Economics prof. weighs in on Sask. Gov. and NDP opposing headlines

The Saskatchewan Government and Official Opposition are seemingly always at odds over the same topics. Areas that the province says Saskatchewan is excelling in are problematic, the Saskatchewan NDP report. Who is telling the truer story Jason Childs, University of Regina professor of economics, weighs in.

This is the headline from September 6 from the provincial government, “Saskatchewan adds 19,200 jobs, 17,800 full-time year over year, and maintains the lowest unemployment rate among provinces.” So this was a Statscan release that was done now that same day, Carla, Beck and the NDP said Scott Moe and the SAS party continue to have one of the worst job creation records in Canada.

CHILDS: Both statements are factually correct.  You’re measuring from different points in time, right? You’re going to get different answers right? And this is the wonderful thing about statistics. Depending on how and what you measure, you’re going to get wildly different answers, right?

What are the stats and what are how do you break this down?

CHILDS: Well, yeah, I mean, one of the ways we get that rate historically has been people leave. Okay, so if you’re unemployed, you move on down the road. But we’re at 6.6% unemployment. That’s that’s pretty good. We’re the lowest in the country. Good for us. Our involuntary part-time is a little high. We’re one of the highest. At 1.4% of people who have jobs working part-time want full-time. That’s that’s not great. We don’t get that. Participation rates were second in the country. So a number of people who are actually active in the economy, looking for work or running their own business, we’re doing pretty well there.

Like per capita?

CHILDS: You say second is that, like per capita? No, it’s just it’s pres the rate, yeah, rate as per circulation or and the employment rate, we’re second again. So the number of jobs divided by the number of people was number two again, right?

So there’s some bad news. I the involuntary unemployment rate. I inform. And, excuse me, involuntary part-time, that’s not good, right? But the other measures are pretty good, so it’s a mixed bag, right? And

Is it up to the government to create jobs?

CHILDS: You can create the preconditions to create jobs. The only way the government really creates jobs is they run around and hire people. And when you look at the public sector to private sector employment ratios in Saskatchewan, we’re at 32% basically, that’s really high. We’re one of the highest ones in the country. So the only way this government can actively, directly create jobs is to hire more people in the public sector. And we already have a big chunk of our economy doing that.

Should we be looking at the private sector?

CHILDS: I want to lean more on that that tends to generate more new income, more new opportunities. If you’re creating something that’s going to be valued at its output level rather than its input level, and that has a lot of merit and a lot of knock-on.

From an economic standpoint, how do you see Saskatchewan, where the point in time we’re at right now knowing that a lot of the challenges we talk about, and that word challenges And so how do you think we’re doing? 

CHILDS: Doing reasonably well. When you look at some of the headline numbers, our GDP per capita is second in the country as well. Our incomes are still pretty robust. We’re not seeing those big upticks in unemployment. So overall, we’re doing reasonably well. We’ve had some pretty serious headwinds. I mean, commodity prices are down. We’ve got a federal government that’s not really helping the cause here. Provincially, we’ve got some serious challenges, and I don’t think those challenges are going away.

How important is the relationship between the feds and the provinces? 

CHILDS: Sometimes having everybody singing from the same songbook is really important. Other times it’s not. And one of the great things about Canada is you get these little policy labs. We get to try different things in different regions and see what works, and then they all copy, right? Hopefully, the successful ones.

What would you say are the important measures of economic health, right?

CHILDS: So, the unemployment rate, that involuntary part-time, the number of discouraged workers, these are people who’ve just given up. They want a job, they don’t have a job, and they go, yeah, it’s not worth looking so that number I look at, and that’s pretty low here, which is encouraging participation, right? If you’ve got a lot of people participating in the economy by looking for workers running their own businesses, that’s going to give you some health so those are the big headline ones. And then you can take deeper dives into income distribution, things like that, to see who’s being left out. Because there’s no system that doesn’t leave somebody out. Doesn’t matter what that system is, whether it’s full-on socialism or, you know, hardcore market-based economies, somebody is going to be left out, or somebody’s not going to be doing as well as they might be, right? And so you need to identify where those are and maybe lend a helping hand.

So how do you see things like healthcare, education, and maybe some of the social challenges?

CHILDS: A lot of cases, the government wants to talk about many of those things is investments. In most cases, they aren’t. They’re consumption goods. They’re goods that really contribute meaningfully to the quality of life. And we want them. We need them. They’re really important to have. Some of them are foundational education, basic literacy, and basic numerator. It does so much for your trajectory in life, and getting that right is really, really important. And we haven’t in this country, I don’t think anywhere for decades, done it very well. I deal with the product of the lower-level education systems, and there’s lots of room for improvement.

Healthcare, for the most part, our spending. If you look at the way healthcare spending breaks down. It’s not in your middle years that you use the healthcare system a lot. It’s in your early years and the end of life is when the big expenses come to those end-of-life things, those are consumption. They’re really, really important. They’re not investments. The other wrinkle about all of those goods you talked about and when you’re rolling. They up into measuring how the economy is doing. Those things are not measured the same way. Say, the output of a farm is measured, or the brand producing stuff, how that contributes to the economy. Those things are measured at the value of output.

Whereas education, including myself, the value attached to that, when I’m rolling that up into how the whole economy is moving, that’s at the input level. So if I cost a lot of money but do a really poor job, that doesn’t show up in the GDP numbers, but if a private sector firm costs a lot of money and does a really poor job, that’s going to show up in those GDP numbers. So there’s a big difference. So we’ve got to be really cautious about an economy like Saskatchewan that does have a big public sect on how we interpret the GDP data.

What about our debt? How does that play into our current economic outlook and forecast?

CHILDS: So right now, we’re carrying about $50 billion give or take. I mean, how do you know an economist is trying to be funny, they use decimal points, but we do carry a fair bit of provincial debt. We do also because we’re Canadian taxpayers, we carry a chunk of federal debt. I’m just wrapping up an academic research piece on this to look at the relationship between provincial debt in Canada and economic growth. And the sad thing is, no matter where you put the threshold for debt, if you’re below it, you grow faster. If you’re above it, you grow slower. So debt can act as a break on growth, or it sure looks that way. There’s a lot of other academic literature to say that. So adding to debt through deficits is a dangerous maneuver.

What do you what do you make? Of a lot of spending promises, we’re even hearing on one side, no taxes. In fact, a hold on tax increases for four years. I asked Carla, back when she was in the studio with me, how is that even possible? Does that worry you as an economist? 

CHILDS: It does. I mean, as somebody who’s concerned about deficits and debt that’s absolutely a worry, because the only way to make that up, if you’re going to spend a lot more and not raise any extra revenue, you’re going to be borrowing, unless you get extremely lucky and you buy a bunch of lottery tickets. But that’s, that’s the game that’s going to be played, is you’re going to bet and you’re probably going to lose.

You said in some ways, Carla Beck is reminding you of Donald Trump. And I said, Excuse me, are you comfortable talking about her?

CHILDS: It was a, an immediate reaction to one of the new pieces in the news release, wanting to build interprovincial trade barriers, wanting to say, no, no, we’ve got to buy Saskatchewan, we’ve got to, you know, only government work should be done by only government Saskatchewan firms, and that just strikes me as such a Buy American policy. That sounds like Trump and interprovincial trade barriers are already a huge problem. They cost us between one and 4% of GDP every year, right? So we’re all worse off because we have these trade barriers, and now we’re talking about adding more. I just think that’s a bad idea.

The corporate tax structure and how that worries you about growth when it comes to businesses. Can you talk a bit about that?

CHILDS: That’s the existing corporate tax structure. We’ve kind of picked on one side. Now it’s time to pick on the other. This is a thing, a place where I think the NDP one. Anybody can make some serious headway. We have two corporate tax rates. We’ve got this, the low tax rate of 2% and we’ve got the standard of 12 and the problem is there’s a big jump between two and 12% at $600,000 and so it’s possible that that sort of tax Cliff limits or slows down growth. Your business is growing, things are going really well. You can make an investment to expand, but if you expand too far, you cross this threshold, and now you’re getting taxed at a much higher rate. Would you rather take some time off and go spend some time with your family rather than grow your business? And that can be a real risk.

— This transcript has been edited for clarity.