WINNIPEG — We await a Manitoba budget many consider pivotal to addressing the growing provincial deficit. Central to the budget deliberations are efforts to rein in spending widely viewed as out of control.
One way to evaluate Manitoba’s government spending is to compare it to other provinces using operating account data collected by Ronald Kneebone and Margaret Wilkins at the University of Calgary School of Public Policy. This allows us to compare total provincial expenditures per capita from the 1980-81 fiscal year to 2014-15, although our focus will be the past two decades.
Manitoba’s spending per capita has surpassed other provinces’, although the origin may be surprising. Manitoba had significantly lower spending than Ontario, Quebec and the other western provinces from 1980-81 until 1996-97, when spending soared from $4,721 to $6,325 per capita in 1998-99, an increase of 34 per cent, over two years at the end of the Gary Filmon Progressive Conservative government.
Thus, when the Gary Doer NDP government assumed power, Manitoba already had the highest spending per capita, eight per cent more than Quebec and Alberta and 11 to 15 per cent more than Ontario, Saskatchewan and B.C.
The situation did not change much until 2007-08 and the Great Recession, when expenditure in Saskatchewan and Alberta rose to the Manitoba level of $10,200. Since then, however, Manitoba spending per capita has grown by 15.4 per cent to 2014-15, quite a bit faster than Saskatchewan (5.3 per cent) and Alberta (4.7 per cent), although the annual rate of growth of 2.4 per cent during this period is only slightly above the inflation rate. Manitoba’s spending growth was quite modest during this period except for one year, 2010-11, when spending grew by 9.6 per cent.
Nonetheless, by 2014-15 Manitoba was the conspicuous spendthrift among provinces in per capita terms, 53 per cent above B.C., 33 per cent above Quebec, 26 per cent above Ontario and 11 per cent above Saskatchewan and Alberta. Since this dramatic change in spending relative to other provinces occurred within only two decades, it is certainly a source for concern.
One way to begin to understand why Manitoba’s spending has taken off is to examine the different components of expenditure, starting with health and education, the two largest provincial fiscal responsibilities.
The pattern of health and education expenditures mirrors overall expenditure, as Manitoba moved from the middle of the provincial pack through the 1990s to more rapid growth in per capita spending, especially compared to more populous Ontario, Quebec and B.C. From 2007-08 to 2014-15, Manitoba health spending grew by 31.4 per cent, outstripping Saskatchewan (27 per cent) and Alberta (26 per cent) as well as the other provinces.
Education spending, on the other hand, surpassed the other provinces between 1996-97 and 2007-08, when it grew by 220 per cent compared to increases from 148 per cent in Ontario to only 26 per cent in Quebec. As of 2014-15, then, Manitoba health spending stood at $4,668 per capita, again well ahead of Ontario (by 28 per cent), B.C. (23 per cent) and Quebec (19 per cent) as well as five per cent higher than Saskatchewan and Alberta, while education spending stood at $2,841 per capita, also well ahead of B.C. (by 65 per cent), Ontario (54 per cent), Quebec (34 per cent), Alberta (24 per cent) and Saskatchewan (17 per cent). For reasons that require deeper scrutiny, rapid growth in Manitoba spending is at least partly attributable to its inability to contain spending in health and education as well as other provinces have.
The remaining third of provincial expenditures lies in three general areas: social services, debt financing and other program spending. Manitoba’s per capita social spending has remained in the middle of the provincial pack throughout the past two decades and, at $874, remains as much as 20 per cent below Ontario and Alberta. Similarly, debt service costs have fluctuated widely across the provinces, but Manitoba has remained in the middle.
What stands out is the black box of other program spending, which has grown much more rapidly in Manitoba. In 1996-97, Manitoba’s other program spending was $989 per capita, about 20 per cent below Alberta and Saskatchewan, seven per cent below Ontario and just seven per cent higher than B.C. and Quebec. By 2014-15, however, Manitoba’s spending of $2,820 per capita in this category was about five per cent higher than Alberta and Saskatchewan, 36 per cent above Ontario and more than double spending in B.C. and Quebec. Thus, other program spending, as much as health and education, contributed to Manitoba’s dubious rise to the top of the provincial pack.
Cursory examination of the provincial accounts shows that no single government department stands out in other program expenditure, with infrastructure and transportation, jobs and the economy, justice and municipal government each accounting for only about five per cent of total spending and other departments far less. Unpacking what appears to have been a very volatile sector of government spending requires further scrutiny and, at least on the surface, more informative accounting.
It is also interesting to note that, as oil revenues have dropped dramatically in Alberta and Saskatchewan in recent years, Manitoba has risen to the top of the provincial pack in revenue per capita as of 2014-15, suggesting that current revenue streams are not a problem in comparative terms. But that is a topic for another time and space.
»Wayne Simpson is a professor of economics at the University of Manitoba. His column also recently appeared in the Winnipeg Free Press.