Released on July 28, 2005
Strong natural resource prices have contributed to a $255.3 million boost to the province's coffers for the fiscal year, allowing government to continue its commitment to fund key priorities.Finance Minister Harry Van Mulligen handed down the 2005-06 First Quarter Report today, showing a forecasted $255.3 million increase in revenue over the Budget estimate of $7 billion largely due to strong oil and natural gas prices. Oil revenue climbed to $857.3 million, a $201 million increase over the Budget estimate of $656.3 million. Natural gas revenue is forecast to be $235.6 million, an increase of $44.2 million from Budget due to higher prices. Total revenue is forecast at $7.3 billion.
"We are very fortunate to once again reap the rewards of strong oil prices," Van Mulligen said. However, he cautioned against high expectations for an even larger oil revenue number, based on the fact that Saskatchewan produces heavy oil and not the light, sweet crude oil, which fetches much higher prices.
"The price gap – or differential – between light and heavy oil has widened greatly, bringing the forecasted spread for the fiscal year to almost $18 per barrel," Van Mulligen noted. "So while oil revenue has gone up considerably, the revenue numbers are not nearly as high as some would believe."
Government spending is on track with the exception of six departments. The spending increases primarily reflect priorities and pressures government was able to fund thanks to strong first quarter results. These include:
· $75 million in CAIS funding for the 2004 crop year
· $13.7 million for the 2005-06 portion of the meat processing strategy
· $40 million for Health to fund the results of the joint job evaluation process; coverage of the breast cancer treatment drug Herceptin and other additional pressures
· $5.1 million at Corrections and Public Safety, primarily for disaster/flood relief
· $3.9 million for Centennial-related expenses
· $500,000 for the Family Literacy Strategy
· $725,000 for forest fire fighting fleet renewal
The improved bottom line of the province also means the drawdown on the Fiscal Stabilization Fund (FSF) will be only $58.3 million, which is $116.2 million less than the Budget estimate of $174.5 million. The FSF continues to serve as a sound budgeting tool to provide a cushion against unforeseen pressures and risks.
"The government continues on its path of strong financial management," Van Mulligen said. "We have a plan. A plan that we began at Mid-Year 2004-05 when our revenue picture first began to improve; a plan that reflects the government's key commitments as we build for the future.
Prudent fiscal management includes debt management, affordable and sustainable tax relief, with investment in public infrastructure and by supporting our citizens with investment in key social priorities," Van Mulligen added.
"Our job numbers keep climbing. Our government debt is at the lowest point in 14 years. And our sound financial management has been rewarded with 13 credit rating upgrades in 10 years," Van Mulligen pointed out. "Four of those upgrades came under Premier Calvert's leadership – the most recent two in April and July, in recognition of our strong financial management coming out of 2004-05 and continuing with the 2005-06 Budget.
In our centennial year, there's plenty of great news to celebrate in Saskatchewan," Van Mulligen concluded.
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For More Information, Contact:
| Lorri Thacyk Finance Regina Phone: (306) 787-6605 |