Fraser Forum

As B.C. budget day looms, Premier Clark’s first place ranking on fiscal policy no reason for complacency

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Each year the Fraser Institute measures and ranks the performance of Canada’s premiers in terms of how well their governments managed provincial finances while in office. Premiers who managed spending more prudently, balanced the books and paid down debt, and reduced and maintained competitive tax rates, rank higher. Critically, the analysis measures the direction of fiscal policy under each premier’s leadership. This year, B.C. Premier Christy Clark (pictured above) ranked first overall, essentially tied with Quebec Premier Philippe Couillard for the best record.

With B.C.’s budget set for next week (Feb. 16), Premier Clark should not be complacent as there are areas of fiscal policy where she can improve. But let’s start with what she has done well over the period she is evaluated (2011/12 to 2014/15).

For starters, Clark did a relatively good job at managing the growth in government spending compared to her counterparts. During her tenure, she increased program spending by an average rate of 2.1 per cent, just enough to keep pace with the combined rate of inflation and population growth. Importantly, the rate of government spending growth under Clark’s tenure was less than the rate of economic growth in the province (3.7 per cent). As a result, the size of B.C.’s government—measured as spending relative to the provincial economy—decreased while Clark was at the helm.

Another bright spot for Clark is that her government has consistently managed to balance the books. In recent years, a number of provinces have consistently run budget deficits, while the B.C. government has been posting budget surpluses. In fact, Clark was one of only two premiers (the other being Brad Wall of Saskatchewan) to maintain a small budget surplus, on average, while in office.

Despite finishing at the top of our index, Premier Clark’s record has weaknesses. For example, despite avoiding annual budget deficits Clark has allowed government debt to grow, due mainly to substantial capital spending by the B.C. government being financed by debt. As a percentage of the economy, the provincial debt burden grew from 15.7 per cent to 16.4 per cent.

Furthermore, Clark performed relatively poorly in the area of taxation. There are two main reasons for her weak performance in this area.

First, she increased B.C.’s general corporate income tax rate from 10 to 11 per cent, making the province less competitive for investment compared to other jurisdictions. (And this increase came on top of reinstating the economically damaging Provincial Sales Tax, which taxes business inputs for entrepreneurs and raises the cost of investment.)

Second, Clark presided over a relatively complicated personal income tax system with five separate tax brackets—the second most among the provinces. She also enacted a temporary increase in the top income tax bracket for two years that was ultimately eliminated in the 2016 tax year.

All told, Premier Clark should be commended for coming in top spot in this year’s ranking but there is still room for improvement. The upcoming provincial budget is an opportunity to further strengthen Clark’s fiscal record by addressing areas where her government has performed poorly.  


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