government programs

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Post-boom Spending in Alberta

The province of Alberta substantially increased program spending after 2004/05, beyond the combined effect of inflation plus population growth. The result was that in subsequent years (2005/06 to 2012/13 inclusive), the province spent $300.5 billion—$41 billion more on programs beyond what was necessary to keep up with population growth and inflation.

It is not clear that such extra program spending had to occur. By 2004/05, program spending in Alberta, on a per-capita basis, had already returned to where it was in the early 1990s. Specifically, program spending amounted to $8,978 in 1993/94, declined to $6,828 by 1996/97, and rose to $8,965 by 2004/05. (In subsequent years, per-capita program spending rose even higher, to $10,672 by 2012/13.) Thus, by 2004/05, Alberta once again spent as much per capita on programs as it did before provincial government budget reductions in the mid-1990s. In other words, Alberta’s era of austerity was long over.

Given that there is always competition for tax dollars, this report asks what fiscal room might have been created had the province of Alberta only increased program spending in line with inflation and population growth since 2004/05. It then demonstrates what such fiscal prudence would have meant for other opportunities, such as capital spending, tax relief, and deposits into the Alberta Heritage Savings Trust Fund.

It determines that had the province not spent the extra $41 billion on programs, significant funds would have been available for capital expenditures, or personal income tax relief, or extra deposits into the Alberta Heritage Savings Trust Fund, or some combination of the three opportunities.

The Proper Size of Government

President Obama has frequently cited the seemingly intractable debate about the size of government currently consuming the political class as his primary obstacle to getting major reforms through a divided Congress.

For example, in his State of the Union address he said:

Bombardier and Canada's corporate welfare trap

In the land of government plenty—that vast landscape populated with the tax dollars of Canadians—there is no shortage of politicians willing to hand out and defend subsidies to business and no dearth of corporations willing to take the cash.

Ontario's have not status sets up a divided Canada

As anyone who has ever watched puppies tussle over a bone knows, nothing will lead to acrimony quicker than competition for an object everyone wants. Keep the puppy image in mind. Replace it with provincial governments, many of whom now have a stake in the federal transfer program, equalization.

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Equalization is a federal transfer program that is explicitly designed to subsidize provinces with weak own-source revenues and to be politically unifying. However, the flip in Ontario?s status from a ?have? to a ?have-not? province has had, and will continue to have, profound consequences for the country as a whole.

This essay focuses on three results that have evolved since 2008/09, the year before Ontario became a ?have-not? province: First, Ontario?s shift means the majority of Canada?s population now live in equalization-receiving provinces; second, a ?have-not? province (Ontario) has higher average living standards than two ?have? provinces (British Columbia and Newfoundland & Labrador); third, all four remaining ?have? provinces are relatively rich in resources while no other province is.

As part of an on-going equalization research program, this essay highlights the above three results of Ontario?s ?have-not? shift.

Evidence suggests bigger government isn't better

Government is the single most pervasive institution of modern life and its programs are important to our quality of life. While government spending around the world has grown, more and larger government is not always associated with better outcomes.

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