CONTENTS
Standing Committee on Public Accounts
Saskatchewan Workers’ Compensation Board
Public Accounts 2023‑24 Volume 1
Public Accounts 2024‑25 Volume 1
THIRTIETH
LEGISLATURE
of
the
Legislative Assembly of Saskatchewan
STANDING
COMMITTEE ON
Hansard Verbatim Report
No.
10 — Thursday, October 16, 2025
[The committee met at 10:00.]
Chair
Wotherspoon: — Okay folks, good morning. We’ll
convene the Standing Committee on Public Accounts. My name is Trent Wotherspoon. I serve as the Chair of the
Public Accounts Committee.
I’ll introduce our committee members: Deputy
Chair Wilson, MLA [Member of the Legislative Assembly] Chan, MLA Crassweller,
MLA Beaudry, MLA Gordon, MLA Pratchler.
I’d like to
welcome and introduce our officials from the Provincial Comptroller’s office:
Provincial Comptroller Brent Hebert and assistant provincial comptroller, Jane
Borland.
And certainly
I’d like to welcome and introduce our Provincial Auditor, Tara Clemett, and her
officials that are here with us here today from the Provincial Auditor’s
office.
Farm Land Security Board
Chair Wotherspoon: — Our first agenda item here today will focus
on agriculture and the chapter pertaining to farm land security. At this time
as well I’ll table the document PAC 56‑30, Farm Land Security Board:
Status update, dated October 16th, 2025. I want to thank those
that prepared that document, those whose work is reflected within that document
as well.
At this point I’m going to turn it over
to our Provincial Auditor to present this . . . Oh, sorry, yeah. Good
help here. I want to welcome Assistant Deputy Minister Standish to the Public
Accounts Committee along with her officials. I’d ask her to briefly introduce
those officials. You don’t need to get into comment on the chapter at this point.
Introduce the officials. Because we’ll get a presentation from the auditor,
then we’ll come back your way.
Amy Standish:
— The officials I have with me today are Kim McLean — she’s our director of our
board governance unit and also the general manager of the Farm Land Security
Board — as well as Rob Pentland, our executive director of our corporate
services branch. Thank you.
Chair
Wotherspoon: — Right on, thanks so much for joining
us. I’ll turn it over to our Provincial Auditor to make presentation, and then
we’ll come back your way.
Tara
Clemett: —
So thank you, Mr. Chair, Deputy Chair, committee members, and officials. With
me today is Mr. Jason Shaw, and he is responsible for leading the audit that
did take place at the Farm Land Security Board. With me as well, directly
behind me and to the right, is Ms. Nicole Dressler, and she was also involved
in the audit that we are discussing today. Beside her is Ms. Kim Lowe, and
she’s acting as our liaison with the committee today.
Jason’s going to present the one chapter
noted on the agenda. It is a new performance audit, and so there are 10 new
recommendations for the committee’s consideration. I do want to thank the
assistant deputy minister and all the staff at the Farm Land Security Board for
the co-operation that was extended to us during the course of our work.
With that, I’ll turn it over to Jason.
Jason Shaw:
— Thank you. The Saskatchewan Farm Security Act and related regulations
restrict the amount of Saskatchewan farm land that non-Canadian entities — that
is, individuals and corporations — can own or lease. The Farm Land Security
Board is responsible for administering the Act and regulating the control of
Saskatchewan farm land, including approving exemptions for non-Canadian
entities to control more farm land than the legislated limit of 10 acres.
Chapter 11 of our 2020 report volume 2,
starting on page 71, reports the results of our audit of the effectiveness of
the Farm Land Security Board’s processes to regulate foreign ownership of
Saskatchewan farm land by non-Canadian entities. We concluded for the period
ending August 31st, 2024, the Farm Land Security Board had effective processes,
except in the areas of our recommendations, to regulate foreign ownership of
Saskatchewan farm land by non-Canadian entities. We made 10 new
recommendations.
Saskatchewan’s foreign ownership model
is a risk-based model, as the board reviews farm land transactions after the
transaction and land title change is finalized, whereas some provinces that
also have foreign farm land restrictions require the government to review farm
land purchases before the transaction is finalized.
We found in 2023 the board requested the
Ministry of Agriculture to consider changing legislation to assess compliance
before the land title change is finalized. We did not make any recommendation;
we encouraged the board to continue to work with the ministries of Agriculture
and Justice and Attorney General to formally analyze and conclude on the best
model for Saskatchewan.
On page 82 we recommended the Farm Land
Security Board update its statutory declaration form templates to require
permanent residents provide proof of residency when submitting statutory
declaration forms.
The board staff requests proof of
residency from landowners called “statutory declarations” for higher risk farm
land purchasers to assess compliance with foreign ownership requirements. If
the board requests a statutory declaration from a purchaser, it becomes
mandatory to comply.
We compared Saskatchewan’s statutory
declaration templates to Alberta’s template and found Alberta’s form requires a
permanent resident to provide a copy of their permanent resident card and
waiver authorizing the federal government to release that person’s resident
information to the Alberta government. This provides another source of
information to verify the purchaser’s residency status complies with foreign
ownership requirements.
Without requesting readily available and
verifiable proof of residency status, the board has less robust information to
determine whether residency status for individuals and corporate shareholders
comply with legislative requirements.
On page 83 we recommended the Farm Land
Security Board set an expected time frame for staff to review farm land
transactions to assess compliance with The Saskatchewan Farm Security Act and
related regulations.
We found the board did not have a
written time frame for how quickly it expects staff to review farm land
transactions. Management told us it had an unwritten expectation for staff to
review farm land transactions within two months of the transaction taking
place. As of August 2024 we found staff were reviewing transactions
approximately five months after the transaction date. Delays in reviewing
transactions caused delays in staff requesting information to determine
compliance. If the board identifies non-compliance with the Act, this late
review adds further delays to any enforcement action.
On page 84 we recommended the Farm Land
Security Board follow its established procedures to request statutory
declarations for individuals and corporations to assess compliance with The
Saskatchewan Farm Security Act and related regulations.
Staff are to request a statutory
declaration for any shareholders, a corporation, or individual purchasers
having a non-Canadian address, and for Canadian corporations incorporated
outside of Saskatchewan. We found this was appropriate, for example, because
other jurisdictions’ corporate registries may not require corporations to
disclose all shareholders, such as preferred shareholders. In our testing we
found staff were not always requesting statutory declarations for
non-Saskatchewan corporations as required by its procedures.
During our testing of 18 farm land
purchases made by corporations incorporated outside of Saskatchewan, we found
the board did not request or receive a statutory declaration for nine
corporations. Instead it relied on other jurisdictions’ corporate registry
information that may not be complete. Not requesting statutory declarations as
required by its procedures increases the risk the board does not use sufficient
information and does not identify foreign individuals or corporations owning
Saskatchewan farm land.
On page 85 we recommended the Farm Land
Security Board work with the Ministry of Agriculture to determine how to
enforce restrictions on foreign leasing of farm land under The Saskatchewan
Farm Security Act. The Act’s definition of “land holding” includes any
interest in farm land held under a lease agreement. This means the Act
restricts land holding, including foreign leasing of farm land, to less than 10
acres. Farm land leases could be formal or informal between parties. There is
no central listing for farm land leases in Saskatchewan. Leases may be
registered on the land title, but this is not a requirement and is not common
in Saskatchewan.
Currently the board reviews leases on a
complaint basis, if it receives an exemption application, or if reported on a
statutory declaration form. Provincial legislation tasks the board to enforce
the foreign leasing of farm land restrictions, but does not provide it with a
practical way of doing so. This reduces the board’s ability to effectively
enforce lease restrictions, increasing the risk the board will not detect
foreign entities leasing Saskatchewan farm land, thereby making farm land
unavailable to Saskatchewan farmers.
On page 87 we recommended the Farm Land
Security Board document in its meeting minutes declared conflicts of interest
as required by its board manual.
The board’s manual requires board
members to declare conflicts of interest at each meeting and document the
nature of the conflict. During our testing of all board meeting minutes from
August 1st, 2023 to July 31st, 2024, we did not see sufficient documentation of
declared conflicts of interest, including the nature of the conflict. Instead
the minutes documented when board members left and returned to meetings, but
did not indicate whether their departure was due to a conflict of interest. Not
clearly documenting declared conflicts of interest increases the risk that the
board is unable to demonstrate it makes fair and impartial decisions when
evaluating compliance with foreign farm landownership rules.
On page 89 we recommended the Farm Land
Security Board provide adequate notice to exemption applicants informing them
as to when the board will discuss farm landownership exemption applications.
At August 2024 the board’s public
website included all upcoming board meeting dates and a deadline to submit
exemption applications to be considered in that meeting. However the website
did not include which applications will be discussed at each meeting, and we
found staff did not communicate this to the applicants.
We found four of the seven exemption
applicants tested attended board meetings to present their exemption
application. The board and staff did not communicate to the other three
applicants specifically when the board meeting planned to discuss their applications.
Upon request the board allows applicants to present information about their
application. Good practice is for administrative tribunals to provide
applicants notice of hearings of when tribunals will make a decision.
This increases the risk of appeals if
the board has not provided an exemption applicant the opportunity to present
additional information or to answer the board’s questions.
On page 91 we recommended the Farm Land
Security Board provide timely communication to individuals and corporations
about requirements to sell when not in compliance with The Saskatchewan Farm
Security Act.
Staff may identify non-compliance with
the Act by reviewing farm land transactions, assessing complaints or exemption
applications, and reviewing whether individuals or corporations meet the terms
and conditions of past board orders. The Act requires foreign entities in
non-compliance to divest farm land immediately or as specified by the board. In
practice, we observed an example of the board providing up to one year to
divest.
We found two cases where the board made
a decision to require the corporations to divest land or to apply for an
exemption, but staff had not communicated this expectation to the corporations,
two and six months respectively. Not providing timely notice of the need to
sell land leaves the owner with limited time to comply with farm landownership
restrictions.
On page 92 we recommended the Farm Land
Security Board formalize procedures for the escalation of enforcement actions
to address identified non-compliance with The Saskatchewan Farm Security Act.
The board did not have escalation
procedures for staff to take further action or when to report unreceived
statutory declarations to the board. We found as of August 2024 the board sent
eight statutory declaration requests to individuals or corporations since 2020
where it did not receive a response. As a result, the board was unable to
conclude whether these eight purchasers complied with the Act.
On page 93 we recommended the Farm Land
Security Board use sufficient performance indicators to monitor effectiveness
of its regulatory activities related to foreign ownership of Saskatchewan farm
land. The board has not identified sufficient performance indicators to assist
it in identifying whether the board meets its objectives for regulating farm
landownership. For example, it should regularly monitor the time frames staff
take to review farm land transactions. Without sufficient performance indicators,
the board cannot effectively assess and publicly report on the regulation of
foreign ownership of Saskatchewan farm land. Further, the board may be unable
to identify trends to inform ways to improve its processes.
On page 94 we recommended the Farm Land
Security Board enhance its public reporting of all of its key regulatory
activities related to regulating foreign ownership of Saskatchewan farm land.
The board publicly reports on certain farm landownership activities taken each
year in its annual report. For example, its ’23‑24 annual report focuses
on exemption applications granted and denied, and it also includes a number of
orders to reduce landholdings, administrative penalties issued, and files sent
to public prosecution.
The board did not publicly report on
other key regulatory activities related to its review of about 40,000 farm land
transactions each year. For example, it does not publicly report on
non-compliance trends as a result of reviews, response rates on requested
statutory declarations, or compliance with the board orders to sell land when
it identifies non-compliance. Publicly reporting on enforced activities and
including examples where the board identified non-compliance may help deter
future non-compliance with the Act and enhance public understanding.
Thank you.
[10:15]
Chair
Wotherspoon: — Thank you very much for the
presentation of, I think, a really important performance audit to the people of
the province. A new audit with many new recommendations, so thank you for that.
I’ll turn it over to ADM [Assistant
Deputy Minister] Standish for some remarks and then we’ll open it up for
questions.
Amy Standish:
— Thank you, Chair. And I’d also like to thank the Provincial Auditor and her
staff for the work on this audit.
I am here today to respond to chapter
11, “Farm Land Security Board — Regulating Foreign Ownership of Saskatchewan
Farmland,” in the 2024 report volume 2. The chapter, as you know, had the
following 10 recommendations that I will go through today.
The first from the Provincial Auditor
is, we recommend that the Farm Land Security Board update its statutory
declaration form templates to require permanent residents provide proof of
residency when submitting statutory declaration forms.
This recommendation has been
implemented. The board developed new statutory declaration forms for both
individuals and corporations, asking for additional information including that
proof of residency.
The second recommendation from the
Provincial Auditor report: we recommend that the Farm Land Security Board set
an expected time frame for staff to review farm land transactions to assess
compliance with The Saskatchewan Farm Security Act and the related
regulations.
This recommendation has also been
implemented. The board first directed staff back in October of 2024 to complete
transaction reviews within 60 days of receiving that information from ISC
[Information Services Corporation of Saskatchewan]. Staff were able to bring
that transaction review within the 60‑day window by the November 7th,
2024 board meeting. And the board further directed staff to review transactions
within 30 days at the January 22nd, 2025 meeting.
Staff have reviewed transactions within
the time frames set out by the board since October 2024. And since July 2025,
staff have been reviewing transactions received by ISC within that week.
The third recommendation from the
Provincial Auditor: we recommend that the Farm Land Security Board follow its
established procedures to request statutory declarations for individuals and
corporations to assess compliance with The Saskatchewan Farm Security Act
and related regulations.
This recommendation has been
implemented. At the October 2024 board meeting the board made a motion to
request that all out-of-province corporations complete a declaration. And this
process has been in place since that time.
The fourth recommendation: we recommend
that the Farm Land Security Board work with the Ministry of Agriculture to
determine how to enforce restrictions on foreign leasing of farm land under The
Saskatchewan Farm Security Act.
This recommendation has been
implemented. The board has received all registered lease interests in the
province in January 2025 through ISC and is working through reviewing all of
those registered interests in a similar fashion to the ownership transactions.
The process for enforcement of these foreign leases is the same as the foreign
purchase transactions.
Several of the board exemption orders
have also been granted to entities seeking to register a lease interest. And
the board continues to monitor these leaseholding exemption conditions, whether
that’s through reporting requirements or bring-forward dates aligned with those
exemption conditions.
The fifth recommendation: we recommend
the Farm Land Security Board document in its meeting minutes declared conflicts
of interest as required by its board manual.
This recommendation has been
implemented. Adjustments were made to how the minutes were written to more
clearly document any conflicts of interest.
The sixth recommendation: we recommend
the Farm Land Security Board provide adequate notice to exemption applicants
informing them as to when the board will discuss farm landownership exemption
applications.
This recommendation has been
implemented. In October of 2024 board staff were directed to provide written
confirmation to the applicants when the applications are received as to when
the board will review those exemption applications. The website has also been
updated to reflect when submissions are due in order for the applications to be
heard at each meeting.
The seventh recommendation: we recommend
that the Farm Land Security Board provide timely communication to individuals
and corporations about requirements to sell land when not in compliance with The
Saskatchewan Farm Security Act.
This recommendation has been
implemented. Board staff were directed to provide a written reminder for those
individuals who would be required to sell inherited land two years prior to
their five-year maximum to hold the land. For those required to remove their
interest due to non-compliance, a process is outlined in the Act to issue an
order to reduce prior to making an application to the court, and the process
documents have been updated to reflect that.
The eighth recommendation: we recommend
that the Farm Land Security Board formalize procedures for the escalation of
enforcement actions to address identified non-compliance with The Saskatchewan
Farm Security Act.
This recommendation has been
implemented. Procedures were formalized around the escalation of enforcement
actions by updating those board meeting materials to allow for more detailed
information regarding outstanding declarations and files where compliance
remains in question.
The ninth recommendation: we recommend
the Farm Land Security Board use sufficient performance indicators to monitor
the effectiveness of its regulatory activities related to foreign ownership of
Saskatchewan farm land.
This recommendation has been
implemented. Statistics are provided to the board and then to the public,
including status and number of investigations, timeliness of transaction
review, statutory declarations requested and received, as well as exemptions, including
acres requested and received.
And finally the 10th recommendation from
the Provincial Auditor’s report: we recommend that the Farm Land Security Board
enhance its public reporting of all of its key regulatory activities related to
foreign ownership of Saskatchewan farm land.
This recommendation has been
implemented. You will be able to find in the annual report tabled July 29th,
2025 it was updated to include those additional metrics for the general public.
And now I believe the team would be
pleased to take any questions. Thank you.
Chair
Wotherspoon: — Okay. Thank you very much for the
comments and for many of the actions that have been taken as well in response
to the audit. I’ll open it up now to committee members that may have questions.
MLA Pratchler.
Joan Pratchler: — Thank you. Does
the ministry operate with the belief that all farm land in Saskatchewan should
be owned by Saskatchewan residents?
Amy Standish:
— And so within the Act I would say it outlines kind of the ownership rules. I
do not believe that it is only Saskatchewan residents who own land. There is
many projects and corporations within the province who have viable projects,
projects that are very good for our economy that we do want to see in this
province.
So I may defer that question, but
generally speaking the Act does allow for non-Canadian residents. It’s just
that there’s the bit of the process that we must go through to make sure that
we’re doing the due diligence on the ownership side.
Joan Pratchler: — Okay. Thank you.
Amy Standish:
— I will turn to Kim McLean just to add further details to that.
Kim McLean:
— There is some confusion around the Act limiting ownership to just
Saskatchewan. The Act was brought in in 2003 to expand to Canadians and
permanent residents. So we are open across Canada and you have to fall within
that criteria to own more than the 10 acres. And then of course the board is
able to provide exemptions for anybody that is requiring land to perform
business in Saskatchewan.
Joan Pratchler: — Thank you.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — I know you
addressed one of the recommendations to bring reviews within 30 days. And I
think you — correct me if I’m wrong — you said that you’ve improved that yet,
have you not? Or is it still 30 days, correct?
Amy Standish:
— Just to clarify, are you talking about the statutory declaration review,
transaction review?
Hugh Gordon: — Yes. Transaction
reviews, yes. But this is still occurring after the fact, correct?
Amy Standish:
— Correct.
Hugh Gordon: — So I guess I have
to ask the question, why are we still not doing what other jurisdictions like
Alberta and elsewhere are doing? That we request this information, when you’re
uploading documents, changes of title registration to ISC, why are we not just
simply requesting proof of residency or statutory declaration, or whatever it
might be? Particularly when we’re talking about non-Canadian residents or
foreign entities, whatever they might be, in purchasing land — whether it’s 10
acres or more, whether they’ve applied for an exemption or not — this sort of
seems to be inconsistent with the spirit and the intent of this legislation.
Amy Standish:
— Thank you for the question. And so registration of land in the province
involves not only The Saskatchewan Farm Security Act but also The
Land Titles Act, 2000. And so as the Provincial Auditor has highlighted in
the report and the recent audit, there are pros and cons to registration
happening before and after, and we’ve seen that model used across different
provinces.
And so we are continuing to explore
options to determine what makes the most sense for Saskatchewan farmers and
ranchers. And we will be looking also to that advisory committee that was
recently struck to provide feedback as they do some of their engagement on what
makes the most sense in the province.
Hugh Gordon: —
I can appreciate, you know, an evaluation of the pros and the cons of the
process. I guess I’m putting on my old retired cop’s hat here a little bit. And
you know, I won’t call them bad actors, but let’s say people who want to take
advantage of a system who are going to find loopholes, who are going to find
the holes in, whether it’s a process or legislation, whatever it might be, this
sort of seems to be one of those doors that is left open for potential abuse.
Regardless
of the fact that perhaps the cost of trying to detect that abuse in advance may
dissuade you from going that route, in my mind it opens up some holes here in
terms of actors or people that might try to take advantage of it.
One small example of that might be the
fact that, you know . . . We have foreign entities or other entities;
let’s say you detect them, after the fact perhaps. And they know before they
have to register with ISC, they can make the transaction; they can arrange for
financing; they can acquire the land. And then they can submit documents — and
we’ll get into maybe a bit of that later too — for review by the board. And you
may catch it. Hopefully you do. And maybe there’s not a statutory declaration
at that time, but then you request a statutory declaration. But they know these
things take time.
So let’s say a bad actor decides to buy
1,000 acres, foreign entity, non-Canadian. They buy the land; transaction goes
through. They’ve arranged for financing, and that may be dubious too. Who
knows? But let’s say that that happens. And they submit all their documents to
ISC. You do the review. You determine that they require a statutory
declaration. They either do comply or don’t comply. Either way, you eventually
go down the path where they decide, you must divest of this land. But we’re
giving these guys five years to do it. Does anything in that scenario change in
terms of the timeline to divest if we’ve detected a bad actor has taken
advantage of this weak point in our review process?
Amy Standish:
— So I’ll provide some, kind of, higher level remarks, then I will turn to Kim
McLean to provide some more specifics.
I would say from the moment that it is
recognized that there could be illegal ownership of farm land and there is an
order to divest from the board, that action is immediate. And so I did want to
clarify perhaps. You said the five-year time frame, and the five-year time
frame is for land that is inherited. And so there is, outlines in the Act that
talks about the five-year time frame. Whereas if it is found that there is
illegal ownership of farm land, it would be sort of the immediate order to
divest that would happen.
And so with that, I’m going to just turn
it to Kim McLean to provide a little bit more detail there.
[10:30]
Kim McLean:
— Yes, I guess I never introduced myself. Kim McLean, director of board
governance and operations, as well as the general manager for the board.
So the stat dec clarification at the
start of ownership is also at that point in time. If somebody wanted to be a
bad actor, they could do that after the transaction occurs, and so we would
still be in the same place of making sure that we are monitoring, enforcing
after the land has transacted. But we do have the ability. Once we have
determined they are offside, the board can begin with their order to divest and
work through the court application to force the sale of that land.
Hugh Gordon: — As a follow-up,
there would be a court process that would have to be engaged. This could be
lengthy. The GTH [Global Transportation Hub] flip happened in short order where
we lost, the taxpayer lost out on a lot of money very quickly on the flip of
land in a short period of time.
Whether it’s five years or an immediate
order to divest, what is, you know, what’s stopping an entity — foreign-owned,
criminal organization, just plain old bad, or just someone that wants to take
advantage, an investor from outside of the country that wants to take advantage
of rising valuations of land — rolling the dice on your process under review,
as robust as you may feel that it is?
And then like okay, let’s say the order
comes right away, but they want to tie it up in court because they know at the
end of the day the sale of the land is going to be worth the hassle. It’s going
to be worth the legal fees. It’s going to be worth tying up in courts.
We’ve got a lot of farm land. It’s worth
an enormous amount and rising every day. You get my drift. That’s just a
concern that I have, and I don’t know if you can answer that question
effectively. I know that you are restrained by what you’re capable of doing,
what powers, authorities, processes are available to you, and I appreciate the
position you’re in.
I’m just wondering, do you believe the
government could be giving you more tools in order to ensure that, you know, people
who are looking to take advantage of the current system as it is aren’t able to
drag this out in perpetuity in order to do a quick flip or make a quick buck?
Amy Standish:
— And so I’ll kind of go over just a few additional points, but I’m not sure
how much new information to kind of shed on this. And so I will say too — and
this came through the audit as well — I do believe that the board and the board
staff, with the legislative tools that they have today, do an effective job of
this process in kind of protecting the farm land in the province.
And so one of the findings in the
auditor’s report — and yes, recommendations for improvements in those processes
— was that there was no illegal, unauthorized ownership of farm land that they
found through their test cases. And so I think that shows the effectiveness of
some of the processes that we have in place.
And to the last point, again because it
is just the differences of models, and we do have to continue to just assess
the pros and cons and make sure whatever we’re doing that there’s no unintended
consequences. And to your point making sure we’re looking for any loopholes,
limiting those wherever possible, both from the ministry’s standpoint, but also
the board in their processes.
So that work is under way. We still need
to kind of go through that analysis before kind of determining, but in the
meantime we were pleased to see through the audit that those processes are
working for no illegal, unauthorized ownership.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — One of the things that the auditor noted in
the report was that there was concern that corporations could be acquiring
land, essentially, shall we say “utilizing” . . . I don’t know if I
have the wording correct; I don’t have it here before me. But essentially like
putting up a nominee to buy the land. Essentially a corporation that for
whatever reason has, you know, a Saskatchewan resident as a shareholder, on the
board of directors, or as a president, or whatever it might be on those documents
that are submitted to ISC.
And I’m just
wondering, like what processes do you have to ensure that a corporation is
either truly Saskatchewan, truly Canadian, versus a foreign-owned entity? What
steps do you take to ensure the people that are being submitted essentially as
owners of the property, or on title, aren’t nominees, for example, like one
might see in a proceeds of crime investigation?
Amy Standish:
— Thank you. And so this does connect in with one of the recommendations that
came through that auditor’s report. And work was done to actually go through
and update the statutory declaration forms. Twofold. Because now any
out-of-province corporations, it is mandatory that they must fill out a
statutory declaration. That was a shift in process to make sure that we are
getting those for all of those out-of-province corporations. Additionally when
you look at the statutory declaration forms now, there are significantly more
questions that we’re kind of getting into to get additional details.
I can give you the example from one of
them. So on the corporate farm landownership statutory declaration form that’s
been updated, if I go to the 13th question — and this is just to provide a bit
of an example — it says, “Is the corporation acquiring a land holding on behalf
of a non-Canadian citizen, a non-permanent resident of Canada, a
non-Canadian-owned entity or pension fund?” So it’s starting to really drill
into a lot of that detail in addition to things like proof of residency that we
are now . . . The board has changed that process.
Chair
Wotherspoon: — Just on that note there, I’m very
interested in this area of work. This is something that we’ve been calling for
like going on a decade here as far as the statutory declaration and statement
of beneficial interests and certainly residency. Because it’s just been really
lax and we’ve had sort of the Wild West out here, when you chat with some of
the legal community and business community that understands that deals can be
structured in very kind of complex ways from a financial and legal perspective that
skirt the spirit and intent of our law.
And they haven’t then left the Farm Land
Security Board with the tools to be able to enforce our laws. And meanwhile
there’s the risk that significant portions of farm land across this province
have been acquired with foreign investment and have foreign ownership that
aren’t legal.
So I guess I’m glad to see some of the
actions that are being taken now. I’m incredibly frustrated, not with those
before us here today, the very good civil servants that are here, but with
ministers previous and governments previous because it’s pretty hard to get the
toothpaste back in the tube on this front. The impacts are being borne by
producers in this province, who deserve a law to be enforced and a fair playing
field to acquire land and grow their operation.
So to the declaration piece here, I
guess one question would be . . . Now the declaration, the statutory
declaration is only in place for out-of-province entities. Is that correct?
Amy Standish:
— So I’m going to turn this over to Kim McLean, who has a lot more technical
details on this one.
Kim McLean:
— So the board passed a motion back in I think it was the July meeting where,
moving forward, we will request a stat dec from every new landowner in the
province. And Canada Post has put a little bit of a holdup on that, but we are
moving forward. I’m meeting with the Law Society this afternoon to go over the
new requirements of the stat decs, what we’re requiring for each completion.
One question that was added to the
corporate stat dec is that they provide the internal control registry that is
required as part of The Business Corporations Act. That will be
submitted by every corporation that has purchased land. We will ask for each
corporation to complete a stat dec — well, every landowner to complete a stat
dec — on the new forms. We will also go back to them on an annual basis if
they’re purchasing land moving forward.
And then once we get a process in place
and get this dialed in, we’ll probably go back to them routinely just to make
sure that they are still the current registry that comes through, and we will
rely on that information. So the board is very aware and wants to make sure
that they are doing their job, and so they are asking for all those stat decs.
We are just in the process of doing the change management piece that will go
with that to make sure that everybody is aware of it and submitting it and that
we will follow up with that.
Chair
Wotherspoon: — The statutory declaration then, so
just to clarify, it applies to every transaction, not just every new owner of
land. Is that correct? Every transaction.
Kim McLean:
— Correct. What we receive from the board is every transaction that occurs on
rural municipality land in the province. And so all of those transactions,
whether it is an inheritance or an estate planning where it transfers from a
father to a son through an estate, they would require that at that time as
well.
Chair
Wotherspoon: — And can you speak about the process
to develop what’s required in that statutory declaration? We’ve had shared some
of those components here. We recognize that deals can be organized in a very
complex way by way of their financial structure and legal structure.
Kim McLean:
— So the statutory declarations are the tool of the board. And it is all
through legislation the questions that they are allowed to know. The Act allows
for it to be voluntary. The board has made the choice to make them . . .
We are moving forward requesting them all, and then it becomes mandatory. The
board created the tool themselves for what they needed to ensure that
compliance is in place. The board went through the legislative direction in who
is allowed to own land, the criteria that was needed, and used that to help
them answer their questions that they need to feel confident in the compliance.
We did work with the corporate registrar
to make sure that we were asking questions that would align with The
Business Corporations Act, make it so that it was very straightforward for
corporations and individuals to fill out the form. So the form itself really
leads through the questions, whether it is a pension plan, whether it is a
trust. And so it goes back to answer the questions that the Act lays out to
make sure that they would be compliant with that. So because it is the board
tool, the board created the form that would meet their needs.
Chair
Wotherspoon: — Was there a consultation with the ag
community, but importantly as well the legal community, that have knowledge as
to how deals have been structured that aren’t in keeping with the spirit and
intent of The Farm Land Security Act? You know, in simpler terms, those
that have knowledge about how deals have been structured to get around our Act?
Amy Standish:
— So the statutory declaration, as it is currently formed — and to Kim’s point
earlier on how it kind of goes through the questions in the Act, so aligned
very much with the current legislative framework . . . The board
itself, different than say the ministry or government, would not go out and
necessarily consult but certainly engage with, through their relationships and
their resources that they have available to them — whether that’s legal
counsel, the corporate registrar — to kind of go through and make sure that
they’re meeting those needs.
[10:45]
I think as the next step, though, from
the ministry standpoint and working closely obviously with the board, is
thinking about that new advisory committee. And so this is the statutory
declaration revisions that we’ve seen to date to kind of enhance and make sure
that there’s compliance there. But obviously we will be looking to that
advisory committee as well to say, is this meeting the needs, are there other
things, as they go through that more formal engagement process to seek further.
So always looking ahead, to your point
of it’s an improvement today, the statutory declaration. And I would just say
kudos to the board and the board staff who have put a lot of time into kind of
improving that process. But obviously looking forward to more analysis and
recommendations coming through that advisory committee.
Chair
Wotherspoon: — Yeah. No, and we’ve got no end of
respect for the role and function and the team at the Farm Land Security Board.
And I’ve certainly given it huge credit over the years as we’ve offered up, you
know, serious criticism of the lax enforcement by the province and the current
environment that has allowed a real risk for our farm land security laws or our
farm land security Act to be breached and compromised. So thank you very much
of course to that team. They’ve needed resources and teeth for a long, long
period of time.
But it is going to be critical that a
statutory declaration in fact, you know, provides the information that allows
the types of deals that could be structured to breach the laws and not be
caught, to make sure that that information’s collected. And certainly there’s,
you know, those within this province and beyond that would have knowledge and
expertise in how those deals are structured. I think it’s critical that they’re
engaged in this process to make sure, in fact, that we’ve got an effective
tool.
I’ve
got a question with respect to the . . . Some of this is kind of as
we move forward. With respect to the statutory declarations or audits or
reviews of landownership across the province, is there anything that’s being
done to review current landholdings for integrity or to make sure that they’re
in keeping on this front? So to go back and look at . . . And it’s
maybe a risk-based approach. I don’t know exactly what tools would be utilized.
Is there anything that’s being done to go back and review land that’s been
acquired over the last number of years?
Amy Standish:
— Thank you. So you were absolutely right that for the most part it is risk
based. And so we always encourage — and you’ll hear us say it lots and others
say it lots, about when there’s complaints — to please forward them in and have
kind of an email that we flow those through to make sure that the board gets
those. And so when they do get complaints in, the board has the authority then
to request a stat dec and use all of those legislative tools that we’ve kind of
gone over. They would all be available to them on that risk-based approach.
One of the other things, and I guess a
bit of a new — not new — process, but they continue to regularly monitor. And
there’s different ways. So at the board’s discretion they can go to any of
those current landholdings and take a look, whether that’s requesting more
statutory declarations, doing a little bit more digging on that side. And so,
yes, risk-based complaints, but also board’s discretion. I won’t call it an
audit, but kind of audit based. You can kind of frequently go back and make
sure you’re revisiting some of those existing landholdings just to make sure.
Chair
Wotherspoon: — Thanks. And when I say risk based,
like certainly I respect that a complaint should be acted upon, and I respect
that you have the independence as a board to go back and review. But risk based
as well when you’re going out and reviewing, sort of, landownership in the
province and some of the changes that are occurring. Maybe it’s possible to
have statutory declarations on all of the land in the province going back. So
maybe that’s a possibility. It would provide you some solid information.
If that’s, you know, too cumbersome or
not realistic, maybe some sort of review on the larger acquirers of land in the
province, and going back and doing an audit and review and statutory
declarations, ensuring understanding of ownership and capital and financing
structures on those, in this case, might be some of the larger entities that
are growing rather quickly.
And I think this is important for lots
of reasons because there’s a lot of concern out there in this province about
this matter. And folks, you know, may even have aspersions around a farm that
may be growing rather quickly, and I think it’s important that we have the
information to be able to ensure integrity on these fronts. It’s also then . . .
If someone’s acquiring land in keeping with the laws, it’s important to their
reputation as well.
Now if someone’s growing really quickly
and competing with an unfair playing field, then that needs to be acted on and
enforced. Now to the questions of enforcement because it’s rather critical here
around sufficient penalties and impacts to deter, I think, as my colleague was
describing here, sort of this attempt to breach our laws.
So I guess I have a question with
respect to when an order to divest has occurred. Does the entity right now
retain the profits on that land? So if an entity . . . Let’s say you
found someone who had acted as a bad actor eight years ago acquired land. Now
you’ve got an order to divest that land. Does that entity or person that acted
in bad faith and breached the laws then retain the profit in the sale of that
land? Which if you look at a period of time in this province of a decade or
something for a landholding, we’re talking about millions and millions of
dollars that they would be then retaining as a profit.
Amy Standish: — So in this situation kind of going through
the order to divest, lots of these cases would go before the courts, and so
some of the court proceedings, what comes through that. One thing that I would
point you to right in the — I think I’m in the Act, under the “Enforcement of
limitation of land holding” — I think it is 5(d). Just to read out:
An
order for the sale of the land holding held in contravention of this Part and
the distribution of the proceeds from the sale to those persons that may be entitled
to the proceeds.
So it is not specific but there is
pieces in there as the court is moving through to determine kind of what is
happening, if land is actually being held in contravention of the Act. And so I
can’t comment on any specific cases, but just that those matters do go before
the courts, to take a look at the individual circumstances and the tools within
the Act.
Chair
Wotherspoon: — Just clearly we need sufficient
penalty and consequences to deter illegal activity. And not to delve into kind
of the policy field debate or discussion at this table, but certainly those
penalties need to be sufficient; those impacts do.
And certainly it seems completely wrong
to me that someone could act illegally, breach laws, organize a complex
structure to do so, and then retain millions of dollars of profits. You know,
it should be clear from my perspective that there should be forfeiture of those
profits on divestment, and certainly sufficient fines as well. I see fines
being identified of 10,000 bucks; well that’s nothing. If you’ve held thousands
of acres of farm land for 1, 2, 3, 10 years and experienced the inflation
that’s there, 10,000 bucks as a fine is absolutely no deterrent at all.
I see my colleague has a couple more
questions here as well. MLA Gordon.
Hugh Gordon: — I concur with the Chair in this regard. You
know, just I think it’s clear that more tools are required. I think you guys
need more tools in your tool box to do your job more effectively.
You know,
whether we were talking about, like . . . Okay, statutory
declarations are now being received going forward, you know, irrespective of
whether you look back. But you know, how robust is it? Like we’re determining,
like someone isn’t just a nominee that, say, a Chinese-owned corporation
decides to pay a Canadian resident whatever amount. Would you please be our
nominee in this land transaction? And so on paper, by all accounts, even with
the statutory declaration, they’re a permanent resident. They’re a
Canadian-born citizen. They’re a Saskatchewan resident. That all looks great,
but at the end of the day the beneficiary, it’s not them.
So you know,
that also begs the question of what are you doing, or what can you do, to
ensure a lot of these transactions, for example, are FINTRAC [Financial
Transactions and Reports Analysis Centre of Canada]-compliant, to ensure that
the funds that are being used to acquire this land aren’t coming from either
proceeds of crime or from some other foreign entity?
Amy Standish:
— So I have some resources here I’ll kind of refer to, but I will mention too
when we look at purchases of farm land, there is the board in that process
there. There will be others in the process of a sale, whether it’s the Realtors
Association as well, that have some responsibility to kind of take a look at
some of those things as well.
So what I will say too is that all the
money used to purchase farm land in the province must be personal resources, a
registered Canadian financial institution, or private lending from a Canadian
or permanent resident. So board staff will ask for those statutory declarations
to gather the additional information where there’s questions as to the
financing of the land. And each statutory declaration will ask where the
financing was obtained.
Upon submission to the board, board
staff will then review for any red flags or begin to explore further. They can
monitor all financial instruments registered on title, which is one way. When
there may be concerns throughout the monitoring of the sale transactions, the
title will be obtained to determine what interests have been registered. And if
the board receives a complaint, the titles will be obtained to determine if
there are entities with registered interests as well.
The only last piece I’ll just mention is
the board has the authority to investigate suspected violations of
landownership again, and again utilizing some of those powers under The
Public Inquiries Act, 2013 which allows it to conduct hearings and gather
further information.
Hugh Gordon: — I appreciate that.
I also know that people have to declare things too and if they don’t, you know . . .
It’s just like the firearms registry, right. Like bad guys don’t register their
guns, right. So that’s another concern going forward.
And another concern might be also too is
how do you mitigate, how do you ensure that an entity — even a Canadian
corporation — that buys the land and for whatever reason is asked to divest it,
doesn’t flip it back to itself under another, you know, numbered company or a
holding company? You know, Canada’s corporate registry laws are pretty lax.
Like you can put anyone pretty much on a registry, is my understanding. And so
it’s difficult to determine who the actual beneficiary owners of things are.
That’s what I’m getting at. And so I’m not dumping this entirely on your
shoulders. I appreciate it’s a lot. But these are the things I hope that the
board is contemplating going forward.
[11:00]
I think you alluded to, in answer to a
question that I think the Chair had with respect to, you know, looking back and
trying to determine what the current state of farm ownership is in the
province, and I’m just going to ask you this: if the board has an understanding
or knows what percentage of Saskatchewan farm land is currently owned by
foreign entities, whether exempted or not.
Amy Standish:
— And so I will say just the way that we record our information, we don’t keep
the records in a way that we can kind of desegregate that way, and also just
with land changing every day it would be incredibly difficult for us to kind of
continue to track it that way.
Hugh Gordon: — Fair enough.
Perhaps if there was a process through ISC where we’re able to check off a box
with a statutory declaration, we could determine that going forward and then we
would keep real-time numbers. Just a hint.
Also I would imagine you . . .
Well maybe I’ll ask. Do you know what percentage of Saskatchewan farm land is
owned by corporations, Canadian or non-Canadian?
Amy Standish:
— So again, just the way that our data tracking works for monitoring the
Canadian versus non-Canadian enforcement and exemptions, we don’t have the data
point to respond there. It is something too, when we think about The Land
Titles Act and ISC, that’s something we could inquire with them to see how
they may track that.
Hugh Gordon: — Could I ask the
board to endeavour to acquire that information and provide it to the committee?
Amy Standish:
— So what I understand too is it is something we can ask the question and
understand what the cost may be as well. And so right now even the board kind
of getting the land transaction data, the lease data, that all comes at a cost
to government. So before any kind of commitment, I think we would have to
understand whether they hold that data in that form that we could pull, but
also what the cost would be. But we can certainly ask those questions.
Hugh Gordon: — And perhaps I’ll
get to ask it again in the future. Thank you.
Chair
Wotherspoon: — I’m going to come to MLA Pratchler
here. She’s got a question. I just want to be clear again with respect to the
very important role of the Farm Land Security Board and the important function
they’ve provided.
And we’ve entered in with some pretty
significant criticisms over the years and some, you know, entries here today.
And from my perspective that lands directly, just to be clear, not with those
at the end of this table but with the Minister of Agriculture, with the Premier
of this province. And that’s where . . . As far as the Farm Land
Security Board, they’ve needed better resources and teeth for a long period of
time to be able to fulfill their function and have done, I know, their very
best and played a very important role for many years with the resources that
they have.
I’ll kick it over to MLA Pratchler.
Joan Pratchler: — Thank you. Would
you be able to tell me how many conflicts of interest have been self-declared
since November 7th of 2024? Did all of those self-declarations include the
nature of the conflict, and did all of the self-declarers leave and return to
the meetings?
Amy Standish:
— So I’ll see if I can keep clear my stat reporting here. And so in one case
with the staff, they came forward probably six meetings since that time, at
every meeting disclosing the nature of the conflict, leaving and returning. And
in two cases with board members, there was two instances since that time, again
describing the nature of the conflict, leaving and returning thereafter.
Joan Pratchler: — Thank you. Can you
explain, if we look at page 8, recommendation that asks about . . .
Can you explain your definition of the board and the public’s interests being
met? What performance indicators are you employing? It’s recommendation no. 9.
It says, under planned actions, “This will continue to be a work in progress to
ensure the board and the public’s needs are being met.” What exactly would
those needs be, and how are you assessing them?
Amy Standish:
— Okay. And so at the board meetings, there’s regular new performance measures,
statistics, that are kind of reported to the board. And so to give you an
example, and some of these may be listed, but the status and the number of the
investigations, the timeliness of the transaction review — and so that was
something that we talked about a little bit earlier, where the board had asked
for that 30 days there within the week, and so board staff would come forward
and say, which date of the ISC transactions they’re at in terms of their review
— statutory declarations requested and received, and the board is having that
regular monitoring of the stat dec side of things as well as the exemptions.
And to give you a sense too in the
annual report, there are some new charts in there. Similar to the stats that
are happening with the board on a regular basis, the annual report will now
provide the public a bit more of that summary so you can take a look annually
and then start to compare year over year on some of those different statistics
such as — there’s one in here — the historical enforcement actions of the
board. That goes through the number of orders to reduce the number of
administrative penalties and the number that went into investigation, just to
give the public a little bit more insight into what that looks like.
Joan Pratchler: — Thank you. And one
last question from me is regarding recommendation no. 10. It recommends
that the land security board enhance its public reporting. And then on the
actions taken, I just want to know if you can give me an idea of what kind of
information is being withheld from publicly reported statistics and who decided
those should be withheld.
Amy Standish:
— And so in this instance it’s fairly specific and it was related to the
specific details of any active investigations that are under way. So if there’s
a complaint that comes in and the board is investigating that, we don’t want to
publicly put out those details because if it does happen to go before the
courts, that could be very problematic. So trying to maintain the integrity of
those situations so that the courts may deal with it if it reaches that point.
The other point that I would just
mention is, yes, we’ve done a lot of these updates. But we’re also working and
very soon updating the website, that a lot of these stats will actually be
updated after board meetings as well. So there will be more information coming
there, more public.
Joan Pratchler: — Thank you.
Chair Wotherspoon: — Thank you. A quick question here
before I kick it back over to another question here. And I suspect this
information might not be readily available, but I’m going to ask. So I would
ask that if it’s not, that an undertaking to be able to provide that back to us
as a committee. Often 30 days is often a window that the entity will commit to.
But
my question would be this: would you be able to provide us — and maybe you can
provide this information here — over a span of time, let’s say 15 years, the
number of orders to divest land that have occurred?
And then further to that, the number of
orders to divest that weren’t fulfilled in the end, so where there was an order
but that land was retained by the entity where they didn’t divest that land if
that was the case.
And then just on the other side of that
through that same period of time, let’s say 15 years, the number of fines and
the amount of those fines over that period of time for each of those fiscal
years, along with again a bit of that land description, so something basic that
speaks to the size of acres and region in the province.
Do you have information like that? I
know that’s asking for a fair amount that you may not have at your fingertips
today. Maybe you do. If not, you know, I’ll kick it to you. So either if you
have that information here today, wonderful. If not, could you commit to
provide that back to this committee within 30 days?
Amy Standish:
— If you give me one moment I can likely quickly tally something here for you.
Chair
Wotherspoon: — Okay. You came organized.
Amy Standish:
— And it may be easier. There’s some summaries at the top here, so I will read
this out for you. So the Farm Land Security Board again has the authority under
section 94 to issue those orders to reduce that to any non-resident who has a
land holding in excess of the allowed under the legislation, so that’s at 10
acres. Since 2016, 13 such orders to reduce were issued totalling 106,375
acres, and under section 93.1, the board has the authority to issue
administrative penalties for up to 10,000 if an individual or company
contravenes the farm ownership provisions of The Saskatchewan Farm Security
Act.”
Since 2016, the board has issued 15
administrative penalties totalling 88,500 . And again pointing into the annual
report — this is my plug today for anybody to read the annual report — is that
there is further those details. And they don’t go back to the 2016 date, but
it’s giving you kind of that recent glimpse into what some of those statistics
would be.
Chair
Wotherspoon: — Thanks very much. And then on the
2016 number and the orders to reduce or divest, what was the number of acres
again in those 13 orders?
Amy Standish:
— So the total there was 106,375.
Chair
Wotherspoon: — And were there any orders to reduce
or divest that weren’t fulfilled or acted upon?
Amy Standish:
— None recorded.
Chair
Wotherspoon: — Again I think it’s, you know, really
something we need to be looking at to make sure that someone can’t skirt the
laws, breach the laws, and then profit from it. So I think we need, you know,
stronger measures. It’s wrong that somebody can walk away with profits of such
an activity.
With respect to the information on the
fines, thanks for that as well. Do you have the number of acres involved for
the fines you shared? What were the fines again? 88,500?
Amy Standish:
— Yes, that total on the fines would be 88,500, and we don’t have the acre
breakdown. Again I think with the nature of some of the fines it’s not necessarily
an acre amount. Sometimes it could be, right, the submission of the stat dec
and things like that.
[11:15]
Chair
Wotherspoon: — Okay. Is it possible to look for
that information? Would that be something that you’d have the ability to
organize and provide back to the committee?
Kim McLean:
— The administrative penalties are often . . . The most recent ones
were for people failing to meet a condition of their exemption, and so it might
not necessarily correctly tie back to it, is the problem of correlation might
not be fair on that situation. There’s certainly acres that would be impacted.
We could go in and add those up, for sure, but it’s maybe not the most accurate
way to report it.
Chair
Wotherspoon: — Okay. No, that’s good. We’ll follow
up as well with the minister on these fronts. It’s just that it’s a question of
having, you know, sufficient consequences. So the ability for someone to profit
on something that’s in essence illegal or to have insufficient penalties just
is not a sufficient deterrent, you know, when you’re talking about the ability
to profit millions of dollars. And again this is all about making sure . . .
We have a law in place. Let’s enforce it. Let’s make sure we have a fair, level
playing field for Saskatchewan and Canadian producers that are vital to this
province.
And it’s just not right that if you’ve
got, you know, an operation, a producer operation that’s legal and looking to
grow and doing their thing and playing by the rules, if they’re competing
against an entity that’s acting illegally and with capital, whether it’s the
People’s Republic of China or billionaire dollars, or investment dollars from
far outside of Canada.
I don’t have any further questions right
now. I’ll kick it over to Gordon.
Hugh Gordon: — Now that the
board’s tracking foreign-leased land, has it discovered any lessees who were in
possession of land without any exemptions, and if so, what actions were taken
to rectify the situation?
Amy Standish:
— And so that review is under way at this time, and to date there hasn’t been
any situations where we have found those without the exemptions.
Hugh Gordon: — And I imagine that
would only pertain to registered leases, not perhaps to the situation where a
person has quietly or not-so-subtly subleased to someone without your
knowledge.
My next question is with respect to an
update, another recommendation that you implemented, no. 8, so formalizing
your procedures for the escalation of enforcement actions. I just noted you
said the board processes were further developed and documented. I’m just
wondering if you could provide some more details as to what that formalization
looks like, what your steps are, if you could explain that.
Amy Standish:
— As it relates to the escalation and the procedures here, I will say . . .
I’ll answer this kind of twofold. I think the first part is a lot of the
enforcement escalation procedures are actually outlined in the Act, and so it
was the board staff kind of taking what’s in the Act and formalizing the
process of how they move through that with the board.
The second really critical part of this,
that was spoken about a little bit earlier too, is the materials that are then
taken to the board and the different statistics, the status of different items
so that it can facilitate that conversation with the board. So take for
example, we’ve requested this many statutory declarations; we’ve received this
many; here’s the outstanding. Then that allows to facilitate that conversation
with the board to move through the tools that they have available to them in the
Act at that time.
And so that was formalized compared to
what it had been previously to make sure that nothing was kind of falling
through . . . to make sure that the board was always having that
regular conversation at every board meeting.
Hugh Gordon: — Yeah just, you
know, my concern there might be that even though you’ve formalized, you know,
bringing it to the board, what formal process is in place requiring the board
then to action those? That’s what I’m saying, and I guess you could rely on the
Act to say, you know, here’s what they can do, but we don’t . . . And
I’m not sure if you’ve detailed exactly the formalized process of what they
should or what that process says they should now be doing.
Amy Standish:
— And so what I will say there, yes, the Act kind of outlines it as I’ve
mentioned. And so in terms of the actual processed documents though, the board
staff would have gone through and updated to say, you know, specific to this
contravention and the Act approaching it with the board, here’s the tools
available to them. And it at the end of the day would be at the discretion of
the board whether they feel that there is a contravention in place or what
other further next steps or investigations they may direct the board to do.
And so those processes updated to kind
of walk through because it’s not always that linear, direct. There may be other
things that the board staff need to look into and things like that. So that’s
been documented in terms of the process.
Hugh Gordon: — Okay.
Recommendation number 10, with respect to publicly reporting all of your key
regulatory activities, I see you said you’re going to include additional
metrics for the general public. I was wondering if you could just describe what
those metrics are.
What I would be curious to know, as I
think the Chair has alluded to, it would be nice for the . . . And I
know that you’re keeping better track of and doing more statutory declarations
and keeping track of lessees, etc. It would be nice to know going forward,
perhaps in your annual report, perhaps you know, what percentage of farm land
was exchanged between Canadian and non-Canadian residents, how many exemptions
were given, what dollar value amounts those were, what acre amounts those were,
etc.
Could
you just maybe clarify what those metrics are going to look like for the
public? And if none of the things I have mentioned are going to be included,
I’m wondering if there is consideration that they might be.
Amy Standish:
— So for the updates that’ll be coming to the website, a good glimpse would be
again looking to the annual report, some of the things that will be broken down
after each meeting, the first being around the farm landownership statutory
declaration statistics — again so what has been requested, what has been
received, and some of those stats. When we get into the exemptions, there will
be the exemptions that have gone forward, the acres requested, and the acres
granted, with that level of detail.
And then there’s going to be — and I’ve
spoken a little bit about this — the enforcement actions by the board, so
providing that detail on any orders to reduce administrative penalties, and
then getting into any potential investigations, again including kind of those
status updates. Are they in process or have they been completed? And so those
stats will be updated regularly after each board meeting.
Hugh Gordon: — One last
follow-up. Will you also be including the amount of corporate-owned land in
those numbers or transactions involving corporations?
Amy Standish:
— And so that one would be up to the board’s discretion of whether they’ll look
to publish that. I think the complication, just in going through it initially,
would be when we think about corporations, are we thinking about the company
side? But also we have producers who may be incorporated and considered
corporations as well. And so just that would be complicated, but that would be
up to the board’s discretion of whether they look to put that on the website.
Hugh Gordon: — Thank you.
Chair
Wotherspoon: — No, thanks so much. And yeah,
certainly without a question you have many family operations that are
incorporated that are incredible producers and, you know, fully compliant with
the Act. So it’s just a matter of you getting some of the information, I think,
that’s been discussed. But I just want to say thanks again.
At this time I would seek a motion to
concur with recommendations 1 through 10 and note compliance. Moved by MLA
Crassweller. All agreed? Okay, that’s carried.
And with respect again to the Farm Land
Security Board, I want to thank all those that have served on that board for
many, many years — so past board members, current, and that team that’s over
there.
MLA Crassweller.
Brad
Crassweller: —
Sorry, Mr. Chair. I thought you were going to ask a few more questions if
anybody had anything. So I just want to say as well, thank you. I want to say
thank you very much for implementing all of those recommendations. Does my
heart good when I look at that, and really just implement and implement and
implement, and so fantastic job. So if you’d pass that on to the board, that’d
be awesome.
And then just for the record, I’d also
like to say we have an incredible Ag minister, so I’m happy that you guys get
to work with him because he’s a pretty awesome guy. So thank you.
Chair
Wotherspoon: — So thank you for the time today. ADM
Standish, do you have any final remarks for us here today before we turn our
consideration to our next chapters?
Amy Standish:
— Just thank you for letting us come. Thank you again to the auditor and her
staff for the work of the audit, and kudos again to the board and the board
staff, who I know have put a tremendous amount of work into this. So thank you.
Chair
Wotherspoon: — Thank you. We’ll take a brief recess
as a committee, and up next we’ll focus on the Saskatchewan Workers’
Compensation Board.
[The
committee recessed for a period of time.]
[11:30]
Saskatchewan Workers’ Compensation Board
Chair
Wotherspoon: — Okay, we’ll continue with our
considerations here this morning as the Standing Committee on Public Accounts.
We’re going to turn our attention to the Saskatchewan Workers’ Compensation
Board and the chapter of the auditor from the 2023 report volume 1, chapter 6.
It has a few new recommendations there.
I want to thank the leadership of the
Workers’ Compensation Board for joining us here today and for all their work,
along with their entire team. I’d invite CEO [chief executive officer] Germain
to offer just an introduction of the officials that are with him here today.
You can refrain from getting into the chapter right now, because we’ll go to
the auditor presentation there. Then we’ll come back your way. So brief
introduction.
Phillip Germain:
— Thank you, Mr. Chair. Good morning, everyone. My name is Phillip Germain, CEO
of the Saskatchewan Workers’ Compensation Board. With me today is our CFO
[chief financial officer] Dale Markewich and our chief legal officer Sophie
Ferré.
Chair
Wotherspoon: — Right on. Thanks so much to you all
for joining us here and for your work. I’m going to turn it over to the Provincial
Auditor to make presentation.
Tara
Clemett: —
So thank you, Mr. Chair, Deputy Chair, committee members, and officials. With
me today and to my left is Mr. Jason Shaw, and he’s the deputy provincial
auditor that is responsible for the portfolio of work that does include the
Workers’ Compensation Board. Behind me and to the right is Mr. Dane Reimer, and
he’s a principal in our office that was directly involved in the audit that we
are considering today. And then beside him, Ms. Kim Lowe, who is acting as our
liaison with the committee today.
Jason’s going to just present the
chapter on the agenda and it does include basically four new recommendations
for this committee’s consideration. I do want to thank the CEO and his staff
for the co-operation that was extended to us during our work. And with that
I’ll turn it over to Jason.
Jason Shaw:
— Thank you. In 2022 Saskatchewan ranked highest in Canada with 4.4 workplace
deaths per 100,000 full-time equivalent employees, considering all provinces
except Prince Edward Island and the three territories.
WCB [Workers’ Compensation Board] works
with Saskatchewan’s seven safety associations to assess and develop safety
programs to prevent injuries. WCB collects premiums from employers to fund the
operations of safety associations. In 2022 WCB provided about $11 million
to the safety associations to promote injury prevention and workplace safety.
These safety associations serve 18 different industries.
Our 2023 report volume 1, chapter 6
starting on page 79, reports the results of our audit regarding Saskatchewan
Workers’ Compensation Board’s processes to monitor safety associations’ use of
funding for injury prevention and workplace safety. We concluded for the 12‑month
period ended December 31st, 2022, the Saskatchewan Workers’ Compensation Board
had effective processes except in the four areas of our new recommendations to
monitor safety associations’ use of funding for injury prevention and workplace
safety.
In our first recommendation on page 87
we recommended Saskatchewan Workers’ Compensation Board formally document its
review of key financial planning information provided by safety associations,
including discussions with safety associations and resolution of any identified
issues.
WCB staff reviewed the annual funding
applications from each safety association each year; however we found staff did
not document sufficient evidence of these reviews, including any follow-up
questions, concerns, or requested changes. Without sufficient assessment of
budget information received, WCB cannot demonstrate whether it determined
safety associations’ planned use of funding was sufficient. It cannot show
whether it identified any issues and took appropriate actions to address them.
In our second recommendation, on page
89, we recommended Saskatchewan Workers’ Compensation Board set detailed
guidelines on eligible expenses for safety association funding. WCB set its
expectations for what safety associations use funding for in its annual funding
agreements. However the agreements and other available guidance do not include
specific expectations for eligible costs, that is, costs that it considers
reasonable for the purposes of providing programs and services to employers to
help reduce injury rates. Nor does it set costs it considers ineligible, for
example, using funding to purchase alcohol at events.
Also, WCB has not set expectations on
what types of costs, if any, the safety associations should use WCB funding for
when safety associations provide services to employers outside of the employers
related to the industries of each safety association. Not having formalized
expectations about eligible expenses increases the risk that safety
associations may use funds for unnecessary purposes that do not contribute to
reducing injury rates or do not add value to the safety programs and services
specifically for the employers of their industries.
In our third recommendation, on page 95,
we recommended Saskatchewan Workers’ Compensation Board formally evaluate the
key performance results reported by safety associations to determine whether
performance meets planned expectations and resolve any identified issues. WCB
staff are expected to evaluate whether the performance measures included in the
safety association’s annual report are the same as indicated in the funding
application, data collection methods are appropriate, all expected information
is included, and explanations for variances are reasonable. Staff are to flag
any identified issues for escalation. Because we found staff do not document
evidence of these reviews, we were unable to assess whether staff completed
them or whether WCB was satisfied with the results of the safety associations
reported.
We examined three safety associations’
2021 annual reports on performance outcomes. We found three safety associations
had appropriate performance measures related to injury prevention, injury
reduction in 2021. However we found issues with the performance reporting of
all three. For example, one safety association only had met 5 out of 12
performance measures in 2021. The remaining four safety associations did not
have appropriate performance measures relating to injury reduction in 2021,
thus it was difficult to evaluate whether those safety associations’
performance contributed to injury reduction.
Without documented evaluation, WCB
cannot demonstrate whether it determined safety associations’ results and use
of funding were sufficient. In addition, it may not identify issues it
considers to be non-compliant with its funding agreements and take actions to
address issues.
In our fourth recommendation, on page
96, we recommended Saskatchewan Workers’ Compensation Board periodically verify
safety associations provide key information such as financial statements,
budgets, and key performance measures to employer members. Through the funding
agreements, the safety associations are required to keep their employer members
updated with key financial, governance, and performance information.
WCB did not have a formal process — for
example, periodic audits — to verify safety associations complied with these
requirements and made these documents available to employer members, for
example, on the safety association’s website. We found three of the seven
safety associations did not make all required documents available to members.
Examples included annual reports and budgets, three-year strategic plans, and
safety association bylaws.
Without effective processes to verify
safety associations make key information available to employer members, there
is a risk that certain employer members do not have sufficient information on
how safety associations utilize their premiums to provide services.
Additionally members may be unaware of services available to them which can
help reduce injury rates.
And thank you. That concludes my
presentation.
Chair
Wotherspoon: — Thank you for the presentation, the
focus of the work. And I think we’ve got four new recommendations of course
we’ll consider too. I’ll turn it over to CEO Germain to provide some remarks
and then we’ll open it up for questions.
Phillip Germain:
— Thank you, Mr. Chair, members of the committee, and thank you to the
Provincial Auditor, Ms. Clemett, for the work that you do and your team have
done and continue to do.
When the Office of the Provincial
Auditor initially released the report in 2023, the WCB accepted all of the OPA
[Office of the Provincial Auditor] recommendations and we got to work
addressing those gaps that were identified. The OPA report was a catalyst for
us which became kind of transformational in terms of our relationship between
the WCB and the Saskatchewan safety associations and their corresponding rate
code members.
WCB started the transformation journey
with the safety associations by reviewing and updating the safety associations’
financial reporting, the policies related to that, contractual compliance
requirements, their annual reporting process to us. We also negotiated new
terms and conditions within the funding agreement to support the reporting and
process improvements and those expectations.
The safety associations’ performance is
assessed based on standards outlined in these guidelines and is verified and
documented through program evaluations. Additionally governance training has
been delivered by a third party to the safety association board of directors
and their administration.
Finally, the WCB’s internal audit
department has recently formally provided notice to the safety associations
that they, along with a third-party audit firm, will be conducting compliance
audits in 2026.
So with those opening remarks, I would
be happy to address any questions from the committee.
Chair
Wotherspoon: — Thanks so much, CEO Germain. And
thanks as well to those that have taken the actions that are reflected in the
status update and those that put together the status update. At this time I’ll
table that. That’s PAC 57‑30, Saskatchewan Workers’ Compensation Board:
Status update, dated October 16th, 2025.
Looking to committee members that may
have questions. MLA Gordon.
Hugh Gordon: — Thank you for
coming today. Just wondering if you could tell me, what sort of criteria are
used in the review template, and who developed these criteria, and have you
solicited feedback from staff and clients on their effectiveness?
Phillip Germain:
— So the criteria, so there’s different levels of evaluation that we use.
There’s an annual review around funding. Every August we formally meet with the
safety associations. They submit a funding request. That funding request is
reviewed, along with all the criteria related that we talked about and that was
suggested within the report.
So all of that information is gone
through in detail and documented every August. There is a template that’s
actually used and documented. I don’t have it with me but we can provide it.
Following those meetings, there’s additional follow-up meetings to make sure
there’s understanding and alignment in terms of finalizing the related budget
requests or funding requests, and the expectations associated with those
funding requests.
So that’s an annual basis, and then
there’s quarterly reporting that happens to us that’s reviewed. The safety
association provides us quarterly reporting, and we review that quarterly
reporting against the expectations that were laid out during the August funding
meetings.
In addition to that, as indicated here,
we have our internal auditor along with an independent auditor that will go in
and review compliance against the funding agreement, the expectations. Because
sometimes even if you get an audited financial statement, it doesn’t
necessarily tell you that that money was spent for the intended purposes. So
that third-party verification is another layer to make sure that the reporting
that we’re getting is in fact accurate.
Hugh Gordon: — With respect to
recommendation no. 2, the guidelines for eligible expenses, I know you say
you’ve developed detailed appropriate guidelines and expectations. I’m just
wondering if it’s gotten very specific as to what kind of line items actually
would qualify as an eligible expense and/or if you have identified what may
qualify as an ineligible expense and made that clear with the associations.
Phillip Germain:
— That’s a good question. So the guidelines that were developed — it’s a 50‑page
document — that were created with the safety associations in mind . . .
Obviously when you talk about changing the expectations, they want to be part
of the conversation and rightfully so.
So we brought them in and we also had it
facilitated. The establishment of those guidelines were facilitated by a third
party. Meyers Norris Penny came in and facilitated all of the discussions and
expectations. We have a governance expert that was brought in as part of all of
those conversations to understand from a non-profit perspective — WCB
essentially being a non-profit insurance company, and the non-profits
themselves that were meeting kind of all the expectations — that the money is
in fact going to be used for intended purposes.
[11:45]
Within the guidelines themselves, I mean
I can go through the details of them, but they do lay out expectations of kind
of where funding can and cannot be spent. I’m just trying to find the
exceptions. There’s a mediation process as well built into this, in terms of if
there’s a misalignment or a misunderstanding, we can do mediation to try and
resolve it. Because these guidelines are brand new, and we don’t necessarily
expect that we’ve probably got it 100 per cent right the first time, so it
might take a few rounds to kind of nail this down.
Different categories of use of funds
include training and education, marketing and communications, research and
development, consulting services, advocacy, administrative expenses, salaries
and benefits, technology and infrastructure, travel including mileage,
professional development, having industry meetings, gifts, and then . . .
So those are the categories that were listed in terms of the expectations of
what could be spent and what that looks like. But I can always share the more
detailed documentation if that’s needed.
Hugh Gordon: — No, I think that
suffices. It sounds like you’ve got a robust oversight in this regard and that
it seems that you’ve left the door open to mediate items that might become
questionable. And you seem to have a grasp about how to detect those in those
instances. So thank you for that answer. Right, it’s a start.
Phillip Germain:
— Yeah, thanks.
Chair
Wotherspoon: — Any further questions? MLA
Pratchler.
Joan Pratchler: — It sounds like you
had a fair amount of consultation with your groups before you came up with the
guidelines as well in that session that you just outlined.
Just wondering. Mediation, education,
those are some of the things you mentioned in order to support the new way of
doing things. Is there anything else you have in place that you might want to
talk about to ensure compliance with the new guidelines?
Phillip Germain:
— There’s probably one other piece, over and above, kind of the third party
through our internal auditor, and a third party going in and just assuring that
the documentation that we’ve got is in fact backed up by evidence.
In addition to that, we actually meet
with the safety associations on a quarterly basis as a group, and we talk about
all of these things in terms of funding agreement expectations, performance,
challenges. So we have a regular cadence meeting with them establishing the
relationship, but then also maintaining kind of the expectations.
Joan Pratchler: — Thank you.
Chair
Wotherspoon: — Further questions? MLA Gordon.
Hugh Gordon: — I’m wondering if
you could share how the full implementation of performance measures by all
safety associations . . . if you’ve been able to tell if it’s led to
reduction in workplace injuries, for example.
Phillip Germain:
— You know, it’s probably early to tell. Some of these things, you know, as
influencers, us as WCB aren’t directly in the workplaces that we’re trying to
influence. The safety associations themselves aren’t directly . . .
Well some of them are in the workplaces, but they don’t have their hand on the
wheel.
So you know, as matters of influence
through education, consulting, support, sometimes that takes a bit of time. But
I will tell you that when we started kind of these conversations at our level
back in 2015‑2016, there was a plateauing of injury rates in the
province. And that’s where we started to renegotiate the funding agreement and
start having expectations.
The report from the OPA was further
assistance in us trying to establish the right expectations for everyone. And
whether this is a direct correction or not, we are starting to see the injury
rates improve over the last couple of years.
Hugh Gordon: — Thank you for
that.
Joan Pratchler: — Is there an audit
firm for those seven safety associations?
Phillip Germain:
— Yes, each safety association has an independent audit firm. It’s different.
Each association and their board of directors — well really their board —
decides which independent audit firm. But there’s been a variety from Meyers
Norris Penny to KPMG to Deloitte to Virtus. It depends.
Chair Wotherspoon:
— MLA Gordon.
Hugh Gordon: — Just was wondering
if WCB invoices for safety association employers now show how much of the
premiums they paid actually go towards the safety association?
Phillip
Germain: —
Yeah, in particular, personally I really like that recommendation. And this is
something that we’re working towards through our system so that when an
employer sees their invoice from us, they see what portion of the invoice is
going to their safety association.
We are in the process of implementing a
new system for WCB. So we didn’t want to wire it through the old system, so
it’ll be coming through the new system which we expect to go live late 2025,
early 2026. So that’s something we expect to do through the new system.
Hugh Gordon: — Just was
wondering, what steps has WCB taken to ensure that it sufficiently analyzed
performance measure outcomes for your safety associations?
Phillip
Germain: —
Yeah, so it starts with the expectations laid out in that August meeting. So
those that we’re having more concrete conversations over and above, you know,
what’s the total outcome, you know, lower injury rates for the rate codes, but
more specifically, how do you expect to achieve that? You know, is it falls
from heights in construction? Like where are you targeting? And we monitor
those and have conversations.
It’s never a direct line. Sometimes it
takes a while for strategies to get implemented and have its impact, but we get
what I would say is pretty granular in terms of how are you going to reach that
overall target of lower injury rates within your industry.
Hugh Gordon: — Thank you.
Chair
Wotherspoon: — Any further questions, committee
members? Not seeing any, I’d welcome a motion to concur and note compliance
with recommendations 1, 2, 3, and 4. Moved by MLA Chan. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: — Okay, that’s carried. Thank you very
much for your time here today. CEO Germain, do you have any final remarks
before we kick you out of here for lunch?
Phillip
Germain: —
Well I appreciate that, but no. I want to sincerely thank the committee for all
the work that they do and in particular the Provincial Auditor. All of the
reports that we get are always helpful. They get us thinking differently, and
we genuinely appreciate all of that. So thank you very much.
Chair Wotherspoon:
— Okay, right on. Thanks so much. This committee will recess until 1 p.m. where
we’ll have the consideration of the Public Accounts volume 1.
[The
committee recessed from 11:52 until 13:01.]
Public Accounts 2023‑24 Volume 1
Public Accounts 2024‑25 Volume 1
Chair
Wotherspoon: — Okay, folks, we’ll reconvene the
Standing Committee on Public Accounts this afternoon, and we’ll turn our
attention to the Public Accounts volume 1 for the past two years. The
committee’s mandate is to review and report on observations, opinions, and
recommendations on both the Provincial Auditor’s reports and on the province’s
public accounts. And the review of the public accounts completes the
accountability cycle of parliamentary control over raising and spending of
public dollars.
This committee had reviewed the public
accounts in the format we’re going to go through here for the first time just
over a year and a half ago. It’s our intention to make this an annual practice.
This last year the election cycle intervened, so we’ll actually have two sets
of Public Accounts volume 1 before us here today, two fiscal years.
And as a reminder, the Public Accounts
procedure manual provides a general outline for how the committee should
structure its reviews. They’re focused on past expenses related to the year in
review or matters that impact those expenses; how revenues are collected and
accounted for; the integrity, appropriateness, and value for money of taxes;
the safeguards in place to protect assets from loss, waste, and
misappropriation; whether appropriate financial management controls exist; the
value for money the government receives when a Crown corporation or agency is
divested; the systems and practices used to determine whether transfer payments
are used for their intended purposes; how efficiently, effectively, and
economically government programs are implemented and whether they’ve achieved
their stated goals; whether expenditures are within the limits and purposes
authorized by the Assembly; and any financial management reforms in government
ensuring legislative accountability.
So like I say, we’re going to consider
the last two fiscal years of the volume 1 Public Accounts. And the way we’ll do
this here today, we’ll get a presentation first off from Finance, likely from
our comptroller and from our deputy minister. And then we’ll turn it over to
the auditor to do the same, whatever they care to present. Then we’ll open it
up to the members for questions.
So thanks to everybody that’s joined us
here today, all the officials that are in the room here today and all those
that are connected to the important work here today as well.
At this time I’d ask Deputy Minister
Hendricks to introduce himself, who’s also joined by our Provincial Comptroller
Hebert at the table there. But if they can introduce the officials that are
with them here today, and then whatever sort of opening statement or
presentation you care to make on the volume 1s for the years ’23‑24 and
’24‑25 respectively.
Max
Hendricks: — Okay. Thank you, Mr. Chair. On
behalf of the Ministry of Finance, thank you for the opportunity to discuss the
’23‑24 and ’24‑25 Public Accounts volume 1, which includes the
government’s summary financial statements and related financial statements
discussion and analysis.
As
you mentioned, there are several ministry officials. Joining me at the front
table is Brent Hebert, Provincial Comptroller, and behind me to my right is
Cullen Stewart, who is the assistant deputy minister of the fiscal policy
division. Directly behind me is Jeff MacDonald, who’s the assistant deputy
minister of the treasury board secretariat. And then to my left behind me is
Rod Balkwill, assistant deputy minister of the provincial treasury office.
Our ministry is committed to preparing
timely, high-quality financial statements on behalf of the government. Timely,
high-quality financial statements are the cornerstone of good accountability
and transparency. I’m pleased to report that the ’23‑24 and ’24‑25
summary financial statements were released in June of 2024 and 2025 and that
the summary financial statements received a clean audit opinion from the
Provincial Auditor.
I also would like to thank the
Provincial Auditor’s office and the relationship that we have with them, an
excellent working relationship, and we really value that as a ministry. So now
I’m going to turn it over to Brent, the Provincial Comptroller, to provide you
with an overview of the contents of volume 1 and the results of the ’23‑24
and ’24‑25 fiscal years.
Brent Hebert: — Thank you, Max. And good afternoon, Mr.
Chair, Vice-Chair, members, and members from provincial audit. My plan is to
provide you with a brief overview of the contents of volume 1 of the Public Accounts
and then give you a short review of the financial results for both fiscal
years.
Volume 1 is
divided into two main sections. There’s a financial statement discussion and
analysis section and the summary financial statement section. Together they
provide good accountability and transparency to the public regarding the
government’s financial performance and fiscal health. The financial statement
section begins on page 41 of both ’23‑24 and ’24‑25 volume 1s. They
start with an acknowledgement that government is responsible for preparing the
statements and that they are prepared in accordance with public sector
accounting principles and standards. They are approved by treasury board,
tabled in the Legislative Assembly, and then referred to your committee for
review.
Next is the
auditor’s opinion on page 43, and I’ll leave that for the auditor to present on
in a few minutes. I’ll note that the audit opinion, as Max noted earlier, is a
clean audit opinion, and the summary financial statements have always had a
clean audit opinion.
Financial
statements are next, beginning on page 47 of the document. A couple of
statements I would like to highlight are the statement of financial position,
or balance sheet, and the statement of operations, or what would be referred to
as an income statement, on page 48. There are some other statements that are
provided, then detailed notes to the statements starting on page 52, and they
are followed by detailed schedules to the statements.
Schedule 19 is
an interesting one on page 87. It describes the government’s reporting entity
and lists out all of the organizations whose financial results are consolidated
into these summary financial statements. There’s close to 200 organizations on
that list across government. It associates each of those entities with a theme
that’s used for preparing the expense section of the income statement that I
mentioned earlier. So using agriculture as an example and referring to that
section of schedule 19, there are seven entities whose financial results roll
up into the agriculture expense theme, including the Ministry of Agriculture
and Saskatchewan Crop Insurance Corporation.
Another
schedule I’d like to highlight is schedule 14 on page 82. It provides a good
breakdown of the revenue sources that make up the five revenue categories in
the statement of operations or income statement on page 48. It’s often one that
we get questions on when people are looking for additional information that
makes up our revenue categories.
Now I’ll talk about the financial
statement discussion and analysis section at the front of the book, beginning
on page 7. This is our version of the management discussion and analysis, or
MD&A, that gets used in the private sector. It’s intended to help people
understand and interpret the financial results. And it leads off with a
highlights section that summarizes results and reviews some of the key
indicators of financial performance.
Following that there’s a section that
deals with the assessment of the fiscal health of the government, beginning on
page 12. It assesses fiscal health by considering the sustainability of the
government’s spending and borrowing decisions, its flexibility to respond to
challenges and opportunities, and its vulnerability to financial risks.
And following that, beginning on page
17, there’s a section that provides details and specific breakdowns about
revenue, expenses, financial assets, and liabilities. The details section
provides some really good explanation for variances from prior year and
variances to budget.
And lastly, on page 38 for volume 1 ’23‑24,
page 37 for ’24‑25, there’s a section there about risks and uncertainties
that the government might be exposed to that are beyond its control.
So now I’ll review some financial
highlights for ’23‑24, and then I’ll move into ’24‑25. So financial
highlights for ’23‑24 . . . And I’m working from page 8 of the
document, “Highlights: At a Glance.” So revenue was $20.9 billion, an
increase of 1.3 billion compared to budget and an increase of
398 million compared to previous year. The revenue increase was primarily
due to higher-than-budgeted income taxes, PST [provincial sales tax], and other
own-source revenue, partially offset by lower-than-budgeted revenue from
non-renewable resources.
Expenses were 20.8 billion, an
increase of 2.1 billion compared to budget and an increase of
1.7 billion compared to the previous year. The expense increase was
primarily due to increased crop insurance indemnity claims due to droughts in the
province, increase in pension costs associated with the teachers’
superannuation plan, and increased demand for health care services and related
compensation increases.
That left us with an operating surplus
of 182 million, $835 million less than what was budgeted and
$1.3 billion less than the previous year.
Moving to the next line, net debt ended
the year at 14.3 billion, an increase of 588 million over budget and
a decrease of 251 million from the previous year. Just as a reminder, net
debt is the difference between the government’s financial assets — so cash,
receivables, etc. — less all of their liabilities that gives the government’s
net debt position. It represents how much money you need in the future to pay
for past transactions in advance.
For the most part, the government’s net
debt is represented by an investment in capital and infrastructure like
schools, roads, and hospitals. A small portion is related to operating results.
And if you’re interested in that breakdown, there’s a breakdown on page 10
under debt highlights, between operating and capital infrastructure. Lastly,
the accumulated deficit ended the year at $1.1 billion, $575 million
higher than budget and $480 million lower than the previous year.
In terms of ’24‑25 . . .
So I’ll move to ’24‑25 volume 1 now. Again working from page 8 in the
schedule there, “Highlights: At a Glance,” revenue was $20.8 billion, an
increase of 994 million compared to budget and a decrease of
137 million compared to the previous year.
The revenue increase was primarily due
to higher-than-budgeted own-source revenue due to tobacco litigation proceeds
of $400 million and higher-than-expected increases to corporate and
personal income taxes. These were offset by decreases in non-renewable resource
revenue, PST, fuel tax, and tobacco tax.
Year over year, the decrease in revenue
was due to a decline in taxation revenue and net income from government
business enterprises due to strong corporate income tax assessments in the
prior year and lower current-year results in the utility sector in ’24‑25.
Expenses were 21.1 billion, an
increase of 970 million compared to budget and an increase of
294 million compared to the previous year. Compared to budget, expense was
higher than budget primarily due to increased demand for health care services,
accrual liability for the removal of the fuel charge on residential home
heating, higher-than-expected costs for corrections facilities and wildfire
activities, and ratification of the SGEU [Saskatchewan Government and General
Employees’ Union] collective bargaining agreement.
Year-over-year expense increased due to
increased demand for health care services, negotiated salary increases in the
education sector, increased spending related to the child care agreement, and
increased spending on disability services. These increases were partially
offset by lower crop insurance indemnities due to improved crop conditions from
the previous year. That left us with an operating deficit of 249 million,
24 million less than what was budgeted and 431 million higher than previous
year.
Net debt ended the year at
15.6 billion, an increase of 102 million over budget and an increase
of 1.2 billion from the previous year. Similar to ’23‑24, the
government’s net debt is represented by an investment in capital infrastructure
like schools, roads, and hospitals — similar to ’23‑24. Lastly, the
accumulated deficit ended the year at 1.5 billion, 140 million higher
than budget and $413 million higher than the previous year.
To conclude my comments, I just want to
acknowledge our team in the Provincial Comptroller’s office, who put a ton of
work into preparing these statements each year. I’ve only been in this job for
a couple months, and already I’m seeing how much work goes into these
statements each year, definitely.
Similar to Max’s comments I want to
acknowledge the strong collaborational relationship we have with the Provincial
Auditor’s office. I want to thank this committee today for reviewing these
statements and asking questions. And I’ll turn it back over to you, Mr. Chair.
Chair
Wotherspoon: — Well thank you very much to our
comptroller and Deputy Minister Hendricks and the entire team here. Thank you
for the presentation. Look forward, I know, to getting some questions from
committee members.
Just on the point though of the actual
publication of the public accounts, I know that Saskatchewan is like a leader
right across Canada in the timeliness of getting those public accounts
finalized and then published. And I know it’s a massive undertaking, and I want
to commend everyone that’s involved in that work certainly through the Ministry
of Finance and to the auditor and her team as well.
[13:15]
And with that I’m going to turn it over
to our Provincial Auditor. Certainly she can introduce any officials with her
and provide a statement on public accounts as well.
Tara
Clemett: —
Thank you, Mr. Chair, Deputy Chair, committee members, and officials. With me
today is Mr. Trevor St. John, and he’s the deputy provincial auditor that is
responsible for leading the audit of public accounts.
So our office is required to audit the
Government of Saskatchewan and its use of public funds, and this does get
reflected in the government’s summary financial statements. Through our audit
opinions the Office of the Provincial Auditor provides the members of the
Legislative Assembly and the public with independent assurance that public
money is spent as presented and sufficient information and disclosures are
provided to inform users and the readers of the provincial government’s actual
financial results.
Our office follows generally accepted
auditing standards when we perform our audit and we form the opinion on the
government’s financial statements. The audit process involves collecting and
evaluating audit evidence. Auditors gain an understanding of key financial
controls supporting the preparations of the financial statements, and we also
look at the tests of the controls, that they are working as intended. For
example we assess the coordination of and the timely receipt of reliable
financial information for the purpose of the consolidation into the summary
financial statements.
Auditors also test a sample of
transactions, so through this process we can provide a high level of assurance
to users about whether the financial statements are fairly presented and free
of material misstatements.
The provincial government does follow
Canadian public sector accounting standards when they prepare the government
financial statements. Our audit assesses whether those financial statements are
presented in accordance with those standards. It is important for the
government to follow those standards to support credibility, quality, and
comparability of the government’s financial information.
For the year ended March 31st, 2024 and
’25, we issued unmodified or clean audit opinions. This means the financial
statements did comply with public sector accounting standards and there are no
material misstatements in the numbers or the notes presented in the financial
statements, which means any material or significant errors that were found were
corrected.
I would like to highlight that our
opinions were dated June 2024 and June 24th, 2025, which is one of the earliest
out of all of the provinces in Canada. And thanks to a very great amount of
hard work by the Provincial Comptroller’s office and a number of staff at my
office as well.
Although our opinion was unmodified for
March 31st, 2024, we did also include an other-matter paragraph in our audit
opinion. An other-matter paragraph is included when the auditor considers it
necessary to communicate a matter in the auditor’s judgment that is relevant to
the user’s understanding of the audit or the auditor’s report.
The other-matter paragraph noted that
the provincial government did not comply with the federal Greenhouse Gas
Pollution Pricing Act and pay all fuel charges to the federal government as
required from January to March 2024. This non-compliance did not have a
material impact on the financial statements for the year ended March 31st,
2024, but we noted that future period financial statements may become materially
misstated from continued non-compliance with the Act.
Our audit opinion is also a place where
we do report the key audit risk areas that required significant amount of audit
effort. The more risky these areas are, the more we obviously focus our work.
We include these as key audit matters in our audit opinion.
For the years ended March 31st, 2024 and
’25, the key audit matters in our opinions touched on three significant
management estimate areas: pension liabilities, income tax revenue, and
non-renewable resource revenue. Pension liabilities were $5.9 billion in
’24‑25; ’23‑24, 6.1 billion. Income tax revenue was
$4.8 billion in ’24‑25, 5.8 billion in ’23‑24. And
non-renewable resource revenue amounted to $2.6 billion in ’24‑25
and 2.4 in ’23‑24. These accounting estimates are subject to measurement
uncertainty, and as a result they are subject to management’s judgments, their
assumptions, and the information that is available at the time of the estimate.
So actual results may differ from estimates.
We do work to assess management’s
processes to make reliable estimates, like testing the accuracy of the
underlying data that was used to formulate the estimate, confirming the
accuracy of the estimate calculations and the reasonableness of the assumption
used. And in certain cases we may use experts to help assess the reasonability.
So for example when it comes to pension liabilities, there are actuaries that
do reports that help to support that estimate. Overall we did find that these
key accounting estimates were reasonable.
The government’s financial statements
alone are not sufficient to communicate the complete picture of the province’s
financial health and annual results. The government’s annual report, so Public
Accounts volume 1, provides explanations for significant variances from budgets
and prior years’ financial results. It does also provide data on key
performance indicators that focus on the province’s financial health. This
information is found in the financial discussion and analysis section, which
does precede the audited financial statements.
I encourage everyone to look at that
report and read the FSD&A [financial statement discussion and analysis]
along with the audited financial statements. The annual report allows the
public and this committee to determine whether public money was spent as the
legislature intended.
Demonstrating public accountability is a
key responsibility of public sector entities. Reporting accurate financial
results in the public accounts and our associated audit opinions show that this
plays a major role in fulfilling the government’s duty to be publicly
accountable and transparent. It is a key part of the government’s
accountability cycle, reporting the government’s plans or budgets, then closing
the loop by accurately reporting what actually happened.
That concludes my presentation.
Chair
Wotherspoon: — Thank you very much, Auditor, for
the work on this front and the presentation as well. And thanks for the
opportunity, to all of you, for entertaining questions from Public Accounts
members today.
At this time I’ll open it up to members
that may have questions. MLA Gordon.
Hugh Gordon: — Just so I
understand maybe on a point of order, Mr. Chair, we’re going to do a review in
sequential order for ’23‑24 and then go on to ’24‑25? Because
that’s how I intend to align my questions.
Chair
Wotherspoon: — That would be just fine for you to
operate that way, but no, we have both volumes before us right now. So just be
clear if you’re referencing a question that pertains to, you know, whatever
respective fiscal year, whatever report you’re focused on. We thought it could
be more fluid.
And one report builds upon the other. So
if you get into a line of questioning on, say the ’23‑24 report, it may
have limited the ability to pursue some questioning. So we’re going to have
both reports on the table, ask questions on both reports. And at the point that
we’re done with questions here, we’ll conclude consideration or look for a
motion to conclude consideration on both reports.
Hugh Gordon: — Thank you, Chair.
I’ll start with a question then. Thank you, gentlemen, for attending and for
all your hard work. I can sympathize somewhat. I was a financial crime
investigator in the RCMP [Royal Canadian Mounted Police] for a lot of years,
and I know what it’s like to get buried in mounds and mounds of documents and
financial statements and try to sort it all out. But I guess that’s why you’re
the pros.
I
just want to ask a clarifying question with respect to the ’23‑24 report.
On page 8 when we’re looking at some of the numbers here, I notice that we’ve
got net debt actually decreasing by 251 million from ’23‑24, but
there was a surplus of 1.581 billion in actual ’23. Is there an
explanation as to why we only saw a reduction in the net debt by only
251 million?
Max Hendricks: — Okay. So summary
financial statement net debt decreased by 251 million, as you mentioned,
mainly due to the operating surplus and remeasurement gain reported during the
current year, ’23‑24.
This decrease in net debt was partially
offset by a net acquisition of capital assets tied to the Government of
Saskatchewan’s continued investment in infrastructure. During ’23‑24 new
accounting standards were also adopted resulting in opening adjustments
impacting net debt. Net debt indicates the amount of future revenues that will
be required to pay for past transactions and events.
Hugh Gordon: — Fair enough. Would
it also include like special warrants that were signed, you know, after budget
to allocate for other expenses — health care, education, and the like? Is that
included in that or . . . [inaudible interjection] . . .
just refer you. It’s mainly capital asset acquisition and accounting standards
that were changed?
Max Hendricks: — It’s capital. There was no debt acquired to
operating. There is some standing on the books, but we didn’t take on any
additional debt.
Hugh Gordon: — I was also wondering — it might help the
committee understand just generally speaking — if you could speak to what the
factors were that contributed to the accumulated deficit going down year over
year in ’23‑24 and/or going up for ’24‑25,
right.
Max Hendricks:
— During that fiscal year, non-renewable resource revenue, in particular
potash, yielded quite high and so we were able to use that money to write down
some of our debt and improve our accumulated surplus position.
Hugh Gordon: — And for the
following year, I guess the decrease in the accumulated deficit . . .
Max Hendricks:
— Non-renewable resources weren’t as good the next year.
[13:30]
Hugh Gordon: — So we’re on a bit
of a roller coaster, is that right? Okay, fair enough. I was just wondering if
you could explain also, to give the committee a good understanding, of what
comprises our non-financial assets when we’re talking about them? I don’t
expect you to go into line item by line item, but just generally speaking, if
you could assist the committee?
Max Hendricks:
— So if you look at schedule 12 in Public Accounts, tangible capital assets
would be the primary explanation of that. They’re non-cash things. So that
would be roads, bridges, land, buildings, improvements that we’re amortizing.
Hugh Gordon: — Thank you.
Joan Pratchler: — And maybe you’ve
already addressed this, but I have a question about the non-renewable resource
revenue. If we look at, I’m just comparing both of those years, yeah, ’23‑24
and then this year as well. Is it potash, is the reason that it’s a billion
dollars off there?
Max Hendricks:
— Potash was high, both in terms of price but also in terms of corporate
revenue that year. And so it benefited us on both lines and so we had a
particularly good year in ’23‑24 with potash.
Joan Pratchler: — Okay, and then
obviously . . . [inaudible interjection] . . . Yeah okay.
Great, thank you.
Can you help me understand in ’23‑24,
and I suppose that would be this year as well, what is the “resource surcharge”
and “other” non-renewable resources comprised of? That resource surcharge. I’m
unclear.
Cullen Stewart: — Cullen Stewart, assistant deputy
minister, fiscal policy division. The resource surcharge is a section of The
Corporate Capital Tax Act specific to upstream production of oil, uranium,
potash, and coal. And so the rate varies depending on the resource, but it’s
essentially a percentage of the value of sales. So the composition of resource
surcharge revenue is primarily from the oil and gas sector and potash sector,
but there is also some revenue in there from coal and uranium as well.
Joan Pratchler: — Is that another
word for royalties?
Cullen Stewart:
— It’s in our non-renewable resource revenue. It’s separate from Crown
royalties or production taxes, so it’s listed as a separate line item. It’s
under The Corporate Capital Tax Act.
Joan Pratchler: — Thank you. If I
look at page 23 in the ’23‑24, could you help me understand the
restructuring of the distribution of gaming funds, and how has that affected
the decrease year over year?
Max Hendricks:
— In that fiscal year there was a change in the way that SLGA [Saskatchewan
Liquor and Gaming Authority] was managed. And so CIC [Crown Investments
Corporation of Saskatchewan] reorganized it and the money now — instead of
coming directly to us — goes CIC to government to the GRF [General Revenue
Fund]. So there was a restructuring of gaming revenue governance.
Joan Pratchler: — So the amount
hasn’t changed? It’s just the path it takes to get from point A to point B?
Max Hendricks:
— Yeah. We had a few upstart challenges, but now it should be on track.
Joan Pratchler: — And why was that
done in the first place?
Brent Hebert:
— So government looked at . . . The restructuring focused the
regulation of liquor and gaming with SLGA, but the operation of gaming
operations and other, you know, gaming business into LGS, Lotteries and Gaming
Saskatchewan.
So they created SLGA as the regulator
and then brought together the business of gaming into LGS.
Joan Pratchler: — Like under one
entity?
Brent Hebert:
— Yeah. Correct.
Joan Pratchler: — Okay, thank you.
Brent Hebert:
— That was the goal.
Joan Pratchler: — Okay.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — Just was wondering
if you could help me understand, explain the reasons for the utility rate
increases on page 23 of the ’23‑24 report.
Max Hendricks:
— There are a few different factors. One would be obviously if some of your
largest users of electricity are busier — so potash, natural gas, that sort of
thing — they buy more power.
Also SaskPower was able to get — and
SaskEnergy — favourable prices when they were buying some of the materials that
they use to produce electricity. So that year saw an increase in utility
revenues.
Hugh Gordon: — As a follow-up
then, was any of that due to like rate increases?
Max Hendricks:
— We can confirm that, but I don’t believe there was a rate increase in that
year.
Hugh Gordon: — Yeah, I would
think if it did, it had to go through the rate review panel and those would
have had to have been publicly, you know . . . I was just curious if
that was the case. My memory isn’t that great. Go ahead, Joan.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — Thank you. If we
take a peek at page 25 of the ’23‑24, there’s a section on fees. Fee
increases were up year over year and over the budgeted amount. Could you help
me understand the impact of the fee increases in health care and what those
fees are comprised of? Was it higher service volumes, out-of-province services,
EMS [emergency medical services]? Why would they have gone up?
Max Hendricks:
— Well there were two or three factors. Obviously when you have higher
utilization, one of the primary sources of revenue for the SHA [Saskatchewan
Health Authority] is long-term care fees. Also in certain years other provinces
will adjust their out-of-province reciprocal rates, and that will drive up
costs that we have to pay under reciprocal agreements. And then EMS as well. So
EMS increases from time to time the cost of providing that service, and also
with an aging population you have an increased usage of that.
Joan Pratchler: — And I’m wondering
a little bit about contracted positions in health care. Was there an increase
in cost in contracted positions like travel nurses, other kinds of contracted
positions that might have added to that increased cost in health care?
Max Hendricks:
— Well they did have increased labour costs. I’d have to direct that one to the
Ministry of Health. I’m just not current enough to answer it.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — Still with respect
to the ’23‑24 Public Accounts, other than the indication from the
numbers, are you able to provide any insight as to why more people were
utilizing SIS [Saskatchewan income support] and SAID [Saskatchewan assured
income for disability] programs that year? Does the department have any details
it can share?
Max Hendricks:
— Yeah, that increase is related to the federal wind-down of their programs
that they had implemented during COVID, and they came back onto provincial rolls.
Hugh Gordon: — Thank you for that. Can you explain why the
amounts for wildfires significantly exceeded what was anticipated that year?
Max Hendricks:
— So with wildfires, not unlike agriculture in terms of how we estimate crop
insurance, we look at the average over a period of years. And it’s a moving
average, so in that particular year we make an estimate about what that will
be, and it was . . . You know, sometimes it’s higher; sometimes it’s
lower, right? But one thing about using a moving average is that, you know,
we’ve seen obviously some increases in wildfire activity over the last few
years, as well as — although this year is really good for crops — some
volatility there. And so as we see that, that gets kind of built into the
number going forward.
Hugh Gordon: — It’s good to have
that kind of insight because, you know, by all expectations we’re assuming that
— and obviously this year might be a bit of an outlier — but that if it helps
move the mean higher over time, in other words the trend is being identified,
then it’s something you could try to keep ahead of. Correct?
Max Hendricks:
— Yeah, you know, we’ve made some significant investments in SPSA [Saskatchewan
Public Safety Agency]. We’ve purchased, as you know, new equipment and that
sort of thing to support their wildfire fighting efforts. And then this year I
think we had an $80 million special warrant to support the fire activities
this summer, but we’re still tallying up those costs because it’s still active
in some places.
Hugh Gordon: — Maybe while we’re on
the topic, if you can, for ’24‑25, maybe even prognosticating here to the
end of this fiscal year, do you have a rough estimate of how much the wildfires
have cost the province this year? Or is that something that’s still ongoing?
The assessment.
Max Hendricks:
— It’s still ongoing. We built in $80 million kind of based on what the
trajectory was at Q1 [first quarter], and at Q2 we’ll have an updated estimate.
As I said, they’re between some of the evacuations and displacements and such,
and we’re kind of catching up on where they are, all the accounting on that. So
we’ll have a final number in our Q2, where we’ll introduce that as a sups
estimate.
Hugh Gordon: — Thank you.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — What insights
might you be able to provide regarding the higher inmate counts in our
correctional facilities for ’23‑24?
Max Hendricks:
— I guess there are a few different ways and, to be honest, you’ll have to
speak to the ministry. But obviously one of the things, we’ve had to expand
capacity. We’ve opened up the Saskatoon remand centre because as more officers
have been added to the RCMP and municipal forces through the province,
obviously they’re catching more bad guys and so that has an impact. But when
they are incarcerating these individuals, when we’re kind of using existing
space, there’s more overtime, and so they’ve had to address that. But now with
the opening of the Saskatoon remand centre, that’s taking some pressure off.
But yeah, it’s been busy.
Joan Pratchler: — Thank you.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — I was also
wondering what details or insights you could provide with respect to the
higher-than-budget environmental liabilities for cleanup costs at uranium and
base metal mine sites in ’23 and ’24. I’m just curious how it was that the
province was left with those liabilities and how that arose.
[13:45]
Max Hendricks:
— So Gunnar and Lorado, as you’re aware, were first established during the
nuclear arms race by the federal government in support of US [United States]
efforts. In 2006 we signed an agreement with the federal government based on
what we saw and knew at the time.
Once we got in there, we found a number
of satellite mines that needed to be cleaned up, where they had gone and done
exploration off the main site. So this is obviously the subject of ongoing
discussions and litigation that we’re having with the federal government
regarding who owns the responsibility for this cleanup.
Right now we have SRC [Saskatchewan
Research Council] doing the cleanup. And you know, it’s a very, very remote
location and during the pandemic there were shutdowns and that sort of thing.
But it’s something that we continue to feel that the province has been left
with a significant burden.
Hugh Gordon: — Fair enough. And
you’re pursuing your options?
Max Hendricks:
— Yes.
Hugh Gordon: — I was wondering
also, for the benefit of the ’24‑25 Public Accounts, our five P3
[public-private partnership] arrangements, I see the amounts that are listed
there on page 78 of that report, ’24‑25. I see the amounts there
attributed to each of the five major P3 projects. I just was curious if you
could give us an idea as to how much longer those liabilities or those
arrangements will be in effect for the province.
Max Hendricks:
— So in the summary financial statements in the Public Accounts that we’re
reviewing, if you look at schedule 10, it talks to the end contract date for
each of those. So the Regina bypass, elementary schools, SHNB [Saskatchewan
Hospital North Battleford], that sort of thing. So most of these have a fairly
long time horizon, so you’re looking to the late 2040s, early 2050s.
Hugh Gordon: — Just to again
provide some more insight about those arrangements, those contracts, are there
any opportunities within the contracts to, you know, mitigate the length or
mitigate costs? You know what I mean? Is there any way to . . .
Max Hendricks:
— I wouldn’t be familiar with that. I’m not involved in the contractual
language. There probably would be at a price, but I don’t know that for sure.
Hugh Gordon: — Yeah. You know, I
think good management would include an option to mitigate those things and
leave options open for the government going forward to ensure that we’re not
incurring excessive costs, and when there’s opportunity to lower those costs,
we take advantage of them. Thank you for that.
My
last question for the ’23‑24 report touches on the auditor’s special note
that she had made mention of — the non-compliance with the paying of the
greenhouse gas pollution Act monies from January to March 2024, if I’m not
mistaken. I just was curious, what’s the state of that now? Is the government
in consultations with the federal government to determine how to repay that? If
so, what’s the schedule for that?
Max Hendricks: — Yeah. So as you
mentioned this was . . . Well I guess the carbon tax on home heating
was removed in January of 2024 after the Prime Minister did the same, provided
relief for Maritime provinces for home heating oil primarily. Like it would have
applied to us too, but we don’t have much here.
So our Premier at the time felt that,
you know, in the interest of affordability and equity, that that shouldn’t
exist on our home heating, so we booked 172 million, I want to say, for
’24‑25 for that. There are discussions with the new Prime Minister and
his cabinet around some of these issues related to that and other things
related to the carbon tax file.
Hugh Gordon: — And just so I
understand clearly, is this something that the department in its financial
statements, in its reports is going to ensure is included, is calculated, is
factored in, this potential liability?
Max Hendricks: — Yes. Yeah. As the auditor mentioned, we did
book . . . I want to say 172, right?
Brent Hebert: — I think it’s around 185.
Max Hendricks: — Oh, 185. Yeah, sorry. The 172 is better.
185. And so we did book that for that fiscal year as a potential liability.
That will continue to be adjusted until we reach a resolution.
Hugh Gordon: — And just curious, is that accumulating with
interest?
Max Hendricks: — Well it’s funded by the CRA [Canada Revenue
Agency], so yes.
Hugh Gordon: — So we might have to have some discussions
with them as well. Thank you. I want to turn our attention to the ’24‑25
Public Accounts. Just was wondering if you could talk about the factors that
contributed to the deficit in the financial statements and how that differs
from the previous year and the budget.
Max Hendricks:
— So there were several factors. The operating deficit, as you point out,
increased. The operating deficit of $249 million was a $431 million
decline from the prior year. And this result was an increase in expense
obviously and a slight decrease in revenue.
So one of the key factors was a
significant increase in health expenses due to increased demand. And this was
partially offset by lower-than-expected crop insurance payments — it was a
strong year for crops — and taxation revenue. You remember earlier when I
mentioned ’23‑24 was particularly strong for potash, and our corporate
income tax and revenue from that sector dropped off in the subsequent year, so
that would have impacted the number.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler:
— Could you speak to the vulnerability of our province’s finances, and what’s
the long-term consequences of accumulating deficits?
Max Hendricks:
— So first of all maybe I’ll start out by framing this question a bit. So right
now we have the second-lowest debt-to-GDP [gross domestic product] ratio in the
country, and in ’24‑25 we had the second-highest rating from credit
rating agencies. We are now in number one position. And so what we’ve tried to
do is several things.
I think when Rod and I meet with the
creditors, they’re concerned whether we are able to manage deficits, keep them
under control. And you know, they realize that sometimes there’ll be ebbs and
flows, right, but that we’re generally taking the necessary steps to do that.
They also look at what we’re spending
and why we’re acquiring debt and are taking on debt, and one of the key things
you’ll notice in our debt is most of it is for capital. And this is hospitals,
schools, roads, that sort of thing. We’ve had a significant population
increase, and so investments in some of that infrastructure are necessary.
But a big one is SaskPower and our
Crowns as well. So SaskPower in particular though requires significant capital
expenditure to not only maintain its current operations, but also, as we have
more industry, new mines going up, potash mines, that sort of thing, they
require more power. So they’re, you know, planning to meet demand. And then
there are also the things around, you know, what direction they’ll go to reduce
the greenhouse gas impacts of that generation. And so I think the credit rating
agencies see that as good debt . . . or not good debt but better
debt, you know. That’s kind of something that . . . You know, we’re
making a long-term investment.
You know, we’ve been I think also very
disciplined in our borrowing strategies and have actually expanded a bit in
terms of the markets that we’re going into. So primarily we had been focusing
on Canadian markets up until a few years ago, and that was for . . .
You know, we borrow in both short- and long-term markets. So in our long-term
markets that would be for capital; short-term, you know, any kind of thing that
has quick turnaround or whatever.
But a few years ago we went into the US
market, and two years ago we went into the European market, and we’re in the
Swiss market as well in a smaller way. But one thing I’ll say is I met with
investors in Europe, and they have a lot of confidence and are pretty bullish
on Saskatchewan, and think that there’s a bright future here. Many of the
investors that we met with ended up buying Saskatchewan bonds. And so, you
know, we think that we’re spreading the risk by going to different markets so
we’re not held to one market, and so that we can actually narrow the spread
that we pay on bonds that get the best price for Saskatchewan residents.
Chair
Wotherspoon: — Okay, thank you. MLA Crassweller.
Brad
Crassweller: —
Sorry, just to clarify. I was just trying to look something up here. So you
just said we have a number one credit rating? Is that what I heard you say?
Max Hendricks:
— Correct.
Brad
Crassweller: —
Thank you.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — Could you explain
what factors have contributed to the increase in the general debt year over
year? I’m thinking ’24‑25, page 76.
Max Hendricks:
— Yeah, and I think it’s kind of what I just talked about. Our operating debt
has been very stable, around seven, a little over 7 billion a year. But
it’s been our capital debt increases, and so some of that is executive
government, and a bigger share is the Crowns, who we do borrow for.
And so they obviously return that. We
call that self-supporting debt because they’re actually paying the interest
cost and that sort of thing through their charges to whoever. But the public
debt, which would be the capital that we purchase as a province — the
hospitals, the schools, that sort of thing — has also been growing, as I
mentioned.
[14:00]
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — Yeah, just to
expand on that a little bit, you said executive debt. Did I hear that
correctly?
Max Hendricks:
— Executive government.
Hugh Gordon: — So those amounts I
see under general debt, for government business enterprise debt, are you saying
that’s the provincial government’s operating obligations on behalf of Crowns?
Max Hendricks:
— Yeah, so I said executive government debt. So that would include your capital
plan debt and your operating debt. The Crown debt — SaskPower and all that —
those are GBEs, government business enterprises, and so they appear in the
summaries and so are reported on in the summaries, so we show their debt as
well.
Hugh Gordon: — So the $750 million government
business enterprise debt for SaskPower, that includes any capital acquisitions
we made on their behalf and any operating costs we’re assuming?
Max Hendricks:
— Okay, there. Rod jogged my memory here. So the total debt for SaskPower went
up from $8.65 billion to 9.389. The 750 million that you’re referring
to is every year we have to do a number of refinancings, we call them. So as
term debt comes due, we pay that off. We replace that debt. And so
$750 million was the general debt that we actually ended up replacing
through renewals.
Hugh Gordon: — So it’s another
way to assist the Crown corporation to do financing essentially is where that
comes from. Now is it separate and apart from what the tangible capital assets
described on page 10 are? And if they are, could you provide a bit more details
of what that constitutes?
Brent Hebert:
— Sorry, Member, are you referring to page 10?
Hugh Gordon: — Yeah, page 10 in
the ’24‑25 Public Accounts. Sorry, it’s just in the notation in the upper
right-hand corner. It just refers to a year-over-year increase primarily due to
operating deficit and net acquisition of tangible capital assets.
Max Hendricks:
— No, this is only — I’ll use the term again — executive government debt. It
does not include the Crowns.
Hugh Gordon: — So what is a
tangible capital asset perhaps is my question?
Max Hendricks:
— A tangible capital asset is like a road, a power station — I don’t know —
power line.
Hugh Gordon: — Is that in the
financial statements? Is there a breakdown of that that I may have missed or
forgot to footnote? Just for my . . .
Max Hendricks:
— On page 80.
Hugh Gordon: — Page 80?
Max Hendricks:
— Yeah.
Hugh Gordon: — Thank you so much
for that. Also if you could discuss the remeasurement losses noted on page 10
as well, and what constitutes those.
Max
Hendricks: — So as part of new PSAB [Public
Sector Accounting Board] accounting rules that were brought into place, we were
required to reassess the value of things like our dividend structures every
year, so we hedge . . . or sorry, derivatives. We hedge against
different funds. And so we have to reassess that every year, re-evaluate it.
Hugh Gordon: — Thank you for
that.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — What factors do
you foresee contributing to the province’s credit rating? And is there a
particular level of debt or deficit that you could see that credit rating being
affected by?
Max Hendricks:
— Like our last credit rating downgrade was in 2021 during the pandemic, and so
one of the things obviously that would affect a credit rating downgrade was
that, you know, if the credit rating agencies didn’t feel that the province had
the capacity to service that debt.
So one of the things that we as a
province try to maintain as kind of an anchor, a fiscal anchor, is we don’t let
non-renewable resource revenue account for any more than 15 per cent of our
total operating expense. And that would include debt servicing, all of that.
But it’s something that we have to keep a close eye on because a few years ago
we were borrowing at next to zero. It was very low, cheap money. But interest
rates have increased, you know, things like that.
So you’re vulnerable when you go to
those refinancings that I was talking about and such. And so it’s keeping and,
you know, it’s meeting with the creditors, which Rod does regularly, and
reassuring them that you have a strategy in place that can meet that. Now at
some point, you know, even a natural disaster like a crop failure or something
like that — complete crop failure, huge wildfire season, you know, whatever —
might affect their view of Saskatchewan’s stability.
Acting
Chair Crassweller: — MLA
Gordon.
Hugh Gordon: — Looking better there, Chair. Don’t tell him I said
that. Oh wait, it’s recorded.
My next question . . . Thank
you. So we’re now spending over $1 billion on debt financing costs. And I
just was wondering if the ministry’s made an assessment, is how much this is
impacting the province’s ability to pay for things like health care, education,
and other supports for people. Note on that would be page 32 of the ’24‑25
Public Accounts.
Max Hendricks:
— In ’22‑23 we were at 816 million and we’re at 951 million
now. Obviously that is something that we monitor closely because it does
. . . You know, as kind of an expense, when you look at your big ones
like health and education and that sort of thing, you know, you see financing
charges start to creep up. We need to be watching that. And so I would be lying
if I said, you know, it’s not something that we watch closely and think about.
Hugh Gordon: — No, and I
appreciate it. You know, we’re just starting to see the charges for interest on
our debt now starting to exceed a number of ministries’ expenses and amounts
that they spend. But yes, thank you for that.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — How does the
ministry anticipate the decrease in non-renewable revenue sources for potash
and oil and gas going to impact the government’s ability to manage their
finances coming up here?
Max Hendricks:
— I’ll start, but I’ll let Cullen weigh in too. He’s the resident expert in
this area. But you know, I think that we’ve seen a lot of activity in the
potash sector. You know, the tariff situation has kind of, it’s something that
we’re kind of monitoring. Not so much the tariff situation with the US — most
of our companies are CUSMA [Canada-United States-Mexico Agreement] compliant —
but things like, you know, it’s a renewable resource I guess, but you know,
canola meal, that sort of thing which are also big industries.
You know, when we look at estimating the
prices and our output, we don’t kind of shoot from the hip. We work with
private sector forecasters, Ministry of Energy and Resources to come up with
estimates that we feel are realistic.
So you know, in any given year we’re
going to be wrong on something, right. So at the beginning of the year we were
a little high on oil, and oil has been quite down this year. But by the same
token, potash has gone up and it’s been a stronger year than we thought it
would be. So as I said, we work with industry and we work with the Ministry of
Energy and Resources. And I’ll let . . .
Chair
Wotherspoon: — Maybe I’ll just say — and I
appreciate you indulging the line of questions as well — it’s maybe just
crossing that line just a bit from the mandate of what this committee is about.
So where the after-the-fact audit focused on the years prior, and focused on
the volume 1 in the years prior . . . I appreciate you getting into
the conversation of the current budget environment and the budget moving
forward, but for the most part I think the mandate of this committee in this
case is after the fact and a measuring up of where things were.
I think there’s an appropriate line of
questions that might get to the same place, where you could look at, sort of
reflect on the year prior as to where each of the different forecasts, you
know, where they’re off with respect to the actual, and a better understanding
of maybe what it means when oil price is up or down from budget or what it
means if WTI [West Texas Intermediate] and WCS [Western Canadian Select], if
that spread is tighter, measuring what the Canadian dollar impacts are if it’s
off from budget.
Because I think we could look at that
for the fiscal year ’24‑25 from this volume 1 and from that ascertain a
bit for purposes to reflect to the future. But I just thought maybe I’d pause
going too far down this road because it is getting into the more future-focused
and current fiscal environment.
Max Hendricks: — Or if you’d like,
Cullen can reflect on ’24‑25 for you.
Cullen Stewart: — Yeah, just following up on Max’s comments
there. In the ’24‑25 fiscal year oil averaged — and this is American
dollars per barrel — WTI, 74.49 compared to 77 at budget. So pretty close, the
budget forecast to the final total-year average.
The
light-heavy oil differential is something also, right. We have, you know, 40
per cent of our production approximately in Saskatchewan is heavy oil, so a
different quality of crude to the light oil or medium grades. There too the
budget forecast was pretty close with the year-end actuals. So the differential
as a percentage of WTI, light-heavy was 14.5 per cent at budget and 14 was the
actuals over the course of the year.
With respect
to potash, at budget — this is again US dollars — and KCl [potassium chloride]
tonne netbacks at the mine gate was 268 a tonne and the year average, 233.
The potash
market is a challenging market in the sense that unlike oil, which is a
ubiquitous product kind of globally and traded daily, potash has very specific
markets for different sub-grades of the product, and it’s not really traded in
the same way that oil is.
So they’re
both volatile for different reasons, and obviously we’re a large oil producer
in the context of Canada and maybe North America but not globally — compared to
potash, obviously we’re a huge producer globally — so the swings there can
impact us quite a bit but difficult to predict in terms of
market forces, inventory builds. Demand can swing pretty quickly depending on
ag commodity prices or local conditions in certain markets, like key ones being
China, India, Brazil, and the area around Malaysia and southeast Asia. Also
there you have another major competitor in Russia-Belarus, and their ability to
deliver potash into those markets, and competing with Canpotex for contracts,
can swing things in a tight period of time.
Uranium has been really positive over
the last number of years. I’ll just say after the Fukushima disaster, there was
a lot of downward pressure on uranium demand, as well as there was a lot of
nuclear weapons that were being converted into nuclear fuel which was pushing
down uranium demand.
[14:15]
In the last couple of years, uranium
demand has really picked up and that conversion of nuclear weapons has
virtually ceased. So we’ve seen really strong prices in uranium and would
predict that that would at least continue in the, you know, coming up in this
year.
I guess more broadly to your question
around long-term trends and maybe to the Chair, you’re always going to have,
you know, swings in the different commodities over time in the pricing, but
it’s really about adding new production. So when you look at Jansen or K+S
expansion in potash, or the potential for the, you know, Wheeler River or Rook
project in uranium, and then some of those new commodities like copper,
lithium, helium, rare earth elements hopefully adding to the mix too over the
medium term.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — Just a quick
follow-up on that too. So is there a range of commodity prices that you
anticipate it to fall into? I mean it’s hard I guess. I know you don’t nail the
exact number every year. But would it be more prudent perhaps to plan out a
range and then provide a calculation of how the revenues might look in
anticipation of a different range of prices, like a low-, medium-, and
best-case scenario?
Cullen Stewart:
— Yeah, there is a version of that that we provide in the budget, and it’s a
resource price sensitivity table. So it would say, here’s what the forecast is,
as Deputy Minister Hendricks had mentioned in terms of using average private
sector experts in some industry data that we get. And then from there, you
know, if WTI is a dollar more it’s . . . You know, I can’t remember
the exact number in our current budget. I believe it’s 17 million. Gives
that sensitivity. So if you want to do the calculations going either direction.
Generally speaking of course it’s an
all-else-equal. You know, there’s other factors that impact Crown royalty or in
particular production tax take. Similar with potash. We provide that revenue
sensitivity. And the other big one is the US-Canada dollar exchange rate, which
can impact resource revenue quite a bit if that swings a lot up or down
compared to the budget forecast. Thank you.
Chair
Wotherspoon: — And just for the thousands of folks
that are tuned in watching this here that might not have looked at the
assumption sensitivity page there, could you give just the numbers for the
fiscal year that we’re looking at here, the ’24‑25 for the difference in
the price of oil or Canadian dollar, and any of the other measures that you
have there as well? I think the differential on WCS and WTI. And maybe if you
can reflect as well on how that lined up in that, how that played out as far as
actuals in the ’24‑25 year.
Cullen Stewart:
— Sure. So I do have the numbers available in our budget document. So on page
45 of the ’24‑25 budget, we list the main resource sensitivities as a $1
American change in the price of WTI averaged over the fiscal year. It would be
a plus or minus 17.5 million change in oil revenue.
For $10 American per tonne netback KCl
averaged over the fiscal year up or down, it would be 52.6 million.
And then a one-cent change in the
Canada-US exchange rate — and this would be across all the revenue categories
under non-renewable resource revenue — would be 35.8 million, so combined
basically across potash, oil, and uranium.
In terms of the forecast to year end on
those pricing items and on the exchange rate, we’re very close on the pricing.
The exchange rate there was about a two-and-a-half-cent difference.
Chair
Wotherspoon: — MLA Pratchler.
Joan Pratchler: — Just looking at
page 19 in the ’24‑25, and looking at the chart at the top of the page
there, the one that is delineating the corporation income tax. So there’s quite
a shift from ’24 to ’25. Is that flux expected? How does one plan for that? Do
you sense that that’s typical?
Cullen Stewart:
— So maybe looking across the ’22‑23, ’23‑24, and ’24‑25
fiscal years for corporate income tax: ’22‑23 was 1.9 billion, ’23‑24
was 2.5 billion, and ’24‑25 was 1.4 billion. The reason why I
mention those years is, if you look at the ’23‑24 fiscal year, whether
this is for personal income tax or corporate income, it has three taxation
years that are impacting that one fiscal year.
So a taxation year is on a calendar
year. So the ’23‑24 fiscal year would’ve had what’s called a prior-year
adjustment. So basically once we get the actuals in from CRA — which come in,
in that case, near the end of March — there’s a prior-year adjustment that can
be positive or negative in terms of reconciling the final for the ’22 tax year.
And then you have the tax forecast for 2023 tax year, which is obviously
three-quarters of the ’23‑24 fiscal year, and for the ’24 tax year, which
is the final quarter of that fiscal year.
Our income tax forecasts build on
. . . Finance Canada provides income tax forecasts, and then we have
some calculations that we do, things like Saskatchewan-specific credits that
are applied or Saskatchewan’s allocation based on historical averages of total
Canadian taxable income.
So what’s happening across those years,
as Max had mentioned, in 2022 in particular the potash price. Other commodities
were very high as well in that year, but the potash price in particular went
very high very suddenly and lasted most of that tax year due to the
Russia-Ukraine war, and then some of the impacts there from sanctions imposed
in Europe and North America and some East Asian countries. So the price was
extremely high in the ’22 tax year, so then there’s a large prior-year
adjustment that got calculated in the ’23‑24 fiscal year.
So there’s income tax in particular.
Corporate income tax has some lag effects when there’s big booms or big busts
in certain sectors. And obviously for us the resource sectors are foremost, and
those swings can be quick and unpredictable in some cases.
Joan Pratchler: — Okay, thank you. I
didn’t realize that.
Chair
Wotherspoon: — MLA Gordon.
Hugh Gordon: — Transfers from the
federal government constituted 18.2 per cent of provincial revenues for ’24‑25.
Particularly for health care and education, you know, how important is this
source of revenue to ensuring the government continues to keep its financial
commitments?
And I’m just curious. The federal
government has pledged to tighten its belt and to find savings, and I’m just
wondering if you’re able to provide any insights into how that might impact
these transfers to provinces like Saskatchewan which rely on them to administer
our social services, health care, and education in the province.
Max Hendricks:
— Okay, maybe I’ll start and then Cullen can add anything he’d like. But they
are important. You know, when medicare began as a federal program, basically it
began in Saskatchewan, but when the federal government did it, it was 50/50
cost sharing. Now it’s down into the 24, 25, maybe even a bit less percentage.
There was an agreement struck a few years ago that saw the feds increase their
share, their escalator on the CHT [Canada Health Transfer]. But that will
expire next year, I think it is, and return to the previous level of 3 per cent
per year.
So I think it’s fair to say that the
premiers are lobbying the federal government to maintain, I want to say 6 per
cent escalator. Or 5 per cent? Yeah, 5 per cent escalator, because it is that
important. Like, we’re not unique — every province is experiencing expenditure
challenges in their health care system. You know, it’s a factor related
. . . Well, medical care is becoming more expensive generally. But
then also your population that you’re dealing with, the demographics are
changing as well.
Hugh Gordon: — Thank you.
Chair
Wotherspoon: — MLA Pratchler. MLA Gordon.
Hugh Gordon: — Yeah, I just was
wondering, on page 24 it showed that health care fees contributed to the
year-to-budget increase. What kind of health care fees were you referring to on
page 24? What did that constitute?
Max Hendricks:
— I think that was something that MLA Pratchler asked earlier. It is long-term
care fees because it’s a utilization-based thing — EMS fees, things like that,
that are charged directly to residents for their use of certain non-Canada
Health Act items.
Hugh Gordon: — So same as from
’23‑24, effective ’24‑25. Okay, thank you. I think that’s all the
questions we have, Mr. Chair.
Chair
Wotherspoon: — Thanks for that. Good questions.
Looking to members that may have other questions. You two got to quite a few of
the questions that I would have wanted to see asked, so great job, and a bunch
of others that I didn’t anticipate as well. Maybe could we just have a bit of a
breakdown on what the debt profile looks like right now for the province, and
what rate we’re looking at on the different amortization terms?
Rod Balkwill:
— Hi. Rod Balkwill, ADM of provincial treasury office. Thank you for the
question. So in terms of the rates . . . Well maybe I’ll back up. So
as you know, probably know, we borrow in longer term bond markets to fund
capital acquisitions, and generally we borrow in terms of 10 years or 30 years,
so longer term. And we borrow in shorter term markets if necessary to fund
operating deficits, which we haven’t had to do in the last three years. So
generally longer term markets, and the average term of that debt is about 15
years on average. We do borrow on behalf of the Crown corporations as well,
which also borrow in that 10‑ and 30‑year term.
So in terms of the cost of funding, it
moves every year, or daily, with global interest rate markets. And we’re
susceptible to that, but we can make efforts to lower the cost of funding by a
good credit rating or meeting with investors to help them understand the
benefits of buying Saskatchewan bonds.
The last few years, interest rates have
bounced around a little bit. As Deputy Minister Hendricks mentioned earlier,
we’re borrowing at some points close to zero, not quite that all the time, but
in very short-term markets during the pandemic. In the fiscal year ending in
2021, we borrowed at an average of 1.5 per cent, and that was for long-term
debt as well as some short-term debt. That steadily increased in 2022 to 2.4
per cent; in 2023 fiscal year ending March 31, at 3.7 per cent; and peaked in
the ’23‑24 year you’re looking at considering today at 4.3 per cent. So
the cost of borrowing did increase by some 3 per cent over those four years.
In ’24‑25, the other year you’re
considering, 4.19 per cent is our average cost of borrowing, so it has dropped
a little bit. And you would have seen that with the Bank of Canada lowering
interest rates, and that’s as the economy has slowed a little bit over the last
couple of years. And of course the tariff impacts have caused interest rates to
fall.
[14:30]
Chair
Wotherspoon: — Thank you very much. And then you
have the schedule of debt that’s maturing that’s in the volume 1, so that’s
there. And then could you just provide us, I guess for the last two fiscal
years, how much debt was rolled over, how much was matured and then replaced,
and then how much additional new debt for those years.
Rod Balkwill:
— In fiscal ’23‑24 we had 988 million of maturing debt that was
rolled over, and in fiscal ’24‑25, 927 million of debt that matured
and was reborrowed, if you like, in that year.
Chair
Wotherspoon: — And just on those, when you’re
reborrowing or replacing that debt, what was the rate for the debt that was
maturing, and what’s the new rate that it’s subjected to now?
Rod Balkwill:
— Okay, so in ’23‑24, that was a bit of an odd year. We had about, I
said, 988 million mature. We actually didn’t have to refund that because
we had cash left over from a strong year. But if we had, the debt that matured
was 3.26. We did borrow at 3.91 per cent for some other debt. In ’24‑25
the 927 million that matured was at a lower rate of 3.16 and we refinanced
at 4.31 per cent.
Chair Wotherspoon:
— Well thanks for that. Maybe just a follow-up question on crop insurance.
There was some discussion of agriculture and the different variabilities and
factors there. But could you speak to, for those two reports and those fiscal
years, what would be the surplus position for crop insurance. I know it’s been
deteriorated over the last number of years based on weather and crop
conditions, but if you could speak to that.
Max Hendricks:
— So their accumulated surplus at the end of ’25 was 144 million, and we
expect from early returns this year that that will grow this year.
Chair
Wotherspoon: — I know you review, you have the
different measures of vulnerability and sustainability, and I know you assess
all factors there. What sort of undertaking have you taken as Finance to assess
crop insurance and that surplus and its risk or vulnerability?
Max Hendricks:
— Yeah, in the year that you mentioned we added to the accumulated surplus,
like, there are several things that I guess are going on. Obviously you know,
the federal government’s a partner in this through AgriStability. Things like
our investment in reinsurance, you know, there’s always the ability to
restructure that a bit if we feel that there’s increased exposure. But that’s
pretty expensive for something that you may or may not use, and you have to hit
a pretty high claim rate to even be able to use it.
And so you know, the last few years,
producers share in this too. And we have been . . . You know,
obviously we have to increase rates by something to reflect the fact that first
of all the price of crops, canola, everything have been higher. We have more
seeded acres, more productive acres. And so I think there are several factors
that are built in to actually kind of make this program a little, you know,
kind of adaptable to the changes both in the farming sector, but also the
risks.
So as I mentioned, it’s a 10-year
average so they will capture some of these years. And it’s based on a federal
forecast, one that the AgriStability fund uses, so yeah.
Chair
Wotherspoon: — No, thanks for that update.
Obviously it’s an incredibly important backstop for producers, and its
sustainability is critical to producers across the province. It’s been on a
challenging trajectory, that surplus, right. It was up to a few billion dollars
not that many years ago, and these last five, six years we’ve suffered, you
know, significant droughts in many parts of the province. And we’ve seen the
impact on yield and on producers, and so it’s been drawn down to a really tight
situation where the surplus seems to be rather non-existent.
If you could speak to the
. . . And I understand that there’s some level of reinsurance that’s
acquired. I do understand that that’s fairly expensive, so there’s some
calculations around, you know, how much of an exposure you want to protect yourself
against. But could you speak in, I guess, these two previous years that we’re
looking to here, just what the strategy has been with reinsurance on that
front, and how much reinsurance is there and what that cost is?
Max
Hendricks:
— So in 2021, which as you know was a very difficult crop year, is the only
time, I believe, in 15 years that we’ve triggered reinsurance. And what we
actually received back, because the bar to access it is so high, it barely
covered our premium. Because it’s very expensive, reinsurance.
So I think we keep, you know, a bit
there and I don’t recall the exact figures. We haven’t adjusted it too, too
much, but it will probably have gone down a little bit just because, you know,
relative to other forms of support that we can give, that’s a relatively
expensive one.
Chair
Wotherspoon: — Can you speak to the amount of
reinsurance — I don’t know if that’s the proper way to describe it here — the
amount of reinsurance that we would’ve had on the books for the last two fiscal
years that you reflected in these two volumes, and the cost for that
reinsurance?
Max Hendricks:
— So we had $246 million of coverage. There’s a thing called the
attachment point, which is 16 per cent of the total liability, and we paid
$40 million in premiums for that. So it’s pretty expensive.
Chair
Wotherspoon: — Yeah, okay, thanks for that. Maybe
just touch on the tobacco settlement that came in that would be reflected in
the ’24‑25 volume 1, about $400 million that came in. And I know
I’ve commented on being careful not to get into sort of the budgets on a
go-forward basis. But when that settlement came in, I believe there was then a
schedule of payments that was agreed to, or committed to, for the out years
here for the amounts that were owed.
Could you speak to (a) when were you
notified that you were going to be receiving those dollars in that fiscal year,
and then too, what the commitment was or what the agreement is for the
settlement of the rest of those dollars based on the previous fiscal year here?
Max Hendricks:
— Yeah, so the agreement with the tobacco companies was reached at the very end
of the fiscal year. We had ended up booking the $400 million through
public accounts and attached it to that fiscal year. In ’25‑26 it’s
supposed to be 179 million. I don’t know if you’re seeing it yet or not,
but that’s our estimate of what we’ll receive.
Chair
Wotherspoon: — You’ve laid out the measurement of
vulnerability and flexibility on the fiscal side in the report here, and those
are good measurements you’ve laid out, I think, really good information for the
public. From your perspective and based on the last two fiscal years, what’s
the greatest, like, vulnerability, if you will, for the finances of our
province? Or what poses the greatest risks additionally from a fiscal
flexibility perspective?
[14:45]
Max Hendricks:
— Well obviously, you know, there’s a lot of uncertainty towards the south and
what happens there. You know, we through our Crown corporations were able to
support Evraz and kind of fulfilling some advanced contracts to keep them
rolling, but we’ve been hit by steel, that sort of thing.
As I said before, most of our stuff is
CUSMA compliant, but if we don’t negotiate a new agreement or a good agreement
for Canada . . . You know, we export about 50 billion of our
$70 billion GDP and most of that’s to the US, right, and so that’s a key
thing. Also just in terms of, as I mentioned, the Chinese government, you know,
and kind of its ongoing spat with the federal government. And so that is
impacting largely Saskatchewan more than anybody.
But you know, there are a few other
things obviously. You know, we’ve seen some volatility in kind of our wildfire
situation, ag situation, that sort of thing, both in terms of price but also
production, weather, and such. But you know, we expect that we can weather
those ones, but those would be kind of the big ones.
Another one that I worry about a lot is
a credit downgrade. I’m not saying it’s going to happen, but you know, that
does have a . . . It’s a pretty small impact. But you know, when I
think about it, Saskatchewan being at just under 14 per cent net debt-to-GDP
ratio, put that in perspective of the federal government’s, which is in the mid‑40
per cents. And so like we’re still in a fairly good position relative to other
provinces and the federal government even.
Chair
Wotherspoon: — Any further questions from committee
members? Thank you very much for that. Not seeing any, I’d certainly like to
thank our deputy minister and his officials here for Finance, our Provincial
Comptroller and officials here from that office, and of course our Provincial
Auditor and her team as well for the time this afternoon and for the important
work they do for the people of the province.
And I would welcome a motion at this
time that we move to conclude consideration of Public Accounts 2023‑24
volume 1 and Public Accounts 2024‑25 volume 1. Moved by Deputy Chair
Wilson. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: — All right, that’s carried. Any final
remarks before we shut this thing down?
Max Hendricks:
— Maybe I would just like to first acknowledge the work of our Provincial
Comptroller’s office and the auditor again for putting all of this information
— as you said, we’re first in the country every year in producing that report —
but also the rest of my colleagues sitting behind me and around me that support
this work every day. Couldn’t do it without them, so it’s been a good ministry
and it’s had a solid reputation for years, and so I’m quite happy to be working
with such a fine group of people.
Chair
Wotherspoon: — Right on, that’s great. And,
Comptroller, you got anything for us before . . .
Brent Hebert:
— No, I echo Max’s comments, and it’s been a pleasure today answering your
questions. Again I just want to call out the Provincial Auditor as well and
their co-operation because, without that co-operation, this would be a really
tough process to go through, especially reaching the production of the
statements so early in the year when you see others that are coming two and
three months past.
So I think it’s really important from an
accountability perspective to get those out as early as possible to the readers
and to people who are interested in them. So we couldn’t do that without the
Provincial Auditor, so we appreciate that as well. Thanks.
Chair
Wotherspoon: — Okay. Right on, that’s great. And I
know these were published, I think, a few months ahead of lots of other
provinces, including Manitoba. And I like Manitoba but, boy, I love beating
them at things — you know, football and having our public accounts published a
few months ahead of them. That’s great. Maybe to our Provincial Auditor, any
final word for us?
Tara Clemett:
— No. Again thanks for the opportunity to just come and present today, and I
think this is just an important, I guess, deliberation that this committee does
have, that you discuss the public accounts each year. So thanks for the
opportunity to talk about the results and talk about the work we did to make
sure those numbers are right. Thank you.
Chair
Wotherspoon: — All right, the most popular motion
of the day. Anyone care to offer a motion of adjournment? MLA Crassweller
moves. All agreed?
Some
Hon. Members: — Agreed.
Chair
Wotherspoon: — Okay, that’s carried. This committee
stands adjourned until Friday, October 17th, 2025 at 9:15 a.m.
[The committee adjourned at 14:50.]
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