Not a dollar of the extra revenue from higher oil prices is going to debt or tax relief
Newfoundland and Labrador is expecting to rake in more than $500 million in extra revenue this year because of higher oil prices.
And instead of taking that extra money and using it to increase spending, Premier Tony Wakeham committed to a much more sensible strategy.
“Those same elevated oil prices are hitting Newfoundlanders and Labradorians at the pump and around their home heating bills,” Wakeham said. “We cannot, and should not, and will not be counting on artificially high oil prices in perpetuity.”
Wakeham is right. Governments should not count on unpredictable situations in the Middle East to pad their coffers every year.
But it gets better. Newfoundland and Labrador Finance Minister Craig Pardy said 80 cents of every dollar from the windfall revenue is being earmarked to pay back the province’s debt. The other 20 cents will be used to make life more affordable for Newfoundlanders and Labradorians.
That’s not what happens in Saskatchewan.
The Saskatchewan government released its 2026-27 First Quarter Financial Report in August. The government is taking in about $331 million more revenue than it expected to this year so far, also because of increased oil prices.
Not a dollar is going to pay back debt. Not a dollar is going to tax relief.
Instead, the Saskatchewan government increased spending by $337 million. That’s more than the entire windfall.
That makes it twice as bad for Saskatchewan. The government isn’t paying back debt or cutting taxes. And spending this windfall leaves the province’s finances worse off in the future.
That’s because, as Wakeham said, governments can’t count on this revenue every year. That means taxpayers will be stuck paying for the ratcheted-up spending with tax hikes or more debt.
And this isn’t new behaviour. The Saskatchewan government received a big windfall in 2021. In that year, the government took in 25 per cent more revenue than the year before. The average revenue increase was about one per cent in the previous five years. The government increased spending by 25 per cent that year.
If it had held spending at the previous year’s level, the government could have paid down $2.2 billion in debt instead of increasing it by $1.4 billion.
This consistent pattern of blowing windfall revenue on increased spending is making the province’s debt problem worse. Premier Scott Moe has more than doubled the provincial debt. It’s now on track to reach $26.8 billion this year, with debt interest payments costing taxpayers more than $1 billion.
And instead of trying to find savings or stop spending from growing, the government increased spending in all but one of its departments in its last budget.
It could have also used the windfall revenue for tax relief. The government expects to take in about $512 million this year in the fuel tax. As Wakeham points out, those high oil prices are boosting the government’s bottom line while making life less affordable for drivers at the pump.
The Saskatchewan government could have suspended its 15-cent-per-litre fuel tax for about eight months without borrowing an extra dollar. A driver filling up their pickup truck once a week would save about $480 during that time.
That’s what Newfoundland and Labrador did. Wakeham is cutting the provincial gas tax to zero for four months starting on Dec. 1.
But the Saskatchewan government didn’t do that either. Instead, it ratcheted up spending, leaving taxpayers to cover the cost in the future.
Saskatchewanians can’t afford for the government to let another resource boom go to waste. Reiter has the blueprint from Newfoundland and Labrador. Use the windfall to pay back debt or cut taxes at the pump or both. But don’t increase spending.
Gage Haubrich, Prairie Director at the Canadian Taxpayers Federation, is a fierce critic of government overspending and a champion for Prairie taxpayers.
Explore more on Saskatchewan debt and deficit, Saskatchewan budget, Saskatchewan taxes
The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.
Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.
