The Fraser Institute

The Fraser Institute

February 10, 2005 07:00 ET

Alberta tops Fraser Institute's Budget Performance Index: BC most improved

VANCOUVER, Feb. 10 - Alberta tops all the provinces and the federal
government for its overall fiscal performance according to the annual Budget
Performance Index, released today by The Fraser Institute.
The Budget Performance Index measures the performance of the federal and
provincial governments on twenty indicators of taxation, spending, and
deficits and debt over the past five years (1999/00 to 2003/04). The Index
also includes an overall budget performance score.
"Whether or not governments can balance conflicting financial pressures
and pursue sound long-term economic policies is a critical determinant of
their economic success," said Niels Veldhuis, senior research economist and
co-author of the article. "The Budget Performance Index provides Canadians
with the information they need to hold governments to account."

Overall Performance

For the eighth consecutive year, Alberta received the top score: 94.9
(out of a possible 100), followed by the federal government (69.5) and Ontario
(61.9). As in the 2004 Index, Newfoundland and Labrador placed last with a
score of 27.2 (see Table 1 http://files.newswire.ca/22/020905-BPItbl.doc ).

- British Columbia improved the most, moving up four positions from
eighth last year to fourth this year.

- Saskatchewan deteriorated the most, dropping three spots to seventh.

- Nova Scotia, Saskatchewan, New Brunswick, Quebec, Prince Edward Island
and Newfoundland all failed to receive a passing grade (50 out of
100).

"The poor performance of nearly every jurisdiction, save for Alberta,
should be cause for concern as we enter the 2005 budget season. Canadian
governments must do a better job of controlling their spending and holding the
line on taxes," warned Veldhuis.

Government Spending

The federal government claims the top position on this sub-index with a
score of 92.8 followed by Alberta (88.8) and British Columbia (75.3).

- Alberta's government is the smallest among the provinces, taking up
only 15.8 percent of GDP.

- Quebec has the largest provincial government at 26.1 percent of GDP,
followed by Saskatchewan (24.9 percent) and BC (23.8 percent).

- Nova Scotia showed the greatest improvement this year, moving from
tenth position to fifth.

Tax Rates and Revenues

Alberta received the top score on the tax rates and revenues sub-index
(with a score of 96.0), with BC ranking second. Newfoundland, the federal
government, Quebec, Saskatchewan, PEI, and Nova Scotia all failed to receive a
passing score.

- The federal government improved the most on this sub-index, moving
from last place to seventh although it still failed to achieve a
passing score.

- Nova Scotia's increase in its top marginal personal income tax rate
moved the province from eighth to last place.

- The general decreases in personal and business income tax rates have
largely been countered with increases in other taxes, most notably
"sin" taxes.

Debt and Deficits

Alberta ranked highest on this sub-index (100.0) with the top scores on
each of the five debt and deficit indicators. Over the last five years,
Alberta has aggressively paid down its debt to a point where its current
assets are greater than its liabilities.
The federal government scored second best (67.2), with per capita debt
(inflation-adjusted) decreasing by $3,993 in the last five years.

- Newfoundland has experienced the largest increase in debt of any
province over the last five years ($2,944 per person) and maintains a
debt-to-GDP ratio of 69 percent.

- Quebec deteriorated the most on the debt and deficit sub-index,
dropping from sixth place in 2004 to eighth this year.

- BC and Nova Scotia were the only provinces to increase their debt as a
percentage of GDP between 1997/98 and 2001/02.

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Established in 1974, The Fraser Institute is an independent public policy
organization with offices in Vancouver, Calgary, and Toronto.
The Budget Performance Index is published in the February 2005 issue of
Fraser Forum and is posted at www.fraserinstitute.ca



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