Bottom Line

Entering upswing after seven-year slide

By Paul Martin, Martin Charlton Communications

For those who follow commodity cycles (and that is probably most of us living in Saskatchewan) we are entering the second phase of the current upswing. For example, veterans of the potash industry will tell you that we live 15-year cycles: seven up and then seven down with a short transition in between.

Sometimes called SaskaBoom 2.0, this cycle began in 2021, almost seven years to the day that the previous upturn reversed itself, pushing us into the typical seven-year slide. For those with good memories, you’ll recall that the price of both potash and oil fell off the cliff in November 2014, triggering the valley on the graph charting our progress.

However, Saskatchewan’s up cycles also tend to have two segments. The first is what I like to call the Income Statement boom – where strong commodity prices generate above-average cash flows for industry and government. It can be measured by the price of our commodities – grain, potash, oil or uranium – multiplied by the volume to derive an income or revenue figure. The price and output of primary products, such as oil and potash, are levelling out as, in the case of potash, Saskatchewan’s competitors are learning how to circumvent international sanctions spawned by the war in Eastern Europe.

The second half of the journey – and arguably the most important – is the Balance Sheet boom which we are now enjoying.

In short, this is all about investment. Capital inflows attract people, which is reflected in our recent population growth, higher levels of expertise and new commercial players. It also adds to the province’s net worth. For example, while the price of potash may go up or down and affect output, you don’t unbuild a mine once its completed, so it is a permanent addition to the overall economy regardless of how prices move. That’s the difference between an income-led boom and one sparked by investment capital.

That’s the curve we’re riding right now. Investment intentions are currently running between $10 billion and $15 billion, depending on who’s numbers you use. Either way, these are significant sums and are the catalyst for attracting further investment. A new mine or canola crush plant leads to increased demand for services and infrastructure, benefiting the entire economy. 

Economic growth in Saskatchewan

By Paul Martin, Martin Charlton Communications

People follow opportunity. 

That economic development truism is the foundation of any community growth strategy. People will move to your community or remain there if they believe they have a positive future for their careers, their lifestyle or their family’s wellbeing. 

No province has more experience with this topic than Saskatchewan, which endured more than two decades of out-migration as our citizens saw better prospects elsewhere. We were able to reverse the drain back in 2006 and have posted positive population numbers ever since, but growth brings its own set of imperatives. In particular, the need for infrastructure growth and renewal.

More people in a community not only results in more households or the need for expanded retail outlets, but it also means more schools, expanded health care delivery and enhanced transportation infrastructure. 

You’d think we’d be used to this after more than 15 years on the winning side of the population growth equation, but recent demonstrations at the legislature and the government’s response to the need for expanded capacity in the education system suggest this remains a work in progress. And, given that our population expansion has now reached a pace we haven’t seen in a century, there is no doubt the volume of this story is going to be amped up.

At the heart of this discussion is investment.

Capital flowing into a community is the fuel that drives growth and opportunity. Billions dedicated to expanding the mining sector, for example, triggered construction of the mine itself, but the spin-offs are also impressive. The industrial sectors in our major cities are evidence of how that cycle works – investment decisions precipitate the arrival of those who do the actual building and the service teams required to support them. All those new arrivals bring families who require more services – schools, hockey arenas, residential subdivisions and grocery stores, the hallmarks of a community in growth mode.

To borrow a phrase: nothing happens until somebody makes an investment – the so-called virtuous circle where investment sparks growth, which sparks more investment. 

Economic developers often say communities that reach a population of 500,000 become self-perpetuating. In other words, their flywheel has enough momentum that the virtuous circle becomes a self-fulfilling legacy.

Saskatchewan, while on its way, has not yet achieved the status of cities such as Calgary or Winnipeg, which now prosper and grow regardless of how the rest of the province is performing, but it is reasonable to assume our current pace of growth makes the half million number not only attainable, but inevitable. 

Ensuring we have the infrastructure in place to meet that target should be a vital part of the provincial growth strategy because the virtuous circle tells us: growth begets infrastructure requirements which begets more growth.  

By Paul Martin, Martin Charlton Communications

Normally this space is reserved for conversation or discussions about building or upgrading things or as Shantel Lipp likes to say: when the earth moves, it’s us. But it has been hard these days to ignore another form of construction – nation building.

With legislatures in Regina and Edmonton being asked to consider bills designed to assert the authority of provincial governments, anyone who was around 40 years ago is feeling like we’ve seen this movie already.

Back then it was Pierre Trudeau on one side of the table, facing off against Saskatchewan’s Allan Blakeney, a politician many considered the intellectual equal of the Elder Trudeau, and Peter Lougheed elegantly projecting gravitas and authority from Alberta.

Today, while the cast is different – Trudeau the Younger on the federal side squaring off against Scott Moe and Danielle Smith representing their respective provinces – the script is the same. Saskatchewan and Alberta are seeking respect at the national table.

Reasonable observers would probably think it fair to assume that after 40 years, things should be sorting themselves out but, in fact, it is showing no sign of improvement as the list of grievances dividing the parties seems to be growing and positions hardening.

The good news is that last time round, in the ’70s and early ’80s, Canada survived, although bruised and divided. The West suffered severe economic damage and decades of resentment over the imposition of the National Energy Program while the entire country found itself repatriating a constitution that a key player in the nation refused to endorse.

Four decades later, the same issues still capture us as multiple attempts to find solutions – olive branches from the West (remember The West Wants In?) to hard-line positions such as demands for Parliamentary reform for elected and equal Senate representation – have failed to bring us closer together. In fact, irritants such as anti-pipeline sentiment outside the prairies have stifled resource development, pouring salt on the wounds.

The one difference between the head butting of old and today’s version is television. Back in Pierre’s day, we got to watch federal-provincial First Ministers meetings live from coast-to-coast. Today, with no First Ministers meetings, having the arguments waged in social media 30 words at a time is what passes for progress.