The most recent report from Saskatchewan's provincial auditor is mixture of very good and very bad.

The report, entitled "Understanding the Finances of Government," shows the province recorded an $844 million surplus for the 2004-05 fiscal year - resulting in an $800 million decrease in provincial debt.

This debt repayment is great news for taxpayers. Government debt is little more than a tax increase for our children and grandchildren. The problem is the province is forecasting an increase in government debt this year and in the future. This is unacceptable given that revenues are extraordinarily high right now.

The report indicates that the majority of the surplus consisted of a one-time transfer from the federal government and increases in non-renewable resource revenues. Federal transfers were nearly $2 billion last year -- an increase of $700 million from the previous year. Non-renewable resource revenue increased by $333 million.

Back in the 1980's it was common to see a bumper sticker in Alberta that read "Dear lord, please give us another boom, and I promise not to throw this one away."

Well folks, this is a "boom" for government, and our politicians are currently in the process of throwing it all away.

If Saskatchewan had not received a one-time equalization payout and oil prices stayed the same year-over-year, the provincial auditor would be a reporting a $244 million deficit. Despite this large surplus, our provincial finances are on very thin ice, and when the handouts from Ottawa dry up and oil prices return to normal, we could be piling up Devine-style deficits. The provincial budget is a house of cards.

The report reveals that since 2001 government spending has increased by 26 per cent while Saskatchewan's population has modestly declined.

The reality is we need to control spending. The auditor's report clearly shows that Saskatchewan is completely reliant on federal handouts and windfall oil revenues. If we are going to provide desperately-needed school and income tax relief, we are going to have to make better choices.

A new report from Statistics Canada shows Saskatchewan's per capita debt ranks fifth-highest in the country. Only Newfoundland, Nova Scotia, Quebec and Nunuvut had higher per capita debt loads as of March 31, 2004. This is completely unacceptable for a province of vast natural wealth such as ours.

Dipping back in to deficits in coming years is the wrong direction.

Saskatchewan residents need and deserve tax relief. We have the highest school taxes in Canada, and in this assessment year they are spiking higher than ever - despite a modest effort by government to lessen the burden. Agricultural producers who are seeing their yields get hammered by damp and cold weather are going to get hammered by an even bigger school tax bill next summer.

Our business community struggles to survive under one of the most onerous tax regimes in North America. In the interest of economic development our government has to lower tax rates.

Low income individuals pay inordinately high rates of taxation in Saskatchewan, and we're hoping the province heeds the Canadian Taxpayers Federation call for a higher Basic Personal Exemption.

All of these demands require an equal and off-setting reduction in government spending. Our politicians must make some tough decisions, but now is the time for action. The government must wake up and realize they are blowing a tremendous opportunity.