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November 18, 2020GOVERNMENT FINANCIAL STATISTICS, 2019 Statistics Canada has published the latest Consolidated Government Finance Statistics (CGFS) for 2019 including consolidated results for provincial-territorial plus local governments. Statistics Canada's data allows for comparability across jurisdictions, as well as consistency with the government consumption and investment data reported in macroeconomic accounts.
These data are based on the international government financial statistical standard and, as such, may differ in their presentation from similar concepts reported in Public Accounts and other financial statements. CGFS data differ from reports published by governments due to differences in institutional coverage, accounting rules, timing and integration with the Canadian macroeconomic accounts.
The following analysis compares the per capita results for consolidated provincial-and-local governments. Local governments are consolidated into the analysis because each provincial government may assign different responsibilities to municipal or local governments.
Revenues and Taxes
Total revenues per capita vary across the country, with Nova Scotia's provincial-local government revenues amounting to $16,009 per capita. This is slightly lower than the Canadian average of $16,040 per capita. The highest per capita revenues are in Quebec ($18,242), where the government offers a different mix of public services, including delivering some services that are otherwise delivered by the Federal government (the value of the Quebec abatement to Federal taxes was $661 per capita and is included in revenue figures presented here). The lowest per capita revenues are in Ontario ($14,881) and British Columbia ($14,967).
Although Nova Scotia's provincial-local government revenues are similar to the national per capita average, this makes up a larger portion of the province's comparatively small GDP per capita.
Taxes are the largest source of consolidated provincial-local government revenues, amounting to $9,687 per capita across Canada. Nova Scotia's tax revenues are $1,288 per capita lower than the national average at $8,399 per capita. The highest provincial-local tax revenues are in Quebec at $11,011 (before the $661 per capita Quebec abatement of Federal taxes).
Beyond taxes and user fees, consolidated provincial-local governments generate revenues from workers compensation premiums, fiscal transfer payments, interest/dividend income, royalties and sales of goods/services. Those provinces that are Equalization recipients report higher fiscal transfer revenues per capita, particularly in the Maritimes and Manitoba. Newfoundland and Labrador's transfer revenues were elevated in 2019 by a one-time payment from the Federal government in respect of the Atlantic Accord.
Provinces with substantial oil and gas sectors (and to a lesser extent hydroelectricity and forestry) report stronger royalty income. Saskatchewan and Quebec also report substantially higher revenues from other sources, though this may include specific items that cannot be classified with others. In Statistics Canada's data, consolidated revenue from sales of goods and services includes tuition fees.
Tax revenues break down into 8 major categories, including personal income taxes, corporate income taxes, general sales taxes, excise taxes/profits of fiscal monopolies, payroll taxes, property taxes, user fees and other taxes. The amount of revenues generated by these taxes reflects both the tax system itself (tax rates, deductions, credits, number of taxes levied) as well as overall economic conditions.
There are also differences in specific taxes across Canada. Alberta has no general sales tax. Alberta relies more on property taxes and user fees for revenues than most other provinces. Only Newfoundland and Labrador, Quebec, Ontario, Manitoba and British Columbia generate revenue from payroll taxes. Corporate income taxes per capita are higher in British Columbia, Ontario, Alberta, Quebec and Saskatchewan. User fee revenues per capita are notably higher in Alberta, Saskatchewan and British Columbia.
Over the last 10 years, there have been clearly distinct patterns of revenue growth between resource-producing provinces and other provinces. Resource-producers (Alberta, Saskatchewan and Newfoundland and Labrador) all generated substantially higher revenues when oil prices were high, but these revenues became volatile after oil prices started to fall in 2014. Despite this volatility, Saskatchewan and Newfoundland and Labrador (with its one-time increase in transfer payments) report higher consolidated provincial-local government revenues per capita than the national average. Alberta's per capita revenues have fallen below the national average since 2015.
Consolidated provincial-local revenue growth for non-resource intensive provinces has been steadier from 2008-2018, but Ontario and British Columbia reported declines in 2019.
Expenses
Consolidated provincial-local government expenditures in Canada were $16,397 per capita. Nova Scotia's consolidated provincial-local government expenditures were slightly lower at $16,079 per capita. The highest expenditures were in Newfoundland and Labrador ($18,616), Alberta ($18,565) and Saskatchewan ($18,087) while the lowest were in British Columbia ($14,342), Prince Edward Island ($15,172) and Ontario ($15,436).
As with consolidated provincial-local government revenues, modest differences in per capita expenditures appear larger when measured relative to GDP per capita, which remains substantially larger in resource-producing provinces.
Employee compensation is the largest component of consolidated provincial-local expenditures, amounting to $6,064 per capita. The highest employee compensation expenditures per capita are found in Newfoundland and Labrador and Saskatchewan. The lowest are reported in Ontario and British Columbia. Nova Scotia's per capita employee compensation expenditures were $6,629.
Purchases of goods and services was the next largest expenditure category with an average provincial-local government expenditure of $4,213 per capita. Expenditures on goods and services were highest in Alberta and lowest in Prince Edward Island.
Interest expenses depend on net financial liabilities and costs of funds. Across Canada, provincial-local expenditures on interest payments averaged $1,068 per capita while interest costs were $951 per capita in Nova Scotia. The highest interest expenditures were in Quebec, Newfoundland and Labrador and Manitoba. The lowest interest expenditures were in British Columbia and Alberta.
Subsidies (particularly in agriculture) are uneven across the country, with an average of $687 per capita. The highest per capita subsidy payments were in Quebec and Prince Edward Island. The lowest subsidies were paid in Newfoundland and Labrador and New Brunswick.
Social assistance and family/employment benefit expenditures per capita were $1,408 per capita across Canada, including notably higher expenditures in Quebec, Ontario and Manitoba. New Brunswick, Prince Edward Island and Nova Scotia ($781 per capita) reported the lowest social benefit expenditures.
Over the last ten years, per capita consolidated provincial-local government expenditures have been higher (and more volatile) in Alberta, Saskatchewan and Newfoundland and Labrador. Outside of resource-producing provinces, expenditures were also higher than average in Quebec and New Brunswick. Nova Scotia's and Manitoba's expenditures were similar to the national average while expenditures were generally below average in Ontario, British Columbia and Prince Edward Island.
Net Operating Balance
The net operating balance of the consolidated provincial-local government sector reflects the difference between revenues and expenses. As this includes local governments, colleges, universities, workers' compensation boards and other entities, it is not comparable to statements of surplus or deficit for Provincial governments as reported in their respective Public Accounts.
Four Provinces reported consolidated provincial-local governments with a positive net operating balance in 2019: Newfoundland and Labrador (+$1,255), British Columbia (+$625), Quebec (+$876) and Prince Edward Island (+$178). Nova Scotia's consolidated provincial-local government sector reported a net operating balance of -$70 per capita in 2019. The largest net operating deficits were reported in Alberta (-$3,051) and New Brunswick (-$1,402). The consolidated provincial-local government sector reported a deficit of $357 per capita across Canada.
Nova Scotia's net operating balance improved in 2019. Prior to a decline in 2018, Nova Scotia's operating had also improved over the previous four years.
National consolidated provincial-local government net operating balances declined in 2019, after reporting steady improvements from 2010-2018. Much of the national improvement to 2018 was attributable to Quebec, Ontario and British Columbia, which offset declines in Alberta, Saskatchewan and Newfoundland and Labrador. In 2019, there was deterioration in net operating balances from New Brunswick, Quebec, Ontario, Manitoba, Alberta and British Columbia.
Resource-producing provinces, New Bruswick and Manitoba report the largest negative net operating balances in their consolidated provincial-local governments.
Net Financial Worth
As with net operating balance, the net financial worth of the consolidated provincial-local government sector includes different entities and accounting treatments than reported by Provincial governments in Public Accounts.
All provinces report negative net financial worth of consolidated provincial-local governments, with an average of -$15,899 per capita across Canada. The three westernmost provinces have the smallest negative net financial worth, followed by Nova Scotia at -$13,053 per capita. The highest negative net financial worth is reported in Newfoundland and Labrador, Quebec, Ontario and Manitoba.
Outside Newfoundland and Labrador and Prince Edward Island, every provincial-local consolidated government net financial worth eroded in 2019. Over the last 11 years, every province's net financial worth declined. The largest deteriorations in net financial worth over there 2008-2019 period were reported in Alberta, Manitoba, Ontario, Saskatchewan and Quebec. The least declines were reported in British Columbia (almost stable) and Nova Scotia.
Statistics Canada. Table 10-10-0147-01 Canadian government finance statistics (CGFS), statement of operations and balance sheet for consolidated governments (x 1,000,000); Table 17-10-0009-01 Population estimates, quarterly; Table 36-10-0222-01 Gross domestic product, expenditure-based, provincial and territorial, annual (x 1,000,000)
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