Weighing the “fiscal fitness” of Canadian governments: The good, bad and ugly
For more details
Restoring Canada’s Fiscal Fitness
Tools to reform government spending by 2020
While Canada may have weathered the recent economic downturn better than most, we did not escape without our fair share of scrapes and bruises. In the race to inject billions of taxpayer dollars to "stimulate" the economy, our governments sank further and further into debt. While a few did manage to spend within their means, the majority accelerated a pattern of over spending that pre-dated the economic downturn.
Although Canada as a whole is middle of the road on the scale of total government spending (38.4 per cent of GDP) compared to the rest of the world, our provinces and territories are literally all over the map. To illustrate the fiscal challenges being faced by governments, the CFIB has developed a long-term model of federal and provincial finances projecting to 2020. The good news is that many governments are appearing to put the brakes to spending growth, but the margin of error is thin-any backsliding could push the debt balance in the wrong direction. Even tying government spending to the rate of growth in the economy would push today's $1 trillion in government debt to $1.8 trillion in the next 10 years.
While balanced budgets should be the goal of all governments, they can easily mask unsustainable spending patterns as documented in this report. Although no Canadian government has enshrined limits on government spending in legislation, evidence from south of the border with Tax and Expenditure Limitations is positive and something governments here should look at adopting.
