VANCOUVER—Spending on government worker wages and benefits in Ontario has increased substantially since 2005/06, hindering the province’s ability to balance its books, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“As the Ontario government prepares to table its budget with yet another deficit, now is a critical time to scrutinize all forms of government spending, and especially compensation spending, which has grown at a significant rate,” said Charles Lammam, director of fiscal studies at the Fraser Institute and co-author of How Compensation Spending Consumes Provincial Government Resources in Ontario.
The study calculates that between 2005/06 and 2013/14 (the latest year of available data), compensation spending by the Ontario government—including wages, benefits, and pensions—increased by 47.1 per cent, faster than all other program spending (38.8 per cent) and well beyond the combined rate of inflation and provincial government job growth (26.0 per cent).
“Ontarians should ask themselves if the jump in compensation spending for provincial government employees has translated into more or better services for their families,” Lammam said.
While the government has recently taken steps to restrain compensation spending, compensation spending is still responsible for nearly three-quarters of new program spending from 2009/10 to 2013/14 and it now consumes a larger share of government resources.
In 2013/14, the Ontario government spent $60.2 billion on employee compensation—or approximately 52.0 per cent of the province’s total program spending budget, up from 50.1 per cent in 2009/10.
Had compensation spending’s share of total program spending been restricted to the 2009/10 level, the province would have saved $14.7 billion over a five-year period and sliced $4.4 billion from the 2013/14 budget deficit.
“With the government expecting ongoing deficits, further restraint on compensation spending would help lessen the strain on Ontario’s finances,” Lammam said.
MEDIA CONTACT: Charles Lammam, Director of Fiscal Studies, Fraser Institute, charles.lammam@fraserinstitute.org
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org.
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