N.L. premier has best spending habits, report concludes
Newfoundland and Labrador Premier Kathy Dunderdale addresses a news conference in Happy Valley-Goose Bay, Newfoundland and Labrador on Friday, Nov. 30, 2012. (Andrew Vaughan / THE CANADIAN PRESS)
Published Thursday, December 6, 2012 9:37AM EST
Last Updated Thursday, December 6, 2012 11:07PM EST
Premiers in the East appears to be doing a better job at managing their provinces’ finances than those in central and western Canada, a new report from the Fraser Institute concludes.
The conservative think-tank ranked Newfoundland and Labrador Premier Kathy Dunderdale first in its annual review of the fiscal performance of the country’s premiers, saying Dunderdale has governed with the best fiscal policy since she came into power in December 2010.
New Brunswick Premier David Alward placed second in the ranking, while Manitoba Premier Greg Selinger was ranked last overall.
The report ranks the 10 premiers’ fiscal performance during their time in office up to the 2011-12 fiscal year on three components:
- government spending
- debt and deficits
Each premier received an overall score out of 100, with Dunderdale earning a 71.4 overall, and Selinger a mere 19.2.
Charles Lammam, the Fraser Institute economist who co-authored the report, says a province’s fiscal plan is the key to their improving its economic well-being.
“Sound fiscal policy means premiers have to manage government spending prudently, balance budgets and avoid imposing a tax burden so heavy that it becomes a disincentive for people to work hard, save, invest, and be entrepreneurial,” he explained in a statement. “The economic record shows clearly that these factors help foster economic growth and prosperity.”
On government spending, New Brunswick’s Alward took top marks with a score of 88.5 out of a possible 100. Manitoba’s Selinger came in last overall with a score of 0.0.
The report authors noted that premiers who increased spending faster than economic growth and the rate needed to compensate for inflation and population growth performed the worst on this component.
Selinger was dinged because spending in Manitoba grew at an average rate of 7.8 per cent over his tenure -- well above the average rates of the province’s economic growth (4.9 per cent) and inflation plus population growth (3.2 per cent).
On taxes, New Brunswick’s David Alward came out on top again, with a score of 87.6 out of 100, while Nova Scotia’s Darrell Dexter came in last overall with a 14.1.
The authors say that structure of a province’s tax system can have a significant influence whether businesses and individuals engage in productive economic activity. Premiers who maintained low corporate and personal tax rates and reduced them relative to their counterparts performed better, as did premiers who presided over personal income tax systems with fewer -- rather than more -- tax brackets.
As for debts and deficits, the report notes they are a critical aspect of fiscal performance because debts require more tax dollars to be spent on interest costs and less on public services. This component measured the premiers’ use of deficit financing for government spending and whether they increased their provinces’ accumulated debt.
Newfoundland’s Kathy Dunderdale and Saskatchewan’s Brad Wall tied for first place on this measure with perfect scores of 100. They were the only premiers to both record a surplus and reduce net debt, on average, during their tenures.
Lammam says with nearly all provinces expecting budget deficits and increased government debt this year, prudent fiscal management is a pressing issue for many Canadians.
“Premiers who fare well should be commended, while those lagging behind should use the performance of others as a model for reform. Regardless of where they ranked, all premiers, even those with high rankings, have room for improvement.”
1) Newfoundland and Labrador Premier Kathy Dunderdale (71.4 out of 100)
2) New Brunswick Premier David Alward (70.4)
3) Saskatchewan Premier Brad Wall (61.6)
4) British Colum bia Premier Christy Clark (60.8)
5) Former Alberta premier Ed Stelmach (49.1)
6) Nova Scotia Premier Darrell Dexter (37.9)
7) Former Quebec premier Jean Charest (35.9)
8) Ontario Premier Dalton McGuinty (28.9)
9) Prince Edward Island Premier Robert Ghiz (23.5)
10) Manitoba Premier Greg Selinger (19.2)