Centre of the Continent

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Statistics Lesson

There is absolutely no credibility to Tom Broadbeck’s weekend column bashing the provincial government for it’s deficit. Mr. Broadbeck offers absolutely no context for the numbers that he presents and any figure out of context is meaningless. When I was a very young goaltender, I had a goals against average of 0.02 goals per game. “Wow”, you might say, “that’s spectacular!” Actually, I was horrible. I usually got one or two shots a game and most of them came from far beyond the blue line. That is context. It is information that when missing makes the numbers meaningless or worse totally misrepresentative.

First, let’s look at his deficit claim of $511 million dollars for 2010/11. My research puts it around $545 million but that discrepancy aside, what does it really mean? Below is a chart I compiled of the ten provinces and their shortfalls for the current fiscal period.


Deficit 2010/11 GDP 2011 (est.) Deficit % of GDP
Alberta 4,750,000,000 192,841,000,000 2.46%
British Columbia 1,720,000,000 172,369,000,000 1.00%
Manitoba 545,000,000 44,551,000,000 1.22%
New Brunswick 749,000,000 24,422,000,000 3.07%
Newfoundland 194,000,000 19,937,000,000 0.97%
Nova Scotia 222,000,000 29,982,000,000 0.74%
Ontario 19,700,000,000 542,545,000,000 3.63%
PEI 55,000,000 4,353,000,000 1.26%
Quebec* 4,500,000,000 281,675,000,000 1.60%
Saskatchewan** -20,000,000 19,937,000,000 n/a




TOTAL 32,415,000,000 1,332,612,000,000 2.43%









*Includes $8.3 billion in HST Federal Transfers
** Budget only shows surplus because Saskatchewan dipped into it’s “Rainy Day Fund”)

As a percentage of our gross domestic product (GDP) it is only 1.22 percent. That debt to output ratio is pretty good. It puts us in fourth place out of the ten provinces and well below the national average. In some further research also found that as a percentage of provincial revenue, we are also in fourth place. Frankly, that’s not too shabby for our small prairie province. What Mr. Broadbeck also doesn’t tell you is that “the province’s out-of-control” deficit is actually lower this year then last and though 2014 is expected to continue to fall. To give even more information to work with, here’s what RBC’s economic evaluation for June 2011 had to say:

Carried by a wave of capital investment and solid demand for
the products and services produced in their province, Alberta, Saskatchewan,
and Manitoba are set to achieve above-average growth this year.

Provincial Forecast – RBC Financial (link below)

Economic growth means more revenue. More revenue allows more spending. No provincial government nor the federal is running in the black right now. That’s to be expected when there is an economic downturn. If the price to achieve solid economic growth is running a deficit a little over one percent of our GDP, who in their right mind would argue that?

Context. What the column likes to bring in as some sort of counterpoint to the deficit claim is a 10.8% increase in spending from 2009 to 2011. Without the a comparison to revenue it’s just a number. My very rough calculations put a revenue increase of nearly 7% over the same period. So there is a real difference of less then 4%. Coming out of a global recession is that so horribly bad?

No.

It’s quite good actually.

Endnotes:

NDP Say: Charge It! – Winnipeg Sun — Saturday, July 9, 2011 – http://www.winnipegsun.com/2011/07/09/ndp-say-charge-it

Most provinces in deficit position – CBC News – Monday, May 3, 2010 – http://www.cbc.ca/news/business/story/2010/04/29/f-provincial-deficits.html

Provincial Forecast – RBC Financial — http://www.rbc.com/economics/market/pdf/provfcst.pdf

Government of Manitoba Budget Summary – 2009 – http://www.gov.mb.ca/finance/budget09/papers/r_and_e.pdf

Government of Manitoba Budget Summary – 2011 –http://www.gov.mb.ca/finance/budget11/papers/r_and_e.pdf