That boom was fun – commodity prices soared and supercharged the Saskatchewan economy. But crashing prices have left a deficit-induced hangover. Nobody can control commodity prices, but we can control our reactions.

The Canadian Taxpayers Federation has released a new study calling for the creation of a heritage fund. We need a plan to save non-renewable resource revenues in good times so that we have more stable investment income in tough times. And that plan needs the iron-clad protection of referendum requirements.

Saskatchewan’s resource blessings also bring challenges. When prices are high and revenues go up, governments tend to increase spending, but expenses don’t come down when prices fall. When it comes to government spending, what goes up doesn’t necessarily come down.

That doesn’t mean all of the boom spending was wasteful. The government paid down debt before it started borrowing again and dedicated resources to infrastructure. Of course, there’s also been waste; such as the government’s inexplicable decision to overpay by millions for land at the Global Transportation Hub. But this issue is about more than good spending versus bad spending; it’s about the pace of spending.

This common-sense concept isn’t new.

In 1978, the province set up a heritage fund, but the rules were weak and money flowed out of the fund almost as fast as it went in. Worse, the remaining money wasn’t invested to secure returns, but directed to various government projects. Ultimately, the deficits of the 1980s and 1990s consumed the remains.

More recently, Premier Brad Wall asked former University of Saskatchewan President Peter MacKinnon to develop a plan for a heritage fund in 2013. At that point, non-renewable resource revenues were 26 per cent of the provincial income. Dr. MacKinnon acknowledged that it would be tough for the government to kick that kind of dependency and suggested simply capping it at 26 per cent and putting any remainder in a heritage fund. That plan hasn’t been implemented.

But the dark clouds of low commodity prices have a silver lining: the government is learning to live with lower non-renewable resource revenues and that’s creating an opportunity to establish a heritage fund.

The Canadian Taxpayers Federation is recommending the creation of a Saskatchewan heritage fund based on three principles:

1)      A referendum should be held to endorse the creation of a heritage fund and, once created, a referendum must be required to alter the fund in the future;

2)      All non-renewable resource revenues in excess of $1.5 billion each year should be used to pay down debt, and, when the debt is paid, the payments should go into a heritage fund; and,

3)      The principal in the heritage fund must be protected and only the returns on those investments should be spent.

If Saskatchewan had deposited all non-renewable resource revenues above the $1.5-billion cap from 2005 to 2015, the CTF report estimates there could have been $13 billion in a Saskatchewan heritage fund generating investment income of $652 million annually.

It may seem strange to call for a savings plan while Saskatchewan is struggling with a deficit. However, under this plan, the low commodity prices are unlikely to hit the $1.5-billion trigger in the immediate future. More importantly, implementing these recommendations will ensure there’s a plan in place if we’re blessed with another boom.

Some may still object that we can’t afford to save, but if we can’t live without non-renewable resource revenues today, how will our kids live without those revenues while paying for our borrowing in the future?

We’ve all seen the bumper sticker:

“Please God – give us another boom, we promise not to [throw] it away this time.”

If we’re invoking the aid of the Almighty through automotive adhesives, we should prepare for answered prayers.

Saskatchewan needs to create a heritage fund and now is the time.