Ontario’s balanced provincial budget, released in March for April 1 2008 to March 31 2009, revealed some interesting information about the make-up of society and the role of government.

Total revenues and spending by the province of Ontario are expected to be about $100 billion over this fiscal year. Most of the revenue will come from three high-profile taxes – personal income tax (27%); the retail sales tax (19%); and corporate taxes (14%). The shares of these three add up to 60% of the total. Another large sum of money (18%) will come from the federal government, but this is mainly part of an earlier agreement by Ottawa to help out with health care. All other revenue sources are relatively minor.

The expenditure side is even more dominated by large blocks. The health care sector receives 40% of the government’s spending attention. Education in the lower grades (kindergarten to grade 12), post-secondary education and training account for another 20%. The math is simple. The health-care financial commitment is almost exactly double the level of spending on education. The two combined are 60% of total Ontario expenditures. The only other standout expenditure in the province is about 10% assigned to pay interest on past accumulated debt.

This gives rise to some interesting philosophical considerations. For every one dollar spent on education, two dollars are spent on health care. This is a story that is repeated in almost all of the provinces. Education spending is mainly on the young. Health care spending is mainly on those of a “certain age” and this will become even more the case as the post-war baby boom generation ages into its 60s and 70s. Therefore, the fight for government dollars can almost be characterized as a skirmish between the future and the past, with the past clearly winning.

The figures on provincial spending reveal much about the roles played by our various levels of government. It is the provinces, more than the federal government or local levels of government, that look after our young and our elderly (i.e., those in society who are most dependent).

The two-to-one ratio, health care to education spending, has to be frustrating for provincial Finance Ministers. They want to spend money in areas that will raise education levels and workplace skills to better equip Canadians to compete in the world marketplace. But they also have to be fiscally responsible. Health care spending (7%-plus per year) is increasing at a rate faster than government revenue growth and faster than any other major expenditure category. The “bleeding” will continue for the foreseeable future and government’s hands are tied.

There is no simple resolution of the health-care spending dilemma for the provinces. Some minor degree of two-tier medical care is already in place in some provinces and being explored in others, but don’t expect it to be widely adopted. Time and again, Canadians have made it clear that their tolerance for privatizing health care is quite limited. We’ve all heard the horror stories from south of the border where a personal medical crisis can leave one helpless, broke and without a home.

Finally, there is one more interesting observation to be made. Both dollars spent and numbers of workers related to health care are significantly higher than for education. However, the two are closely linked, since the training and skill levels of the former depend on society’s commitment to the latter. Care must be taken to never short-change the schooling system, or it may well be your health and my health that will eventually pay the price.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

» View all comments (0 total comments)

Post Your Own Comments 

» Not a member? Register now to become one. Otherwise, login to post your comments on this article.

11/20 - Labor Markets in a Recession − Production Workers to Take a Pasting

11/17 - The Most Serious Letter in the Alphabet

11/14 - Canada’s Construction Starts have Underperformed in 2008

11/11 - What President-elect Barack Obama will mean for Canada

11/10 - The Wise Old Rooster

» Back to Alex's Blog