Education spending restraint could have improved the fiscal state of provinces across Canada
As provincial governments across Canada draft budgets for the coming fiscal period, a reminder about the impact of restraint, particularly in the larger areas of spending including education, is relevant.
In a recent study, Enrolments and Education Spending in Public Schools in Canada, authors for the Fraser Institute’s Barbara Mitchell Centre calculated the impact spending restraint would have had on the fiscal situation in each province in 2012/13 (the most recent year of comparable data).
The analysis was straightforward and simply asked, “What if spending on education in public schools had been increased between 2003/04 and 2012/13 to only account for price changes (inflation) and for changes in student enrolments?”
The results were dramatic. Fully four provinces—Newfoundland and Labrador, Nova Scotia, Quebec and British Columbia—would have moved from deficit to surplus in 2012/13. Saskatchewan would have moved from essentially a balanced situation to a surplus of more than three-quarters of a billion dollars. The remaining five provinces—Prince Edward Island, New Brunswick, Ontario, Manitoba and Alberta—would have materially reduced their 2012/13 deficits, ranging from a 53 per cent reduction in Manitoba to 79 per cent in New Brunswick. Ontario would have gone from a deficit of more than $9 billion to a deficit of just over $3 billion, fully reducing its deficit by two-thirds.
The aggregated impact of all provinces holding spending on public schools constant for the decade (while still adjusting for inflation and changes in enrolments) would have reduced the total aggregated deficit of the provinces by a remarkable 80.9 per cent.
Still, this comparative analysis is not to say that a province’s fiscal balance is solely the function of changes to education spending. What it does say, however, is that every spending choice has consequences within the fiscal framework of a province’s budget. Like any economic actor, provincial governments must make choices about how and where to spend the resources available to them.
So what education spending choices have provincial governments made recently?
Every province chose to spend substantially more per student over the decade. Our study reported that spending on public schools (aggregated for the 10 provinces) had increased dramatically—45.9 per cent, from $41.6 billion in 2003/04 to $60.7 billion a decade later.
When price changes (inflation) were taken into account, average spending rose from $9,231 to 12,070 per student, a 30.8 per cent increase over the period. Five provinces—from Saskatchewan at the top of per-student increases (after adjusting for price changes) at 43.8 per cent to New Brunswick, Ontario, Newfoundland and Labrador, and Alberta—showed increases in education spending above the national average. Even Manitoba, which ranked tenth for increases, increased education spending on public schools by almost 15 per cent.
Each province needs to ask—are such increases in spending on public schools justified?
Regardless of the the answer to that question, what is certain is that restraint in public school spending, as demonstrated over a recent decade, could have substantially impacted the budget deficits in nine of 10 provinces.
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