The Fraser Institute

The Fraser Institute

October 25, 2010 06:14 ET

Fraser Institute: Quebec Premier Jean Charest Ranks Sixth Among 10 Provincial Premiers in Comparison of Fiscal Management

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 25, 2010) - Quebec Premier Jean Charest ranked sixth overall in a comparison of 10 Canadian provincial premiers on key aspects of fiscal policy including government spending, taxes, and debt and deficits.

Charest scored 53.7 out of a possible 100, according to the rankings contained in Measuring the Fiscal Performance of Canada's Premiers, a new peer-reviewed study released today by the Fraser Institute, Canada's leading public policy think-tank.

BC Premier Gordon Campbell ranked first overall with a score of 89.1 while former Manitoba Premier Gary Doer ranked second with a score of 78.2. Newfoundland and Labrador Premier Danny Williams scored 71.0 and ranked third. Premiers Ed Stelmach of Alberta (66.4) and Brad Wall of Saskatchewan (57.9) followed in fourth and fifth positions respectively.

Three of the four remaining Premiers were from Atlantic Canada: Rodney MacDonald, former premier of Nova Scotia (33.7), Shawn Graham, former premier of New Brunswick (33.2), and Robert Ghiz of Prince Edward Island (30.0). Premier Dalton McGuinty of Ontario, Canada's most populous province and Quebec's neighbour, ranked last overall with a score of just 29.7.

"This study gives Quebecers an objective, empirical assessment of Premier Charest's management of Quebec's public finances and economic policies compared to that of other Canadian premiers," said Niels Veldhuis, Fraser Institute senior economist and co-author of Measuring the Fiscal Performance of Canada's Premiers.

"In a world of increasing competitiveness, sound fiscal policy is a critical determinant of long-term economic success. It's critical that provincial premiers show leadership by prioritizing, rather than simply increasing, existing government resources. They must ensure balanced budgets and focus on improving incentives for individuals and businesses to engage in productive economic activity."

Measuring the Fiscal Performance of Canada's Premiers measures the relative fiscal performance of 10 Canadian premiers for the duration of their time in office up to the most recent year of available data (2009/10). Each premier received an overall score and rank based on their performance on three components of fiscal policy: government spending, taxes, and debt and deficits.

Government Spending

Economic research shows that sound policy in the area of government spending is characterized by restraint and not allowing spending to increase at unsustainable levels.

Charest performed well on the government spending component compared to other premiers, scoring 81.7 which ranked him third overall behind Campbell of BC (100 out of 100) and Doer of Manitoba (85.5). Ontario's McGuinty scored 29.8, ranking him seventh.

"Although Premier Charest showed more restraint in spending than most of the other premiers, he still increased Quebec spending at an unsustainable rate and his record cannot be considered prudent. From 2003/04 to 2009/10, Quebec's average growth in program spending exceeded average GDP growth and average inflation and population growth," Veldhuis said.

Taxes

Tax rates and the structure of the tax system have a significant impact on economic incentives that influence the behaviour and decisions of business and individuals.

Charest performed poorly on the taxes component scoring just 25.3 and ranking eighth. Campbell of BC also topped this ranking with a score of 83.1 followed by New Brunswick's Graham (80.3). Ontario's McGuinty scored 39.2 and ranked seventh.

"Along with Ontario Premier Dalton McGuinty, Premier Charest was the only premier to increase the corporate income tax rate while in office. He also failed to address Quebec's high personal income tax rates. Today, Quebec maintains some of the highest marginal tax rates on personal income in the country," Veldhuis said.

Debt and Deficits

Debt and deficits are a critical aspect of fiscal policy because annual deficits increase the overall level of government borrowing and debt, requiring more and more tax dollars to be spent on debt servicing and ultimately reducing the amount of money available for public services.

Charest scored 54.2 and ranked 7th on the debt and deficits component. Four premiers tied for top position on the debt and deficits component with a perfect score of 100: Wall (Saskatchewan), Williams (Newfoundland), Doer (Manitoba), and Stelmach (Alberta). All four averaged budget surpluses during their time in office and reduced net debt as a share of GDP. Ontario's McGuinty scored 19.9 and ranked ninth.

"Premier Charest had the dubious distinction of being among the five premiers to average a deficit over his tenure. As a result, net debt increased to 47.5 per cent in 2009/10 from 39.6 per cent of GDP in 2002/03," Veldhuis said.

The complete study with detailed data tables is available as a free PDF at www.institutfraser.org.

Follow the Fraser Institute on Twitter | Become a fan on Facebook

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 80 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 www.fraserinstitute.org.

Contact Information