Changes to provincial budgets often happen so slowly over time that citizens often don’t realize what’s happened.
There are exceptions, as when premier Gordon Campbell’s B.C. government introduced a carbon tax in 2008. In 2011-12, that $30-a-tonne tax will bring in $960-million. True to the government’s word, all of it is being recycled into lower taxes elsewhere.
Generally, however, headlines reflect noticeable changes, whereas more important longer-term trends are obscured. So it was this week with the latest B.C. budget.
Premier Christy Clark’s decision to raise the corporate tax rate by one point in two years made news. The change will yield about $200-million a year.
Meanwhile, over the next three years, the province’s health-care budget will grow by $1.5-billion. The increase presumes a herculean effort to keep health care growing at only 3 per cent a year, something no province has managed.
Sixty per cent of B.C.’s new spending over the next three years ($1.5-billion of $2.5-billion) will be for health care. As such, this budget is a template for what’s happening across Canada: health-care über alles.
What happens to every other department when health care takes so much? Budgets are either cut in absolute terms or in real terms – that is, after inflation. Those cuts are made even though the B.C. government is raising health-care premiums (a form of tax) so that they will bring in $360-million more in three years, and raising the corporate tax rate.
The drip-drip of health care spending über alles can be seen another way.
In the B.C. budget, a document shows government expenses since 2005-2006, then projected to 2014-2015, a period of nine fiscal years. During that period, health care spending will have risen at 4.9 per cent yearly (after inflation) compared to 3.3 per cent for education and 3.4 per cent for social services. That gap doesn’t seem like much in a year, but multiply that gap over nine years, and it yawns.
Nine years ago, health care was 38 per cent of B.C.’s operating expenses. At the end of the period, it will be 42.2 per cent, assuming the herculean restraint projected for the next three years. And while health care rises to 42.2 per cent, everything else falls as a share of provincial spending (except transportation). Per capita, health care rises from $2,950 to $4,106, whereas education rises from $2,124 to $2,510.
B.C. is lucky in one sense: It will have a budgetary surplus next year, in contrast to Ontario and Quebec. In those provinces, a much worse fiscal position intensifies pressure on spending – especially in Ontario, where the deficit is large and Premier Dalton McGuinty has ruled out tax increases.
B.C. does share Ontario’s goal of holding health care increases to 3 per cent a year, although Ontario commissioner Don Drummond recommends 2.5 per cent. Both provinces will have their hands full, because curbing public spending where providers defend their turf is exceptionally difficult.
Consider B.C.’s K-12 education budget: Enrolment of students is down, but costs are not.
Or consider its justice budget: There has been a 33-per-cent decline in provincial criminal court cases over the past six years. (Is the Harper government, with its “tough on crime” agenda, listening?) And yet, according to the budget, adult criminal justice costs have increased by 35 per cent despite “improvements and the implementation of a number of reform initiatives to increase efficiencies and alleviate pressures.”
Court cases down by a third; costs up by a third. Go figure.
One reason, the government says, is “the entrenched culture and the traditions of the system.” The same words could be used to describe the health care, K-12 and university systems, which explain in part why these are so hard to change and why efficiency gains, the panacea of reformers everywhere, are so difficult to achieve.
These B.C. trends were below the headlines, but they are apparent across the country. Health care eats up a larger share of budgets at the expense of other programs. Efficiency gains are sought everywhere but achieved with difficulty. Everywhere but Alberta, taxes have to pay for health care while balancing budgets.