Government sizes growing nation wide, including B.C.

According to a recent report from the Fraser Institute, the combined size of the federal, provincial, and municipal governments increased in all but two provinces over a period from 2007 to 2019, relative to the sizes of their economies.

“The size of government increased in eight of ten provinces and the country as a whole going into the pandemic,” said Alex Whalen, policy analyst at the Fraser Institute and co-author of The Size of Government in Canada in 2019.

The study measures federal, provincial, and local government spending in each province as a share of the economy (GDP) from 2007 to 2019, the most recent year of comparable data. The reason for having 2007 and 2019 as reference points is because both years preceded a national recession, so they provide an opportunity to compare like-years.

The report shows that government size grew in every province except Saskatchewan and Prince Edward Island during the given period. In 2019, the size of government relative to the GDP was 40.4 per cent as a whole in Canada, and ranged from a low of 29.7 per cent in Alberta to a high of 60.2 per cent in Nova Scotia.

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According to the report, out of the provinces that had an increase in government size, B.C. had by far the smallest increase at less than one per cent. In 2007, the statistics show that the size of the government relative to the GDP was 34.8 per cent, in 2019 it was 35.7 per cent.

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The report states that previous research shows that in order to maximize economic growth and social progress, the size of government should be between 26 and 30 per cent of the GDP. When governments exceed that size, it can cause negative effects such as cutting out the private sector investment without providing greater social progress.

“It’s important to understand just how much governments across Canada have grown in recent years, and what impact that might have on our economic recovery moving forward,” said Whalen.