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CAUT Bulletin Archives

June 1999

Days of Fiscal Restraint Not Over by a Long Shot

Economic forecast reveals program spending this year will remain below 1992 levels in almost every province.

Tax cuts and increased spending for health and education were the common themes echoed by provincial finance ministers in budgets tabled this spring. But those who think the days of fiscal restraint are over should think again.

That's the conclusion reached by the economic forecasting firm Informetrica. In its annual assessment of provincial budgets released in May, economist Carl Sonnen warns that in most cases provincial spending increases are far more modest than political spin would suggest.

Comparing real per capita spending in each province, Informetrica's analysis reveals that total program spending this year will remain below 1992 levels in seven provinces. Only Newfoundland, Manitoba and Saskatchewan are the exceptions.

Generally, all provinces enacted similar levels of cuts in program spending, with the exception of Alberta. Total program spending in that province, measured on a constant per capita basis, will be 25 per cent lower this year than in 1992.

At first glance, the major exception to the trends in reduced funding appears to be health care as per capita spending has risen above 1992 levels in all provinces except Prince Edward Island and Alberta. However, from a patient's perspective the quality of care received still may be deteriorating.

"As a rule, real per capita spending on health care has been cut least severely," notes Sonnen. "However, this may be misleading since demographic data suggest that patient populations are increasing about one half a per cent faster than the general population."

Across the provinces, education has generally suffered more cuts than health care, with the most severe reductions enacted in New Brunswick.

"Generally, enrolments appear to have grown approximately in line with population," says Sonnen. "Adjusting for this, the cuts from a pupil's and a patient's point of view have probably been similar."

Social assistance, transfers to municipalities, environmental programs, and highway maintenance have been cut most deeply, leading Informetrica to conclude that any more reductions in these areas would result in serious social and economic costs.