HALIFAX, NS – The Atlantic Institute for Market Studies (AIMS) publishes this morning a policy study entitled Measuring Austerity in Atlantic Canada. The paper examines the public finances of governments in the region, paying close attention to the notion of austerity. The study sets to discover whether we have we lived in the recent past, or if we are living currently, in a period of austerity in Atlantic Canada.
Using public accounts data and budget estimates, the study charts government spending regimes in the four Atlantic provinces since 1980. The paper also compares the experience of Atlantic Canada with the relevant European experiences of budget austerity in the years following the Great Recession. Atlantic Canadian provinces, by contrast, have expended significantly more for government programs on absolute and per capita bases than they did 35 years ago. While Atlantic provinces have implemented “blips” of restraint, there has been no effort to seriously pare down government spending that could qualify as austere.
The paper reaches 3 conclusions:
- The budgets of southern European countries such as Portugal, Ireland, Greece, and Spain (the so called “PIGS” nations) have experienced genuine austerity following the Great Recession. These countries had to cut their government spending by up to a quarter, over as few as two fiscal years.
- Provincial governments in Atlantic Canada have increasingly spent more money on programs — in absolute and per capita terms — between 1980 and 2016. Per capita program expenditure in Newfoundland and Labrador saw the greatest increase at 113.7 percent. Prince Edward Island’s growth rate was the slowest at 61 percent over the examined period.
- A shifting demographic landscape in the region — notably its aging population — does not suffice to explain these significant spending increases. While the school-age population has dwindled in the four Atlantic provinces, education spending continues to grow, showing that spending increases cannot be a response to demographic changes.
“In debates about public finances or benefits for public sector employees, the word ‘austerity’ gets tossed around emotively and haphazardly, without much connection to the region’s fiscal history,” says AIMS President Marco Navarro-Génie. “This study shows that spending regimes in Atlantic Canada have grown considerably in a generation. It establishes that the rhetoric of anti-austerity advocates does not conform to the facts.”
The author is Patrick Webber, an independent researcher based in Fredericton. He was formerly Research Coordinator for New Brunswick’s New Democratic Party. Mr. Webber holds a master’s degree in history from the University of New Brunswick and contributes to Inroads: A Journal of Canadian Opinion.
Read the study.