The Feds giveth and taketh away

While there is considerable discussion about the growth of federal government transfer payments to New Brunswick over the past 15 years, less focus has been put on the rise in federal government public administration GDP over that time frame.

In 1997, federal government public administration GDP (economic activity associated with the administration of federal government activities – think ACOA, DFO, gun registry in Miramichi, etc. – was $993 per New Brunswicker (in constant 2002 dollars).  By 2011, it had risen to just under $1,500 per person – the fastest growth rate among the 10 provinces across Canada over that time frame.  This province went from less than $100 more federal public admin GDP per capita than Ontario to almost $400 more per capita – a point that I am sure the folks in Ontario are making to their federal counterparts.

As we struggle to try and precisely figure out why New Brunswick`s economy is in the doldrums and how long it will last, we need to understand the impact of federal government austerity.  We won`t have hard data on this for a while but my view is that federal austerity – transfer growth stagnation, federal employment and overall spending cuts – is a big contributor to NB`s challenges – now and for the foreseeable future.

Per Capita Federal government GDP – by province (2011 and % change since 1997)*

GDP % Change
Per Capita 97-2011
NL  $1,298 128%
PE  $2,004 121%
NS  $2,094 116%
NB  $1,483 149%
QC  $ 826 132%
ON  $1,094 122%
MB  $1,074 108%
SK  $744 113%
AB  $587 98%
BC  $688 113%

*shown in 2002 dollars. Source: Statistics Canada CANSIM Tables Table 379-0025 and 051-0001.

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3 Responses to The Feds giveth and taketh away

  1. mikel says:

    I think the more likely complainers would be the western provinces. Clearly ‘federal administration’ is designed as a job creator for poorer provinces. Saskatchewan has 250,000 more people than NB, but gets half the amount per capita. I’d be interested to see exactly WHAT is included in the list of federal public administration.

  2. richard says:

    “now and for the foreseeable future.”

    The ‘forseeable future’ may be relatively short. The desire of the current masters in Ottawa to cut govt spending might turn out to be more than matched by their desire to get re-elected. Especially if the Cdn economy continues to sputter. The Conservatives hold most of the Federal ridings in NB and the loss of a few of those could be the difference between majority and minority, or worse (you’d think that Alward would be able to leverage those MPs to NB’s advantage, but he has the leadership skills of a possum). As we have a record of being easily bought, and as private sector job creation has been very weak here, sprinkling a few more fed jobs here might stave off defeat.

  3. > By 2011, it had risen to just under $1,500 per person

    I’d be interested to see the breakdown. It’s hard for me to imagine where the increase would be (and when it happened – one wonders whether 1997 is cherry-picked). And how much of an increase per capita is due to a declining population.

    Clearly, if it now decreases, given the new highs in unemployment, the debt, and out-migration, it would have (and is having) a significant impact.

    At a certain point, too, the Alward government is going to have to answer for economic performance. The gains, however modest, made under the Graham government have now disappeared, the deficit is not being properly managed, and the economic outlook is as dim as I’ve seen it in 11 years living here in the province.

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