Thursday, June 16, 2005

The Government Has How Much Money?

These figures were released by Statistics Canada today:

Canada's federal, provincial, territorial, and local governments (as well as the two major pension plans) recorded a combined surplus of $12.1 billion. This was $9.7 billion higher than the consolidated surplus in 2003/04.

Healthy chunk of change. But look how it breaks down:

The federal government and the Canada and Quebec pension plans accounted for the entire consolidated government surplus in 2004/05. Their total far more than offset a deficit recorded by the provinces, territories and local governments combined.

The biggest surplus was recorded by the Canada Pension Plan at $8.0 billion. Close behind was the federal government with $7.8 billion, its eighth surplus in a row. The Quebec Pension Plan had a surplus of $1.6 billion.

Well, it's impressive. Given the number of boomers now reaching retirement age, expect that surplus to shrink pretty quickly. I think we can expect the pension plans to become the next fiscal battleground, after health care.

On the other hand, provincial governments collectively were still in a deficit position of $2.3 billion in 2004/05, despite an improvement of $6.1 billion in their fiscal balance from the previous year. Local governments had a deficit of $3.0 billion.

Well, well -- ammunition for the Liberals. They can make the argument that they need the big spending programs, especially for cities, both in the budget bill and the NDP-inspired amendment.

Provincially, the largest surplus, about $3.5 billion, occurred in Alberta in 2004/05, with British Columbia coming a distant second with a surplus of about $1.3 billion.
Ontario had the largest deficit, $4.7 billion, followed by Quebec at $3.0 billion.

And one can easily imaging Premiers Dalton and Jean grumbling about the good fortune of Premier Ralph.

In 2004/05, federal revenues corresponded to 16.8% of GDP, down only slightly. However, federal expenditures corresponded to only 16.2% of GDP, a more substantial 6.7 percentage point decline.

During the same 15 year-period, the share of both revenues and expenditures of provincial/territorial governments fell slightly. But in 2004/05, their expenditures were equivalent to 21% of GDP, still five percentage points higher than the federal government.

During the past 15 years, provincial and territorial governments captured a much larger share proportionally of public spending.

The good news if you're an economic conservative: the federal government's role in the economy is shrinking. The bad news if you're a taxpayer: the provinces and the towns are playing a bigger role. Much bigger.

So where's all the money going? Mostly health and social services:

Of the $19.6 billion increase in spending, health and social services combined accounted for over one-half (56%). Debt charges, which were equal to 8.8 cents out of every dollar of government revenues, declined for the fourth consecutive year.

If you want a primer on current government spending, have a look at the whole thing.