A Little Bit of Success Buys
an Awful Lot of Overhead
BY PAUL MARTIN
THE BOTTOM LINE
Transformational change. This is the new buzzword in
the provincial lexicon. Its exact definition remains un-certain
but in broad terms it means changing the way
we do things.
No doubt that it will become twisted to suit everyone’s particular
agenda but it appears to be a catch-all for redesigning the delivery
of government services.
Premier Wall has promised no new taxes but, with resource rev-enues
down and a deficit, he must reduce expenditures to bring the
budget into line. The lean initiative was, perhaps, the beginning of
this movement and transformational change is the latest iteration.
While lean had many successes, they were poorly chronicled, giv-ing
the public sector unions – and their voice in the legislature, the
NDP, – time to rally against them. In the wake of a provincial elec-tion,
where the ideas advanced by the NDP and their cohorts in the
public sector labor movement – who probably spent as much as any
political party in the campaign – were soundly rejected, Wall now
has the mandate to take his reform to the next level.
To put it another way, transformational change, as we understand
it today, is going to focus on the expenditure side of the ledger –
streamlining service delivery.
The last decade was expansionary in the province. Investment,
rising from an average of $7 billion to more than $20 billion an-nually,
propelled Saskatchewan to a new level. It brought people
to the province, increasing our population by roughly 15 per cent.
Investment followed by people attraction created the Saskatchewan
boom. That public sector spending got a bit out of hand in a period
of strong cash flow is a story for another day but suffice it to say that
a little bit of success buys an awful lot of overhead As we have seen,
success is fleeting while overhead can be permanent.
So the work of matching overhead to revenues begins.
But here’s a novel thought – how about adding the possibility of
a growth-based solution into the mix, rather than one focused sole-ly
on reduction?
If the answer is investment and more people, then the question is:
how do we attract more of both?
One way is to realign the income tax system to make us the most
taxpayer-friendly jurisdiction in the country. A flat 10 or 9.9 per cent
rate would do it.
Businesses and high net worth individuals follow tax rates.
Burger King merged with Tim Hortons and moved its headquarters
to Canada because America’s corporate tax rate is higher than just
about any other industrial nation. We attract investment and head
offices because we look like a tax haven to Americans. Saskatchewan
could become the provincial equivalent of that now that Alberta has
ceded the position.
Lowering personal taxes actually results in more money for the
treasury as proven by one-time finance minister Eric Cline when he
lowered provincial income taxes and revenues went up the next year.
Add in the notion of an address of convenience where high-in-come
earners – say someone who just sold a business – domicile
themselves in the low-tax jurisdiction for a day for tax purposes.
Alberta had that status until this year, a circumstance where they
enjoyed the gift of millions in tax money while providing no servic-es
in exchange.
But that is a one-time win. To hold those individuals indefinite-ly,
the system must be sufficiently transformed as to make it unap-pealing
to leave.
Think of this way: make Saskatchewan the Switzerland of Canada.
All the money would flow here along with the people who know how
to make money. Fresh capital would lure people. Saskatchewan’s
best days are indeed still ahead of us – so long as we have the cour-age
to seize them. Cutting is not the only way to prosperity.
Business commentator Paul Martin is a The Executive Committee
(TEC) Canada Ltd. chair in Saskatchewan and is heard on
more than a dozen Saskatchewan radio stations daily.
“… Here’s a novel thought – how about adding the
possibility of a growth-based solution into the
mix, rather than one focused solely on reduction?”
60 Think BIG | Quarter 3 2016 | saskheavy.ca
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