The
Economic Freedom
Network

Provincial Economic Freedom in Canada 1981-1998

by Faisal Arman, Dexter Samida, and Michael Walker

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Economic Freedom Analysis of the Provinces

Saskatchewan

In 1981, Saskatchewan was ranked the third freest province but fell to fifth position in 1985. In 1989, this province became the sixth freest province. It is now ranked as the fourth freest province and its economic freedom has been increasing since 1993. Nevertheless, it still had less economic freedom in the 1998 estimate than it had in 1981.

Saskatchewan's poor rating in the Provincial Economic Freedom Index is the result of increases in government consumption as a percentage of GDP, rising from 18.9 percent in 1981, to 23.4 percent in 1985, and to 27.3 percent in 1989. By comparison, Ontario in 1989 had government consumption at 16.3 percent of the provincial economy. In Saskatchewan, expenditures on government regulations on business increased markedly as a percentage of business revenue. Saskatchewan currently expends twice as much on regulating business (expressed as a percentage of business revenue) as Alberta. As well, transfers and subsidies as a percentage of GDP increased from 5.7 percent in 1981 to 7.8 percent in 1989. In 1989, Ontario and Alberta's transfer and subsidy sectors were 3.9 percent and 6.6 percent of the provincial economy, respectively. Finally, by 1995, Saskatchewan's provincial sales tax increased relative to the rest of the provinces.

Saskatchewan managed to improve its economic freedom rating from 4.7 in 1993, to 4.8 in 1994, to 5.1 in 1995, and to 5.3 in the 1998 estimate. These increases were the result of a reduction in government consumption of provincial GDP from 26.6 percent in 1993 to 23.6 percent in 1995. This is still much higher than Alberta's government consumption of 16.7 percent of the provincial economy in 1995. As well, transfers and subsidies were reduced from 7.4 percent of GDP in 1993, to 6.3 percent of GDP in 1994, to 5.8 percent of GDP in 1995. In 1995, five provinces had less of the provincial economy devoted to transfers and subsidies than Saskatchewan. Finally, compared to the rest of the provinces, Saskatchewan gained ground due to the relatively low annual minimum-wage income as a ratio of per-capita GDP.

Looking to the future, Saskatchewan still has areas of concern. Saskatchewan has a large government enterprise sector whose net worth, total liabilities, and debt guarantees amounted to 39.3 percent of GDP in 1994. If improvements to economic freedom were made, the province would benefit greatly. Matching the economic freedom of Alberta, its neighbor, could provide Saskatchewan residents with an additional $5,700 to $6,500 in per-capita GDP.

Saskatchewan:Ranking for Components of the Index of Provincial Economic Freedom

	1981	1985	1989	1993	1994	1995	1998 (est.)
I.Government Operations and Regulations	4	6	10	(tie) 9	(tie) 9	(tie) 7	7
II.Takings and Discriminatory Taxation	4	6	5	3	(tie) 3	4	4
III.Interprovincial Trade	1	1	1	1	1	1	(tie) 1
IV.Regulation of the Labour Market	4	(tie) 4	(tie) 4	(tie) 5	(tie) 2	(tie) 2	2

Part 1: Economic Freedom Ratings for the Components and Various Area and Summary Indexes: 1981, 1985, 1989, 1993, 1994, 1995, 1998 estimate.

	IPEF	Ranking
1981	6.2	3
1985	5.3	5
1989	5.0	6
1993	4.7	5
1994	4.8	4
1995	5.1	4
1998	5.3	4
			IPEF (1998 est.):		5.1	Trend:	Recovering

Components of Economic Freedom
			1981	1985	1989	1993	1994	1995	1998 est.
I. Government Operations and Regulations			7.4	5.3	3.5	3.1	3.8	4.0	4.5
(a) Consumption Expenditures (% of GDP)			8.0	5.0	3.0	3.0	4.0	5.0	7.0
(b) Government Enterprises and Guarantees			6.0	4.0	2.0	4.0	6.0	6.0	6.0
(c) Price Controls			6.0	6.0	6.0	6.0	6.0	6.0	6.0
(d) Regulatory Effort			9.0	6.0	3.0	0.0	0.0	0.0	0.0

II. Takings and Discriminatory Taxation			5.1	4.8	5.2	4.9	4.7	5.2	5.2
(a) Transfers and Subsidies (% of GDP)			7.0	5.0	5.0	5.0	6.0	7.0	7.0
(b) Top Marginal Tax Rate and Threshold			2.0	1.0	5.0	3.0	3.0	3.0	3.0
(c) Direct Corporate Taxes (% of profits)			6.0	8.0	7.0	8.0	8.0	9.0	9.0
(d) Provincial Sales Tax			6.0	6.0	4.0	4.0	2.0	2.0	2.0

III. Interprovincial Trade			7.2	6.6	6.6	6.6	6.6	6.6	6.6
(a) Occupational Licensing			4.0	4.0	4.0	4.0	4.0	4.0	4.0
(b) Marketing Boards			10.0	9.0	9.0	9.0	9.0	9.0	9.0

IV. Regulation of the Labour Market			6.0	6.0	7.0	6.0	7.0	7.0	7.0
(a) Minimum Wage Legislation			6.0	6.0	7.0	6.0	7.0	7.0	7.0

Economic Freedom Rating			6.2	5.3	5.0	4.7	4.8	5.1	5.3
Ranking of Province			3	5	6	5	4	4	4

I. Government Operations and Regulation
	1981	1985	1989	1993	1994	1995	1996	1997
(a) Consumption Expenditures (% of GDP)	18.9	23.4	27.3	26.6	25.2	23.6	20.6	—
(b) Government Enterprises & Guarantees	36.5	45.4	57.0	42.2	39.3	—	—	—
(c) Price Controls	Price controls are often applied in energy markets; marketing boards often influence prices of agricultural products; controls are also present in a few other areas, but most prices are determined by market forces
(d) Regulatory Effort	0.199	—	0.337	—	—	0.419	0.425	—

II. Takings and Discriminatory Taxation
(a) Transfers and Subsidies (% of GDP)	5.7	7.5	7.8	7.4	6.3	5.8	—	—
(b) Top Marginal Tax Rate and	53.4	54.9	49.1	51.9	51.9	51.9	51.9	51.9
Threshold at Which It Applies	$53,377	$62,161	$70,330	$63,315	$63,396	$63,438	$63,438	$63,409
(c) Direct Corporate Taxes (% of profits)	28%	26%	26%	26%	24%	23%	23%	23%
(d) Provincial Sales Tax	5.0	5.0	7.0	7.0	9.0	9.0	9.0	7.0

III. Interprovincial Trade
(a) Occupational Licensing	44.0	—	—	—	—	—	—	46.0
(b) Marketing Boards	2.7	2.9	3.3	3.2	2.9	2.8	2.9	—

IV. Regulation of the Labour Market
(a) Minimum Wage Legislation	52.9	51.9	47.1	49.7	46.7	44.3	43.3	—

Click Here to View Key to Areas and Components of the Index and the Weights Assigned to Each

Saskatchewan:Recent Economic Indicators
Population 1996 (in thousands):1,023 Average annual rate of change 1985–1996:–0.09 percent
Real per-capita GDP 1996: $26,906 Average rate of economic growth 1985–1990:3.3 percent; 1991–1996:1.3 percent

	1981	1982	1983	1984	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996
Annual change (%) in population		1	1	2	1	1	0	0	-1	-1	0	0	0	0	0	1
Annual change (%) in real GDP		-2.4	5.0	2.2	2.1	7.8	.01	-2.9	3.3	9.1	1.4	-5.0	3.1	3.8	1.7	3.3
Annual change (%) in real GDP (average of other provinces)		-3.4	3.9	6.2	4.6	3.4	4.4	5.2	2.4	-0.4	-1.9	1.0	2.2	4.1	2.3	1.4
Annual change (%) in real per-capita GDP		-3.6	3.4	0.8	1.1	7.4	-0.3	-2.5	4.2	10.4	1.9	-5.2	2.8	3.7	1.2	2.7
Annual change (%) in real per-capita GDP (average of other provinces)		-3.2	2.8	4.3	3.6	1.4	3.0	3.2	1.1	-0.8	-2.0	0.1	1.3	2.7	1.0
Ratio of business investment to GDP (%)	26	22	23	21	22	20	22	22	18	19	19	18	17	18	18	19
General government budget deficit (-) or surplus (+) (% of GDP)	+1	-2	-1	-2	-3	-6	-2	-2	+1	0	-2	-3	+1	+2	+1
Unemployment rate (%)	4.7	6.2	7.5	8	8.2	7.7	7.4	7.5	7.5	7	7.3	8.2	8	7	6.9	6.6

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