The size of government is on the rise in nearly every province across the country, according to a recently released study.
A Fraser Institute report on the size of government shows that consolidated government spending – the combined spending between the federal government and a given provincial government – as a share of GDP increased from 37.7% in 2007 to 40.5% in 2022.
The province that saw the greatest increase in consolidated government spending over that 15 year period was Nova Scotia, with government spending as a share of GDP rising from 56.9% to 63.0%, becoming the province with the biggest government in Canada.
The other seven provinces that saw the size of government increase were Newfoundland and Labrador, New Brunswick, Quebec, Ontario, Manitoba, Alberta, and British Columbia.
Prince Edward Island saw a reduction in its size of government from the already high 61.6% to 58.3%. Saskatchewan saw government spending drop from 37.7% to 32.8%.
While it increased over the time span studied, Alberta’s government is still the smallest at 26.8%, followed by Saskatchewan, British Columbia, and then Ontario.
In an interview on The Andrew Lawton Show, Fraser Institute fiscal studies director Jake Fuss said the growth in government’s size spells bad news for economic growth.
“There’s been a pretty substantial increase in government spending as a share of the economy over the last fifteen years or so and it’s been a pretty much across the board change in all provinces across Canada except for P.E.I and Saskatchewan,” said Fuss.
“Generally the optimal size of government is generally between 26% and 30% of the size of the economy, and this is when you get historically maximizing your economic growth rates.”
During the COVID-19 pandemic and subsequent public health response, government spending as a share of GDP exploded, jumping from 40.3% nationwide in 2019 to 51.9% in 2020. Notably, government spending comprised 71% of Nova Scotia’s GDP and 70% of P.E.I.’s GDP in 2020.
The report also found that every single provincial government is employing more employees as a percentage of total employment since 2007.
Nationwide, public sector employment as a percentage of total employment rose from 19.2% to 21.2%, with the largest increases coming in P.E.I. and Newfoundland.
The public sector makes up the largest share of employment in Newfoundland and Labrador with the government employing 30.3% of workers, followed by P.E.I at 29.1% and Saskatchewan at 27.0%. Alberta had the smallest public sector relative to total employment at 18.5%.
