Legislative Report (5 October 2006)
4 October 2006
NDP Crown Corporation Dividend Policy Flawed
Earlier this month, Saskatchewan people found out that SaskPower was applying for a 4.3% rate increase. While many would have been surprised at the announcement itself, Saskatchewan people will be even more surprised that had the NDP government allowed SaskPower to invest its profits in infrastructure renewal, the rate hike would not have been needed.
In the last five years, Saskatchewan people have faced a total of 15 per cent in increases to their power rates. At the same time, SaskPower has been forced to pay more than $400 million dollars to the provincial government in the form of a dividend. Meanwhile, SaskPower’s infrastructure – much of which was built in the 1950s, 1960s and 1970s – is in dire need of replacement. And that is the main reason why SaskPower is asking for a rate increase.
The current NDP government has a dividend policy that means SaskPower must hand over 65% of its profits to the government. For example, this year, SaskPower is projecting a $100 million surplus, which will translate into approximately $65 million dollars in dividends to the government. By requesting a hike of 4.3 per cent in your power rates, SaskPower hopes to bring in some $55 million dollars. Essentially, the rate hike is necessary to make up for the money it will lose through its dividend payment. Sounds more like a shell game to me.
Instead of forcing SaskPower to fork over such a large dividend and in turn, apply for a rate hike, a responsible government would allow SaskPower to keep more of its profits to invest in replacing or repairing infrastructure. The case for such a move is even stronger in a year like this year when the NDP government’s coffers are overflowing
While the NDP government is getting richer, the rest of us are being hit with rate hikes. People in who live in rural areas of Saskatchewan are being hit with the largest hike in the province. And let’s not forget about how difficult it will be for those on fixed incomes to keep up with their bills.
It’s hard to take the NDP government seriously when it says it values our Crown Corporations. How can it say that it values SaskPower when it has literally backed the company into a corner. The NDP would rather continue to take dividends from the corporation, threatening the very viability of the SaskPower’s infrastructure. Clearly, the NDP government is on the wrong track when it comes to its dividend policy.
A Saskatchewan Party government would establish a Crown corporation dividend policy that publicly establishes net return levels adequate to meet re-investment requirements for each Crown corporation. Any excess above and beyond re-investment requirements would be put in a dedicated provincial infrastructure renewal fund. This type of policy would put an end to the shell game that has corporations asking for rate hikes, the government taking excessive dividends, and then giving your money back to you in the form of a rebate.
What is needed is a government in charge that will allow our Crown corporations to operate like the businesses that they are. Unfortunately, the NDP government isn’t that government.
If you have a question about this report or any other matter, just Contact Glen.
Past Legislative Reports