November 2000 Fraser Forum: November Questions & Answers and
November Graph
Note to readers
In the June 2000 issue of Fraser Forum we noted that the OECD had made an historical revision to their government spending figures, that this revision changed the results of the December 1999 "Questions and Answers," and that we would print a full update when we had all of the necessary information. This "Question and Answer" is that update.
Q: How much money do Canadian governments spend per person? How does this compare to the United States?
A: Canadian governments spent a total of $11,041 (all figures in 2001 US dollars, converted using Purchasing Power Parity (PPP)) and the US spent $10,874 per person in 1999. A more relevant comparison, however, can be had by removing debt service costs from total expenditures. Debt service costs represent the current costs of past deficit spending. Since there is no current benefit from the bulk of this past deficit spending, we should remove this expenditure category from the total. The results are presented in table 1 and in the first section of this month’s graph. Whereas Canadian governments spent $166 per capita more in total than the US in 1999, American governments actually spent $113 per capita more in 1999 on non-debt-service activities. This month’s graph shows real per capita spending and real per capita non-debt-service spending for Canada and the US from 1983 through 2001. The bottom graph shows Canadian governments spending significantly more for all years except the late 1990s, early 2000s, and the US’s high defense spending years in the mid-1980s. The top graph tells a similar story except that per capita spending by American governments, net of debt service costs, surpassed per capita spending by Canadian governments in 1999 and is also expected to be higher in 2000 and 2001.
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Table 1: Real Government Expenditure Per Capita, 2001 US dollars—PPP |
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|
Government Expenditure |
Government Expenditure Less Net Debt Costs |
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|
US |
Canada |
Canada less US |
US |
Canada |
Canada less US |
|
|
1983 |
9,088 |
9,760 |
672 |
8,338 |
9,142 |
805 |
|
1984 |
9,382 |
10,141 |
758 |
8,503 |
9,357 |
854 |
|
1985 |
9,823 |
10,725 |
902 |
8,893 |
9,793 |
899 |
|
1986 |
10,219 |
10,618 |
399 |
9,233 |
9,659 |
426 |
|
1987 |
10,315 |
10,480 |
165 |
9,311 |
9,480 |
169 |
|
1988 |
10,261 |
10,749 |
488 |
9,232 |
9,684 |
452 |
|
1989 |
10,389 |
10,913 |
524 |
9,312 |
9,745 |
433 |
|
1990 |
10,561 |
11,414 |
853 |
9,461 |
10,119 |
658 |
|
1991 |
10,528 |
11,548 |
1,021 |
9,389 |
10,373 |
984 |
|
1992 |
10,853 |
11,862 |
1,009 |
9,699 |
10,678 |
979 |
|
1993 |
10,738 |
11,698 |
960 |
9,636 |
10,552 |
916 |
|
1994 |
10,688 |
11,749 |
1,061 |
9,558 |
10,513 |
955 |
|
1995 |
10,736 |
11,661 |
925 |
9,561 |
10,251 |
690 |
|
1996 |
10,743 |
11,236 |
493 |
9,582 |
9,920 |
337 |
|
1997 |
10,726 |
11,012 |
286 |
9,599 |
9,739 |
140 |
|
1998 |
10,742 |
11,298 |
556 |
9,615 |
9,972 |
357 |
|
1999 |
10,874 |
11,041 |
166 |
9,863 |
9,750 |
(113) |
|
2000e |
10,967 |
11,269 |
302 |
10,000 |
9,979 |
(21) |
|
2001e |
11,126 |
11,425 |
299 |
10,217 |
10,165 |
(52) |
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Note: e = estimate |
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Q: How much of total government spending goes to cover interest on government debt in Canada and the United States? How is this expected to change over the next few years?
A: In 1999, 11.7 percent of all Canadian government spending went to cover interest on the debt of all levels of government; American governments spent 9.3 percent (calculated from table 2, which shows debt service as a percentage of GDP). Canada has spent approximately 5.1 percent of Gross Domestic Product (GDP) on debt service annually since 1990; projections for 2000 and 2001 show this ratio falling slightly. The United States has spent approximately 3.4 percent of GDP on debt service annually since 1990; projections for 2000 and 2001 show this ratio falling substantially to around 2.5 percent of GDP.
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Table 2: Government Expenditure as a Percentage of GDP |
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|
United States |
Canada |
Canada less the US— |
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|
Total outlays |
Net debt service costs |
Total Expenditure less Debt Service Costs |
Total outlays |
Net debt service costs |
Total Expenditure less Debt Service Costs |
||
|
1983 |
33.9 |
2.8 |
31.1 |
45.8 |
2.9 |
42.9 |
11.8 |
|
1984 |
33.1 |
3.1 |
30.0 |
45.3 |
3.5 |
41.8 |
11.8 |
|
1985 |
33.8 |
3.2 |
30.6 |
46.0 |
4.0 |
42.0 |
11.4 |
|
1986 |
34.2 |
3.3 |
30.9 |
45.4 |
4.1 |
41.3 |
10.4 |
|
1987 |
33.9 |
3.3 |
30.6 |
44.0 |
4.2 |
39.8 |
9.2 |
|
1988 |
32.9 |
3.3 |
29.6 |
43.4 |
4.3 |
39.1 |
9.5 |
|
1989 |
32.8 |
3.4 |
29.4 |
43.9 |
4.7 |
39.2 |
9.8 |
|
1990 |
33.6 |
3.5 |
30.1 |
46.7 |
5.3 |
41.4 |
11.3 |
|
1991 |
34.2 |
3.7 |
30.5 |
50.1 |
5.1 |
45.0 |
14.5 |
|
1992 |
34.8 |
3.7 |
31.1 |
51.1 |
5.1 |
46.0 |
14.9 |
|
1993 |
34.1 |
3.5 |
30.6 |
50.0 |
4.9 |
45.1 |
14.5 |
|
1994 |
33.1 |
3.5 |
29.6 |
47.5 |
5.0 |
42.5 |
12.9 |
|
1995 |
32.9 |
3.6 |
29.3 |
46.3 |
5.6 |
40.7 |
11.4 |
|
1996 |
32.4 |
3.5 |
28.9 |
44.4 |
5.2 |
39.2 |
10.3 |
|
1997 |
31.4 |
3.3 |
28.1 |
42.4 |
4.9 |
37.5 |
9.4 |
|
1998 |
30.5 |
3.2 |
27.3 |
42.6 |
5.0 |
37.6 |
10.3 |
|
1999 |
30.1 |
2.8 |
27.3 |
40.2 |
4.7 |
35.5 |
8.2 |
|
2000e |
29.5 |
2.6 |
26.9 |
39.3 |
4.5 |
34.8 |
7.9 |
|
2001e |
29.4 |
2.4 |
27.0 |
39.0 |
4.3 |
34.7 |
7.7 |
|
Note: e = estimate |
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November Graphs
Joel Emes (joele@fraserinstitute.ca) is Senior Research Economist at The Fraser Institute. He has an M.A. in Economics from Simon Fraser University.
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