Halifax – Good Enough for Government Work, the latest edition of the Atlantic Institute for Market Studies’ annual review of provincial finances, finds that no province stands out with a gold medal performance. Or, to use a more appropriate analogy for early April, there are few home runs; rather, provinces are more likely to hit singles, take walks, or get hit by pitches. Of course there are a few strikeouts as well.

This year’s highest overall grade is a solid but unspectacular B+, shared by Alberta and Ontario, and the lowest is not that far away at C–, the mark received by Manitoba and Nova Scotia.

“Because most provinces have both weaknesses and strengths that are captured in this analysis, the final results tend to bunch toward the middle,” said Ian Munro, Director of Research at AIMS and author of the report.

“Traditional economic strength does help with some components of the analysis,” explains Munro. “But powerhouses like Alberta still record very low grades, including F marks, on some indicators. Similarly, traditionally poorer provinces like Newfoundland and Labrador are able to score highly on many measures, despite the more difficult circumstances they face in certain economic dimensions.”

In between the bookends of Alberta and Ontario at the top and Manitoba and Nova Scotia at the bottom, Newfoundland and Labrador, New Brunswick, Saskatchewan, and British Columbia manage average C+ grades, and Prince Edward Island and Quebec are slightly below with C marks.

These overall results, based on the 2007/08 budgets presented in the spring of 2007 (except for Prince Edward Island’s October budget), are broadly similar to last year’s findings. The only provinces showing significant movement are Alberta, moving up from a B– to a B+, and Manitoba, going in the other direction from a C+/B– last year to a C– this year.

The budgets that are being introduced in provincial legislatures now in the spring of 2008 will form the basis of next year’s analysis.

The overall mark is calculated from three subgrades: fiscal health, a measure of the state of the province’s fiscal finances for fiscal year 2006/07, prior to the tabling of the spring 2007 budget; fiscal accuracy, which assesses 2007/08 budget figures against both the estimates made in the prior year’s budget document and independent third party figures; and budget impact, which focuses on the direction of the 2007/08 budget.

Not surprisingly, the three traditional “have” provinces, Alberta, British Columbia, and Ontario, have the top scores on the fiscal health measure, with Newfoundland and Labrador at the bottom of the list. The leaders on the fiscal health subgrade have, in general, the lowest levels of per capita interest payments, the lowest per capita deficits, the lowest levels of per capita spending, and the smallest numbers of public servants in relation to provincial population.

Alberta and Ontario do best at producing budget estimates that are consistent both with independent third-party analysis and across years in the provinces’ own budget documents and therefore also do well on the fiscal accuracy measure. They are joined in the top ranks by Newfoundland and Labrador and Prince Edward Island. Manitoba and Quebec record the worst performances on this subgrade.

On the budget impact score, Alberta and Prince Edward Island are at the bottom of the pack, while the top marks on this subgrade go to Newfoundland and Labrador and Saskatchewan. The high grades for Newfoundland and Labrador and Saskatchewan mean they presented the 2007/08 budgets that would do the most to promote healthy economies in the long term — by limiting or reducing taxes, expenditures, interest payments, and deficits.

Munro notes that in this time of increased economic uncertainty, it is more important than ever for governments to be prudent in their budgeting.

“At this point the Canadian economy seems to be holding its own, but troubles in the United States continue. Keeping debt and taxes low and expenditures in check will be critical for the provinces’ economic health as they weather any storm that crosses over the border.”

To read the complete paper, click here.


For further information, please contact:

Ian Munro, AIMS Director of Research
902-429-1143, ext. 223

Charles Cirtwill, AIMS Executive Vice President
902-429-1143, ext. 225

Barbara Pike, AIMS Director of Communications
902-429-1143, ext. 227 / 902-452-1172