Exhibit d

Province of Saskatchewan

Current Description

December 2010

[MAP]

TABLE OF CONTENTS

	Page
Province of Saskatchewan	1
Overview of the Economy	3
Finances of the Government	17
General Revenue Fund Supplementary Financial Information	33
Detail of General Revenue Fund Debt	51
Crown Corporations	55
Government of Saskatchewan Summary Financial Statements (Volume 1 of the Public Accounts)	Exhibit E
Sources of Information	63

In this document, unless otherwise specified or the context otherwise requires, all dollar amounts are expressed in Canadian dollars.  On November 17, 2009, the noon nominal rate for Canadian dollars ($), as reported by the Bank of Canada, was $1.0592 = 1.00 United States dollar (U.S. $).

Tonnes as used in this document refers to metric tons.  One tonne is equivalent to 1.102311 short tons.

In this document, the financial transactions of the general fund of the Government are recorded under the General Revenue Fund.  (Refer to page 17 for further information.)

The Government uses accrual accounting.  The accrual accounting method recognizes financial transactions at the time they occur, regardless of whether any cash is received or paid.  This method of accounting provides a complete picture of the total financial obligations resulting from decisions made during the year.  The General Revenue Fund follows the accrual method except for defined benefit pension plan costs.  During 2008-09, the Government made a change in accounting policy to comply with the recommendations of the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants for long-term debt.  On the Statement of Financial Position, loans to Crown corporations and public debt (gross debt net of sinking funds) are now presented net of government business enterprise specific debt.  Additionally, reimbursements of interest from Crown corporation general debt are no longer netted against debt servicing costs on the Statement of Operations.  Prior to this change in accounting policy, public debt was presented on a gross basis on the Statement of Financial Position, and all reimbursements of interest from Crown corporations’ debt were netted against debt servicing costs.  The 2007-08 amounts have been restated for this change in accounting policy.

During 2008-09, the Government determined that agricultural land held for resale, previously presented as a financial asset, is more appropriately classified as tangible capital assets because this land is not expected to be sold within the next year.  This change has been applied retroactively with restatement of the 2007-08 amounts.

During 2008-09, the Government reclassified certain revenue categories, with restatement of 2007-08 amounts:

·   Corporation capital tax has been split into two components.  Resource surcharge has been moved to non-renewable resources and the remaining component of corporation capital tax has been included with other taxes;

·   Liquor consumption tax has moved from sales tax to other taxes and sales tax has been renamed provincial sales tax; and

·   Crown land sales previously reported in oil revenues has been broken out.

 This document contains forward-looking statements which may be identified by their use of words like “plans,” “expected,” “will,” “project,” “estimated,” “forecast” or other words of similar meaning.  All statements that address expectations or projections about the future are forward-looking statements.  Forward-looking statements are based on certain assumptions and expectations of future events.  It cannot be guaranteed that these assumptions and expectations are accurate or will be realized.

The Canadian Dollar

Canada maintains a floating exchange rate for the Canadian dollar to permit the rate to be determined by market forces without intervention except as required to maintain orderly conditions.

Recent high and low exchange rates for the Canadian dollar in terms of United States cents are as follows:

2005 2006 2007 2008 2009 2010*  

High	86.90	90.99	109.05	102.89	97.16	100.12
Low	78.72	85.28	84.367	77.11	76.92	93.07

Source: Bank of Canada – noon rate.                              

* First ten months only.

  i

PROVINCE OF SASKATCHEWAN

Summary Economic and Financial Statistics

The following information is qualified in its entirety by the more detailed information contained in this document.  See also AGeneral Revenue Fund Supplementary Financial Information - Government of the Province of Saskatchewan, General Revenue Fund Statement of Financial Position” commencing on page 34 for a discussion of the Provincial Auditor=s report accompanying the General Revenue Fund=s financial statements as at March 31, 2010, and for the year then ended.

																	Compound
	Calendar Year Ended December 31																Annual
																	Growth Rate
		2005			2006			2007			2008			2009				2005-2009
								(Millions)
Economy
Gross Domestic Product at Current
Market Prices *		$	43,726		$	45,086		$	51,345		$	64,581		n.a.				12.5	%
Farm Cash Receipts		$	6,191		$	6,667		$	7,753		$	9,392		$	9,197			10.4
Mineral Sales		$	12,503		$	12,816		$	14,437		$	23,727		$	14,447			3.7
Manufacturing Shipments		$	9,614		$	9,865		$	10,423		$	13,180		$	11,428			4.4
Exports *		$	30,198		$	31,535		$	35,741		$	46,693		n.a.				14.8
Personal Income *		$	27,860		$	29,349		$	32,253		$	36,449		n.a.				7.5
Population at July 1 (Thousands)			994			992			1,000			1,014			1,029			0.9
Unemployment Rate			5.1	%		4.7	%		4.2	%		4.1	%		4.8	%	n.a.
Change in Consumer Price Index			2.2	%		2.0	%		2.9	%		3.2	%		1.1	%	n.a.
1 2002 = 100
n.a. = not applicable
* = compound annual growth rate from 2004-2008

	Fiscal Year Ended March 31
																	Estimate
		2006			2007			2008			2009			2010			2011
								(Millions)
Government Finances - General Revenue Fund
Budgetary surplus (deficit)		$	400		$	293		$	641		$	2,389		$	425		$	20
Add (deduct) non-cash items
Amortization of foreign exchange gains and losses			2			3			2			5			(1	)		2
Amortization of Capital Assets			135			152			148			167			146			166
Loss on loans and investments			2			1			9			1			3			3
Net change in non-cash operating activities			6			(17	)		228			(115	)		227			(174	)
Earnings retained in sinking funds			(63	)		(46	)		(46	)		(79	)		(159	)		(82	)
Adjustment to accumulated deficit			11			0			0			0
Capital Activities
Cash (used for) Acquisition of capital assets			(218	)		(248	)		(278	)		(342	)		(348	)		(300	)
Investing Activities
Cash provided by (used for) investing activities			(102	)		(29	)		(283	)		(1,758	)		546			(170	)
Cash Provided (Required)		$	173		$	109		$	421		$	268		$	839		$	(535	)

1 For information concerning the adverse effect on the reported budgetary surplus (deficit) of certain adjustments that are required in the opinion of the Provincial Auditor, see Notes 1-9 to the Government of the Province of Saskatchewan, General Revenue Fund Statement of Financial Position for the five years ended March 31, 2010, under “General Revenue Fund Supplementary Financial Information,” commencing on page 34.

  ii

	Fiscal Year Ended March 31
	2006			2007			2008			2009			2010
							(Millions)
Debt - General Revenue Fund
Gross Debt	$	11,933		$	12,057		$	11,578		$	11,066		$	10,690
Less:  Equity in Sinking Funds		(1,105	)		(1,255	)		(1,359	)		(3,364	)		(2,697	)
Guaranteed Debt		46			34			25			20			17
Total General Revenue Fund Debt	$	10,874		$	10,836		$	10,244		$	7,722		$	8,010

 In this document statistics for the economy of the Province are set forth on a calendar year basis at current market prices, except as otherwise indicated.  Economic statistics for recent years frequently are preliminary estimates, which are subject to adjustment. Financial statistics and information for the Government=s General Revenue Fund are set forth on a fiscal year basis of April 1 to March 31 of the following year, unless otherwise noted.  Financial statistics and information for provincial Crown corporations are set forth on a fiscal year basis of January 1 to December 31 of the same year, unless otherwise noted.  In this document, compound annual growth rates assume the first year as the base and are computed by distributing the aggregate amounts of growth during the period.

  iii

PROVINCE OF SASKATCHEWAN

Introduction

The Province of Saskatchewan (Saskatchewan or the Province) was established as a province of Canada in 1905.  Saskatchewan is centrally located in Western Canada and is bordered by the provinces of Manitoba to the east and Alberta to the west.  The Province shares its 650 kilometre southern border with the American states of North Dakota and Montana and its 450 kilometre northern border with the Northwest Territories of Canada.  With a 1,250 kilometre distance from north to south, Saskatchewan covers an area of 652,330 square kilometres.

The sparsely populated northern third of the Province is part of Canada=s Precambrian Shield and consists of forests, rivers and thousands of fresh water lakes.  A sizeable commercial forest region is located across the entire central part of Saskatchewan.  The southern half of the Province is part of the great continental plain of North America, consisting of a mixed agricultural and parkland area merging southward into open plains, a grain-growing region where the majority of the Province=s population resides.  About one-half of all of Canada=s cultivated farm land is located in Saskatchewan.

The population of Saskatchewan was approximately 1,045,622 on July 1, 2010, compared with approximately 1,029,124 on July 1, 2009 and 1,014,524 on July 1, 1999.  The Province=s two largest urban areas are the cities of Regina, the capital of Saskatchewan, with a population of approximately 210,006 on July 1, 2009, and Saskatoon, with a population of approximately 257,298 as of the same date.

The climate of Saskatchewan is generally dry with temperatures varying markedly between very distinct seasons. The following table sets forth statistics on Saskatchewan=s population, area and climate.

Saskatchewan Statistics

Population					Area
	1,045,622 (July 1, 2010)					Land:
						$	570,700 square kilometres
Major Urban Centres							(220,350 square miles)
	Regina					Fresh Water:
	$	Capital of Saskatchewan				$	81,630 square kilometres
	$	210,006 (July 1, 2009)*					(31,520 square miles)
	Saskatoon					Total:
	$	Centre for Saskatchewan=s				$	652,330 square kilometres
		resource-based and advanced					(251,870 square miles)
		technology industries				Farm Land:
	$	257,298 (July 1, 2009)*				$	268,655 square kilometres
							(103,730 square miles)
Population Density						Cultivated Farm Land:
	1 person per 0.66 square					$	202,470 square kilometres
	kilometre (0.25 per square mile)						(78,170 square miles)
Mean Temperatures Range (Regina)						Commercial Forests:
	January	-11	to	-22 degrees Celsius		$	126,300 square kilometres
	July	26	to	12 degrees Celsius			(48,760 square miles)
Mean Precipitation (Regina)
	January	15	millimetres
	July	59	millimetres
	Year	364	millimetres

*  Post-census adjusted data for 2009 for Regina and Saskatoon are not yet available.

Sources:   Saskatchewan Bureau of Statistics, Statistics Canada.

  1

Constitutional Framework of Canada

Canada consists of a federation of ten provinces with a constitutional division of powers between the federal and provincial governments.  Canada was established by the Constitution Act, 1867, an Act of the Parliament of the United Kingdom, and by later enactments including the Constitution Act, 1982, which transferred jurisdiction over the Constitution of Canada (the Constitution) from the United Kingdom to Canada.

Various constitutional issues have been under discussion in Canada for a number of years.  On August 20, 1998, in response to a reference from the Federal government, the Supreme Court of Canada ruled that under the Constitution of Canada and international law, Quebec may not secede unilaterally from Canada, but that if the people of Quebec voted to secede by a clear majority vote on a clear question, the other provinces and the Federal Government would be obliged to enter negotiations with Quebec with respect to secession, such negotiations to be guided by constitutional principles, including federalism, democracy, constitutionalism and the rule of law, and the protection of minorities.

Under the Constitution, each provincial Legislature has exclusive authority to borrow money on the sole credit of that province and the authority to raise revenue for provincial purposes through direct taxation within its territorial limits.  Legislatures can also raise revenue through taxation in respect of non-renewable natural resources, forestry resources and sites and facilities for electricity production and generation.  Each province owns minerals and other resources on its provincial Crown lands and may own sub-surface resources on its other lands. Each province has the right to levy royalties on all lands and minerals which it owns. Each province has the legislative authority to regulate the exploration for and development, conservation and management of non-renewable natural resources, forestry resources and electricity generation.  Each province also has legislative authority in the areas of education, health, social services, property and civil rights, natural resources, municipal institutions and generally all matters of a purely local or private nature.

The Parliament of Canada is empowered to borrow money and to raise revenue by any mode or system of taxation.  Parliament has legislative authority over, among other things, the federal public debt and federal property, the regulation of trade and commerce, currency and coinage, banks and banking, bankruptcy and insolvency, navigation and shipping, foreign affairs, defence, postal service and unemployment insurance.  It also has authority over matters not assigned to the provincial legislatures.

Provincial Government

The executive power in the Province of Saskatchewan is vested in the Lieutenant Governor acting upon the advice of the Executive Council, which is responsible to the Legislative Assembly.  The Lieutenant Governor is appointed by the Governor General of Canada in Council and the Governor General in turn is appointed by a commission under the Great Seal of Canada.  The Executive Council, which includes the Premier and the Ministers of Departments of the Provincial Government, is appointed by the Lieutenant Governor on the nomination of the leader of the political party which forms the Government.  Members of the Executive Council hold seats in the Legislative Assembly.

Saskatchewan=s Legislative Assembly has 58 seats and is elected for a term of five years, subject to earlier dissolution by the Lieutenant Governor acting in accordance with constitutional principles.  The Legislative Assembly is usually dissolved by the Lieutenant Governor on the recommendation of the Premier.  The most recent Provincial election was held on November 7, 2007, and resulted in a majority for the Saskatchewan Party as the Government of Saskatchewan.  The representation in the Legislative Assembly at November 17, 2010 was as follows:  Saskatchewan Party, 38 seats; and, New Democratic Party, 20 seats.

  2

OVERVIEW OF THE ECONOMY

Introduction

Saskatchewan has a modern, open and diversified economy.  Approximately two-thirds of the total value of all goods and services produced in the Province are exported.  Major exports include grains, oilseeds, crude oil, potash, natural gas, uranium and manufactured goods.  While many of the goods and service producing industries are directly or indirectly related to agriculture and natural resources, the Provincial economy continues to diversify into information age activities such as high technology, bio-technology and financial and other services.  The Province=s abundance of renewable and non-renewable resources has made it the largest producer of wheat, second largest producer of crude oil and third largest natural gas producer in Canada.  Saskatchewan is also one of the world=s leading suppliers of potash and uranium.

Saskatchewan’s economy grew at an annual real rate of 4.0 percent in 2008 largely due to strong personal consumption, business investments and a record harvest.  Canada’s real Gross Domestic Product (GDP) increased by 0.5 per cent in the same year and declined by 2.5 per cent in 2009.  Due in large part to strong commodity prices, Saskatchewan’s nominal GDP grew by 25.8 per cent in 2008.

Mining is the largest sector among Saskatchewan’s goods-producing industries.  The dominant mineral products of the Province include crude oil, potash, natural gas and uranium.  The number of oil wells drilled increased by 22.9 per cent and the value of oil sales increased by 59.6 per cent in 2008 because of stronger oil prices.  The value of natural gas sales increased by 13.9 per cent as a result of higher natural gas prices in 2008 while the number of gas wells drilled rose by 5.8 per cent in 2008.  Potash sales rose by 142.7 per cent in 2008 primarily reflecting strong sales and high prices.  Weak prices caused the value of oil and natural gas sales to decline by 32.7 per cent and 55.0 per cent, respectively in 2009.  The value of Potash sales also dropped by 58.4 per cent last year due to weak global demand.

Manufacturing is the second largest sector of Saskatchewan’s goods-producing industries.  Saskatchewan’s manufacturing sales increased by 26.4 per cent in 2008 but decreased by 13.3 per cent in 2009.

Agriculture is the third largest sector among Saskatchewan’s goods-producing industries.  Saskatchewan farmers harvested 29.4 million tonnes of the major grains and oilseeds in 2009, about 1.3 per cent lower than the harvest in 2008.

Saskatchewan farm cash receipts amounted to $9.2 billion in 2009, down 2.1 per cent from 2008.  Realized net farm income, which is the income left with farmers after deducting operating expenses and depreciation costs from farm cash receipts, amounted to $1.9 billion reflecting higher crop receipts.

Retail sales decreased by 0.5 per cent in 2009 while wholesale trade dropped 22.1 per cent in the same year.  New vehicle sales went down by 9.3 per cent in 2009.

Saskatchewan’s employment level increased by 1.6 per cent or 7,900 jobs in 2009.  In Canada, employment declined by 1.6 per cent or 277,000 jobs in the same year.

Saskatchewan’s unemployment rate averaged 4.8 per cent in 2009.  The national unemployment rate averaged 8.1 per cent in the same year.

The inflation rate of the Province, as measured by the rate of increase in the Consumer Price Index, was 1.1 per cent in 2009 compared to Canada’s inflation rate of 0.3 per cent.

  3

The following table sets forth a summary of economic indicators for Saskatchewan and for Canada for the five years ended December 31, 2009.

Summary of Economic Indicators
																	Compound
																	Annual
	Calendar Year Ended December 31																Growth Rate
		2005			2006			2007			2008			2009				2005-2009
Gross Domestic Product - Saskatchewan
Current Market Prices (Millions) *		$	43,726		$	45,086		$	51,345		$	64,581		n.a				12.5	%
Annual Rate of Change			8.6	%		3.1	%		13.9	%		25.8	%	n.a			n.a
Per Capita *		$	44,009		$	45,444		$	51,331		$	63,703		n.a				12.1	%
Chained 2002 Dollars (Millions) *		$	39,275		$	38,774		$	39,722		$	41,296		n.a				2.1	%
Annual Rate of Change			3.3	%		(1.3	)%		2.4	%		4.0	%	n.a			n.a
Per Capita *		$	39,528		$	39,082		$	39,712		$	40,734		n.a				1.7	%
Gross Domestic Product - Canada
Current Market Prices (Millions)		$	1,373,845		$	1,450,405		$	1,529,589		$	1,599,608		$	1,527,258			2.7	%
Annual Rate of Change			6.4	%		5.6	%		5.5	%		4.6	%		(4.5	)%	n.a
Per Capita		$	42,606		$	44,524		$	46,450		$	48,013		$	45,292			1.5	%
Chained 2002 Dollars (Millions)		$	1,247,807		$	1,283,033		$	1,311,260		$	1,318,055		$	1,285,604			0.7	%
Annual Rate of Change			3.0	%		2.8	%		2.2	%		0.5	%		(2.5	)%	n.a
Per Capita		$	38,697		$	39,386		$	39,820		$	39,562		$	38,126			(0.4	) %
Consumer Price Index  1
(Annual Percentage Change)
Saskatchewan			2.2	%		2.0	%		2.9	%		3.2	%		1.1	%	n.a
Canada			2.2	%		2.0	%		2.1	%		2.4	%		0.3	%	n.a
Population (July 1)(Thousands)
Saskatchewan			994			992			1,000			1,014			1,029			0.9	%
Canada			32,245			32,576			32,930			33,316			33,720			1.1	%
Unemployment Rate
Saskatchewan			5.1	%		4.7	%		4.2	%		4.1	%		4.8	%	n.a
Canada			6.8	%		6.3	%		6.0	%		6.1	%		8.1	%	n.a
1 2002 = 100
n.a. = not applicable
Sources: Saskatchewan Bureau of Statistics, Statistics Canada
* Data for Saskatchewan's economy in 2009 are not available. Compound annual growth rate was calculated from 2004-2008 only.

  4

Gross Domestic Product

Saskatchewan=s real GDP measured in chained 2002 dollars increased at a compound average annual rate of 2.3 per cent in the period from 2004 to 2008.  Measured in current market prices, Saskatchewan=s GDP grew at a compound average annual rate of 12.5 per cent in the same period.  In 2008, Saskatchewan=s real GDP increased by 3.9 per cent.

The following table sets forth the composition of the Province=s GDP both at current market prices and in chained 2002 dollars for the five years ended December 31, 2008.

Gross Domestic Product
															Compound
															Annual
	Year Ended December 31														Growth Rate
		2004		2005		2006			2007			2008			2004-2008
						(Millions)
Gross Domestic Product
Current Market Prices
Personal Expenditure on Goods
and Services		$	21,006	$	21,949	$	23,165		$	25,219		$	27,393			6.9	%
Government Expenditure on Goods
and Services			8,253		8,679		9,197			9,677			10,277			5.6	%
Gross Fixed Capital Formation			7,619		9,082		10,535			11,920			14,146			16.7	%
Value of Physical Change in Inventories:
Non-Farm			368		448		166			388			(668	)	n.a.
Farm Inventories and Grain in
Commercial Channels			733		600		(722	)		(577	)		1,775		n.a.
Exports of Goods and Services			26,854		30,198		31,535			35,741			46,693			14.8	%
Less:  Imports of Goods and Services			25,058		27,530		29,176			30,872			34,982			8.7	%
Residual Error and Adjustment			506		300		387			(152	)		(53	)	n.a.
Total		$	40,282	$	43,726	$	45,086		$	51,345		$	64,581			12.5	%
Gross Domestic Product
Chained 2002 Dollars
Personal Expenditure on Goods
and Services		$	20,230	$	20,797	$	21,598		$	23,073		$	24,383			4.8	%
Government Expenditure on Goods
and Services			7,813		7,972		8,219			8,310			8,461			2.0	%
Gross Fixed Capital Formation			7,643		8,923		10,095			10,792			12,203			12.4	%
Value of Physical Change in Inventories:
Non-Farm			460		551		160			306			(674	)	n.a.
Farm Inventories and Grain in
Commercial Channels			865		1,390		(637	)		(311	)		1,531		n.a.
Exports of Goods and Services			25,964		26,819		27,087			27,630			27,638			1.6	%
Less:  Imports of Goods and Services			25,320		27,178		28,570			30,395			32,125			6.1	%
Residual Error and Adjustment			483		271		334			(117	)		(33	)	n.a.
Total		$	38,027	$	39,275	$	38,774		$	39,722		$	41,296			2.1	%
n.a. = not applicable
Note: Components may not add due to use of chained fisher price methodology.
Source: Saskatchewan Bureau of Statistics, data for 2009 are not yet available.

  5

Capital Expenditure

Gross fixed capital formation increased at a compound average annual rate of 16.7 per cent over the period from 2004 to 2008.  Investment in transportation and warehousing increased by 39.7 per cent; construction, 23.7 per cent; and public administration, 20.1 per cent.

The following table sets forth information on Saskatchewan=s gross fixed capital formation for the five years ended December 31, 2008.

Gross Fixed Capital Formation
											Compound
											Annual
	Year Ended December 31										Growth Rate
	2004		2005		2006		2007		2008		2004-2008
					(Millions)
Agriculture 1	$	680	$	733	$	556	$	995	$	878		6.6	%
Mining  2		2,355		3,183		4,006		4,370		4,520		17.7
Construction		71		86		97		154		167		23.7
Manufacturing		253		297		435		353		402		12.3
Transportation & Warehousing		358		373		455		527		1,362		39.7
Utilities		376		634		433		429		648		14.6
Retail and Wholesale Trade		334		351		389		386		435		6.9
Finance and Insurance 3		1,958		2,030		2,337		2,979		3,321		14.1
Commercial Services		393		432		603		645		752		17.6
Institutions		308		313		462		301		555		15.8
Public Administration		532		651		763		780		1,108		20.1
Total	$	7,619	$	9,082	$	10,535	$	11,920	$	14,146		16.7	%
1 Includes forestry, fishing, trapping and hunting.
2 Includes oil and natural gas extraction, potash, uranium and other minerals.
3 Includes real estate and other services not shown above.
Components will not add to total.
Source: Saskatchewan Bureau of Statistics, data for 2009 are not yet available.

  6

Exports and Imports

Crude oil, manufactured goods, grains and potash are Saskatchewan=s principal exports, accounting for 28.7 per cent, 13.5 per cent, 13.5 per cent and 15.8 per cent, respectively, of total exports in 2008.  For the five years ended December 31, 2008, total exports increased by an average of 14.8 per cent per year while imports increased by an average of 8.7 per cent per year.

The following table sets forth details of Saskatchewan=s exports and imports at current market prices for the five years ended December 31, 2008.

Trade with the Rest of Canada and Abroad
											Compound
											Annual
		Year Ended December 31									Growth Rate
		2004		2005		2006		2007		2008	2004-2008
						(Millions)
Exports
Grain	$	2,903	$	2,640	$	3,477	$	5,253	$	6,303		21.4	%
Crude Oil		5,718		7,115		8,131		8,393		13,401		23.7
Potash		2,167		2,697		2,209		3,056		7,379		35.8
Manufactured Goods		4,147		4,798		5,132		5,737		6,319		11.1
Other		11,919		12,948		12,586		13,302		13,291		2.8
Total Exports	$	26,854	$	30,198	$	31,535	$	35,741	$	46,693		14.8	%
Imports
Crude Oil	$	1,042	$	1,572	$	1,584	$	1,361	$	2,227		20.9	%
Manufactured Goods		5,832		6,001		6,031		6,417		7,026		4.8
Other		18,184		19,957		21,562		23,094		25,729		9.1
Total Imports	$	25,058	$	27,530	$	29,176	$	30,872	$	34,982		8.7	%
Source:  Saskatchewan Bureau of Statistics, 2009 data are not yet available.

  7

Labour Force and Employment

Saskatchewan=s unemployment rate remained well below the national unemployment rate in 2009.  The national unemployment rate stood at 8.1 per cent in 2009, while Saskatchewan=s unemployment rate was 4.8 per cent in the same year.

In the first ten months of 2010, Saskatchewan’s seasonally adjusted unemployment rate has averaged 5.1 per cent, compared to the national average unemployment rate of 8.1 per cent over the same period.  Thus far, total employment in the Province has increased by about 5,900 compared with the same period last year.

The following table sets forth selected labour force statistics for Saskatchewan and Canada for the five years ended December 31, 2009.

Labour Force Statistics
						Compound
						Annual
	Year Ended December 31					Growth Rate
	2005	2006	2007	2008	2009	2005-2009
	(Thousands, Except Percentages)
Labour Force
Saskatchewan	509	516	524	535	547	1.8	%
Canada	17,343	17,593	17,946	17,946	18,369	1.4	%
Employed
Saskatchewan	483	492	502	513	521	1.9	%
Canada	16,170	16,484	16,866	17,126	16,849	1.0	%
Unemployed
Saskatchewan	26	24	22	22	26	0.3	%
Canada	1,173	1,108	1,079	820	1,520	6.7	%
Unemployment Rate
Saskatchewan	5.1%	4.7%	4.2%	4.1%	4.8%	n.a.
Canada	6.8%	6.3%	6.0%	6.1%	8.1%	n.a.
Participation Rate
Saskatchewan	68.1%	69.1%	69.7%	69.7%	70.1%	n.a.
Canada	67.2%	67.2%	67.6%	67.8%	67.3%	n.a.
n.a. = not applicable
Source:  Statistics Canada.

  8

Approximately 38,000 net new jobs were created in the Province in the period from 2005 to 2009.  Construction, mining and Finance, insurance & real estate were the leaders in terms of job creation during the period in review.

The following table sets forth selected statistics of employment by industry for the Province.

Employment by Industry
						Compound
						Annual
	Year Ended December 31					Growth Rate
	2005	2006	2007	2008	2009	2005-2009
			(Thousands)
Goods-Producing Industries
Agriculture	47	48	44	41	43	(1.8)	%
Mining	19	22	22	25	24	7.0
Construction	26	30	32	37	39	10.0
Manufacturing	30	29	31	31	28	(1.5)
Subtotal	122	128	129	134	135	2.6
Service Industries
Transportation, Communication,
Utilities and Storage	29	30	29	30	30	0.2
Wholesale and Retail Trade	78	79	83	83	81	0.9
Finance, Insurance and Real Estate	26	26	27	28	29	3.4
Business and Community Services	201	201	208	208	215	1.7
Public Administration	27	28	28	29	31	3.3
Subtotal	362	363	373	379	386	1.6
Total	483	492	502	513	521	1.9	%
Note:      Components may not add due to rounding.
Source: Saskatchewan Bureau of Statistics

  9

Personal Income

Saskatchewan personal income increased at a compound average annual rate of 7.5 per cent over the period from 2004 to 2008. The following table sets forth personal income for Saskatchewan for the five years ended December 31, 2008.

Personal Income
												Compound
												Annual
		Year Ended December 31										Growth Rate
		2004		2005		2006			2007		2008	2004-2008
						(Millions)
Wages, Salaries and Supplementary
Labour Income	$	16,689	$	17,620	$	19,197		$	20,763	$	22,567	7.8	%
Net Income Received by Farm Operators
from Farm Production		786		288		(330	)		83		1,797	n.a.
Net Income of Non-Farm Unincorporated
Business 1		2,108		2,168		2,240			2,401		2,713	6.5
Interest, Dividends and Miscellaneous
Investment Income		2,887		2,981		3,224			3,550		3,740	6.7
Others		4,781		4,803		5,018			5,456		5,632	4.2
Total	$	27,251	$	27,860	$	29,349		$	32,253	$	36,449	7.5	%
1  Includes rent.
n.a. = not applicable
Source:  Saskatchewan Bureau of Statistics, 2009 data are not yet available.

10 

Economic Structure

The following table sets forth Saskatchewan=s real GDP at basic prices by industry for the five years ended December 31, 2009.

Gross Domestic Product at Basic Prices by Industry in Millions of Chained 2002 Dollars
													Compound
		Year Ended December 31									Per Cent		Annual
											of 2009		Growth Rate
		2005		2006		2007		2008		2009	Total		2005-2009
						(Millions)
Goods-Producing Industries
Agriculture, forestry, fishing
and hunting	$	4,155	$	3,798	$	4,016	$	4,822	$	4,945	13.1	%	4.4	%
Mining 1		5,953		5,484		5,440		5,425		4,457	11.8	%	(7.0)	%
Utilities		896		898		918		879		860	2.3	%	(1.0)	%
Manufacturing		2,845		2,707		2,884		2,895		2,748	7.3	%	(0.9)	%
Construction		1,982		2,023		2,090		2,623		2,603	6.9	%	7.1	%
Subtotal	$	15,832	$	14,910	$	15,349	$	16,643	$	15,615	41.3	%	(0.3)	%
Services Industries
Transportation and Warehousing	$	2,273	$	2,291	$	2,281	$	2,355	$	2,287	6.1	%	0.2	%
Finance, Insurance and
Real Estate		5,359		5,536		5,789		5,882		5,987	15.8	%	2.8	%
Wholesale and Retail Trade		3,773		3,924		4,359		4,807		4,510	11.9	%	4.6	%
Business Services		3,863		3,975		4,218		4,305		4,343	11.5	%	3.0	%
Institutions		4,089		4,135		4,234		4,313		4,395	11.6	%	1.8	%
Public Administration		1,879		1,951		2,006		2,019		2,066	5.5	%	2.4	%
Subtotal	$	21,235	$	21,812	$	22,887	$	23,681	$	23,588	62.4	%	2.7	%
Gross Domestic Product at
Basic Prices	$	36,820	$	36,321	$	37,591	$	39,445	$	37,793	100.0	%	0.7	%
1  Includes oil, potash, uranium, natural gas and other minerals.
Note: Components may not add due to use of chained fisher dollar methodology. GDP at basic prices and GDP at market prices
differ by the amount of "indirect taxes net of subsidies on products."
Source:  Statistics Canada.

  11

Agriculture

Based on the 2006 Census of Agriculture, Saskatchewan has 44,329 farms with an average size of 1,449 acres.  With slightly less than half of the total land area of the Province utilized for farming, the Province has approximately half of the cultivated farm land in all of Canada.

Historically, wheat has been Saskatchewan=s largest single grain crop in terms of volume and value.  Between 2000 and 2009, wheat accounted for 30.4 per cent of all crops grown in the Province and represented over half of all the wheat grown in Canada. In 2009, wheat=s share accounted for 28.6 per cent of the total Saskatchewan crop harvest.  Other major grains and oilseeds such as durum, barley and canola accounted for 48.4 per cent of total crop production in 2009.  Specialty crops such as mustard, lentils and peas accounted for 23.0 per cent of the total harvest in 2009.

Crop Production

											2000 to 2009
	Calendar Year Ended December 31										10 year
	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	Average
	(Millions of Tonnes)
Wheat	8.7	7.4	4.5	7.0	7.8	8.1	8.4	6.0	8.0	8.4	7.4
Durum	4.8	2.5	2.9	3.2	3.8	4.9	2.7	3.0	4.4	4.4	3.7
Barley	5.3	3.7	2.5	4.4	4.7	5.0	3.4	3.9	4.6	4.1	4.2
Canola	3.4	2.2	1.8	2.7	2.9	4.5	3.7	4.2	5.6	5.7	3.7
Specialty Crops 1	3.3	2.1	1.5	2.2	3.7	3.8	2.8	3.3	4.1	4.4	3.1
Other 2	2.5	2.0	1.7	1.7	1.9	2.6	2.8	3.2	3.1	2.4	2.4
Total	28.0	19.8	14.9	21.1	24.7	28.8	23.8	23.7	29.9	29.4	24.4

                       
1   Includes mustard, sunflowers, lentils, field peas and canary seed.

2   Includes oats, fall rye, spring rye, flax and other mixed grain.

Source: Statistics Canada.

Note:  Components may not add due to rounding.

 Livestock production is also important in Saskatchewan.  Approximately one-quarter of the total Canadian beef cattle herd is located in the Province.  Other livestock raised in Saskatchewan include hogs, sheep, lambs, poultry and dairy cattle.

Farm cash receipts from crop production totalled $7.3 billion in 2009, with wheat, durum and canola accounting for $4.6 billion, or 63.1 per cent, of the year=s total cash receipts from crop sales.  Farm cash receipts from the sale of livestock and livestock products amounted to $1.5 billion in 2009, with cattle and calves accounting for $923 million, or 63.3 per cent, of the year=s total cash receipts from livestock sales.

Total farm cash receipts reached $9.2 billion in 2009, down 2.1 per cent from 2008.

  12

The following table sets forth Saskatchewan=s farm cash receipts for the five years ended December 31, 2009.

Farm Cash Receipts
											Compound
											Annual
	Year Ended December 31										Growth Rate
		2005		2006		2007		2008		2009	2005-2009
						(Millions)
Crops
Wheat and Durum	$	1,084	$	1,328	$	2,064	$	2,715	$	2,310	20.8	%
Canola		701		1,117		1,472		2,009		2,284	34.3
Barley		252		229		353		431		458	16.1
Other Crops 1		1,034		989		1,297		1,838		2,224	21.1
Subtotal	$	3,071	$	3,663	$	5,187	$	6,993	$	7,275	24.1
Livestock & Livestock Products
Cattle & Calves	$	1,183	$	1,129	$	1,093	$	1,120	$	923	(6.0	)
Hogs		301		289		261		236		182	(11.8	)
Other Livestock and Livestock Products 2		312		319		341		364		354	3.2
Subtotal	$	1,796	$	1,737	$	1,696	$	1,719	$	1,459	(5.1	)
Supplementary, Deficiency, Stablization,
Insurance and Other Payments	$	1,323	$	1,267	$	871	$	680	$	463	(23.1	)
Total Farm Cash Receipts	$	6,191	$	6,667	$	7,753	$	9,392	$	9,197	10.4	%
1  Includes net deferments.
2Includes sheep, lambs, dairy products, poultry, eggs and other livestock products.
Note:    Components may not add due to rounding.

Source:  Statistics Canada.

Total farm revenue is made up of three components:  crop receipts, livestock receipts and government program payments.  Crop receipts amounted to $7.3 billion in 2009, up 4.0 per cent from 2008 due to improved crop quality and higher prices.  Farm cash receipts from livestock sales amounted to $1.5 billion in the same year, down 15.1 per cent from 2008.  Government payments in 2009 amounted to $463 million, down 31.9 per cent from the amount provided by both the federal and provincial governments to farmers in 2008.

Saskatchewan=s 2009 realized net farm income amounted to $1.9 billion, compared with $1.6 billion in 2008 reflecting higher crop sales.  Realized net farm income is the result of deducting farm operating expenses and depreciation cost from farm cash receipts.

  13

Mining and Petroleum/Natural Gas

In 2009, the total value of mineral sales amounted to $14.4 billion, a decrease of 39.1 per cent from the prior year.  Crude oil, natural gas and potash accounted for 88.4 per cent of the total value of mineral sales in 2009.

In the first seven months of 2010, the value of oil sales increased by 29.1 per cent while the value of natural gas sales dropped by 14.4 per cent due to lower selling volume.  The value of potash sales went up by 99.3 per cent over the same period.

The following table sets forth Saskatchewan=s value and volume of mineral sales for the five years ended December 31, 2009.

Mineral Sales
											Compound
											Annual
	Year Ended December 31										Growth Rate
		2005		2006		2007		2008		2009	2005-2009
		(Millions of Dollars Unless Otherwise Indicated)
Value of Mineral Sales
Oil	$	6,682	$	7,880	$	8,376	$	13,324	$	8,963	7.6	%
Natural Gas		2,103		1,666		1,452		1,653		744	(22.9	)%
Potash		2,697		2,210		3,057		7,378		3,068	3.3	%
Other 1		1,021		1,059		1,553		1,372		1,672	13.1	%
Total	$	12,503	$	12,816	$	14,437	$	23,727	$	14,447	3.7	%
Volume of Mineral Sales
Oil (millions of barrels)		153		156		156		161		155	0.3	%
Natural Gas (millions of cubic metres)		7,220		7,126		6,400		5,868		5,230	(7.7	)%
Potash (thousands of tonnes)		9,539		8,210		10,661		9,894		3,715	(21.0	)%
1Other includes Uranium, Gold, Sodium Sulphate, Salt, Coal, and Base Metals and Bentonite.
Note:      Components may not add due to rounding.
Source:  Saskatchewan Bureau of Statistics and Saskatchewan Ministry of Energy and Resources.

 Oil.  Saskatchewan is the second largest crude oil producing province in Canada.  Subject to change due to price fluctuations and technology improvements, remaining economically recoverable reserves in the Province are estimated to be 1.2 billion barrels of crude oil.

The volume of Saskatchewan oil sales increased at a compound annual rate of 0.3 per cent from 2005 to 2009 while the value of oil sales increased by 7.6 per cent in the same period.

Saskatchewan crude oil production is of light, medium and heavy gravity.  Approximately 15 to 20 per cent of Saskatchewan’s crude is sold within the Province (primarily to the NewGrade Upgrader, Husky Upgrader and Moose Jaw Asphalt plant) while 10 to 15 per cent is sold to refineries in Eastern Canada.  The major market for Saskatchewan’s oil is the upper Midwest of the United States (approximately 65 to 75 per cent.)

Both the NewGrade and Husky Upgraders are designed to produce an output of light synthetic crude oil from a feedstock of blended heavy crude oil.  The NewGrade Upgrader has an operating capacity of approximately 60,000 barrels per day while the Husky Upgrader has the capacity to upgrade approximately 82,000 barrels per day.

In addition to local companies, a large number of multinational oil and gas companies are actively involved in exploration and development in the Province.  The oil industry has experienced success with deep drilling discoveries and is adopting technological improvements.  For example, horizontal drilling and screw pump technology can significantly improve recovery rates and lower operating costs for many reservoirs in Saskatchewan.  The oil industry in the Province invested approximately $14.0 billion in the period from 2005 to 2009 exploring for and developing oil reserves.  From 2005 to the end of 2009, 11,078 oil wells were drilled in Saskatchewan.  In 2009, 1,610 oil wells were drilled in the Province.

  14

Natural Gas.  The volume of Saskatchewan natural gas sales decreased at a compound average annual rate of 7.7 per cent from 2005 to 2009, while the value of natural gas sales decreased by 22.9 per cent in the same period.  The natural gas industry in the Province invested approximately $1.2 billion in the period from 2005 to 2009 exploring for and developing natural gas reserves. During this period, 5,924 natural gas wells were drilled.  In 2009, 233 gas wells were drilled in the Province.

Potash.  Saskatchewan has ten potash mines that produce potash from massive reserves located in southern Saskatchewan. By conservative estimates, Saskatchewan could supply world demand at current levels for several hundred years.  Potash production in Saskatchewan is highly mechanized and relatively low-cost because of the regularity and thickness of deposits and the predictability of ore grades.

In recent years, Saskatchewan potash production has accounted for about 30 per cent of the world=s output.  Approximately 45 per cent of Saskatchewan=s potash production is exported to the United States.  The Saskatchewan government implemented changes in 2005 to the potash tax system to promote sales and investment by the potash industry.  As a result of the tax changes and strong demand growth, the potash industry is expected to be one of the main engines of economic growth for the Saskatchewan economy in the future.  The Saskatchewan potash industry is expected to spend close to $12 billion by the end of the current decade, expanding the existing mines in the Province.  There is also the potential for the development of new potash mines that could each cost up to $10 billion to construct, depending on size.  These expansions and potential new mines are expected to create significant economic spin offs and thousands of permanent and construction jobs in the Province.

Uranium.  In 2009, Saskatchewan was the world’s second largest producer of uranium behind Kazakhstan.  The Athabasca Basin, in northern Saskatchewan, contains the largest, high-grade uranium deposits in the world and has good potential for significant new discoveries.  Uranium was produced at three facilities (McArthur River-Key Lake, Rabbit Lake and McClean Lake) located in northern Saskatchewan.

Current and planned expansion of the Province’s uranium supply capability includes the McClean Lake, McArthur River and Rabbit Lake mines and the Midwest and Cigar Lake projects.

McClean Lake, the Province’s newest facility, commenced production in 1999.  In 2009, with mining operations having ceased, McClean Lake continued production of stockpiled ore from the Sue E and Sue B deposits and in July 2010 the mill was placed in care and maintenance mode.  Mining authorization for the McClean North deposits has been granted and the Caribou deposit was deferred due to economic conditions but continues in the regulatory review process.  Future ore supply sources are being evaluated.

The McArthur River project began production in 1999 with the ore being processed at the Key Lake mill.  Under regulatory approval, in 2009 the mine was allowed to increase production marginally to cover 2008 reductions during scheduled mill maintenance.  An application to expand production capacity at Key Lake and McArthur River is under regulatory review.

The Rabbit Lake mine returned to production in 2002 following a two-year shutdown. With the identification of additional reserves, production will continue at current levels decreasing by 2014 as the mill converts to the processing of Cigar Lake ore.

Of the future mine expansion projects, Cigar Lake and Midwest received initial environmental assessment approval in 1998 but did not proceed due to market conditions.  Cigar Lake was granted a full construction license to proceed in 2004.  In 2006 and 2008, Cigar Lake experienced water inflows and the mine was allowed to flood.  The initial production date is forecast for 2013 as remediation activities continue.  In 2006, it was announced that the Midwest project would proceed.  In 2008, the project was deferred due to economic conditions but continues in the environmental review process and is currently forecast to begin production in 2017.

  15

Manufacturing

The value of Saskatchewan=s manufacturing shipments reached $11.4 billion in 2009, down 13.3 per cent from 2008.

Manufacturing activity has been traditionally based on agriculture.  Food processing is the largest component of the manufacturing sector, accounting for about 22.2 per cent of total manufacturing activity in 2009.  Saskatchewan=s manufacturing sector also produces farm machinery and chemical products.  The further processing of primary products such as grain, livestock, forest products and oil is a growing component of Saskatchewan=s manufacturing sector.

Saskatchewan=s high technology industry is centred in Saskatoon.  Satellite control technology, telecommunications, data communications and agricultural biotechnology products are produced in the Province for domestic and international sale.

Value of Manufacturing Shipments
											Compound
											Annual
		Year Ended December 31									Growth Rate
		2005		2006		2007		2008		2009	2005-2009
		(Millions)
Food Processing	$	1,996	$	2,296	$	2,433	$	2,666	$	2,537	6.2	%
Wood		790		486		284		232		184	(30.5	)%
Metal Fabrication		524		665		688		812		731	8.7	%
Machinery		776		785		997		1,206		1,353	14.9	%
Chemical Products		934		946		1,101		1,396		1,292	8.4	%
Other		4,595		4,688		4,920		6,868		5,332	3.8	%
Total	$	9,614	$	9,865	$	10,423	$	13,180	$	11,428	4.4	%
Note:      Components may not add due to rounding.
Source: Statistics Canada. Data for chemicals and chemical products, electrical and electronic products are not available from
Statistics Canada. These data are now included in Other.

Service Industries

The service industries form the largest component of the Province=s economy.  Services contribute a substantial part of the Province=s economic growth and create the vast majority of jobs.  Services accounted for approximately 74.1 per cent of total employment in the Province in 2009.

This sector is comprised of six industries, namely: business, personal and community services; finance, insurance and real estate; wholesale and retail trade; transportation; communication and utilities; and, public administration.

Of these, the biggest sector in terms of output share and employment is business, personal and community services.  Output from the business, personal and community services sector accounts for one-fifth of the entire economy and approximately four out of ten jobs in the Province.  This segment of the industry consists of:  education and related services; heath care institutions, including hospitals, nursing homes and welfare services; religious organizations; amusement and recreation services; business services such as management and business consultants and computer services; personal services; and, accommodation and food.

Finance, insurance and real estate, which constitute a large component of the service-producing industries, represented 16.5 per cent of the entire Saskatchewan economy in 2009.  This segment includes banks and other institutions delivering financial services, insurance carriers and agencies and real estate companies.

  16

FINANCES OF THE GOVERNMENT

Introduction

The Saskatchewan Government (Government) has general authority for the administration of provincial activities and functions within the Province.  Responsibility for a variety of such activities and functions has been ceded to local government bodies and agencies under authority of a number of provincial statutes.  Responsibilities of the Government not ceded to local government bodies are carried out directly by the Government and through a number of funds and provincial Crown corporations.

Funds

The General Revenue Fund financial statements have been designed primarily to provide an accounting of the financial resources appropriated by the Saskatchewan Legislative Assembly.  The General Revenue Fund is the general fund of the Government to which all public monies received are credited except where the Legislative Assembly has directed otherwise.  Substantially all of the debt of the Government is incurred pursuant to The Financial Administration Act, 1993 and is repayable from the General Revenue Fund.

The General Revenue Fund financial statements are not intended to be summary financial statements that provide a full accounting of the financial affairs and resources of all the entities for which the Government is responsible.  Only those transactions pertaining to the receipt of money from or payment of money to the General Revenue Fund are reflected in these statements.  The financial transactions of other Crown entities, such as provincial Crown corporations, agencies, boards, and commissions, are reported separately from the financial transactions of the General Revenue Fund.  See the AGovernment of Saskatchewan Summary Financial Statements@ contained within Exhibit (e) Volume 1 of the Public Accounts.

A variety of special purpose and other funds are administered by the Government.  Included within these funds are pension plans, funds held in trust for third parties under various arrangements and special purpose funds.  The assets, liabilities and residual balances of these funds are maintained and reported separately from those of the General Revenue Fund.

The General Revenue Fund=s fiscal year begins on April 1 and ends on March 31.  Revenue and expenses are recorded on an accrual basis except for defined benefit pension plan costs.

During 2008-09, the Government made a change in accounting policy to comply with the recommendations of the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants for long-term debt.  On the Statement of Financial Position, loans to Crown corporations and public debt (gross debt net of sinking funds) are now presented net of government business enterprise specific debt.  Additionally, reimbursements of interest from Crown corporation general debt are no longer netted against debt servicing costs on the Statement of Operations.  Prior to this change in accounting policy, public debt was presented on a gross basis on the Statement of Financial Position, and all reimbursements of interest from Crown corporations’ debt were netted against debt servicing costs.  The 2007-08 amounts have been restated for this change in accounting policy.

During 2008-09, the Government determined that agricultural land held for resale, previously presented as a financial asset, is more appropriately classified as tangible capital assets because this land is not expected to be sold within the next year.  This change has been applied retroactively with restatement of the 2007-08 amounts.

During 2008-09, the Government reclassified certain revenue categories, with restatement of 2007-08 amounts:

•   Corporation capital tax has been split into two components.  Resource surcharge has been moved to non-renewable resources and the remaining component of corporation capital tax has been included with other taxes;

•   Liquor consumption tax has moved from sales tax to other taxes and sales tax has been renamed provincial sales tax; and

•   Crown land sales previously reported in oil revenues has been broken out.

Each year the Minister of Finance presents a budget to the Legislative Assembly that provides estimates of the Government=s planned activities during the fiscal year for the General Revenue Fund.  The estimates of expenses in each fiscal year are voted by the Legislative Assembly, with the exception of those expenses for which provision has been made previously by legislation, such as amounts required to service the debt of the Government.

The accounts and financial statements of the Province are examined by the Provincial Auditor who is responsible to the Legislative Assembly and is required to make a report to the Legislative Assembly with respect to each fiscal year.

  17

General Revenue Fund Statement of Cash Requirements and Financing

The following table summarizes cash requirements and financing of the General Revenue Fund for the five fiscal years ended March 31, 2010, and the Budget Estimate for fiscal year 2011.

General Revenue Fund Statement of Cash Requirements and Financing
	Fiscal Year Ended March 31
																	Estimated
		2006			2007			2008			2009			2010			2011
								(Millions)
Cash Requirements
Operating Activities
Revenue		$	8,217		$	8,643		$	9,866		$	12,325		$	10,267		$	9,950
Expenditures			7,678			8,245			8,583			10,355			10,099			10,124
Transfers (to) from Fiscal Stabilization Fund			(139	)		0			642			0			0			0
Transfers (to) from Saskatchewan Infrastructure Fund			0			(105	)		0			0			0			0
Transfers (to) from Growth and Financial Security Fund			-			-			-			419			257			194
Budgetary Surplus (Deficit) 1			400			293			641			2,389			425			20
Add (deduct) Non-Cash Items
Amortization of Foreign Exchange Gains and Losses			2			3			2			5			(1	)		2
Amortization of Capital Assets			135			152			148			167			146			166
Loss on Loans and Investments			2			1			9			1			3			3
Net Change in Non-Cash Operating Activities			6			(17	)		228			(115	)		227			(174	)
Earnings Retained in Sinking Funds			(63	)		(46	)		(46	)		(79	)		(159	)		(82	)
Adjustment to Accumulated Deficit			11			0			0			0			0			0
Cash provided by (used for) Operating Activities			493			386			982			2,368			641			(65	)
Capital Activities
Acquisition of Capital Assets			(218	)		(248	)		(278	)		(342	)		(348	)		(300	)
Investing Activities
Receipts			465			270			124			565			1,012			902
Disbursements			567			299			407			2,323			466			1,072
Cash (required for) provided by
Investing Activities			(102	)		(29	)		(283	)		(1,758	)		546			(170	)
Cash provided (required)		$	173		$	109		$	421		$	268		$	839		$	(535	)
Financing Activities
Proceeds from Debt		$	829		$	1,421		$	558		$	32		$	509		$	1,067
Repayment of Debt			(1,014	)		(1,293	)		(646	)		(755	)		(867	)		(687	)
Proceeds from (repayment of) Debt			(185	)		128			(88	)		(723	)		(358	)		380
Increase (decrease) in Deposits Held			179			(850	)		74			209			(198	)		0
Decrease (increase) in Cash & Temporary Investments			(167	)		613			(407	)		246			(283	)		155
Total Financing		$	(173	)	$	(109	)	$	(421	)	$	(268	)	$	(839	)	$	535
1 See Notes 1-9 commencing on page 34.

  18

Fiscal Year 2010 Results

On June 24, 2010, the Minister of Finance released the financial results for the General Revenue Fund (GRF) for the fiscal year ended March 31, 2010.

Total General Revenue Fund revenue of $10,266.5 million for the fiscal year ended March 31, 2010 decreased by $2,058.6 million, or 16.7 per cent, from the previous fiscal year.  The decrease is primarily due to lower non-renewable resources revenue, particularly potash, and lower transfers from the federal government.  These decreases were partially offset by increases in transfers from Crown entities, tax revenue and other own-source revenue.

General Revenue Fund expense (operating expense plus debt-servicing expense) of $10,098.8 million decreased by $256.3 million, or 2.5 per cent, over the previous year primarily due to year-over-year decreases in Highways and Infrastructure, Agriculture, Health, Enterprise and Innovation, Advanced Education, Employment and Labour, and debt-servicing costs.  In addition, Crown Investments Corporation of Saskatchewan did not receive a transfer in 2009-10.  These decreases were partially offset by increases in Social Services, Enterprise Saskatchewan, Finance (pensions and benefits), Education and Corrections, Public Safety and Policing.

In addition, the GRF received a net transfer of $256.8 million from the Growth and Financial Security Fund (GFSF) that was established by legislation on May 14, 2008. This net transfer was made up of an $83.9 million transfer from the GRF to GFSF (equal to 50 per cent of the GRF pre-transfer surplus as required by The Growth and Financial Security Act) and a transfer of $340.7 million back from the GFSF to the GRF to assist in financing government-owned capital.  In fiscal year 2009, the GRF recorded a net transfer of $418.9 million from the GFSF.

As a result, the General Revenue Fund recorded a surplus of $424.5 million for fiscal year 2010, compared to a GRF surplus of $2,388.9 million for fiscal year 2009.

At March 31, 2010, gross debt of the General Revenue Fund was $10,690.0 million compared to $11,065.8 million at March 31, 2009.  Approximately 60 per cent of the General Revenue Fund's gross debt at March 31, 2010 was incurred for general government purposes while 40 per cent was incurred for and reimbursable from Crown corporations.  Crown corporation debt at March 31, 2010 was incurred for general Crown purposes (21 per cent) and for Government Business Enterprises (79 per cent).  Approximately 97 per cent of the General Revenue Fund's gross debt was denominated in Canadian dollars while about 3 per cent was denominated in United States dollars at March 31, 2010.

During fiscal year 2010, the General Revenue Fund issued and sold $3.2 million in medium and long term debentures for general government purposes and increased short term debt by $194.4 million.  During fiscal year 2010, the General Revenue Fund redeemed outstanding debentures issued for general government purposes totaling $812.5 million.  During the same period, the General Revenue Fund issued and sold $101.9 million in medium and long term debentures for Crown corporations, increased short term debt by $301.4 million for Crown corporations and redeemed $96.9 million of debentures issued for Crown Corporations.  The General Revenue Fund's sinking funds totaled $2,697.4 million at March 31, 2010. Contributions to the General Revenue Fund's sinking funds amounted to $97.8 million in fiscal year 2010.

Guaranteed debt of the General Revenue Fund was $17.1 million at March 31, 2010, compared to $20.3 million at March 31, 2009.

Fiscal Year 2011 Budget Estimate

On March 24, 2010, the Minister of Finance tabled the Budget Address and Estimates for the fiscal year ending March 31, 2011.

The Budget Estimates for the General Revenue Fund for fiscal year 2011 projected total revenue of $9,949.9 million, total expense of $10,124.1 million, a net transfer from the GFSF to the GRF of $194.2 million, and a budgetary surplus of $20.0 million.  This is estimated to be the seventeenth consecutive balanced budget for the Province since fiscal year 1995. Net cash required for operations and investments for fiscal year 2011 is estimated to be $535.5 million.

Expense in the 2010-11 Budget is estimated to be down by $121.3 million, or 1.2 per cent, from the 2009-10 Budget.  This reduction is primarily due to decreases in Agriculture, Finance Debt Servicing, Education (including Advanced Education, Employment and Labour Teachers’ Pensions and Benefits), partially offset by an increase in Health.

  19

Agriculture. The Ministry's estimated total expense for fiscal year 2011 is $385.8 million, a decrease of $97.2 million, or 20.1 per cent, from the fiscal year 2010 estimate. The decrease largely reflects lower funding for farm income stabilization programs.

Education (includes Advanced Education, Employment and Labour, Education, and Teachers' Pensions and Benefits). The estimated total expense for fiscal year 2011 is $2,158.5 million, a decrease of $53.5 million, or 2.4 per cent, from the fiscal year 2010 estimate. The decrease primarily reflects a reduction for school capital projects as well as the education property tax reform.

Environment.  The Ministry's estimated total expense for fiscal year 2011 is $174.3 million, a decrease of $25.7 million, or 12.9 per cent, from the fiscal year 2010 estimate, primarily related to decreases in the fire management program.

Finance.  The Ministry's estimated total expense for fiscal year 2011 is $324.8 million, a decrease of $4.0 million, or 1.2 per cent, from the fiscal year 2010 estimate.  This decrease is due mainly to eliminating a subsidy for a driver’s license administration system, as well as lower salary, IT and accommodation costs.

Finance Debt Servicing. Costs for servicing government debt for fiscal year 2011 are estimated to be $435.0 million, a decrease of $67.5 million, or 13.4 per cent, from the fiscal year 2010 estimate.  The decrease is mainly due to a reduction in government general gross debt.

Health.  The Ministry's estimated total expense for fiscal year 2011 is $4,202.1 million, an increase of $126.9 million, or 3.1 per cent, from the fiscal year 2010 estimate.  The increase primarily reflects higher funding provided to regional health authorities for compensation, drugs and medical supplies and operating costs.

Highways and Infrastructure. The Ministry's estimated total expense for fiscal year 2011 is $402.9 million, a decrease of $33.7 million, or 7.7 per cent, from the fiscal year 2010 estimate.  The decrease primarily reflects lower funding for surface preservation and reduced grants to rural municipalities.

Justice and Attorney General.  The Ministry's estimated total expense for fiscal year 2011 is $140.4 million, a decrease of $3.7 million, or 2.6 per cent, from the fiscal year 2010 estimate due largely to general efficiencies as well as the transfer of certain functions to agencies outside of the General Revenue Fund.

Social Services.  The Ministry's estimated total expense for fiscal year 2011 is $753.7 million, an increase of $34.4 million, or 4.8 per cent, from the fiscal year 2010 estimate.  The increase primarily reflects increases for child protection and income assistance programs.

Other Expenses.  The other category includes expenses for industry and economic development, government relations, aboriginal affairs and ministries serving central government functions.  The category's estimated total expense for fiscal year 2011 is $1,146.5 million, an increase of $13.4 million, or 1.2 per cent, from the fiscal year 2010 estimate primarily due to increases for both municipal infrastructure programs and policing.

In fiscal year 2011, 78.8 per cent of the General Revenue Fund estimated total expense is for transfer payments to individuals (e.g. social assistance) or organizations such as health authorities, school boards, and municipalities for their operating, pension and capital requirements.  Government organizations account for 12.7 per cent of the estimated expense, 2.7 per cent is for benefits and pensions and 1.5 per cent is for the amortization of government owned assets and infrastructure.  The remaining 4.3 per cent of the estimated total expense is for debt servicing.

Total General Revenue Fund revenue for 2010-11 is estimated at $9,949.9 million, a decrease of $710.9 million, or 6.7 per cent, from the 2009-10 Budget Estimates.  The decrease is primarily related to a decrease in non-renewable resource revenue, other own-source revenue and lower transfers from Crown entities.  These decreases are partially offset by an increase in taxation revenue and transfers from the Government of Canada.

Taxation.  Provincial taxes include personal and corporate income taxes, sales tax, tobacco tax, fuel tax and other taxes, including liquor consumption, corporate capital and insurance premiums taxes.  Tax revenue is estimated to total $4,859.2 million, or 48.8 per cent, of total General Revenue Fund revenue for 2010-11, an increase of $400.3 million, or 9.0 per cent, from the 2009-10 Budget Estimates.  Increases are expected for all tax categories, primarily corporation and individual income taxes.

Non-Renewable Resources.  Non-renewable resource revenue is collected by the Government in respect of the production of crude oil, natural gas, potash, uranium, other minerals and Crown sales of petroleum and natural gas rights (Crown land sales).  Non-renewable resource revenue is estimated to total $2,108.0 million, or 21.2 per cent, of General Revenue Fund revenue for 2010-11, a decrease of $1,260.9 million, or 37.4 per cent, from the 2009-10 Budget Estimate.  The decrease is primarily due to lower potash revenue.

  20

Transfers from Government Entities and Other Revenues.  Transfers from Government entities and other revenues include dividends from Provincial Crown Entities, motor vehicle fees, charges for service, interest earnings, licenses and permits, and other miscellaneous revenues.  These revenues of the Province are estimated at $1,283.0 million, or 12.9 per cent, of General Revenue Fund revenue for 2010-11, a decrease of $92.3 million, or 6.7 per cent, from the 2009-10 Budget Estimate.  The decrease is primarily due to lower sales, services and service fee revenue due to lower projected agricultural land sales, as well as lower interest earnings.

Transfers from Crown Entities have been principally from the Crown Investments Corporation of Saskatchewan (CIC) and the Saskatchewan Liquor and Gaming Authority (SLGA).  The Government determines the timing and level of transfers from CIC to the extent of available income or surplus.  The Budget Estimate includes a CIC regular dividend of $266 million and a special dividend of $10 million in 2010-11 as compared to a $185 million regular dividend and $110 million special dividend in the 2009-10 Budget Estimate.  The transfer from SLGA represents SLGA net income for the year.  In 2010-11, this amount is estimated to be $445.6 million.

Transfers from the Federal Government.  Transfers from the Government of Canada consist of payments made to the Province to assist in financing a number of programs.  Transfer payments from the federal government are estimated to total $1,699.7 million in 2010-11, an increase of $242.0 million, or 16.6 per cent from the 2009-10 Budget Estimate of $1,457.7 million.  Transfer payments represent 17.1 per cent, of General Revenue Fund revenue in 2010-11.

One component of federal transfer payments to Saskatchewan has traditionally been Equalization.  Equalization payments are made to provinces that have a below average capacity to raise revenue based on a ten-province standard.  Total federal Equalization payments to provinces in 2010-11 are $14.4 billion.

The current formula uses a ten-province standard and allows for the exclusion of 100 per cent of natural resource revenue when determining provincial entitlements.  Entitlements are then limited by a fiscal capacity cap that requires the inclusion of 100 per cent of provincial natural resource revenue and limits any province’s entitlement to the average of the fiscal capacities of all receiving provinces (including Ontario).

Saskatchewan did not receive an Equalization payment in 2009-10 and will again not be a recipient province in 2010-11 due to the recent strength of the Province’s natural resource revenue combined with recent reforms to the Equalization program, particularly the introduction of a fiscal capacity cap.

Unconditional federal transfer payments made under the Canada Health Transfer (CHT) and Canada Social Transfer (CST) are authorized by the Federal-Provincial Fiscal Arrangements Act, 1977.  These federal programs provide “block funding” to all provinces in support of health care, post-secondary education and social assistance.  There is no link between provincial expenditures and these transfers.  Combined, these transfers are expected to be $1,154.2 million for 2010-11, a decrease of $24.3 million, or 2.1 per cent, from the 2009-10 Budget Estimate of $1,178.5 million.

The 2010-11 CHT Budget Estimate is $811.8 million, $31.7 million lower than the 2009-10 Budget Estimate.  The decrease is due mainly to increases in the value of Saskatchewan’s income tax points for 2010 and 2011.

The 2010-11 CST Budget Estimate is $342.4 million, $7.4 million higher than the 2009-10 Budget Estimate.  The increase is due to an increase in total federal cash combined with a slight increase in Saskatchewan’s share of the national population.

The 2010-11 Other Federal Transfers Budget Estimate is $545.5 million, $266.3 million higher than the 2009-10 Budget Estimate.  The increase is primarily related to increases in a number of federal-provincial cost-sharing stimulus and major infrastructure programs.

2010-11 borrowing requirements are estimated at $1,067.7 million; $132.2 million for government requirements and $935.5 million for Crown Corporations.  Debt retirement is estimated at $687.3 million, resulting in an increase in gross debt of $380.4 million.

The 2010-11 Budget estimates public debt (gross debt less equity in sinking funds) at March 31, 2011 to be $8,792.6 million compared to $8,097.5 million forecast at March 31, 2010, an increase of $695.1 million, or 8.6 per cent. Government general debt is estimated to be $4,145.3 million at March 31, 2011 exhibiting no change from the forecast at March 31, 2010.  Crown corporation general debt is estimated to be $975.2 million at March 31, 2011 compared with $919.7 million forecast at March 31, 2010, an increase of $55.5 million or 6.0 per cent.  Government Business Enterprise specific debt is estimated to be $3,672.1 million at March 31, 2011 compared to $3,032.5 million forecast at March 31, 2010, an increase of $639.6 million or 21.1 per cent.

  21

 During the period April 1, 2010 to October 31, 2010, the Government issued and sold debentures and bonds totaling $513.0 million.  On May 3, 2010, the Government issued $13.0 million, 4.80 per cent debentures to the Canada Pension Plan Investment Board (CPPIB) due May 3, 2040.  On July 28, 2010, the Government issued $300.0 million, 3.90 per cent debentures in the Canadian public market, due July 28, 2020.  On September 8, 2010, the Government issued $200.0 million, 4.75 per cent debentures in the Canadian public market, due June 1, 2040.

The 2010-11 Budget continues reporting Summary Financial Budget details that provide a bottom line forecast for all entities over which the Government has control, such as Crown corporations and other entities.  The Budget uses a full accrual accounting model for reporting capital costs in both the GRF and the Summary Financial Statements.  Since 2004-05, under this full accrual accounting model, the full cost of capital is no longer included in the expenses within the fiscal year.  Rather, the capital is included as part of the Government's assets.  The annual cost of using the asset (i.e. amortization) is recognized as an expense in the annual spending.

During 2008-09, the Government made a change in accounting policy to comply with the recommendations of the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants for long-term debt.  On the Statement of Financial Position, loans to Crown corporations and public debt (gross debt net of sinking funds) are now presented net of government business enterprise specific debt.  Additionally, reimbursements of interest from Crown corporation general debt are no longer netted against debt servicing costs on the Statement of Operations.  Prior to this change in accounting policy, public debt was presented on a gross basis on the Statement of Financial Position, and all reimbursements of interest from Crown corporations' debt were netted against (debt servicing costs).  The 2007-08 amounts have been restated for this change in accounting policy.

During 2008-09, the Government determined that agricultural land held for resale, previously presented as a financial asset, is more appropriately classified as tangible capital assets because this land is not expected to be sold within the next year.  This change has been applied retroactively with restatement of the 2007-08 amounts.

During 2008-09, the Government reclassified certain revenue categories, with restatement of 2007-08 amounts:

• Corporation Capital Tax has been split into two components.  Resource Surcharge has been moved to Non-Renewable Resources and the remaining component of Corporation Capital Tax (on financial institutions and Crown corporations only) has been included with Other Taxes;

• Liquor Consumption Tax has moved from Sales Tax to Other Taxes and Sales Tax has been renamed Provincial Sales Tax; and,

•      Crown land sales revenue, previously reported in Oil revenue, has been broken out.

Fiscal Year 2011 1st Quarter Report

On August 20, 2010, the Minister of Finance released the 1st Quarter Financial Report for the fiscal year ending March 31, 2011. The Report forecasts total revenue of $10,144.8 million, total expense of $10,285.8 million, a net transfer from the GFSF of $161.0 million and a budgetary surplus of $20.0 million.

Total revenue is forecast to be up $194.9 million from budget primarily due to increased revenue from Crown land sales, partially offset by decreases in potash, oil, natural gas, other non-renewable resources, transfers from Crown entities and transfers from the Government of Canada.

Total expense is forecast to be up $161.7 million from budget, primarily reflecting a $144.0 million increase in Agriculture due to the provincial contribution to the Canada-Saskatchewan Excess Moisture Program and an additional $23.0 million in Corrections, Public Safety and Policing, including $18.5 million for higher claims through the Provincial Disaster Assistance Program (PDAP).

Total debt is forecast to be $8.6 billion, up $835.8 million from actual 2009-10 entirely due to increases in Crown corporation debt.

22 

General Revenue Fund Revenue

The General Revenue Fund receives revenue from taxes, non-renewable resources, other provincial sources and other governments.

The following table sets forth General Revenue Fund revenue by major sources for each of the previous five fiscal years ending March 31, 2010, and the Budget Estimate for fiscal year 2011.  Also included is the percentage composition of major revenue sources for the Budget Estimate for fiscal year 2011.

General Revenue Fund Revenue 1
	Fiscal Year Ended March 31
															Percentage
													Budget		of Total
										Actual			Estimate		Revenue
		2006		2007		2008		2009		2010			2011		2011
	(Thousands)
Taxation
Corporation Capital 2		$	524,650	$	513,458	$	0	$	0	$	0		$	0		0.0	%
Corporation Income			393,629		554,001		673,641		591,930		881,424			762,500		7.7
Individual Income			1,447,905		1,668,538		1,938,258		1,844,226		1,890,848			1,964,700		19.7
Sales 3			1,112,350		1,079,794		929,865		1,108,628		1,084,001			1,186,300		11.9
Fuel			376,426		383,576		406,434		429,162		441,533			452,700		4.5
Tobacco			171,107		190,334		190,412		199,072		196,868			235,100		2.4
Other			89,751		94,844		279,633		257,977		237,599			257,900		2.6
Total			4,115,818		4,484,545		4,418,243		4,430,995		4,732,273			4,859,200		48.8	%
Non-Renewable Resources
Oil			1,124,952		1,318,852		1,246,205		1,616,071		1,294,670			1,098,300		11.0	%
Potash			277,967		161,729		432,770		1,364,463		(183,887	)		221,000		2.2
Crown Land Sales 4			0		0		419,062		928,245		151,455			202,800		2.0
Natural Gas			269,074		165,131		133,780		125,922		40,078			42,200		0.4
Resource Surcharge 5			0		0		315,230		458,299		475,632			398,700		4.0
Other			49,106		48,540		93,299		119,408		132,676			145,000		1.5
Total			1,721,099		1,694,252		2,640,346		4,612,408		1,910,624			2,108,000		21.2	%
Transfers from Government
Entities and Other Revenues
Crown Investments Corporation			221,000		167,000		200,000		0		185,000			266,000		2.7	%
-  Special dividend			0		0		0		365,000		570,000			10,000		0.1
Liquor & Gaming Authority			351,673		370,053		399,531		446,652		429,924			445,600		4.5
Other Enterprises and Funds			41,214		50,043		53,623		39,564		64,172			46,900		0.5
Motor Vehicles Fees			135,183		138,908		140,631		151,143		158,303			152,400		1.5
Other Licences and Permits			41,800		36,787		35,927		36,607		34,587			27,100		0.3
Sales, Services, and Service Fees			89,389		93,332		94,936		101,885		110,555			108,300		1.1
Commercial operations			64,724		69,575		78,664		86,567		87,771			0		0.0
Interest, premium, discount and
exchange 6			89,226		96,062		120,502		187,957		237,372			134,300		1.3
Other			81,061		53,660		80,714		157,330		141,844			92,400		0.9
Total			1,115,270		1,075,420		1,204,528		1,572,705		2,019,528			1,283,000		12.9	%
Transfers from the
Federal Government
Equalization			88,672		12,723		226,146		0		0			0		0.0	%
Canada Health Transfer			659,558		716,775		739,648		823,496		819,262			811,800		8.2
Canada Social Transfer			298,756		323,599		325,098		338,301		334,976			342,400		3.4
Other			218,379		335,732		311,669		547,167		449,795			545,500		5.5
Total			1,265,365		1,388,829		1,602,561		1,708,964		1,604,033			1,699,700		17.1	%
Total Revenue		$	8,217,552	$	8,643,046	$	9,865,678	$	12,325,072	$	10,266,458		$	9,949,900		100	%
1 See "General Revenue Fund Statement of Operations and Accumulated Deficit" commencing on page 36.
2 Commencing in 2008-09, the non-Resource Surcharge component of Corporation Capital tax is recorded under Taxation - Other. The 2007-08 amounts have been restated.
3 Commencing in 2008-09, the Liquor Consumption Tax component of Sales Tax is recorded under Taxation - Other. The 2007-08 amounts have been restated.
4 Prior to 2008-09, Crown Land Sales were included in Oil revenues. The 2007-08 amounts have been restated.
5 Prior to 2008-09, Resource Surcharge revenue was included in Corporation Capital Tax. The 2007-08 amounts have been restated.
6 During 2008-09, the Government made a change in accounting policy resulting in reimbursements of interest from Crown corporation general debt no longer being netted against debt servicing costs. The 2007-08 amounts have been restated.

  23

General Revenue Fund Expense

The following table provides a breakdown of the General Revenue Fund expense on government programs and services for the five fiscal years ended March 31, 2010, and includes the Budget Estimate for fiscal year 2011.

General Revenue Fund Expense 1, 2
(unaudited)
	Fiscal Year Ended March 31
														Percentage
												Budget		of Total
										Actual		Estimate		Expense
		2006		2007		2008		2009		2010		2011		2011
	(Thousands)
Agriculture		$	422,390	$	369,995	$	302,197	$	424,396	$	373,246	$	385,776	3.8	%
Education 3			1,472,946		1,667,504		1,645,114		2,200,752		2,200,456		2,158,545	21.3
Environment			146,030		194,151		174,921		177,129		172,304		174,299	1.7
Finance			247,447		258,964		284,463		290,832		326,558		324,827	3.2
Finance Debt Servicing 4			544,666		538,303		546,718		520,181		479,962		435,000	4.3
Health			2,990,625		3,202,965		3,504,333		3,976,241		3,934,231		4,202,106	41.5
Highways and Infrastructure			263,938		307,310		353,684		482,400		418,279		402,939	4.0
Justice and Attorney General			217,415		237,622		129,189		135,648		145,293		140,350	1.4
Social Services			630,819		711,193		615,032		676,604		740,087		753,703	7.4
Other Expense			741,810		757,245		1,027,158		1,470,956		1,308,337		1,146,541	11.3
Total		$	7,678,086	$	8,245,252	$	8,582,809	$	10,355,139	$	10,098,753	$	10,124,086	100.0	%
1See "General Revenue Fund Statement of Operations and Accumulated Deficit" commencing on page 36.
2Due to a government reorganization, 2008 Actual, 2009 Actual, 2010 Actual and 2011 Budget Estimate are stated on the new ministry structure of government.
3 Includes the Ministries of Advanced Education, Employment and Labour and Education (including Teachers' Pensions and Benefits)
4During 2008-09, the Government made a change in accounting policy resulting in reimbursements of interest from Crown corporation general debt no longer being netted against debt servicing costs. The 2007-08 amounts have been restated.

Transfers To (From) The Growth and Financial Security Fund

The Growth and Financial Security Fund (GFSF), was established with the passage of The Growth and Financial Security Act on May 14, 2008.  The purpose of the GFSF is to assist in the achievement of the Government of Saskatchewan's long-term objectives by providing for financial security of the Government of Saskatchewan from year to year and to provide a source of funds that are to be available for appropriation to be used for programs of the Government of Saskatchewan identified as promoting or enhancing the economic development of Saskatchewan.

On the coming into force of The Growth and Financial Security Act, the balances in the Fiscal Stabilization Fund ($1,528.9 million) and the Saskatchewan Infrastructure Fund ($105.1 million) were transferred to the Growth and Financial Security Fund.

At March 31, 2010, the GFSF had a balance of $958.3 million.  The following table displays net transfers to and from the GFSF for the five fiscal years ended March 31, 2010 and includes the Budget Estimate for fiscal year 2011.  Transfers into the GFSF are shown as a positive number and transfers from the GFSF are shown as a negative number.

	Fiscal Year Ended March 31
															Budget
															Estimate
		2006		2007		2008		2009			2010				2011
		(Thousands)
Growth and Financial Security Fund			N/A		N/A		N/A	$	(418,930	)	$	(256,795	)	$	(194,186	)

24 

Transfers To (From) The Fiscal Stabilization Fund

The 2000-01 Budget established the Fiscal Stabilization Fund (FSF to safeguard the fiscal position of the Province from year to year.  The FSF was established through legislation with an initial appropriation from the General Revenue Fund of $775.0 million in fiscal year 2001.

The Growth and Financial Security Act, passed on May 14, 2008, repealed The Balanced Budget Act, The Fiscal Stabilization Fund Act, and The Infrastructure Fund Act.  On the coming into force of The Growth and Financial Security Act, the balance in the FSF was transferred to the Growth and Financial Security Fund (GFSF) and the FSF ceased to exist.

The following table displays transfers to and from the FSF for the five fiscal years ended March 31, 2010. Transfers into the FSF are shown as a positive number and transfers from the FSF are shown as a negative number.

Transfers To (From) The Fiscal Stabilization Fund
	Fiscal Year Ended March 31
		2006		2007		2008		2009			2010
	(Thousands)
Fiscal Stabilization Fund		$	139,000	$	0	$	641,434	$	(1,528,934	) *		N/A
* Transferred to the GFSF upon passage of The Growth and Financial Security Act

Transfers To (From) The Saskatchewan Infrastructure Fund

The Saskatchewan Infrastructure Fund (SIF) was established at mid-year 2006-07 to support the provision of public infrastructure.  The SIF was established through legislation with an initial appropriation from the General Revenue Fund of $100.0 million in fiscal year 2007.  On the coming into force of The Growth and Financial Security Act, the balance in the SIF was transferred to the GFSF and the SIF ceased to exist.

The following table displays transfers to and from the SIF for the five fiscal years ended March 31, 2010.  Transfers into the SIF are shown as a positive number and transfers from the SIF are shown as a negative number.

Transfers To (From) The Saskatchewan Infrastructure Fund
	Fiscal Year Ended March 31
		2006		2007		2008		2009			2010
	(Thousands)
Saskatchewan Infrastructure Fund....................			N/A	$	105,090	$	0	$	(105,090	)  *		N/A
* Transferred to the GFSF upon the passage of The Growth and Financial Security Act.

General Revenue Fund Investing Activities

Investing activities of the General Revenue fund include loans to and investments in Crown entities and other organizations, individuals and agricultural land held for resale.  Cash provided by investing activities for fiscal year 2010 was $546.1 million as compared to $1,757.9 million required in fiscal year 2009.  Cash required for investing activities for fiscal year 2011 is estimated at $170.0 million.  The changes in 2010 are related primarily to debt redemption.  The changes in 2009 are related primarily to one time contributions to sinking funds.

25 

Financing and Debt Management

Saskatchewan=s financing activities involve the raising of funds through the issue and sale of Province of Saskatchewan securities, changes in deposits held and changes in cash and temporary investments.  Funds raised are used to assist in the financing of the capital budgets of, and to provide a temporary credit facility for, Crown corporations as well as for general government purposes (which includes General Revenue Fund operations and other non-Crown corporation agencies).  Crown corporations are responsible for reimbursing the General Revenue Fund for the costs of servicing the interest and principal associated with debt borrowed on their behalf.  In addition to direct borrowing in the name of the Province, the Government provides loan guarantees for certain purposes such as bonds issued in the name of Crown corporations that are offered for sale to Saskatchewan residents.

At March 31, 2010, gross debt of the General Revenue Fund amounted to $10,690.0 million as compared to $11,065.8 million at March 31, 2009.  Approximately 40 per cent of the gross debt of the General Revenue Fund at March 31, 2010, was reimbursable from and was incurred for Crown corporations and Government Business Enterprises (GBEs).  Approximately 60 per cent of the General Revenue Fund gross debt at March 31, 2010, was incurred for general government purposes.

Approximately 97 per cent of the gross debt of the General Revenue Fund was denominated in Canadian dollars while about 3 per cent was denominated in U.S. dollars at March 31, 2010.  Included in the debt denominated in Canadian dollars are certain financing transactions that involved borrowing in foreign currencies and swapping or hedging the liability into Canadian dollars to eliminate the foreign exchange rate risk to the General Revenue Fund.  (Foreign exchange adjustments resulted in a decrease in gross debt of $67.3 million at March 31, 2010, compared to an increase of $63.9 million at March 31, 2009).

Securities issued and sold include Province of Saskatchewan promissory notes and debentures.  At March 31, 2010, promissory notes and debentures outstanding were $650.0 million and $10,040.0 million, respectively.  Promissory notes and debentures outstanding at March 31, 2009, were $154.2 million and $10,911.6 million, respectively.

During fiscal year 2010, the Government issued and sold $3.2 million in debentures and $194.4 million of promissory notes for general government purposes.  During the same period, the Government redeemed outstanding debentures issued for general government purposes totalling $812.5 million.

During the year, $101.9 million in debentures and $495.8 million of promissory notes were issued and sold for the purposes of Crown corporations.  Redemptions of debentures issued for Crown corporations amounted to $96.9 million during fiscal 2010.

The Government=s sinking funds totalled $2,697.4 million at March 31, 2010.  Contributions to the Government=s sinking funds amounted to $97.8 million in fiscal year 2010.

26 

The following table sets forth the debt of the General Revenue Fund (including guarantees) for the five fiscal years ended March 31, 2010.

	Total Debt 1
	At March 31
	2006		2007		2008		2009		2010
	(Thousands)
Promissory Notes
(for the purpose of)
Crown Corporations 2	$	150,760	$	109,660	$	316,702	$	154,197	$	455,630
General Government Purposes 3		40		113,540		113,298		0		194,370
Total		150,800		223,200		430,000		154,197		650,000
Debentures
(for the purpose of)
Crown Corporations 2		3,788,094		3,799,607		3,442,836		3,802,379		3,807,387
General Government Purposes 3		7,994,414		8,034,489		7,705,073		7,109,217		6,232,638
Total		11,782,508		11,834,096		11,147,909		10,911,596		10,040,025
Gross Debt		11,933,308		12,057,296		11,577,909		11,065,793		10,690,025
Less:  Equity in  Sinking Funds
(for the purpose of)
Crown Corporations		307,869		352,199		365,210		400,306		410,849
General Government Purposes 3		797,231		903,091		994,048		2,963,931		2,286,526
Total		1,105,100		1,255,290		1,359,258		3,364,237		2,697,375
		10,828,208		10,802,006		10,218,651		7,701,556		7,992,650
Guaranteed Debt		46,122		34,359		25,227		20,305		17,058
Debt plus Guaranteed Debt	$	10,874,330	$	10,836,365	$	10,243,878	$	7,721,861	$	8,009,708
1 Debt repayable in foreign currency has been restated in Canadian dollar equivalents based on the exchange rate in effect on March 31 of each year.
2 These enterprises are responsible for reimbursing the General Revenue Fund for the repayment of principal and interest.
3 Debt for General Government Purposes is incurred for the general purposes of, and is repayable out of, the General Revenue Fund.

  27

 The following table sets forth the allocation of gross debt of the General Revenue Fund for the five fiscal years ended March 31, 2010.

	Gross Debt by Allocation 1
	At March 31
		2006		2007		2008		2009		2010
	(Thousands)
Crown Corporations
Information Services Corporation of Saskatchewan			36,500		24,547		13,547		13,547		13,547
Investment Saskatchewan Inc.			20,919		10,919		3,919		0		0
Municipal Financing Corporation of Saskatchewan			13,301		22,276		26,230		39,092		97,660
Saskatchewan Crop Insurance Corporation			153,000		115,800		100,000		50,000		0
Saskatchewan Gaming Corporation			0		0		0		0		6,000
Saskatchewan Housing Corporation			83,004		83,004		83,004		52,004		52,004
Saskatchewan Opportunities Corporation			3,000		18,000		31,844		37,543		34,783
Saskatchewan Power Corporation			2,457,131		2,525,322		2,359,597		2,515,488		2,772,265
Saskatchewan Telecommunications
Holding Corporation			393,574		360,976		347,379		355,600		356,100
Saskatchewan Water Corporation			33,391		34,970		41,074		43,583		54,475
SaskEnergy Incorporated			745,034		713,453		752,944		849,819		876,183
Total Crown Corporations			3,938,854		3,909,267		3,759,538		3,956,576		4,263,017
General Government Purposes			7,994,454		8,148,029		7,818,371		7,109,217		6,427,008
Gross Debt		$	11,933,308	$	12,057,296	$	11,577,909	$	11,065,793	$	10,690,025
1 Debt repayable in foreign currency has been restated in Canadian dollar equivalents based on the exchange rate in effect on March 31 of each year.

  28

 The following table sets forth the composition of debentures issued and redeemed by the General Revenue Fund for the five fiscal years ended March 31, 2010.

Composition of Debentures Issued and Redeemed 1
(unaudited)
	Fiscal Year Ended March 31
		2006			2007		2008			2009			2010
	(Millions)
Total Debentures Issued		$	829.5		$	1,348.8	$	419.2		$	293.8		$	105.1
Total Debentures Redeemed			962.5			1,293.3		1,071.0			869.8			909.4
Increase (Decrease) in Debentures		$	(133.0	)	$	55.5	$	(651.8	)	$	(576.0	)	$	(804.3	)
1 All foreign currency debt has been stated in the equivalent Canadian funds based on the exchange rate in effect on March 31 of each year.

The following table sets forth the composition of outstanding debentures of the General Revenue Fund for the five fiscal years ended March 31, 2010.

Composition of Debentures Outstanding 1
	Fiscal Year Ended March 31
		2006		2007		2008		2009		2010
	(Millions)
Debentures Outstanding
To the Public		$	10,897.1	$	10,982.7	$	10,349.3	$	10,166.5	$	9,294.9
To the Canada Pension Plan			885.4		851.4		798.6		745.1		745.1
Other Obligations			0.0		0.0		0.0		0.0		0.0
Total		$	11,782.5	$	11,834.1	$	11,147.9	$	10,911.6	$	10,040.0
1 All foreign currency debt has been stated in the equivalent Canadian funds based on the exchange rate in effect on March 31 of each year.

The Canada Pension Plan (ACPP@) is a compulsory national pension plan in which residents of all provinces, except Quebec, participate.  Prior to January 1, 1998, surplus contributions to the CPP were invested in non-marketable securities issued by participating provinces, provincially guaranteed Crown corporations and the federal government.  The rate of interest charged by the CPP was generally lower than the rate available to the Saskatchewan government in the public market for debt of comparable maturity as CPP rates were based on the federal government long term, public market borrowing costs.

In 1997, the federal government passed legislation which took effect January 1, 1998 and changed the nature of CPP borrowing. The legislation specifies that surplus CPP funds must be invested in a diversified portfolio of securities, at arm=s length from government.  While provinces continue to have access to CPP funds, they are now required to pay rates comparable to their own cost of borrowing, rather than the federal long term rate.

Provincial securities sold to the CPP prior to July 1, 2005 are payable 20 years after their respective dates of issue.  Effective July 1, 2005, no new loan capital is available to provinces.  However, provinces are permitted to roll over maturing securities and may choose the term of the new securities within the parameters of not less than five years and not more than 30 years.

The securities are not negotiable, transferable or assignable.  The securities are callable in whole or in part, before maturity, at the option of the Province.

29 

The following table summarizes various Provincial Government debt indicators at year end for the five fiscal years ended March 31, 2010.

Debt Indicators
(unaudited)
	At March 31
		2006			2007			2008			2009			2010
Total debt of the General Revenue Fund
Per Capita1		$	11,012		$	10,870		$	10,276		$	7,618		$	7,775
As a Percentage of Saskatchewan Gross Domestic
Product 2			25.0	%		23.6	%		20.0	%		12.0	%		14.2	%
Total debt of the General Revenue Fund -
General Government Purpose Portion 3
Per Capita1		$	7,334		$	7,301		$	6,870		$	4,109		$	4,036
As a Percentage of General Revenue Fund Revenue			88.1	%		84.2	%		69.6	%		33.8	%		40.5	%
As a Percentage of Saskatchewan Gross Domestic
Product 2			16.6	%		15.9	%		13.3	%		6.5	%		7.4	%
Annual Interest Payments on the General
Government Purpose Portion of Gross Debt of
the General Revenue Fund
As a Percentage of General Revenue Fund Revenue			6.6	%		6.2	%		5.6	%		4.2	%		4.7	%
1Debt plus guaranteed debt per capita for 2006 through 2010 are calculated by dividing the debt at March 31 by the population of the Province on July 1 of the same calendar year.
2 Debt plus guaranteed debt as a percentage of Saskatchewan's GDP are calculated by dividing the debt at March 31 by the Province's current GDP for the previous calendar year.
3Debt plus guaranteed debt of the General Revenue Fund - General Government Purpose Portion does not include debt incurred by the General Revenue Fund on behalf of Crown entities for which the crown entities are responsible for reimbursing the General Revenue Fund.

 The following table sets forth the debt maturity schedule, by principal amount and currency of payment, of the General Revenue Fund gross debt at March 31, 2010.

Debt Maturity Schedule
Fiscal Year	Canadian		U.S. Dollar Debt		Total
ending March 31	Dollar Debt		(Canadian Dollars) 1		(Canadian Dollars)
			(Thousands)
2011	$	1,299.1	$	0.0	$	1,299.1
2012		260.7		0.0		260.7
2013		1,161.5		0.0		1,161.5
2014		789.3		50.8		840.1
2015		898.9		0.0		898.9
1 - 5 years	$	4,409.5	$	50.8	$	4,460.3
2016-2020		1,246.1		0.0		1,246.1
2021-2025		1,141.1		228.5		1,369.6
2026-2030		821.2		0.0		821.2
2031-2035		1,030.0		0.0		1,030.0
2036-2040		862.8		0.0		862.8
After 2040		900.0		0.0		900.0
	$	10,410.7	$	279.3	$	10,690.0

1 Debentures repayable in U.S. dollars of $275.0 million have been converted to Canadian dollars at the exchange rate in effect at March 31, 2010.

    (U.S. dollars - $1.0156)

  30

The following table sets forth the General Revenue Fund gross debt characteristics at March 31, 2010.

Debt Charactistics

(unaudtied)

				Weighted Average
	As a			Term To
	Percentage			Maturity 1		Weighted Average
	of  Total			(years)		Interest Rate 1
Public Debentures 2		87	%		12.58		6.43	%
Canada Pension Plan Debentures		7	%		7.99		6.67	%
Promissory Notes		6	%		0.02		0.19	%
Gross Debt		100	%				6.07	%
1 Weighted by the total principal amount of each loan issue.
2 Includes other debentures.

 Interest on the General Revenue Fund debt amounted to $698.9 million in fiscal year 2010.  Of this amount, $245.2 million was reimbursed by the Crown corporations and GBEs.  The non-reimbursable portion of gross interest expense was $453.7 million.

Debt guaranteed by the General Revenue Fund amounted to $17.1 million at March 31, 2010, compared to $20.3 million at March 31, 2009.  This decrease was due primarily to debt reduction of $1.5 million for Breeder Association loan guarantees ($9.1 million debt outstanding at March 31, 2010) and $0.3 million Feeder Association loan guarantees ($5.8 million debt outstanding at March 31, 2010).

The following table sets forth this guaranteed debt for the five fiscal years ended March 31, 2010.

Guaranteed Debt

	At March 31
			2006		2007		2008		2009		2010
							(Millions)
Guaranteed Debt		$	46.1	$	34.4	$	25.2	$	20.3	$	17.1

 Guaranteed debt is reported net of loss provisions (2010 - $0.3 million; 2009 - $0.6 million; 2008 - $0.5 million; 2007 - $0.5 million; 2006 - $0.5 million).

The major decrease in guaranteed debt between March 31, 2006, and March 31, 2010, is due to the elimination of the liability for NewGrade Energy Inc. debt ($17.7 million).

Authority for the Government to guarantee the debt of others must be provided in specific legislation since no general statutory authority exists.  The Financial Administration Act, 1993 provides that no department, board, commission or agent of the Government shall provide a guarantee or a program of guarantees of loans or other liabilities by which guarantee or program of guarantees the Government of Saskatchewan would be liable to make any payment with respect to the loans or liabilities, unless the guarantee or program of guarantees, as the case may be, has received the prior approval of the Minister of Finance.  Certain Crown corporations located within the Province are separately authorized to provide guarantees of the debt of others.  Such guarantees are not contingent liabilities of the General Revenue Fund, and the amounts so guaranteed are not included in the above table or in the financial statements of the General Revenue Fund.

  31

The Government of Saskatchewan provided Royal Trust with a guarantee and indemnity in 1983 respecting the liability and obligations of CIC Mineral Interest Corporation pursuant to each of two lease agreements of CIC Mining Corporation (previously the Potash Corporation of Saskatchewan Mining Limited) for the purchase of mining equipment.  The Government has been released from all such guarantees but remains contingently liable for indemnity related to damages caused by the equipment and provisions governing the payment of taxes for the period during which its guarantees to Royal Trust were in place.

Debt Record

The Government has always paid the full face amount of the principal of and interest on every direct obligation issued by it and every indirect obligation on which it has been required to meet its guarantee, all promptly when due in the lawful currency of the country where payable at the time of payment thereof, subject during wartime to any applicable laws and regulations forbidding trading with the enemy.

Other Public Sector Debt

The General Revenue Fund financial statements do not disclose the debt of all public entities located within the Province.  Responsibility for a variety of provincial functions and powers has been transferred to local government bodies, including regional health authorities, municipalities, school boards and certain other local authorities.  Regional health authorities may raise money for their purposes through certain service charges.  The authorities have power to borrow money up to a prescribed amount above which the approval of the Minister of Health is required.  Other local bodies raise money for their purposes, in the case of municipalities by way of direct levy on persons or property within their jurisdiction or, in other cases, by requisition on municipalities, and may have power to borrow money, subject to the approval of the Saskatchewan Municipal Board. The Saskatchewan Municipal Board is an autonomous regulatory body established by Provincial statute with broad powers to regulate local government activity.

Notwithstanding that significant financial assistance for operating and capital expenditures is made available to local government bodies by appropriation of the Legislative Assembly, the activities of local government bodies, including borrowing, are conducted independently of the Government.  The Government is not directly or contingently liable for debt incurred by these bodies (with the exception of certain debt of certain regional health authorities), and, relative to the gross debt of the General Revenue Fund and the GDP of the Province, debt incurred by these bodies is not significant.

32 

GENERAL REVENUE FUND SUPPLEMENTARY FINANCIAL INFORMATION

			Page
	I.	General Revenue Fund Statement of Financial Position	34
II.		General Revenue Fund Statement of Operations and Accumulated Deficit	36
III.		General Revenue Fund Statement of Change in Net Debt	39
IV.		General Revenue Fund Statement of Investing Activities	40
	V.	General Revenue Fund Statement of Cash Flow	42
VI.		General Revenue Fund Notes to the Financial Statements	43

 The information contained in the following tables and notes, except for information marked as unaudited, has been derived from the financial statements of the General Revenue Fund, which have been examined by the Provincial Auditor for the five years ended March 31, 2010.

  33

Government of the Province of Saskatchewan
General Revenue Fund Statement of Financial Position 1-9
	At March 31
		2006			2007			2008			2009			2010
								(restated)
		(Thousands of dollars)
Financial Assets
Cash and temporary investments		$	1,027,206		$	414,469		$	821,475		$	575,895		$	858,427
Accounts receivable			629,062			700,198			736,377			915,389			855,117
Agricultural land held for resale 8			105,343			103,447			0			0			0
Deferred charges			39,382			22,335			19,236			14,166			9,775
Loans to Crown corporations 9			3,630,985			3,557,068			461,161			520,229			818,751
Other loans			132,192			129,767			129,635			122,454			100,168
Equity investment in Crown Investments
Corporation of Saskatchewan			1,181,152			1,181,152			1,181,152			1,051,152			1,051,152
Total Financial Assets			6,745,322			6,108,436			3,349,036			3,199,285			3,693,390
Liabilities
Accounts payable and accrued liabilities			1,339,590			1,384,259			1,653,449			1,721,516			1,896,708
Deposits held			1,161,000			310,893			385,388			594,355			396,122
Unearned revenue			69,298			69,520			72,823			76,454			75,642
Public Debt (net of sinking fund equity) 9			10,828,208			10,802,006			0			0			0
Government general debt			0			0			6,824,323			4,145,286			4,140,482
Crown corporation general debt 9			0			0			461,161			520,229			818,751
Unamortized foreign exchange gain (loss)			(16,828	)		(12,573	)		606			(10,503	)		3,939
Total Liabilities			13,381,268			12,554,105			9,397,750			7,047,337			7,331,644
Net Debt			(6,635,946	)		(6,445,669	)		(6,048,714	)		(3,848,052	)		(3,638,254	)
Non-financial Assets
Prepaid expenses			6,102			6,299			6,685			6,902			7,004
Inventories held for consumption			66,784			74,626			85,269			97,345			109,411
Tangible capital assets 8			2,240,259			2,363,518			2,596,969			2,772,877			2,975,411
Total Non-financial Assets			2,313,145			2,444,443			2,688,923			2,877,124			3,091,826
Accumulated Deficit		$	(4,322,801	)	$	(4,001,226	)	$	(3,359,791	)	$	(970,928	)	$	(546,428	)

1 The Government also prepares summary financial statements.  The Government=s summary financial statements provide a full accounting of the financial affairs and resources of all entities for which the Government is responsible.  The financial transactions of the General Revenue Fund and provincial Crown corporations, agencies, boards, and commissions are included in the Government=s summary financial statements. The Government=s summary financial statements are included in Exhibit (e) Volume 1 of the Public Accounts.

2 In his opinion on the 2006, 2007, 2008, 2009 and 2010 General Revenue Fund financial statements, the Provincial Auditor directs the reader to refer to the Government=s summary financial statements to understand and assess the Government=s management of public financial affairs and resources as a whole.

3 The General Revenue Fund’s financial statements for 2006 are accompanied by a report of the Provincial Auditor which provides that, except for the effects of the following reservations, the financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31:

a.   It is the auditor’s opinion that pension liabilities should be recorded in the financial statements.  Had pension liabilities been recorded, liabilities and accumulated deficit would increase by $4,246 million and expenses would increase and surplus would decrease by $103 million.

b.  The financial statements show a liability of $888 million owed to the Fiscal Stabilization Fund and an expense of $139 million to the Fiscal Stabilization Fund.  It is the auditor’s opinion that, instead of recording an expense, the financial statements should record an asset equal to the liability it records.  Had this been done, financial assets would increase and accumulated deficit would decrease by $888 million, and transfer to the Fiscal Stabilization Fund would decrease and surplus would increase by $139 million.

c.  It is the auditor’s opinion that loans receivable from Crown corporations include $24 million that should be recorded as an expense as they can only be repaid if the Government provides money from the General Revenue Fund to repay the loans.  Had this amount been recorded as an expense, loans receivable from Crown corporations would decrease and accumulated deficit would increase by $24 million.  Also, operating expense would decrease and surplus would increase by $20 million.

  34

4 The General Revenue Fund’s financial statements for 2007 are accompanied by a report of the Provincial Auditor which provides that, except for the effects of the following reservations, the financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31:

a.  It is the auditor’s opinion that pension liabilities should be recorded in the financial statements.  Had pension liabilities been recorded, liabilities and accumulated deficit would increase by $4,659 million and expenses would increase and surplus would decrease by $413 million.

b.  The Government records transactions between the General Revenue Fund and the Fiscal Stabilization Fund and the Saskatchewan Infrastructure Fund as revenue or expense of the General Revenue Fund.  It is the auditor’s opinion that, instead of recording an expense, the financial statements should record an asset equal to the amount it owed or paid to these funds.  Had this been done, financial assets would increase and accumulated deficit would decrease by $993 million, and transfer to the Saskatchewan Infrastructure Fund would decrease and surplus would increase by $105 million.

5   The General Revenue Fund’s financial statements for 2008 are accompanied by a report of the Provincial Auditor which provides that, except for the effects of the following reservations, the financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31:

a.  It is the auditor’s opinion that pension liabilities should be recorded in the financial statements.  Had pension liabilities been recorded, liabilities and accumulated deficit would increase by $5,088 million and, for the year, expenses would increase and surplus would decrease by $429 million.

b.  The Government records transactions between the General Revenue Fund and the Fiscal Stabilization Fund and the Saskatchewan Infrastructure Fund as revenue or expense of the General Revenue Fund.  It is the auditor’s opinion that, instead of recording an expense, the financial statements should record an asset equal to the amount it owed or paid to these funds.  Had this been done, financial assets would increase and accumulated deficit would decrease by $1,634 million, and, for the year, transfer to the Fiscal Stabilization Fund would decrease and surplus would increase by $641 million.

6   The General Revenue Fund’s financial statements for 2009 are accompanied by a report of the Provincial Auditor which provides that, except for the effects of the following reservations, the financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31:

a.   It is the auditor’s opinion that pension liabilities should be recorded in the financial statements.  Had pension liabilities been recorded, liabilities and accumulated deficit would increase by $5,442 million and, for the year, expenses would increase and surplus would decrease by $355 million.

b.   The Government records transactions between the General Revenue Fund and the Growth and Financial Security Fund as revenue and expense of the General Revenue Fund.  It is the auditor’s opinion that, instead of recording an expense, the financial statements should record an asset equal to the amount it owed or paid to these funds.  Had this been done, financial assets would increase and accumulated deficit would decrease by $1,215 million, and, for the year, the net transfer from the Growth and Financial Security Fund and surplus would decrease by $419 million.

7   The General Revenue Fund’s financial statements for 2010 are accompanied by a report of the Provincial Auditor which provides that, except for the effects of the following reservations, the financial statements present fairly, in all material respects, the financial position of the General Revenue Fund as at March 31:

a.   It is the auditor’s opinion that the liabilities of several pension plans and a disability benefit plan should be recorded in the financial statements.  Had these liabilities been recorded, liabilities and accumulated deficit would increase by $5,783 million and, for the year, expenses would increase and surplus would decrease by $341 million.

b.   The Government records transactions between the General Revenue Fund and the Growth and Financial Security Fund as revenue and expense of the General Revenue Fund.  It is the auditor’s opinion that, instead of recording an expense, the financial statements should record an asset equal to the amount it owed or paid to these funds.  Had this been done, financial assets would increase and accumulated deficit would decrease by $958 million, and, for the year, the net transfer from the Growth and Financial Security Fund and surplus would decrease by $257 million.

8   During 2008-09, the Government reclassified agricultural land held for resale as tangible capital assets because this land is not expected to be sold within the next year.  The 2007-08 amounts have been restated.

9   During 2008-09, the Government made a change in accounting policy resulting in loans to Crown corporations and public debt (gross debt net of sinking funds) now being presented net of government business enterprise specific debt.  The 2007-08 amounts have been restated.

(see accompanying notes)

35 

Government of the Province of Saskatchewan
General Revenue Fund Statement of Operations and Accumulated Deficit 1
	For the Year Ended March 31
		2006		2007		2008		2009		2010
						(restated)
		(Thousands of dollars)
Revenue
Taxation
Corporation capital 2		$	524,650	$	513,458	$	0	$	0	$	0
Corporation income			393,629		554,001		673,641		591,930		881,424
Fuel			376,426		383,576		406,434		429,162		441,533
Individual income			1,447,905		1,668,538		1,938,258		1,844,226		1,890,848
Provincial sales 3			1,112,350		1,079,794		929,865		1,108,628		1,084,001
Tobacco			171,107		190,334		190,412		199,072		196,868
Other 2,3			89,751		94,844		279,633		257,977		237,599
Total Taxation			4,115,818		4,484,545		4,418,243		4,430,995		4,732,273
Non-renewable Resources
Crown land sales 4			0		0		419,062		928,245		151,455
Natural gas			269,074		165,131		133,780		125,922		40,078
Oil 4			1,124,952		1,318,852		1,246,205		1,616,071		1,294,670
Potash			277,967		161,729		432,770		1,364,463		(183,887	)
Resource surcharge 2			0		0		315,230		458,299		475,632
Other			49,106		48,540		93,299		119,408		132,676
Total Non-renewable Resources			1,721,099		1,694,252		2,640,346		4,612,408		1,910,624
Transfers from Government Entities
Crown Investments Corporation of Saskatchewan			221,000		167,000		200,000		0		185,000
- Special dividend			0		0		0		365,000		570,000
Liquor and Gaming Authority			351,673		370,053		399,531		446,652		429,924
Other enterprises and funds			41,214		50,043		53,623		39,564		64,172
Total Transfers from Government Entities			613,887		587,096		653,154		851,216		1,249,096
Other Own-source Revenue
Fines, forfeits and penalties			9,788		10,173		11,225		11,448		13,219
Interest, premium, discount and exchange 5			89,226		96,062		120,502		187,957		237,372
Motor vehicle fees			135,183		138,908		140,631		151,143		158,303
Other licences and permits			41,800		36,787		35,927		36,607		34,587
Sales, services and service fees			89,389		93,332		94,936		101,885		110,555
Transfers from other governments			16,860		17,368		15,107		15,010		18,421
Commercial operations			64,724		69,575		78,664		86,567		87,771
Other			54,413		26,119		54,382		130,872		110,204
Total Other Own-source Revenue			501,383		488,324		551,374		721,489		770,432
Total Own-source Revenue			6,952,187		7,254,217		8,263,117		10,616,108		8,662,425
Transfers from the Federal Government
Canada Health Transfer			659,558		716,775		739,648		823,496		819,262
Canada Social Transfer			298,756		323,599		325,098		338,301		334,976
Equalization			88,672		12,723		226,146		0		0
Other			218,379		335,732		311,669		547,167		449,795
Total Transfers from the Federal Government			1,265,365		1,388,829		1,602,561		1,708,964		1,604,033
Total Revenue		$	8,217,552	$	8,643,046	$	9,865,678	$	12,325,072	$	10,266,458

(see accompanying notes)

36 

Government of the Province of Saskatchewan
General Revenue Fund Statement of Operations and Accumulated Deficit (continued)
	For the Year Ended March 31
		2006			2007			2008		2009		2010
								(restated)
							(Thousands of dollars)
Expense
Ministries and Agencies
Advanced Education, Employment and Labour		$	0		$	689,414		$	685,163	$	893,291	$	866,110
Agriculture			422,390			369,995			302,197		424,396		373,246
Corrections, Public Safety and Policing			140,205			163,078			305,417		315,083		340,314
Crown Investments Corporation of Saskatchewan			0			0			0		240,000		0
Education			1,472,946			978,090			959,951		1,307,461		1,334,346
Energy and Resources			62,395			67,862			56,268		37,946		40,546
Enterprise and Innovation			8,142			11,361			54,040		54,618		22,497
Enterprise Saskatchewan			0			0			0		6,087		45,406
Environment			146,030			194,151			174,921		177,129		172,304
Executive Council			8,569			9,311			12,562		8,293		8,478
Finance			247,447			258,964			284,463		290,832		326,558
Finance Debt Servicing 5			544,666			538,303			546,718		520,181		479,962
First Nations and Metis Relations			48,314			59,842			70,958		86,526		86,842
Government Services			(765	)		13,993			8,654		12,738		15,215
Government Services - commercial operations			58,384			63,248			70,312		81,180		82,030
Health			2,990,625			3,202,965			3,504,333		3,976,241		3,934,231
Highways and Infrastructure			263,938			307,310			353,684		482,400		418,279
Highways and Infrastructure - commercial operations			5,715			4,198			6,542		2,892		3,281
Information Technology Office			4,853			6,812			5,362		5,384		11,834
Information Technology Office - commercial operations			0			89			27		1,630		1,574
Intergovernmental Affairs			0			0			2,757		3,519		3,295
Justice and Attorney General			217,415			237,622			129,189		135,648		145,293
Labour			14,751			15,369			0		0		0
Municipal Affairs			198,236			207,534			214,871		397,388		409,956
Northern Affairs			5,184			5,351			0		0		0
Office of the Provincial Secretary			0			0			2,750		4,401		4,879
Public Service Commission			8,908			15,868			39,234		35,182		50,229
Saskatchewan Research Council			12,390			8,446			8,992		12,082		15,016
SaskEnergy Incorporated			74,700			7,000			0		0		0
Social Services			630,819			711,193			615,032		676,604		740,087
Tourism, Parks, Culture and Sport			62,662			67,004			125,309		130,726		129,703
Legislative Assembly and it's Officers
Chief Electoral Officer			809			1,281			10,852		1,166		1,679
Children's Advocate			1,195			1,298			1,624		1,529		1,628
Conflict of Interest Commissioner			114			128			136		145		143
Information and Privacy Commissioner			487			599			675		812		874
Legislative Assembly			18,987			19,740			21,389		22,429		23,295
Ombudsman			1,643			1,779			1,911		2,085		2,152
Provincial Auditor			5,932			6,054			6,516		7,115		7,471
Total Expense			7,678,086			8,245,252			8,582,809		10,355,139		10,098,753

  37

Government of the Province of Saskatchewan
General Revenue Fund Statement of Operations and Accumulated Deficit (concluded)
	For the Year Ended March 31
		2006			2007			2008			2009			2010
								(restated)
		(Thousands of dollars)
Pre-transfer Surplus			539,466			397,794			1,282,869			1,969,933			167,705
Transfer to the Growth and Financial Security Fund			0			0			0			(984,967	)		(83,853	)
Transfer from the Growth and Financial Security Fund			0			0			0			1,403,897			340,648
Transfer to the Fiscal Stabilization Fund			(139,000	)		0			(641,434	)		0			0
Transfer to the Saskatchewan Infrastructure Fund			0			(105,090	)		0			0			0
Surplus		$	400,466		$	292,704		$	641,435		$	2,388,863		$	424,500
Accumulated Deficit, Beginning of Year			(5,047,210	)		(4,322,801	)		(4,001,226	)		(3,359,791	)		(970,928	)
Adjustment to accumuated deficit			323,943			28,871			0			0			0
Accumulated Deficit, End of Year		$	(4,322,801	)	$	(4,001,226	)	$	(3,359,791	)	$	(970,928	)	$	(546,428	)

 1  See Notes 1-9 commencing on page 34.

 2  For 2009, corporation capital tax has been split into two components. Resource surcharge has been moved to non-renewable resources and the remaining component of corporation capital tax has been included with other taxes. The 2008 amounts have been restated.

 3  For 2009, liquor consumption tax has been moved from sales tax to other taxes and sales tax has been renamed provincial sales tax. The 2008 amounts have been restated.

 4 For 2009, crown land sales previously reported in oil revenues have been broken out. The 2008 amounts have been restated.

 5 During 2008-09, the Government made a change in accounting policy resulting in reimbursements of interest from Crown corporation general debt no longer being netted against debt servicing costs. The 2007-08 amounts have been restated.

(See accompanying notes)

  38

Government of the Province of Saskatchewan
General Revenue Fund Statement of Change in Net Debt 1
	For the year ended March 31
		2006			2007			2008			2009			2010
								(restated)
		(Thousands of dollars)
Surplus		$	400,466		$	292,704		$	641,435		$	2,388,863		$	424,500
Tangible Capital Assets
Acquisitions 2			(221,278	)		(249,510	)		(284,657	)		(349,349	)		(388,541	)
Amortization			134,530			141,657			146,621			151,521			160,175
Net (gain) loss on disposal 2			(391	)		12,722			931			5,153			(13,284	)
Proceeds on disposal 2			3,243			1,569			6,765			7,082			40,332
Write downs			2,927			82			1,499			11,026			180
Net Acquisition of Tangible Capital Assets			(80,969	)		(93,480	)		(128,841	)		(174,567	)		(201,138	)
Other Non-financial Assets
Net (acquisition) use of prepaid expenses			337			(197	)		(386	)		(217	)		(102	)
Net acquisition of inventories held for consumption			(5,862	)		(7,842	)		(10,643	)		(12,076	)		(12,066	)
Net Acquisition of Other Non-financial Assets			(5,525	)		(8,039	)		(11,029	)		(12,293	)		(12,168	)
Decrease in net debt			313,972			191,185			501,565			2,202,003			211,194
Net Debt, beginning of year			(6,880,388	)		(6,635,946	)		(6,445,669	)		(6,048,714	)		(3,848,052	)
Adjustment to net debt 2			0			0			(103,447	)		0			0
Transfers from government organizations			(69,530	)		(908	)		(1,163	)		(1,341	)		(1,396	)
Net Debt, End of Year		$	(6,635,946	)	$	(6,445,669	)	$	(6,048,714	)	$	(3,848,052	)	$	(3,638,254	)
1 See Notes 1-9 commencing on page 34.
2 During 2008-09, the Government reclassified agricultural land held for resale as tangible capital assets because this land is not expected to be sold within the next year. The 2007-08 amounts have been restated.

(See accompanying notes)

39 

Government of the Province of Saskatchewan
General Revenue Fund Statement of Investing Activities 1
	For the Year Ended March 31
		2006		2007			2008		2009		2010
							(restated)
						(Thousands of dollars)
Receipts
Loans
Information Services Corporation of Saskatchewan		$	10,500	$	30,000		$	11,000	$	3,919	$	0
Investment Saskatchewan Inc.			0		10,000			7,000		0		0
Municipal Financing Corporation of Saskatchewan 2			3,847		0			4,946		0		0
Saskatchewan Crop Insurance Corporation			68,579		37,200			15,800		50,000		50,000
Saskatchewan Housing Corporation			0		0			0		31,000		0
Saskatchewan Opportunities Corporation			0		0			0		17,985		2,760
Saskatchewan Power Corporation 2			86,312		31,809			0		125,000		0
Saskatchewan Telecommunications
Holding Corporation 2			0		32,598			0		0		0
Saskatchewan Water Corporation			34,012		876			1,496		2,491		0
SaskEnergy Incorporated 2			101,195		32,681			0		48,000		0
Other			60,224		60,855			55,883		54,440		62,217
Total Loan Receipts			364,669		236,019			96,125		332,835		114,977
Sinking Funds
Contributions 2			69,045		32,411			28,522		20,261		4,644
Redemptions 2			30,912		0			0		81,635		892,655
Total Sinking Fund Receipts			99,957		32,411			28,522		101,896		897,299
Other Investing Activities
Equity investment in Crown Investments
Corporation of Saskatchewan			0		0			0		130,000		0
Other 3			905		1,509			0		0		0
Total Other Investing Activities			905		1,509			0		130,000		0
Total Receipts		$	465,531	$	269,939		$	124,647	$	564,731	$	1,012,276

(See accompanying notes)

40 

Government of the Province of Saskatchewan
General Revenue Fund Statement of Investing Activities (concluded)
	For the Year Ended March 31
		2006			2007			2008			2009			2010
								(restated)
							(Thousands of dollars)
Disbursements
Loans
Information Services Corporation of Saskatchewan		$	0		$	18,047		$	0		$	0		$	0
Municipal Financing Corporation of Saskatchewan 2			5,000			8,975			0			1,062			5,294
Saskatchewan Crop Insurance Corporation			0			0			0			0			0
Saskatchewan Opportunities Corporation			3,000			15,000			13,844			23,684			0
Saskatchewan Power Corporation 2			250,000			100,000			165,000			100,000			260,000
Saskatchewan Telecommunications
Holding Corporation 2			0			0			0			28,900			600
Saskatchewan Water Corporation			7,067			2,455			7,600			5,000			10,892
SaskEnergy Incorporated 2			102,500			1,100			60,500			170,000			32,500
Other			64,738			58,567			63,954			48,158			43,300
Total Loan Disbursements			432,305			204,144			310,898			376,804			352,586
Sinking Funds
Contributions 2			135,070			95,132			96,415			1,913,015			64,588
Redemptions 2			0			0			0			32,793			48,993
Total Sinking Fund Disbursements			135,070			95,132			96,415			1,945,808			113,551
Other Investing Activities 3			13			20			0			0			0
Total Disbursements		$	567,388		$	299,296		$	407,313		$	2,322,612		$	466,137
Net Receipts (Disbursements)		$	(101,857	)	$	(29,357	)	$	(282,666	)	$	(1,757,881	)	$	546,139
1 See Notes 1-9 commencing on page 34.
2 During 2008-09, the Government made a change in accounting policy resulting in loans to Crown corporations and public debt (gross debt net of sinking funds) now being presented net of government business enterprise specific debt and related sinking funds. Also, receipts    on redemptions of sinking funds for Crown corporation general debt are no longer netted. The 2007-08 amounts have been restated.
3 During 2008-09, the Government reclassified agricultural land held for resale as tangible capital assets because this land is not expected to be sold within the next year. The 2007-08 amounts have been restated.

(see accompanying notes)

41 

Government of the Province of Saskatchewan
General Revenue Fund Statement of Cash Flow 1
	For the Year Ended March 31
		2006			2007			2008			2009			2010
								(restated)
							(Thousands of dollars)
Operating Activities
Surplus		$	400,466		$	292,704		$	641,435		$	2,388,863		$	424,500
Non-cash items included in surplus			75,973			111,308			111,831			94,061			(10,122	)
Net change in non-cash operating activities			6,067			(17,237	)		228,384			(114,537	)		226,875
Adjustment to accumulated deficit			10,513			0			0			0			0
Cash Provided by Operating Activities			493,019			386,775			981,650			2,368,387			641,253
Capital Activities
Acquisition of tangible capital assets 2			(221,278	)		(249,510	)		(284,657	)		(349,349	)		(388,541	)
Proceeds on disposal of tangible capital assets 2			3,243			1,569			6,765			7,082			40,332
Cash Used for Capital Activities			(218,035	)		(247,941	)		(277,892	)		(342,267	)		(348,209	)
Investing Activities
Loan Advances 3			(432,305	)		(204,144	)		(310,898	)		(376,804	)		(352,586	)
Loan Repayments 3			364,669			236,019			96,125			332,835			114,977
Sinking Funds
Contributions for general debt 3			0			0			(96,415	)		(1,913,015	)		(64,558	)
Contributions received for
Crown corporation general debt 3			0			0			28,522			20,261			4,644
Redemptions for general debt 3			0			0			0			81,635			892,655
Redemptions disbursed for
Crown corporation general debt 3			0			0			0			(32,793	)		(48,993	)
Sinking fund contributions received
from Crown corporations 3			69,045			32,411			0			0			0
Contributions made to sinking funds 3			(135,070	)		(95,132	)		0			0			0
Government debt redemption funded from sinking funds 3			30,912			0			0			0			0
Equity investment in Crown Investments
Corporation of Saskatchewan			0			0			0			130,000			0
Other 2			892			1,489			0			0			0
Cash  Provided by (Used for) Investing Activities			(101,857	)		(29,357	)		(282,666	)		(1,757,881	)		546,139
Financing Activities
Proceeds from general debt 3			0			0			558,138			32,005			508,629
Repayment of general debt 3			0			0			(646,719	)		(754,791	)		(867,047	)
Proceeds from debt 3			829,511			1,421,164			0			0			0
Repayment of debt 3			(1,014,404	)		(1,293,271	)		0			0			0
Increase (Decrease) in deposits held			179,385			(850,107	)		74,495			208,967			(198,233	)
Cash Provided by (Used for) Financing Activities			(5,508	)		(722,214	)		74,495			(513,819	)		(556,651	)
Increase (Decrease) in Cash and
Temporary investments			167,619			(612,737	)		407,006			(245,580	)		282,532
Cash and temporary investments
beginning of year			859,587			1,027,206			414,469			821,475			575,895
Cash and Temporary Investments,
End of Year		$	1,027,206		$	414,469		$	821,475		$	575,895		$	858,427
1 See Notes 1-9 commencing on page 34.
2 During 2008-09, the Government reclassified agricultural land held for resale as tangible capital assets because this land is not expected to be sold within the next year. The 2007-08 amounts have been restated.
3 During 2008-09, the Government made a change in accounting policy resulting in loans to Crown corporations and public debt (gross debt net of sinking funds) now being presented net of government business enterprise specific debt. The 2007-08 amounts have been restated.

(see accompanying notes)

42 

Government of the Province of Saskatchewan

General Revenue Fund Notes to the Financial Statements

As at March 31, 2010

1.         Significant Accounting Policies

Basis of accounting

These financial statements are prepared in accordance with generally accepted accounting principles for the public sector, as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants, with the following exceptions:

·   transfers to and from the Growth and Financial Security Fund (2008 – transfers to and from the Fiscal Stabilization Fund) are included in the determination of surplus for the year; and

·   pension liabilities and a disability benefit are not recorded in the financial statements.  The General Revenue Fund accounts for defined benefit pension plans and a disability benefit plan on a cash basis.

Reporting entity

The General Revenue Fund is the general fund which receives all revenues unless otherwise specified by law.  Spending from the General Revenue Fund is appropriated by the Legislative Assembly.

Other government entities such as special purpose funds, government business enterprises, and other Crown corporations and agencies report separately in other financial statements.  Only financial transactions to or from these other entities are included in the General Revenue Fund.  The net expenses/recoveries for revolving funds= operations are charged to expense.

Government business enterprises are self-sufficient government organizations that have the financial and operating authority to sell goods and services to individuals and organizations outside the government reporting entry as their principal activity.

The Government=s Summary financial statements, which include the financial activities of the General Revenue Fund and other government entities, are provided separately.

Specific accounting policies

Financial assets

Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal course of operations.

Temporary investments are recorded at the lower of cost or market.

Deferred charges include issue costs and net discounts or premiums incurred on the issue of general debt and related derivative instruments.  They are recorded at cost and amortized on a straight-line basis over the remaining life of the debt issue.

Loans to Crown corporations and Other loans generally have fixed repayment terms and are interest bearing.  Promissory notes issued by Crown corporations are recorded at par; all other loans are recorded at cost.  Loans to Crown corporations are presented net of amounts Crown corporations have contributed to sinking funds and net of government business enterprise specific debt.

Equity investment in Crown Investments Corporation of Saskatchewan is an advance to the corporation to form its equity capitalization and is recorded at cost.

Where there has been a loss in value that is other than a temporary decline, loans and equity investments are written down to recognize the loss.

Liabilities

Liabilities are present obligations to individuals and organizations outside of the General Revenue Fund arising from transactions and events occurring prior to year end, which will be satisfied in the future through the transfer or use of assets or another form of economic settlement. They consist of obligations to provide authorized transfers where any eligibility criteria have been met, to repay borrowings, to pay for goods and services acquired prior to year-end, and to deliver goods or services in the future, where payment has been received.

  43

Unearned revenue consists mainly of revenue for Crown mineral leases and motor vehicle fees that will be earned in a subsequent fiscal year.

Public debt is recorded at par and is comprised of:

·   Government general debt which is debt issued by the General Revenue Fund to fund government spending;

·   Crown corporation general debt which is debt issued by the General Revenue Fund and subsequently loaned to a Crown corporation; and

·   Government business enterprise specific debt which is debt issued by the General Revenue Fund specifically on behalf of government business enterprises where the government expects to realize the receivables from the government business enterprises and settle the external debt simultaneously.

On the Statement of Financial Position, public debt is presented net of government business enterprise specific debt.  Debt servicing costs on the Statement of Operations are presented net of reimbursements of interest for government business enterprise specific debt.

Certain debenture issues require contributions to a sinking fund.  These obligations are recorded at principal less sinking fund balances where applicable.  The General Revenue Fund is reimbursed by Crown corporations for all sinking fund contributions made on debt incurred on their behalf.  Premiums and discounts on long-term investments within these sinking funds are amortized on a constant yield basis.

Debt issues and sinking fund investments held in foreign currencies are converted to the Canadian dollar equivalent at the exchange rate in effect at March 31.

Premiums, discounts and issue costs incurred on general debt are recorded as deferred charges.  Discounts, premiums and commissions on government business enterprise specific debt are netted against reimbursements by these entities.

Unamortized foreign exchange gain or loss includes unrealized foreign exchange gains and losses resulting from conversion of general debt and sinking fund investments held in a foreign currency to the Canadian dollar equivalent at March 31.  Unrealized foreign exchange gains and losses are amortized on a straight-line basis over the remaining life of the debt issue.  Realized foreign exchange gains and losses resulting from general debt transactions are included in debt servicing costs.

Guaranteed debt includes guarantees by the Minister of Finance made through specific agreements or legislation to pay all or part of the principal and/or interest on a debt obligation in the event of default by the borrower.  Loss provisions on guaranteed debt are recorded as a liability and an expense when it is likely that a loss will occur.  The amount of the loss provision represents the best estimate of future payments net of recoveries.

Non-financial assets

Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead are normally employed to deliver government services, may be consumed in the normal course of operations and are not for sale in the normal course of operations.

Inventories held for consumption are recorded at cost and are expensed as they are consumed.

Tangible capital assets are recorded at cost which includes all amounts directly attributable to the acquisition, construction, development or betterment of the asset but does not include interest.  Tangible capital assets are generally amortized on a straight-line basis over the estimated useful life of each asset.

Revenue

Revenues are recorded on the accrual basis.  For corporate and individual income taxes, cash received from the federal government is used as the basis for estimating the tax revenue.  Government transfers are recognized as revenue in the period during which the transfer is authorized and any eligibility criteria are met.

Expense

Expenses are recorded on the accrual basis, except for costs related to defined benefit pension plans and a disability benefit plan which are recorded on the cash basis.  Government transfers are recognized as expenses in the period during which the transfer is authorized and any eligibility criteria are met.

  44

Measurement uncertainty

Measurement uncertainty is uncertainty in the determination of the amount at which an item is recognized or disclosed in financial statements.  Such uncertainty exists when there is a variance between the recognized or disclosed amount and another reasonably possible amount.

Measurement uncertainty that may be material to these financial statements exists:

·   in corporate and individual income tax revenue totalling $2,772.3 million (2009 - $2,436.2 million) because final tax assessments may differ from initial estimates on which cash payments are based;

·   in oil and natural gas non-renewable resource revenue totalling $1,334.7 million (2009 - $1,742.0 million) because of price and production sensitivities in the royalty revenue structures;

·   in potash non-renewable resource revenue totalling $(183.9) million (2009 - $1,364.5 million) because actual operating profits may differ from initial estimates;

·   in the Canada Health Transfer and Canada Social Transfer revenue totalling $1,154.2 million (2009 - $1,161.8 million) because of changes in the economic and demographic conditions in the Province and the country;

·   in agricultural income stability programs expense of $131.4 million (2009 - $111.1 million) because of revisions to farm income forecasts; and,

·   in the disclosure of liabilities for defined benefit pension plans of $5,760.7 million (2009 - $5,416.7 million - restated) because actual experience may differ from actuarial estimations.

While best estimates are used to report items, it is reasonably possible that changes in future conditions, occurring within one fiscal year, could require a material change in the amounts recognized or disclosed.

2.         Temporary Investments

The temporary investments are recorded at $782.9 million (2009 - $895.7 million), consist of investment grade money market securities and are generally for less than 30 days.  Due to the short-term nature, market value approximates cost.

3.          Risk Management of Public Debt

Funds are borrowed in both domestic and foreign capital markets by issuing Government of Saskatchewan securities.  This borrowing activity finances Government operations and the activities of Crown corporations.  These transactions result in exposure to four types of risk: interest rate risk, foreign exchange rate risk, credit risk and liquidity risk.

To manage these risks, a preference for fixed rate Canadian dollar denominated debt is maintained.  Where market conditions dictate that other forms of debt are more attractive, opportunities are identified to use derivative financial instruments to reduce these risks.  A derivative financial instrument is a contract, the value of which is based on the value of another asset or index.

Interest rate risk is the risk that debt servicing costs will increase due to changes in interest rates.  This risk is managed by issuing debt securities at predominately fixed rates of interest rather than at floating rates of interest.

Floating rate debt is defined as the sum of floating rate debentures, short-term promissory notes, fixed rate debt maturing within one year and Saskatchewan Savings Bonds.  Opportunities are sought to effectively convert floating rate debt into fixed rate debt through the use of interest rate swaps.  There are interest rate swaps on a notional value of debt of $66.0 million (2009 - $66.0 million).  At March 31, 2010, 85.6 per cent (2009 – 88.0 per cent) of the gross debt effectively carried a rate of interest that was fixed for greater than a one-year period.

Gross debt includes floating rate debt of $1,535.5 million (2009 - $1,330.4 million).  A one percentage point increase in interest rates would decrease the surplus by $13.7 million in 2010-11.

Foreign exchange rate risk is the risk that debt servicing costs will increase due to a decline in the value of the Canadian dollar relative to other currencies.  This risk is managed by maintaining a preference for issuing debt that is denominated in Canadian dollars.  Where debt has been issued in foreign currencies, opportunities are sought to effectively convert it into Canadian dollar debt through the use of a cross currency swap.  At March 31, 2010, 97.4 per cent (2009 – 96.9 per cent) of the gross debt is effectively denominated in Canadian dollars.  A one cent change in the value of the U.S. dollar compared to the Canadian dollar from the March 31, 2010 level would have an insignificant effect on debt and debt servicing costs.

The following foreign-denominated items have been hedged to Canadian dollars using cross currency swaps:

·   debentures totalling 1,225.0 million U.S. dollars (2009 – 1,225.0 million) fully hedged to $1,619.3 million Canadian (2009 - $1,619.3 million);

·   debentures totalling 300.0 million Swiss francs (2009 – 300.0 million) fully hedged to $274.7 million Canadian (2009 - $274.7 million); and

·   interest payments on debentures of 275.0 million U.S. dollars (2009 - 275.0 million) hedged to Canadian dollars at an exchange rate of 1.2325 (2009 – 1.2325).

45 

In total, there are cross currency swaps on a notional value of debt of $2,507.5 million (2009 - $2,507.5 million).  The effectiveness of these hedges is assessed on an ongoing basis by monitoring the credit ratings of the counterparties to the hedges.

Credit risk is the risk that a loss may occur from the failure of another party to meet its obligations under a derivative financial instrument contract.  This risk is managed by dealing only with counterparties that have good credit ratings and by establishing limits on individual counterparty exposures and monitoring those exposures on a regular basis.  At March 31, 2010, 100 per cent (2009 – 100 per cent) of counterparties held a Standard and Poor’s credit rating of A or higher.

Liquidity risk is a risk that financial commitments will not be met over the short term.  This risk is managed by distributing debt maturities over many years, maintaining sinking funds on long-term debt issues and maintaining adequate cash reserves and short-term borrowing programs as contingent sources of liquidity.

4.   Employee Future Benefits

Pension Plans

The Government sponsors several defined benefit pension plans and a defined contribution pension plan.

Pension fund assets of government-sponsored defined benefit and defined contribution pension plans are invested in fixed income securities, equities, real estate and short-term monetary items.  The investment in Government of Saskatchewan securities is insignificant for all plans.

Defined benefit plans

Defined benefit plans provide benefits based on length of service and pensionable earnings.  A typical defined benefit plan provides pensions equal to 2.0 per cent of a member=s average five years highest salary, multiplied by the years of service to a maximum of 35 years.  Members contribute a percentage of salary, which may vary based on age, to their plan. Pensions and contribution rates are integrated with the Canada Pension Plan.

The two main plans are the Teachers= Superannuation Plan (TSP) and the Public Service Superannuation Plan (PSSP).  Other plans include Judges of the Provincial Court Superannuation Plan (Judges), Saskatchewan Transportation Company Employees Superannuation Plan (STC), Anti-TB League Employees Superannuation Plan (ATB) and the Saskatchewan Pension Annuity Fund, an annuity underwriting operation.  Obligations for allowances payable to members of the former Members of the Legislative Assembly Superannuation Fund (MLA) are part of the General Revenue Fund.

Actuarial valuations are performed at least triennially.  An actuary extrapolates these valuations when a valuation is not done in the current fiscal year.  Valuations are based on a number of assumptions about future events, such as inflation rates, interest rates, wage and salary increases and employee turnover and mortality.  These assumptions reflect estimates of expected long-term rates and short-term forecasts.  Estimates vary based on the individual plan.

The accrued benefit obligation is determined using the projected benefit method prorated on services.  Pension fund assets are valued at market related values based on actual market values averaged over a four year period.  In the periods between valuations, the actuary estimates the market related value of pension fund assets using expected long-term rates of return for the individual plans.

The Government is required to match member current service contributions for all plans except the PSSP and Judges.  Separate pension funds are maintained for all plans except the PSSP and the MLA.  The PSSP member contributions are deposited into the General Revenue Fund.  All pension obligations arising under the PSSP and the MLA are paid from the General Revenue Fund.

46 

Information on the defined benefit plans is as follows:

	2010										2009
	TSP		PSSP			Others			Total		Total
											(Restated)
Plan status	closed		closed			closed 1				n/a		n/a
Member contribution rate (percentage of salary)		7.85		7.00-9.00	2		5.00-9.00	2		n/a		n/a
Number of active members		1,895		891			56			2,842		3,321
Average age of active members (years)		56.2		55.4			57.3			56.0		55.0
Number of former members entitled to deferred pension benefits		4,652		117			10			4,779		4,896
Number of superannuates and surviving spouses		11,026		5,693			2,301			19,020		18,864
Actuarial valuation date	June 30/09		Dec. 31/08			Various				n/a		n/a
Long-term assumptions used
Rate of compensation increase (percentage)		3.50		3.50			3.50			n/a		n/a
Expected rate of return on plan assets (percentage)		6.60		n/a			5.75-6.15			n/a		n/a
Discount rate (percentage)		4.80		4.90			4.50-5.10			n/a		n/a
Inflation rate (percentage)		2.50		2.50			2.50			n/a		n/a
Expected average remaining service life (years)		4.0		1.5			1.5-7.9			n/a		n/a
Post-retirement index (percentage of annual increase in
Consumer Price Index)		80		70			70-75			n/a		n/a
1 Judges is open to new membership; all other plans are closed.
2 Contribution rate varies based on age upon joining the plan.

Based on the latest actuarial valuations, extrapolated to March 31, 2010, the present value of accrued pension benefits and the market related value of pension fund assets are shown in the table below:

(thousands of dollars)	2010												2009
	TSP1			PSSP			Others			Total			Total
													(Restated)
Accrued benefit obligation,
beginning of year		5,040,014			1,855,981			320,152			7,216,147			7,185,236
Current period benefit cost		42,422			12,269			4,605			59,296			65,790
Plan amendment		0			0			(173	)		(173	)		2,339
Interest cost		261,120			94,804			15,221			371,145			373,178
Actuarial losses (gains)		122,643			52,792			5,492			180,926			25,994
Benefit payments		(314,150	)		(117,196	)		(22,136	)		(453,482	)		(436,390	)
Accrued Benefit Obligation, End of Year		5,152,049			1,898,650			323,160			7,373,859			7,216,147
Plan assets, beginning of year		1,289,407			0			197,483			1,486,890			1,636,657
Employer contributions		53,527			114,078			5,771			173,376			167,192
Employee contributions		11,191			3,118			531			14,840			17,309
Return on plan assets		81,495			0			7,944			89,439			99,054
Actuarial gains (losses)		52,688			0			5,667			58,355			3,068
Benefit payments		(314,150	)		(117,196	)		(22,136	)		(453,482	)		(436,390	)
Plan Assets, End of Year 2		1,174,158			0			195,260			1,369,418			1,486,890
		3,977,891			1,898,650			127,900			6,004,441			5,729,257
Unamortized estimation adjustments 3		(172,364	)		(65,801	)		(5,537	)		(243,702	)		(312,602	)
Total Pension Liabilities 4		3,805,527			1,832,849			122,363			5,760,739			5,416,655
1 The TSP had an actual rate of return on plan assets of 15.0 per cent (2009 - negative 12.9 per cent)
2 At March 31, 2010, the market value of plan investments was $1,233.1 million (2009 - $1,328.6 million). Of this amount 42.9 per cent (2009 - 42.5 per cent) was invested in fixed income securities and 47.7 per cent (2009 - 42.2 per cent) in equity investments.
3 Unamortized estimation adjustments are amoritzed against the net obligation over periods ranging from 3.7 to 4.7 years for the TSP, from 1.5 to 3.9 years for the PSSP, and from 1.5 to 10 years for the other plans. These represent the expected average remaining service life of active plan members at the time the estimation adjustments arose.
4 Changes in assumptions can result in significantly higher or lower estimates of pension liabilities. A one percentage point decrease in the discount rate would result in a $629.5 million and $220.2 million increase in the pension liabilities for the TSP and the PSSP respectively, and a one percentage point increase would result in a $519.3 million and $184.2 million decrease in the pension liabilities for the TSP and the PSSP respectively.

  47

Defined contribution plans

Defined contribution plans provide pensions based on accumulated contributions and investment earnings.  Employees contribute a percentage of salary.

The Government sponsors the Public Employees Pension Plan (PEPP), a multi-employer defined contribution plan. Employers are required to provide contributions at specific rates for employee current service.  The General Revenue Fund has fully funded its share of contributions.  The General Revenue Fund also contributes to the Saskatchewan Teachers= Retirement Plan (STRP), sponsored by the Saskatchewan Teachers= Federation.

Information on the defined contribution plans to which the General Revenue Fund contributes is as follows:

	2010							2009
	PEPP			STRP 1		Total		Total
Plan status	open				n/a		n/a		n/a
Member contribution rate (percentage of salary)		5.00-9.00	2		n/a		n/a		n/a
Government contribution rate (percentage of salary)		6.00-9.00	2		n/a		n/a		n/a
Number of active members, all employers		28,801			n/a		28,801		31,532
General Revenue Fund participation
Number of active members		14,373			n/a		14,373		16,542
Member contributions (thousands of dollars)		52,023			n/a		52,023		47,756
Government contributions (thousands of dollars)		56,817			54,992		111,809		97,773
1 The STRP is a contributory defined benefit pension plan. The Government contributes an amount which is set through provincial negotiations.
2 Contribution rate varies based on employee group.

Pension expense

Pensions are accounted for on a cash basis.  The pension liabilities are not recorded in the financial statements.

(thousands of dollars)	2010		2009
			(restated)
Defined benefit plans		173,376		167,192
Defined contribution plans		111,809		97,773
Total Pension Expense		285,185		264,965

Other Employee Future Benefits

The Government provides long-term disability benefits to members of the TSP.  The disability benefit plan liability of $22.6 million (2009 - $25.7 million) is not recorded in the financial statements.  The benefit expense on a cash basis is $5.4 million (2009 - $5.7 million).

5.         Contingencies

Guaranteed debt

The Minister of Finance has guaranteed the debt of others of $17.1 million (2009 - $20.3 million).

Lawsuits

Up to $35.9 million may be paid depending on the outcome of lawsuits in progress.

48 

6.         Contractual Obligations

Significant contractual obligations include:

·   contracts for highway improvement, $258.1 million over four years;

·   construction contracts, $20.3 million over five years;

·   aerial fleet renewal for fire suppression, $15.8 million over two years;

·   Building Communities Program agreements, $20.5 million over two years;

·   computer service agreements, $44.7 million over five years;

·   treaty land entitlement agreements valued at approximately $10.3 million over four years; rural municipality and school division tax loss compensation of approximately $13.3 million as land achieves reserve status over the course of the agreements;

·   research and development projects for agriculture technology and opportunities in the agri-food industry including agricultural programs administrative funding $26.2 million over five years;

·   Saskatchewan Association of Rehabilitation Centres for beverage container collection and recycling, $17.7 million;

·   projects to expand innovation and enhance the competitive ability of the Saskatchewan economy, $17.8 million over six years;

·   Go Green environmental projects, $14.0 million over five years; and

·   operating and capital lease obligations as follows:

(thousands of dollars)	Operating		Capital
Future minimum lease payments
2010-11		37,310		13,064
2011-12		32,618		9,533
2012-13		28,456		6,773
2013-14		24,546		1,838
2014-15		20,008		1,343
Thereafter		53,041		4,800
		195,979		37,351
Interest and executory costs		0		(16,633	)
Total Lease Obligations		195,979		20,718

7.         Related Party Transactions

Included in these financial statements are transactions with various Saskatchewan Crown corporations, agencies, boards, and commissions related to the General Revenue Fund by virtue of common control by the Government of Saskatchewan.

Transactions include transfers to related parties of $4,534.2 million (2009 - $3,735.1 million).

Routine operating transactions with related parties are recorded at the rates charged by those organizations and are settled on normal trade terms.  These transactions include:

·   payments to Saskatchewan Telecommunications Holding Corporation of approximately $21.9 million (2009 - $26.2 million); and

·   taxation and non-renewable resource revenue received from related parties during 2009-10 of approximately $92.9 million (2008-09 - $88.5 million).  In addition, Saskatchewan Provincial Sales Tax and Fuel Tax are received from related parties on all taxable purchases.

  49

8.         Trust Funds

Trust assets are administered but not owned by the Government and the Government has no equity in the funds.

Trust fund assets held and administered by the General Revenue Fund are as follows:

(thousands of dollars)	2010		2009
Pension plans		7,367,998		6,781,544
Public Guardian and Trustee of Saskatchewan		152,540		140,575
Other		51,707		45,917
Total Trust Fund Assets 1		7,572,245		6,968,036
1 Amounts are based on the latest financial statements of the funds closest to March 31, 2010, where available.

9.         Debt Retirement Fund

This fund was established pursuant to The Growth and Financial Security Act and is an accounting of the surpluses of the General Revenue Fund commencing April 1, 2008.

(thousands of dollars)	Budget		Actual
Debt Retirement Fund, beginning of year		2,388,863		2,388,863
Surplus for the year		424,500		424,500
Debt Retirement Fund, End of Year		2,813,363		2,813,363

10.          Comparative Figures

Certain of the 2009 figures have been reclassified to conform with the current year presentation.  With regard to expenses, the figures are reported on the same basis as the Estimates for the prior year.

  50

DETAIL OF GENERAL REVENUE FUND DEBT

As at March 31, 2010 (unaudited)

A.        Term Debt Issued to the Public

		Interest		$ Amount
Date of Issue	Date of Maturity	Rate %	Currency	Outstanding
July 15/05	July 15/10	2.50	Canadian	7,590,100
(Redeemable annually at the option of the holder or any time on the death of the holder; the Province reserves the right to increase the interest rate after July 14, 2006)
September 1/00	September 1/10	6.15	Canadian	550,000,000
(Non Callable; annual sinking fund)
July 15/06	July 15/11	4.00	Canadian	50,739,700
(Redeemable annually at the option of the holder or any time on the death of the holder; the Province reserves the right to increase the interest rate after July 14, 2007)
June 10/03	September 5/11	4.75 – 5.80	Canadian	104,500,000
(Extendible at the option of the holder to September 5, 2033;  This note pays interest at 4.75% to September 5, 2011, and 5.80% thereafter; annual sinking fund)
July 15/07	July 15/12	4.20	Canadian	179,280,500
(Redeemable annually at the option of the holder or at any time on the death of the holder; the Province reserves the right to increase the interest rate after July 14, 2008)
September 20/02	December 3/12	5.25	Canadian	350,000,000
(Non Callable; annual sinking fund)
February 2/93	February 1/13	7.613	Canadian	568,212,000
(The original 8% $400,000,000 U.S. debentures have been swapped into Canadian dollars at an interest rate of 7.613%; Non Callable; annual sinking fund)
June 17/03	June 17/13	4.75	Canadian	200,000,000
(Non Callable; annual sinking fund)
July 20/93	July 15/13	7.753	Canadian	228,639,500
		7.809	Canadian	97,147,500
		7.375	U.S.	50,000,000
($175,000,000 and $75,000,000 U.S. of the 7.375% debenture issue have been swapped into Canadian dollars at an interest rate of 7.753% and 7.809% respectively.  Interest payments on the remaining $50,000,000 U.S. have been swapped into Canadian dollars at an interest rate of 7.912%; Non Callable; annual sinking fund)
July 15/08	July 15/13	2.50	Canadian	3,186,000
(Redeemable annually at the option of the holder or at any time on the death of the holder; the Province reserves the right to increase the interest rate after July 14, 2009)
September 30/03	December 3/13	4.90	Canadian	200,000,000
(Non Callable; annual sinking fund)
March 14/91	April 10/14	10.25	Canadian	583,916,000
(Non Callable; annual sinking fund)
June 22/04	June 3/14	5.25	Canadian	300,000,000
(Non Callable; annual sinking fund)
July 15/09	July 15/14	1.00	Canadian	3,224,200
(Redeemable annually at the option of the holder or at any time on the death of the holder; the Province reserves the right to increase the interest rate after July 14, 2010)
June 3/05	December 3/15	4.25	Canadian	200,000,000
(Non Callable; annual sinking fund)

  51

		Interest		$ Amount
Date of Issue	Date of Maturity	Rate %	Currency	Outstanding
November 15/05	January 15/16	4.305	Canadian	274,654,700
(The original 2.125% 300,000,000 Swiss Franc debentures have been swapped into Canadian dollars at an interest rate of 4.305%; Non Callable; annual sinking fund)
August 23/06	August 23/16	4.50	Canadian	300,000,000
(Non Callable; annual sinking fund)
September 17/96	September 17/16	8.08	Canadian	10,309,000
(Non Callable; Serial Note payable in annual instalments)
September 5/07	September 5/17	4.65	Canadian	200,000,000
(Non Callable; annual sinking fund)
June 17/04	June 17/19	5.50	Canadian	33,000,000
(After June 17, 2014, this note pays interest at the three month BA rate less 0.245%; Non Callable; annual sinking fund)
August 03/04	June 17/19	5.50	Canadian	26,000,000
(Non Callable; Canadian Medium Term Note)
December 20/90	December 15/20	9.653	Canadian	65,972,500
		10.08	Canadian	126,600,000
		9.965	Canadian	128,797,500
		9.375	U.S.	45,000,000
($55,000,000, $100,000,000 and $100,000,000 U.S. of the 9.375% debenture issue has been swapped into Canadian dollars at an interest rate of 9.653%, 10.08% and 9.965% respectively; Interest payments on the remaining $45,000,000 U.S. have been swapped into Canadian dollars at an interest rate of 9.653%.  Non Callable; annual sinking fund)
February 26/91	February 15/21	9.254	Canadian	147,600,000
		9.125	U.S.	80,000,000
($120,000,000 U.S. of this debenture has been swapped into Canadian dollars at an interest rate of 9.254%.  Interest payments on the remaining $80,000,000 U.S. have been swapped into Canadian dollars at an interest rate of 9.254%; Non Callable; annual sinking fund)
February 4/92	February 4/22	9.60	Canadian	255,000,000
(Non Callable; annual sinking fund)
July 21/92	July 15/22	8.942	Canadian	256,320,000
		8.50	U.S.	100,000,000
($200,000,000 U.S. of the 8.5% debentures have been swapped into Canadian dollars at an interest rate of 8.942%.  Interest payments on the remaining $100,000,000 have been swapped into Canadian dollars at an interest rate of 8.497%; Non Callable; annual sinking fund)
May 30/95	May 30/25	8.75	Canadian	175,000,000
(Non Callable; annual sinking fund)
December 4/98	March 5/29	5.75	Canadian	350,000,000
(Non Callable; annual sinking fund)
March 24/99	March 05/29	5.60	Canadian	60,000,000
(Non Callable; annual sinking fund)
February 17/00	January 25/30	6.25	Canadian	25,000,000
(Non Callable; annual sinking fund)
January 25/00	January 25/30	6.35	Canadian	199,995,000
(Non Callable; annual sinking fund)
December 10/01	September 5/31	6.40	Canadian	550,000,000
(Non Callable; annual sinking fund)
February 13/02	February 13/32	6.30	Canadian	29,954,000
(Non Callable; annual sinking fund)

  52

		Interest		$ Amount
Date of Issue	Date of Maturity	Rate %	Currency	Outstanding
May 12/03	September 5/33	5.80	Canadian	450,000,000
(Non Callable; annual sinking fund)
August 12/04	September 5/35	5.60	Canadian	400,000,000
(Non Callable; annual sinking fund)
February 15/05	March 5/37	5.00	Canadian	425,000,000
Non Callable: annual sinking fund)
May 26/06	June 1/40	4.75	Canadian	850,000,000
(Non Callable; annual sinking fund)
September 16/02	September 5/42	5.70	Canadian	50,000,000
(Non Callable; annual sinking fund)

53 

B.        Debentures Issued to Minister of Finance of Canada

Date of Issue	Date of Maturity	Interest Rate %	Amount Outstanding
Re:  Canada Pension Plan1
April 1990-March 1991	April 2010-March 2011	10.85	90,318,000
April 1991-March 1992	April 2011-March 2012	9.92	90,664,000
April 1992-March 1993	April 2012-March 2013	9.37	62,705,000
April 1999-March 2000	April 2019-March 2020	6.34	46,335,000
April 2000-March 2001	April 2020-March 2021	6.54	75,553,000
April 2002-March 2003	April 2022-March 2023	5.89	41,182,000
April 2003-March 2004	April 2023-March 2024	5.48	40,189,000
April 2005-March 2006	April 2015-March 2036	4.63	20,654,000
April 2006-March 2007	April 2011-March 2027	4.58	99,655,000
April 2007-March 2008	April 2017-March 2028	4.65	35,491,000
April 2008-March 2009	April 2013-March 2039	4.49	40,484,000
April 2009-March 2010	April 2014-March 20201	3.49	01,867,000
Total			$        745,097,000

1 Debentures issued to the CPP have a 5-30-year maturity, are callable at the option of the Province and are redeemable in certain circumstances.  The interest rates have been prepared on a weighted average basis.  The debentures are subject in part to annual sinking funds; equity in sinking funds at March 31, 2010 $282,055,049.

Summary

		Thousands
Payable in Canadian Funds:
Term Debt Issued to the Public	$	9,015,638
Debentures Issued to Minister of Finance of Canada		745,097
Payable in Foreign Currencies
Term Debt Issued to the Public (converted to Canadian Dollars)		279,290
		10,040,025
Term Debt Outstanding
Promissory Notes Outstanding		650,000
Gross Debt	$	10,690,025

  54

CROWN CORPORATIONS

Introduction

Saskatchewan’s Crown corporations are involved in a broad range of activities including the provision of electricity, natural gas, telecommunications, financial services and other goods and services.  Certain Crown corporations are commercial enterprises intended to be self-sustaining while others receive an annual appropriation or grant to cover costs of administration and other expenses.

Traditionally, the capital requirements of the Government’s enterprises have been financed, with few exceptions, through direct obligations of, or advances by, the General Revenue Fund (GRF).  Provincial legislation governing certain Crown corporations provides for the issuance of securities by these enterprises, with or without a guarantee of the Province.  Pursuant to The Financial Administration Act, 1993, all borrowings by Provincial Crown corporations must be approved by the Minister of Finance for Saskatchewan.

Loans and advances to, and investments in, Crown corporations are carried in the financial statements of the GRF at cost.  Loans and equity investments are written down to their estimated net realizable value.

For administrative purposes, Saskatchewan’s Crown corporations are categorized into two separate groups.  Most Crown corporations with commercial operations are under the purview of, and report to, Crown Investments Corporation of Saskatchewan, as discussed below.  All other Crown corporations report directly to the Treasury Board, which is a committee of the Executive Council.

Crown Investments Corporation of Saskatchewan (CIC)

Introduction.  CIC is a Provincial Crown corporation without share capital, established and operating under authority of The Crown Corporations Act, 1993.  CIC iswholly owned by the Government of Saskatchewan.  CIC is responsible for certain Provincial investments including Crown corporations and financial and operating investments.  Crown corporations are designated as being under the purview of CIC by legislation or Order-in-Council.  As at December 31, 2009 there were eleven corporations so designated.

Fiscal Year 2009 Highlights - Non-Consolidated Basis.  CIC, as a legal entity, makes investments, borrows money, receives dividends and interest income and pays interest, grants and other expenses.  The results of these transactions are reflected in CIC’s Non-Consolidated Financial Statements which, unlike the financial statements of the GRF, are based on the calendar year.

Non-consolidated net earnings in 2009 were $176.7 million compared to $749.3 million in 2008.  The $572.6 million decrease was primarily the result a result of decreased dividend revenue of $515.3 million, a decrease in revenue from investments of $13.6 million, and an increase in grants to subsidiary corporations of $72.8 million.  Offsetting these amounts were an increase in grant funding from the GRF of $25.7 million and a decrease in operating expenses of $3.5 million.  Dividend revenue in 2008 included a one-time special dividend from CIC Asset Management Inc. (formerly Investment Saskatchewan Inc.) of $543.0 million relating to the sale of their interest in Saskferco Products Inc.

The following dividends were declared to CIC in 2009:

	Thousands
Saskatchewan Telecommunications Holding Corporation (SaskTel)	$	103,207
SaskEnergy Incorporated (SaskEnergy)		51,253
CIC Asset Management Inc. (CIC AMI) (formerly Investment Saskatchewan Inc.)..		34,000
Information Services Corporation (ISC)		13,553
Saskatchewan Gaming Corporation (SGC)		20,307
Saskatchewan Government Growth Fund Management Corporation (SGGF MC)		1,743
Saskatchewan Government Insurance (SGI)		34,039
	$	258,102

Dividends declared to CIC in 2008 totalled $773.4 million.

Expenses, including grants to subsidiary corporations and public policy expenditures, were $121.9 million in 2009 (2008 - $52.6 million).  The $69.3 million increase was mainly due to an increase in grants to subsidiary corporations of $72.8 million primarily due to a $45.0 million grant to SaskTel to fund the Saskatchewan Rural Infrastructure Program and grants to SaskPower of $27.8 million (2008 - $2.1 million) to fund the carbon capture and storage demonstration project.  Administrative expenses were $18.6 million (2008 - $22.1 million) due mainly to decreased program funding.

55 

Operating costs decreased by $3.5 million during 2009 relative to the prior year.  The decrease is primarily due to a decrease in consulting and program funding.

CIC’s grant funding to subsidiary corporations of $103.3 million (2008 - $30.5 million) increased by $72.8 million over 2008. CIC’s grant funding is as follows:

·   CIC grant funding to STC of $9.6 million decreased from $15.2 million in 2008. Funding for 2009 was comprised of $7.8 million (2008 - $6.2 million) for operations, $1.8 million (2008 - $2.3 million) to meet capital requirements, and $Nil

(2008 - $6.6 million) to complete the construction of the new bus terminal in Regina.  STC began construction of its new facility in 2005 and has received a total of $25.5 million from CIC for the project.  The new facility was opened to the public in November 2008.

·   CIC provided $47.8 million in grants to SaskTel, $45.0 million (2008 - $Nil) to fund the Saskatchewan Rural Infrastructure Program and $2.8 million (2008 - $4.5 million) to fund FleetNet, a provincial emergency communications network.

·   CIC provided SaskEnergy with $16.3 million (2008 - $7.6 million) as part of the Saskatchewan Energy Share program.

·   SaskPower received $27.8 million (2008 - $2.1 million) for carbon capture and storage demonstration projects. CIC provided SaskPower’s grant out of restricted funding from the GRF.

·   Gradworks Inc. received $1.9 million in grants in 2009 (2008 - $1.0 million) to fund its internship program.

CIC does not carry any debt and did not have any asset write-downs in either 2009 or 2008.

In November 2005, CIC established the Entrepreneurial Foundation of Saskatchewan and the Saskatchewan Entrepreneurial Fund to assist with the development and growth of small businesses in the province. CIC provided $0.9 million in 2009 in capital for investment purposes. CIC’s funding of this program ended in 2010.

In May 2006, CIC established the First Nations and Métis Fund to improve participation by First Nations and Métis people in the economy by investing in Saskatchewan-based First Nations and Métis businesses.  During the year, CIC did not advance any capital to the fund.  CIC has committed to provide up to $20 million for the Fund.  The Fund will make investments of between $1 million and $3 million in new or expanding businesses, which are majority-owned or controlled by First Nations or Métis people.

CIC, through its wholly-owned subsidiary, CIC Apex Equity Holdco Ltd., entered into a joint venture agreement with Apex Investment GP Inc., PFM Capital Inc., Conexus Credit Union 2006, Cornerstone Credit Union and Innovation Credit Union to establish Apex Investment Limited Partnership (APEX).  APEX was established on February 1, 2007 to focus on debt and equity investments, up to $3 million per investment, in Saskatchewan small and medium-sized businesses.  The objective of APEX is to realize long-term capital appreciation from its investments.  CIC Apex Equity Holdco Ltd. holds a 60 per cent joint venture interest in APEX and is committed to fund Apex to a maximum of $60 million.  To December 31, 2009, CIC has invested $10.1 million in capital in APEX through CIC Apex Equity Holdco Ltd.

Fiscal Year 2009 Highlights - Consolidated Basis.  The financial statements of CIC are consolidated with the Crown corporations under its purview and other investments to provide the Legislature with financial information relating to the aggregate results of these corporations.  The corporations provide a wide variety of services and sell various commodities in both domestic and international markets.  The diversified nature of the corporations within the consolidated group is such that the operating results are affected by events and conditions occurring throughout the world.

For the year ended December 31, 2009, CIC reported consolidated net earnings of $348.7 million on total revenues of $4.7 billion, compared to consolidated net earnings of $978.2 million on total revenues of $4.8 billion (restated) in 2008.  Net earnings from ongoing operations (earnings before public policy expenditures, income taxes, non-recurring items and discontinued operations) were $361.0 million (2008 (restated) - $345.1 million).

Consolidated earnings decreased $629.5 million from the prior year.  Variances in earnings in the CIC Crown sector were as follows:

·   SaskPower earnings of $102.7 million increased by $39.2 million from 2008 mainly due to increased revenues related to a June 1, 2009 rate increase;

·   SaskTel net earnings of $129.0 million were $5.4 million higher than 2008 driven by improved net earnings from continued strong customer growth in cellular, MAX™ Entertainment and internet services, partially offset by lower net earnings from local access and long distance services;

·   SaskEnergy net earnings of $93.3 million were $64.1 million higher than 2008 primarily due to favourable fair value adjustments related to price management tools used in the purchase and sale of natural gas, as well as a gain of $8.4 million related to the sale of Heritage Gas Limited (Heritage Gas) in 2009;

 SGI net earnings of $52.4 million increased $12.0 million from 2008 as a result of strong underwriting results in Saskatchewan, Manitoba and Alberta;

56 

·   CIC Asset Management Inc. recorded a net loss of $32.8 million in 2009 which was $723.8 million less than the net earnings of $691.0 million reported in 2008.  The large decrease was due mainly to the $679.8 million one-time gain on sale of Saskferco Products Inc. (Saskferco) recorded in 2008, a $17.9 million impairment loss taken on Big Sky Farms Inc. (Big Sky) long-lived assets in 2009, and a $7.6 million write down on its investment in Performance Plants Inc. in 2009;

·   SGC earnings of $25.4 million increased $6.3 million from 2008 due to the inclusion of twelve months of earnings in 2009 versus nine months earnings in 2008 (subsequent to its acquisition on April 1, 2008); and

·   CIC (Non-Consolidated) earnings of $176.7 million decreased $572.6 million mainly due to reduced dividend revenue of $515.3 million primarily resulting from a one-time dividend of $543.0 million received from CIC AMI in 2008 related to the sale of Saskferco.  Earnings were also negatively impacted by lower interest rates on cash equivalents and short-term investments resulting in a drop in interest revenue of $13.6 million from 2008.

In 2010, CIC expects to declare total dividends of $471.0 million (2008 - $755.0 million) to the GRF. During 2010, CIC has repaid $120.0 million in equity advances (April 2010) to the GRF and $195.0 million in dividends (September 2010).

During 2008, capital expenditures made by CIC and the Crown corporations under its purview totaled $968.6 million compared to $716.7 million (restated) spent in 2008.  Taxes and resource payments made by the corporations were $137.5 million in 2009 compared to $128.6 million in 2008.  Total consolidated assets administered by CIC were $10.2 billion as at December 31, 2009, a decrease of approximately $0.3 billion from assets under administration at December 31, 2008.

On July 26, 2000, the Saskatchewan Rate Review Panel (SRRP) was established with a mandate to conduct a review and provide an opinion on the fairness and reasonableness of proposed Crown corporation monopoly rate changes, referred to the SRRP by the Minister of Crown Investments Corporation, considering the interests of the customer, the Crown corporation, and the public.

SRRP considered four rate applications in 2009:

·   SaskEnergy received a commodity rate reduction to $5.96/GJ effective April 1, 2009;

·   SaskPower received a system wide increase of 8.5% effective June 1, 2009;

·   SaskEnergy received a commodity rate reduction to $5.21/GJ effective November 1, 2009; and,

·   SaskEnergy received a delivery rate increase averaging 4.6% that came into effect on January 14, 2010.

Subsequent to year end SRRP is considering a commodity rate application from SaskEnergy.  SRRP is expected to deliver its report in October, 2010.

CIC administers eleven subsidiary Crown corporations.  Following is a brief commentary on CIC’s major holdings.

Active Crown Corporations

As at December 31, 2009, the following eleven active Crown corporations were under CIC’s purview:  Information Services Corporation of Saskatchewan, Saskatchewan Development Fund Corporation, Saskatchewan Gaming Corporation, Saskatchewan Government Insurance, Saskatchewan Opportunities Corporation, Saskatchewan Power Corporation, Saskatchewan Telecommunications Holding Corporation, Saskatchewan Telecommunications (a subsidiary of SaskTel), Saskatchewan Transportation Company, Saskatchewan Water Corporation, and SaskEnergy Incorporated.  Of these corporations, SaskPower, SaskTel and SaskEnergy are the most significant in terms of assets, liabilities and operating income generated.

During 2009, CIC wound-up the affairs of one of its subsidiary Crown corporations, Saskatchewan Government Growth Fund Management Corporation and amalgamated remaining assets and liabilities into CIC.  Also, On September 10, 2009, Investment Saskatchewan Inc., was de-designated as a subsidiary Crown corporation pursuant to Order in Council 653/2009.  Investment Saskatchewan Inc., is continued under the authority of The Business Corporations Act (Saskatchewan) as CIC Asset Management Inc. with CIC, as a sole shareholder.

57 

Saskatchewan Power Corporation. SaskPower provides the generation, purchase, transmission, distribution and sale of electricity and related products and services.

·   Earnings of $102.7 million were $39.2 million higher than in 2008.  Both revenues and expenditures increased in 2009 with revenue growth outpacing expenditure growth.

·   Revenue of $1,545.9 million (2008 - $1,489.2 million) increased due to an 8.5 per cent rate increase on June 1, 2009 and grant funding for the Boundary Dam Integrated Carbon Capture and Sequestration project (ICCS).  These increases were partially offset by reduced electricity demand.

·   Expenses of $1,443.2 million (2008 - $1,425.7 million) increased due to additional pension expenses required to fund the plans, ICCS spending (which was 100 per cent offset by ICCS grants), rising wages and salaries and higher maintenance costs.  These were partially offset by lower natural gas prices.

·   Gross debt of $2,845.5 million (2008 - $2,578.3 million) increased as a result of higher capital expenditures required to replace aging infrastructure.  The additional debt resulted in an increase in the debt ratio from 60.7 per cent in 2008 to 61.4 per cent in 2009.

·   SaskPower invested $640.0 million (2008 - $422.0 million) in various capital projects including new generation, customer connects and the life extension of existing infrastructure.

·   Dividends declared to CIC were $Nil (2008 - $46.0 million).  CIC has suspended dividends due to SaskPower’s significant capital requirements.

Saskatchewan Telecommunications Holding Corporation.  SaskTel is the leading full service communications company in Saskatchewan, providing competitive voice, data, dial and high speed internet, entertainment and multimedia services, security, secure electronic transactions, wireless, data storage and web-hosting applications, text and messaging services over a fiber optic based fully digital network.  The Corporation’s major asset is a wholly owned subsidiary, Saskatchewan Telecommunications, which has been the principal supplier of telecommunications in Saskatchewan 100 years.  Saskatchewan Telecommunications’ operations are regulated by the Canadian Radio-television and Telecommunications Commission.  The Corporation also maintains investments in companies that provide directory publishing, remote security monitoring, system design, project management, engineering consulting, software sales, multimedia, cable television, transaction clearing house, wireless point of sale, broadband Internet streaming, advertising services, and telecommunication to business customers in British Columbia, Alberta, Ontario and Quebec.  Through interconnection agreements with the Canadian telecommunication industry – primarily Bell Canada – the Corporation is part of the national and global communications network.

·   Earnings for the year are $129.0 million, up $5.4 million from 2008. Earnings from operations was $151.2 million and cash provided by operating activities was $319.0 million, which enabled SaskTel to self-finance most of its capital expenditures, acquisitions, debt obligations and dividend requirements.

·   Operating revenues for the year are $1,152.8 million, up $13.7 million from 2008. The increase was primarily driven by continued strong customer growth in cellular, MAX™ Entertainment and internet services.  Increases in these services were partially offset by reductions in local access and long distance services.

·   Operating expenses for the year are $1,001.6 million, up $6.5 million from 2008. The increase was driven primarily by increased expenses to support cellular and MAX™ Entertainment Services revenue growth, and increases to depreciation and amortization expenses.  These increases were partially offset by a reduction in restructuring charges and by a reduction in the write down of assets held for sale.

·   Interest costs of $22.5 million (2008 - $23.1 million) decreased primarily due to reduced debt levels for most of the year.

·   Debt decreased to $339.2 million (2008 - $362.7 million) due to the repayment of notes payable.

·   Net capital expenditures for the year are $189.3 million, down $30.0 million from 2008, primarily due to reduced spending for wireless spectrum in 2009 and funding received for the Rural Infrastructure Program (RIP).  SaskTel acquired spectrum for $66.0 million in 2008 through the Advanced Wireless Services (AWS) auction. This reduction was partially offset by an increase in property, plant and equipment expenditures of $78.1 million, part of which ($45.0 million) was funded by CIC.  Spending increased to support the Saskatchewan Infrastructure Improvement Program, enhancements to MAX™ entertainment services and increased spending on buildings and equipment.

·   Debt ratio of 24.3 per cent (2008 - 27.3 per cent) declined as a result of repayment of long-term debt, reduced notes payable and increased sinking funds, partially offset by reduced cash and short-term investments.

·   Return on equity increased to 16.2 per cent (2008 - 16.1 per cent) consistent with higher earnings.

·   Dividends of $103.2 million were declared in 2009 (2008 - $78.9 million).

58 

SaskEnergy Incorporated.  SaskEnergy operates a natural gas distribution utility that provides natural gas and related services to residential, farm, commercial and industrial customers in Saskatchewan.  In addition, TransGas Limited (TransGas) is SaskEnergy’s wholly owned natural gas transmission and storage subsidiary.

·   Earnings of $93.3 million increased (2008 - $29.2 million) primarily due to favourable fair value adjustments related to price management tools used by SaskEnergy in the purchase and sale of natural gas.  In 2009, there were favourable fair value adjustments of $29.3 million (2008 - $24.7 million unfavourable fair adjustments).  Also included in net earnings is a gain of $8.3 million related to the sale of SaskEnergy’s 50.1 per cent interest in Heritage Gas Limited.  Operating net earnings, before the effects of fair value adjustments, was $64.0 million (2008 - $53.9 million).

·   Revenues were $1,197.2 million (2008 - $1,301.1 million).  The decrease in revenues was mainly attributable to lower natural gas rates.  The impact of lower rates was partially offset by increased delivery rates, gas marketing activities and sales volumes to utility and delivery customers.

·   Expenses of $1,117.2 million decreased (2008 - $1,276.6 million) primarily due to lower prices paid for natural gas.  This was partially offset by higher operating and maintenance expenses including a change in accounting policy for intangible assets.

·   SaskEnergy had a gain on commodity sales of $33.6 million (2008 - $37.9 million loss).  SaskEnergy utilizes a natural gas purchase price risk management program to assist in managing the volatility of natural gas purchase prices and may use various natural gas derivative contracts.  The related fair value adjustments of these contracts are included in the cost of gas sold.  In 2009, the net effect of the fair value adjustments was to decrease the cost of gas sold, reported as a gain on commodity sales.

·   Debt, which includes short- and long-term debt, decreased to $904.1 million (2008 - $914.8 million) as a result of proceeds from the sale of SaskEnergy’s 50.1 per cent interest in Heritage Gas Limited ($73.3 million) and was partially offset by debt issues used to fund capital expenditures and purchases of natural gas inventory.

·   Capital investment was $130.3 million (2008 - $114.6 million) with the majority spent on ensuring the safe and reliable operation of over 80,000 kilometers of transmission and distribution systems.

·   SaskEnergy’s debt ratio was 63.9 per cent (2008 - 66.4 per cent) which coincides with the decrease in debt, and higher retained earnings.

·   Return on equity of 13.5 per cent increased (2008 - 12.5 per cent) corresponding with the higher net earnings.

·   Dividends of $51.2 million (2008 - $42.9 million) were declared to CIC.

Major Wholly Owned Subsidiary

CIC Asset Management Inc. (Formerly Investment Saskatchewan Inc.)  CIC Asset management Inc. (CIC AMI) provides investment capital and financing, and manages portfolios of commercially viable investments.  CIC Asset Management Inc. was incorporated under The Business Corporations Act (Saskatchewan) on November 14, 1979 as a wholly-owned subsidiary of Crown Investments Corporation of Saskatchewan (CIC), a Provincial Crown corporation.

·   Net loss of $32.8 million compared to earnings of $691.0 million in 2008.  The significant decrease in earnings is attributable to unusually high earnings in 2008 due to the $679.8 million gain from the sale of Saskferco. Additionally, during 2009, CIC AMI reported a $17.9 million write down on its investment in Big Sky and a $7.6 million write down on its Performance Plants Inc. investment.

·   Revenues of $119.5 million in 2009 were significantly lower than the $893.0 million reported in 2008 due to lower gains on sale of investments, which in 2008 was primarily made up of the gain on the sale of Saskferco.

·   Expenses of $131.9 million in 2009 decreased from $164.1 million reported in 2008.  This is mainly due to lower operating expenses at Big Sky, which was consolidated until November 10, 2009.

·   Long-term debt is $Nil in comparison to the $59.2 million reported at the end of 2008.  This is due to no longer including the interest in Big Sky on a consolidated basis.

·   Capital spending for property, plant and equipment was $0.6 million in 2009 as compared to $0.3 million in 2008.

·   Investment disbursements of $7.0 million in 2009 are lower than the $21.4 million reported in 2008 due to decreased new investment activity by CIC AMI and its consolidated entities.

·   The provision for environmental liabilities increased by $3.3 million in 2009 to $98.6 million.  This increase is due to inflationary adjustments to the expected cost of remediation.

CIC AMI’s significant holdings are discussed below:

Saskferco Products Inc. (Saskferco).  Saskferco is a nitrogen-based fertilizer plant located near Belle Plaine, Saskatchewan, that was until October 1, 2008 owned by Investment Saskatchewan (49 per cent), The Mosaic Company (50 per cent), and Citibank Canada (1 per cent).

On October 1, 2008, the Corporation sold its 49.5 per cent interest in Saskferco for net proceeds of $816.9 million resulting in a gain of $679.8 million.

59 

Crown Investments Corporation of Saskatchewan
Consolidated Statements of Financial Position
	At December 31
		2005			2006				2007			2008			2009
								(Thousands)				Restated
												Note 4
Assets
Current		$	2,093,929		$	2,054,238			$	2,233,622		$	2,842,699		$	2,088,345
Long-term investments			657,093			1,006,887				1,164,715			1,008,683			1,157,067
Property, plant and equipment			5,688,140			5,884,049				5,952,302			6,027,194			6,447,289
Other assets			419,746			256,168				276,667			639,826			555,816
Long-term assets of discontinued operations			389,307			459,820				3,627			68,034			0
Total Assets		$	9,248,215		$	9,661,162			$	9,630,933		$	10,586,436		$	10,248,517
Liabilities and Province's Equity
Current		$	1,724,875		$	1,581,780			$	1,690,770		$	1,551,876		$	1,683,742
Long-term debt			3,217,556			3,491,525				3,226,998			3,710,329			3,607,801
Long-term liabilities from discontinued operations			460,903			443,767				0			0			0
Deferred revenue and other liabilities			468,124			493,653				531,544			704,321			705,404
Province of Saskatchewan's Equity			3,376,757			3,650,437				4,181,621			4,619,910			4,251,570
Total Liabilities and Province's Equity		$	9,248,215		$	9,661,162			$	9,630,933		$	10,586,436		$	10,248,517
Crown Investments Corporation of Saskatchewan
Consolidated Statement of Operations
	For the Period Ended December 31
			2005			2006				2007			2008			2009
									(Thousands)			Restated
												Note 4
Revenue
Sales of products and services		$	4,155,153		$	4,298,900			$	4,329,036		$	4,636,779		$	4,589,291
Investment			89,555			96,816				106,835			173,758			62,255
Other			5,551			10,372				16,299			12,380			36,060
Total Revenue		$	4,250,259		$	4,406,088			$	4,452,170		$	4,822,917		$	4,687,606
Expenses
Operating costs other than
those listed below		$	3,065,619		$	3,318,622			$	3,235,838		$	3,612,274		$	3,443,769
Interest			243,939			261,864				264,098			244,890			238,449
Amortization of property, plant and equipment			406,455			428,524				467,626			492,051			506,881
Saskatchewan taxes and resource payments			99,944			100,646				103,004			128,577			137,504
Total Expenses		$	3,815,957		$	4,109,656			$	4,070,566		$	4,477,792		$	4,326,603
Earnings before the following			434,302			296,432				381,604			345,125			361,003
Future income tax (expense) recovery			(35,881	)		866				8,036			0			0
Public policy expenditure			0			0				0			0			0
Non-recurring items			43,915			18,942				236,622			679,776			(23,854	)
Current income tax expenses			(20,249	)		(1,718	)			(1,000	)		0			0
(Provision for) recovery of environmental liabilities			0			0				(24,077	)		(48,217	)		464
Gain (loss) from discontinued operations			(115,422	)		126,597				95,151			1,545			11,095
Net Earnings		$	306,665		$	441,119			$	696,336		$	978,229		$	348,708

(see accompanying notes)

60 

CROWN INVESTMENTS CORPORATION OF SASKATCHEWAN

Notes to Financial Information

1.   The foregoing financial information has been derived from the audited consolidated financial statements of Crown Investments Corporation of Saskatchewan.  The foregoing narrative description is unaudited.

2.   Accounting Guideline 15, “Consolidation of Variable Interest Entities” (AcG-15) of the CICA Handbook is effective for periods beginning on or after November 1, 2004; as a result, the Corporation adopted this standard effective January 1, 2005.  AcG-15 relates to the application of consolidation principles to certain entities that are subject to control on a basis other than ownership of voting interests.  The purpose of AcG-15 is to provide guidance for determining when an enterprise includes the assets, liabilities and results of activities of such an entity (a “variable interest entity”) in its consolidated financial statements.

An entity falls under the guidance in AcG-15 and is classified as a variable interest entity (VIE) if it has equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties; or equity investors that cannot make significant decisions about the entity’s operations, or that do not absorb the expected losses or receive the expected returns of the entity.  A VIE is consolidated by its primary beneficiary, which is the party involved with the VIE that will absorb a majority of the expected losses or will receive the majority of the expected residual returns or both, as a result of ownership, contractual or other financial interests in the VIE.

The Corporation has determined that the following entities fall under the classification of a VIE and have been consolidated in the financial statements:

HARO Financial Corporation (HARO)

Meadow Lake Pulp Limited Partnership (MLPLP)

Prairie Ventures Limited Partnership (PVF)

Prior to January 1, 2005, the Corporation accounted for HARO as a loan receivable, and MLPLP and PVF using the equity method.

Restatement of comparative financial information is not required by AcG-15.  The cumulative effect to retained earnings on the adoption of AcG-15 as at January 1, 2005 is an increase of $36.3 million.  Net income in 2005 increased $10.3 million as a result of the consolidation of VIE’s.

3.   Effective January 1, 2007, the Corporation adopted the accounting recommendations for accounting changes (Canadian Institute of Chartered Accountants (CICA) Handbook Section 1506) in accordance with the transitional provisions of the section.  The new standard allows for voluntary changes in accounting policy only if they result in the consolidated financial statements providing reliable and more relevant information.  New disclosures are required in respect of changes in accounting policies, changes in accounting estimates and correction of errors.  The adoption of section 1506 has had no material impact on these consolidated financial statements.

On January 1, 2007, CIC adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3855, financial instruments - recognition and measurement, CICA Handbook Section 3861, financial instruments - disclosure and presentation, CICA Handbook Section 1530, comprehensive income, CICA Handbook Section 3865, hedges and CICA Handbook Section 3251, equity.  The comparative consolidated financial statements have not been restated.

4.   Effective January 1, 2008, the Corporation adopted the accounting recommendations for capital disclosures (Canadian Institute of Chartered Accountants (CICA) Handbook Section 1535) in accordance with the transition provisions of the section.  This section requires disclosure of information related to the objectives, policies and processes for managing capital, and particularly whether externally imposed capital requirements have been complied with.  As this standard only addresses disclosure requirements, there is no impact on the Corporation’s operating results.

Effective January 1, 2008, the Corporation adopted the accounting recommendations for financial instruments - disclosures (CICA Handbook Section 3862) and financial instruments - presentation (CICA Handbook Section 3863) in accordance with the transition provisions of the sections.  These sections replace the existing disclosure and presentation recommendations contained in financial instruments - disclosure and presentation (CICA Handbook Section 3861).  The new disclosure standards increase the disclosures related to financial instruments, and the nature, extent and management of the Corporation’s risks arising from financial instruments.  The presentation standards carry forward unchanged from the former presentation requirements.  As these standards only address disclosure and presentation requirements, there is no impact on the Corporation’s operating results.

  61

Effective January 1, 2008, the Corporation adopted CICA Handbook Section 3031 - Inventories.  The new recommendations establish standards for the determination of the cost of inventories and the subsequent recognition as expense, including any write-down to net realizable value and reversals of previous write-downs for increases to net realizable value.  Also, guidance is provided related to reclassification of inventory items as property, plant and equipment.  The standard requires retrospective application with no restatement of prior year results.  Upon the adoption of the new standard, the Corporation began using the weighted average cost method for valuing all natural gas inventories.

5.   Certain of the 2007 comparative figures have been reclassified to conform with the current year’s presentation.  Figures for 2004 through 2006 have not been similarly reclassified.

  62

SOURCES OF INFORMATION

Information included herein which is designated as being taken from a publication of the Province or Canada, or any agency or instrumentality of either, is included herein upon the authority of such publication as a public official document.  The financial statements of the Government included herein under the headings "General Revenue Fund Supplementary Financial Information" and "Summary Financial Statements" have been taken from the Public Accounts of the Province (subject to certain adjustments for purposes of comparability).  All financial information contained herein was obtained from the most recent annual Budget Estimates, Public Accounts, or Crown Investments Corporation of Saskatchewan Annual Report, or was prepared by representatives of the Department of Finance or of CIC in their official capacities.  The information set forth under "Province of Saskatchewan", and other than described in the first sentence of this paragraph, was prepared by representatives of the Department of Finance in their official capacities.

  63