Saving for tomorrow helps Saskatchewan today.

When you get a bonus, you don’t count on that windfall every month. So, you use it to pay down your credit card or top up savings.

That’s exactly why Saskatchewan needs to set up a resource revenue heritage fund.

Here’s how a heritage fund works. When revenues for oil and potash and other non-renewable resources go up, the province puts some of the windfall in the heritage fund instead of spending it as fast as it comes in.

It sets the province up for the long term by squirrelling away cash to earn interest income. It also helps the province resist the urge to splurge on windfalls by capping the amount it can spend.

Back in 2013, the province got former University of Saskatchewan president, Peter MacKinnon, to write a report on heritage funds. He recommended the creation of a heritage fund that “allows for one-time resource revenues to become a lasting source of wealth, while stabilizing government use of these volatile revenues.”

The government did not adopt the recommendation and it’s been missing out on the benefits from saving since.

If the government had created that kind of a heritage fund back in 2013, putting aside debt repayment, it would be worth about $4.2 billion today and generate $210 million annually in interest.

With that income every year, the government could cut the 15 cent per litre fuel tax by six cents without losing revenue. That would save a Saskatchewanian filling up a minivan once a week about $230 a year.

Investing in a heritage fund makes sure that during booms, the province is saving extra cash it likely won’t have again next year. And during recessions, it helps the government weather the storm because its not counting on those extra resource revenues to keep the lights on.

In 2023, the government projected a $1-billion surplus when it presented the budget, but by the end of the year it dropped down to $182 million. This shows the problem with relying on resource revenues that change with the markets and the weather.

“Significant decreases in non-renewable resources revenue combined with higher crop insurance payments when compared to the prior year and budget contribute to the government’s diminished fiscal results,” says the 2023-24 year end results.

If the government had committed all the extra resource revenue to a Saskatchewan heritage fund, the amount of money the government would have to work with would be much clearer.

Resource revenues are difficult to predict so the amount budgeted might not actually be the same by the end of the year. And it’s a problem when the government writes budgets on the back of these predictions.

Restricting resource revenues to make up only a certain amount of the budget, such as 13 per cent which is the average over the last 10 years, would help the government budget wisely and the extra money could be deposited in the heritage fund to save for the future.

This is being done by other places. Alaska and Norway both have successful heritage funds. Last year, each eligible Alaskan received $1,704 in a dividend from its fund. Norway’s fund is worth more than $2.5 trillion. Money generated from it now covers about 20 per cent of Norway’s budget every year.

It pays to save.

Before any heritage fund can be set up, the government needs to pay off the debt. If the government had controlled spending and used deposits that would go into a heritage fund to pay off the debt in 2013, the provincial debt would only be $1.6 billion today.

That’s compared to the $23.5 billion that the Saskatchewan debt is expected to hit by the end of the year.

Twelve years ago, the provincial government was told to start a heritage fund. The government failed to act and now the province is missing out on the benefits of saving. The time to act is now.