Quebec and Alberta are leaders of a dubious pack for overshooting their spending targets, according to the C.D. Howe Institute’s latest study into how governments regularly miss their goals in budgeting.
The economic think tank added up the annual spending overruns from the 2002-03 through 2011-12 fiscal years, and found Quebec’s total of $11.4-billion was the highest among governments. Alberta’s accumulated spending overruns during the decade reviewed came to $11.07-billion.
“The combined spending overruns of federal, provincial and territorial governments have surpassed $53-billion in the last 10 years,” said the authors of the report – Colin Busby, a senior policy analyst at the institute, and C.D. Howe president William Robson.
The authors also produced their Pinocchio Index, which calculates the decade’s total spending overruns as a percentage of 2012-13 expenditures. Using that measurement, Saskatchewan ranks No. 1 on the index because its $4.21-billion in total spending overruns works out to 38 per cent of 2012-13 expenditures. Alberta places second in the Pinocchio Index due to cumulatively overshooting spending by $11.07-billion, or 27 per cent of 2012-13 expenditures.
“The past decade’s overshoots, and growing awareness that lack of fiscal transparency undermines good management of public money, should inspire Canadian governments to improve their financial reporting and their adherence to targets – and for legislators and voters to hold them more closely to account,” Mr. Robson said in a statement that accompanied Thursday’s release of the institute’s fifth annual fiscal accountability rankings.
Newfoundland and Labrador and the federal government have the lowest tendency to overshoot spending targets, said the C.D. Howe study. By contrast, Saskatchewan and Alberta are resource-reliant provinces that have often missed the mark when it comes to forecasting commodity prices and predicting expenses.
Manitoba’s $3.14-billion of spending overruns during the decade studied works out to 22 per cent of the province’s 2012-13 expenditures, ranking it third on the Pinocchio Index, followed by Quebec ($11.4-billion; 16 per cent), Prince Edward Island ($241-million; 15 per cent), British Columbia ($6.67-billion; 15 per cent), New Brunswick ($1.1-billion; 13 per cent), Nova Scotia ($721-million; 8 per cent), Ontario ($9.01-billion; 7 per cent) and the federal government ($6.22-billion; 2 per cent).
Newfoundland and Labrador stands out because the province undershot its spending targets by $861-million over a 10-year period.
There has been some progress, as more governments provide greater detail in quarterly updates that track revisions compared with original projections in budgets. “These updates are more common from the western and central provinces, although Quebec publishes a monthly report on financial transactions,” said the C.D. Howe study.
“We should note actions by some governments to improve the comparability of budget and public accounts documents. Although all of Canada’s senior governments used different accounting methods in their budgets and public accounts a decade ago, that objectionable practice is on its way out,” the report said.
“Ontario’s and Ottawa’s public accounts provide a wealth of information on their in-year, budgeted-versus-actual, fiscal performance. Other jurisdictions are taking an extra step to make an in-year fiscal evaluation more accessible.”