Wednesday, March 03, 2010

On undisclosed risks

Murray Mandryk weighs in on the Sask Party's $200 million potash payout. And the background raises even more serious questions about what we're being told by the Wall government:
The "profit tax portion of potash royalties is paid on a calendar-year basis", meaning that producers are required to estimate their full-year profit and full-year payments in the first quarter of their calendar year. That also happens to be the last quarter of the provincial budget year. Based on these estimates, potash producers must "remit an installment payment equal to 25 per cent of total forecast payments for the year."

In short, the industry already paid taxes or royalties in last year's budget on potash that it didn't wind up selling.
The net result of this is that we wound up collecting too much from the industry in the banner 2008-09 budget and now have to pay it back in 2010-11 when we have less capacity to afford it. As (NDP MLA Trent) Wotherspoon pointed out, it not only makes the 2009-10 budget a sham, but it also calls into question the validity of the record 2008-09 budget.

Whatever it is, it's incompetence well beyond anything voters should ever have to tolerate.
So what does Mandryk's explanation tell us that we may not have known before? Let's take a closer look at the timeline involved.

Apparently the money being paid out to potash corporations is money that was collected in 2008-09. Which means that it's been a part of the books reported by Gantefoer for at least a year, and should have been part of the province's evaluation of potash revenue throughout 2009 as the province's estimates dwindled from $1.9 billion to under $100 million.

But at no point did Gantefoer did give any indication that there would be another cost to factor into the mix. And in fact his spin last fall as to why we should stop worrying about the growing shortfall portrayed "near zero" as the lower bound of what could become of potash revenues.

Which means one of two things. It could be that Gantefoer, in the midst of presenting yet another explanation for a massive miscalculation, chose to hold back from the province the reality that money sitting in the province's accounts since early 2009 had the potential to make matters worse. Or it could be that Gantefoer himself still isn't close to developing a clue how the province's revenue system works, with the result that he's as surprised as anybody about the payout - even in the wake of a year where potash revenues have constantly been in the spotlight.

Now, one can't rule out the possibility that the issue actually is one of utter incompetence rather than deliberate dishonesty. After all, Gantefoer has a history of not knowing his own job description - so it shouldn't come as much surprise if he just hasn't bothered to figure out the mechanics of how the provincial finances work either, even after two years as the minister responsible for them.

But for Saskatchewan voters, it's hard to see how either explanation would be the least bit reassuring about the Sask Party's ability to manage the province.

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