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Unfocused Spending Spoils Provincial Budget

Author: Richard Truscott 2001/04/02
The spin on the latest budget is that increased spending is focused on the vital needs of the province. But the numbers tell a different story. A look at the budget beyond the sound bytes reveals government spending that is unfocused, undisciplined, and unsupportable in the long term.

Spending on health, highways, and education is rising by a big 8% this year. But while increased strategic spending in these important areas may be necessary, can we say the same about the 6% spending increase in other government departments 13 of 15 major departments are seeing spending increases this year.

This really adds up from two or three budgets ago. Between 1998-99 and 2001-02, budgeted spending on health, education, and highways has risen by $627 million or 25%. But outside of these vital areas spending has risen by $526 million or 26%. If you factor out agriculture and post-secondary education spending as well, other "non-vital" spending still increased by $323 million or 24% from three years before. Add it all back together and total operating spending for 2001-02 will be more than $1.1 billion higher or 25% higher than it was in the 1998-99 budget. Are we getting 25% more for our money

So while our provincial government defends spending increases and fends off calls for more tax cuts by claiming that it is focusing on health, education, highways, and agriculture, the numbers suggest a different reality. Its not focused strategic spending, but unfocused and undisciplined spending that is draining resources from important programs, hampering debt reduction, and slowing tax relief.

Many people had hoped that this budget would accelerate the tax cuts announced last year, but beyond a little tinkering, that didn't happen. As shown above, government spending in non-vital areas has increased by hundreds of million of dollars since 1998-99. If the government had even just held the line on this spending over the last couple of years, they could have eliminated the small business tax ($70 million), cut school taxes in half ($240 million), and improved this year's income tax relief with the rest. This government could be doing much more on tax relief if our money was better managed. Simply put, controlling spending now is the best way to protect taxpayers in the future.

But is the government courting real fiscal trouble with its unfocused spending Only time will tell, but the current spending spree is being paid for with unreliable resource revenue, hand-outs from Ottawa (now over $1 billion), and by dipping into the Fiscal Stabilization Fund. We can't rely on the first, we can't rely on the second (the feds have been known to chop the provinces off at the knees before), and drawing on the Fiscal Stabilization Fund is just pulling money out of the savings account. The government is spending like there is no tomorrow, and tomorrow there may be a recession (but let's hope not - knock on wood).

A budget is supposed to clear up some questions, but we have as many questions after this budget as we did before. What are the spending priorities Where is the new tax relief How will we pay for this if resource prices tank or a recession deepens our economic problems If this budget was supposed to be a chance for the new Premier to leave his mark, the only mark for taxpayers is a question mark.

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Federal Director at
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