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Saskatchewan’s Forgone Potash Windfall: Collecting a Fair Public Return

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    Saskatchewan’s Forgone Potash Windfall: Collecting a Fair Public Return

    Saskatchewan’s Forgone Potash Windfall: Collecting a Fair Public Return

    ​The price of potash doubled in 2022, adding $10 billion to the value of Saskatchewan's pink gold. But the provincial government collected only a quarter of this windfall. This policy paper highlights the need to improve royalties and taxes to ensure a fair return for the people of Saskatchewan.

    [url]https://www.schoolofpublicpolicy.sk.ca/research-ideas/publications-and-policy-insight/policy-brief/saskatchewan-forgone-potash-windfall.php[/url]

    Saskatchewan has one-third of the world’s potash. This fertilizer’s price doubled in 2022, creating windfall profits of $10 billion.

    Although the Potash Corporation of Saskatchewan (PCS) was privatized in 1989,1 the potash itself – like any other mineral – still belongs to the province. For more than a decade, economists including yours truly,2 Jack Mintz,3 Jack Warnock,4 John Burton,5 and Jim Marshall6 pointed out that flawed royalties and taxes under successive governments have failed to capture the value of this resource.

    Last year’s windfall highlights the need to collect a fair return for the people of Saskatchewan, who own the resource, from the mining companies that extract it. Although potash prices moderated this year, the value sold in 2023 already exceeds 2021 and every previous year.7

    The Ukraine war dramatically increased demand and prices for Saskatchewan potash. Facing economic sanctions, Russia and Belarus slashed their combined potash production from one-third of global output in 2021 to an estimated one-fifth in 2022.8

    While Saskatchewan mined the same volume of potash in both years,9 the value of those sales leapt from $7.6 billion in 2021 - already above any prior year - to $18.0 billion in 2022.10 An extra $10.4 billion arose not from additional production, investment or risk-taking by mining companies but from international events beyond their control.

    This sum is enormous for Saskatchewan, enough to pay off the provincial General Revenue Fund’s entire operating debt.11 Ten billion amounts to $8,500 for every Saskatchewan resident,12 seventeen times the value of the $500 Affordability Tax Credit cheques the provincial government sent only to adult tax-filers.

    The potash windfall could have been distributed to Saskatchewan people through cash transfers or tax cuts, used to pay off debt, saved for future generations, or invested in provincial infrastructure and services such as healthcare, education and housing. To fund these worthy goals, the Government of Saskatchewan would have needed to collect much of the ten billion on behalf of resource owners.

    #2
    Maybe potash mining should be turned over to the government and mine potash at a loss like the past NDP.

    Comment


      #3
      Originally posted by chuckChuck View Post
      Saskatchewan’s Forgone Potash Windfall: Collecting a Fair Public Return

      ​The price of potash doubled in 2022, adding $10 billion to the value of Saskatchewan's pink gold. But the provincial government collected only a quarter of this windfall. This policy paper highlights the need to improve royalties and taxes to ensure a fair return for the people of Saskatchewan.

      [url]https://www.schoolofpublicpolicy.sk.ca/research-ideas/publications-and-policy-insight/policy-brief/saskatchewan-forgone-potash-windfall.php[/url]

      Saskatchewan has one-third of the world’s potash. This fertilizer’s price doubled in 2022, creating windfall profits of $10 billion.

      Although the Potash Corporation of Saskatchewan (PCS) was privatized in 1989,1 the potash itself – like any other mineral – still belongs to the province. For more than a decade, economists including yours truly,2 Jack Mintz,3 Jack Warnock,4 John Burton,5 and Jim Marshall6 pointed out that flawed royalties and taxes under successive governments have failed to capture the value of this resource.

      Last year’s windfall highlights the need to collect a fair return for the people of Saskatchewan, who own the resource, from the mining companies that extract it. Although potash prices moderated this year, the value sold in 2023 already exceeds 2021 and every previous year.7

      The Ukraine war dramatically increased demand and prices for Saskatchewan potash. Facing economic sanctions, Russia and Belarus slashed their combined potash production from one-third of global output in 2021 to an estimated one-fifth in 2022.8

      While Saskatchewan mined the same volume of potash in both years,9 the value of those sales leapt from $7.6 billion in 2021 - already above any prior year - to $18.0 billion in 2022.10 An extra $10.4 billion arose not from additional production, investment or risk-taking by mining companies but from international events beyond their control.

      This sum is enormous for Saskatchewan, enough to pay off the provincial General Revenue Fund’s entire operating debt.11 Ten billion amounts to $8,500 for every Saskatchewan resident,12 seventeen times the value of the $500 Affordability Tax Credit cheques the provincial government sent only to adult tax-filers.

      The potash windfall could have been distributed to Saskatchewan people through cash transfers or tax cuts, used to pay off debt, saved for future generations, or invested in provincial infrastructure and services such as healthcare, education and housing. To fund these worthy goals, the Government of Saskatchewan would have needed to collect much of the ten billion on behalf of resource owners.
      Remind me? How many years was Cline in government and didn't do a thing about it?

      He was in CABINET and did squat.

      So Eric STFU.

      Comment


        #4
        Only incompetent fools sell resources and collect less revenue than what they should be getting on behalf of the owners.

        Comment


          #5
          Spudco?

          Comment


            #6
            I wonder if these economists are aware that they themselves could buy shares in potash Corp and take advantage of these excess profits they are so concerned about. Alternately, they could encourage the government to do the same. Thereby taking advantage of the efficiencies of the private sector while still keeping the profits public.

            Perhaps they could even provide an example of a crown corporation which didn't turn into an economic boondoggle.

            Comment


              #7
              Sask Power has cheaper electricity than Alberta's deregulated free market. Is that the economic boondoggle in Alberta you are speaking of?

              Comment


                #8
                Originally posted by chuckChuck View Post
                Sask Power has cheaper electricity than Alberta's deregulated free market. Is that the economic boondoggle in Alberta you are speaking of?
                No, that is the inevitable effect of adding wind and solar. We have been through this over and over.

                Comment


                  #9
                  Not according to Blake Shafer and Andrew Leach economists in Alberta who study the energy industry in Alberta.

                  Oh yeah I forgot you don't listen to experts instead you make up crap!

                  Even Danny Smith agrees that utilities that withhold supply to drive up prices are not a good thing for consumers!

                  Comment

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