Size of Government

Topic Box from the 2006 Sixth Annual Benchmark Report

Description
Consolidated local-provincial government spending as a percent of GDP.

Why it's Important
Research indicates that the relative size of a country's government sector may negatively affect competitiveness. Increases in the size of government beyond the "optimal point" may produce little in terms of social progress.

How Does BC Compare?
Although BC ranked 3rd in 2005/06, its government spending as a percent of GDP (25.4%) was above Alberta's (17.5%) and Ontario's (24.0%). Between 1996/97 and 2005/06, BC's government sector shrank by 10.0%, the third-largest decrease in the country. Newfoundland and Labrador government spending as a percent of GDP shrank by 33.1%, Alberta's shrank by 12.7% and Ontario's shrank by 4.5%. Four other provinces had single-digit decreases over the last ten years ranging from 0.4% in Manitoba to 5.7% in Nova Scotia. The two exceptions were Prince Edward Island, which saw government spending as a percent of GDP increase by 1.9% and Saskatchewan with a 2.4% increase.

Sources: Tanzi, Vito and Ludger Schuknecht (2000) Public Spending in the 20th Century: A Global Perspective, Cambridge University Press; Tanzi, Vito and L. Schuknecht (1995), The Growth of Government and the Reform of the State in Industrial Countries. IMF Working Paper, December.
Note: This indicator uses data from Statistics Canada's Financial Management System (FMS) and, therefore, may not exactly match results provided by Finance Ministries.