukon Party’s last pre-election opportunity to show Yukoners their plan. Do the numbers show us whether they believe in big government or small government? Higher taxes or lower? How much of our rainy day cash reserve should be spent during this recession to stimulate the economy? Of this, how much is in big investments that will boost our long-term productivity versus spending on government services?
I read the budget documents last Thursday. Whether you like the Yukon Party or not, the budget made their position on these questions clear.
On the size of government, they put forward a budget that set another record in terms of government spending: $1.391 billion. This is about $37,000 per Yukoner, and about $300 million bigger than five years ago.
On taxes, there were no tax cuts to attract investment and people, although our taxes remain lower than most places in Canada. Our gas tax is the lowest in Canada. Cigarette taxes are third lowest. Small business tax rates are tied for third lowest. Our sales tax is zero, and tied for lowest in Canada with Alberta and the other territories. Our income tax rate for someone making $100,000 a year is the third lowest in Canada. The premier made a big deal about being opposed to a carbon tax.
On our cash reserve, while the budget is in surplus in accrual accounting terms, in a cash sense it runs down our cash reserve by $75 million, from $132 million at the end of last fiscal year to a projected $57 million at the end of this one. This reserve was $223 million two years ago. With only $57 million in cash left, after this budget the government will not be able to keep spending so much more cash than it collects, unless it borrows.
Indeed, the Yukon Party’s projections show Yukon government spending actually shrinking in 2017-18 after this year’s record budget. The Yukon government budget hasn’t shrunk year-to-year in a very long time.
On the question of whether the budget invests in big-ticket infrastructure that will improve our economy’s productivity over the long run, consider the items bigger than $10 million that were announced: $67 million for the Whistle Bend continuing care facility, $22 million for the hospital’s emergency room and MRI project, $15 million for planning on phases 3-7 of the Whistle Bend subdivision, and a combined $23 million in Shakwak and Robert Campbell highway upgrades.
Big investments in economically-related infrastructure such as electricity generation, mining roads, internet infrastructure and the Dawson airport may be coming in the future, but they are not in this budget.
So that’s the Yukon Party’s position. The opposition leaders had over the weekend to bone up on the delights of government accounting, analyze the numbers and lay out their alternative visions in the legislature this week. This also gave them time to re-read some classic finance minister speeches to tune up their rhetoric. Winston Churchill was finance minister for several years in the 1920s, although even Churchill fans will admit he didn’t shine in the portfolio (remember the gold standard fiasco of 1924?).
So it was with some excitement that I prepared my Excel table to compare the three fiscal policies, before downloading the NDP leader’s speech on Monday.
She made a series of pointed critiques about how the Yukon Party runs the territory, which engaged voters should read before the next election (along with the premier’s speech and the Liberal speech discussed below). She noted how the annual surplus has declined in recent years. But she did not put forward specific alternative policies on the size of government, tax rates, deficit spending (or not) or any of the economically-related infrastructure projects I mentioned above.
On Tuesday, the fun continued with the lone Liberal MLA’s budget speech. He also critiqued how the Yukon Party runs the territory, but avoided presenting the specifics of an alternative fiscal policy.
After reading the opposition speeches, my Excel table remained blank. Would they spend more or less? Make taxes higher or lower? Institute a carbon tax or not? Run down the cash reserve faster or slower? Cancel any big projects and replace them with others? Or do they agree with the broad outlines of the Yukon Party’s fiscal policy, but just want to fiddle with the list of projects the cash gets spent on?
It is a time-honoured political strategy for opposition parties to say as little as possible and hope to benefit when voters get tired of the incumbent. It may work for them. But it makes me nervous that I don’t know where the opposition leaders stand on these very important questions after reading their budget speeches.
Perhaps they will tell us more before the next election. I hope so.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won 2015’s Ma Murray award for best columnist.