Alberta Tops Institute's Budget Performance Index While Quebec Lingers in Last Place
Contact:
Jason Clemens, Director fo Fiscal Studies,
The Fraser Institute, (604) 714-4544 Email: jasonc@fraserinstitute.caJoel Emes, Senior Reserch Economist,
The Fraser Institute, (604) 714-4546 Email: joele@fraserinstitute.caRelease Date: 21 March 2000
VANCOUVER,BC>>> According to a new study released today by The Fraser Institute, Alberta tops all provinces and the federal government for overall fiscal performance. Alberta out-performed all the other provinces and the federal government to end up with a score of 74.3 out of a possible 100 on the Institute's Budget Performance Index 2000.
"The purpose of the study is to provide Canadians with information about how their local and provincial governments tax, spend, and manage debt relative to other Canadian jurisdictions," says Joel Emes, Research Economist at The Fraser Institute and author of the new study.
The Budget Performance Index measures the recent fiscal conduct of the provinces and the federal government (Figure 1). The index uses 17 variables in 3 areas to measure the level of, and changes in, spending, tax rates, tax revenues, and deficits as well as changes in debt (Table 1).
Two items that stand out are Alberta's perfect score on the debt and deficit sub-index and the federal government's perfect score on the spending sub-index.
Alberta holds or shares top position on every variable in the debt and deficit sub-index because the province did not have a single deficit year over the period of the study. In fact, Alberta decreased their debt by almost $3,000 per person and all but eliminated their net debt (which has been eliminated as of 1999/00).
British Columbia, on the other hand, received an overall rank of 8th with a score of 41.7 on the Index. Of the two jurisdictions that experienced an increase in their debt-to-GDP ratio, BC's was the highest. BC's also rated low on the spending side because of relatively small decreases in spending relative to GDP and personal income, and a high spending-to-GDP ratio.
Although the federal government did eliminate its deficit mainly through increased revenue, and their low score on the Tax Rates and Revenue sub-index certainly bears this out, it did cut spending between 1995/96 and 1999/00 while the provinces as a whole increased their spending.
"Federal spending cuts coupled with steady population growth and strong GDP and personal income growth explain why the federal government scores so well on the Spending sub-index," explains Emes.
Ontario also ranked well on the spending side due to decreases in per capita spending, spending relative to GDP and personal income, and a low spending-to-GDP ratio.
Tax Rates and Revenue
A few of the standouts on the Tax Rates and Revenue measures are Ontario's large cut to personal income taxes and the cuts in the sales tax rate in Newfoundland, Nova Scotia, New Brunswick, and Saskatchewan. On the negative side Newfoundland has increased their personal income tax rates.
The federal government ranked last on this sub-index reinforcing the fact that the federal deficit was eliminated largely because of revenue increases and high tax rates.
Debt and Deficit
Alberta dominated the Debt and Deficit sub-index with a surplus in every year, a $2,986 decrease in debt per capita, and the almost total elimination of net debt, which is reflected in the large decrease in the debt to GDP ratio. Five jurisdictions (Newfoundland, Prince Edward Island, Manitoba, Saskatchewan, and Alberta) had an annual average surplus for the period of study and the debt to GDP ratio fell in nine jurisdictions, the exceptions being Ontario and British Columbia.
Methodology
The period of analysis for most variables is fiscal year 1995/96 through fiscal year 1999/00. The exceptions are tax rates which are measured in calendar years 1995 and 1999 and debt per capita and as a percent of GDP which are measured from fiscal year 1994/95 through fiscal year 1998/99. The study uses consolidated provincial-local data and all references to an individual province include both provincial and local government activities.
Figure 1
Table 1
Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.
For further information contact:
Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca
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