Leveling the Spending Field

Executive Summary

• The political history of the Prairie region is a constantly evolving relationship between citizens and government that originated in Europe almost a millennium ago. The Fiscal Constitution presents the opportunity for another chapter in that evolution.

• Provincial government expenditure per capita, adjusted for inflation, increased at a trend average of $306 in Alberta, $307 in Saskatchewan and $188 in Manitoba over the years 1997-2007.

• During this period, these increases amounted to $3,060, $3,070 and $1,880 more spent on behalf of each citizen in 2007 than was spent in 1997.

• Results for common social statistics like Gini coefficients, life expectancy, suicide rate, educational achievement and infant mortality show either deterioration or very limited progress.

• These increases in expenditure without demonstrable results may be attributed to the power of interest groups (the public choice theory of economics) and the predisposition of politicians to focus on inputs (or expenditure) as a proxy for policy outcomes.

• A fiscal constitution would help to refocus government expenditure on getting results by ensuring that inflation adjusted per capita expenditure cannot increase without the explicit permission of voters.

• The onus would be on the increase-expenditure champions to demonstrate the results they expect to achieve, thus leading to higher quality expenditure.

• A fiscal constitution could be introduced through Section 43 of the Constitution of Canada as a federally ratified part of any province’s constitutional background.

• By settling the ongoing dispute over expenditure levels and creating a political environment for more productive government service delivery, a fiscal constitution is attractive to both the political left and right.

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