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Thirty-Five Years of Social Spending


The costs of our social welfare state have burgeoned much more quickly than our generation of wealth, and also more quickly than the benefits from such spending.

Originally published in The Edmonton Journal, February 10th, 1999.


Lorne Gunter

 Author Notes

Regular columnist with The Edmonton Journal, and frequent contributor to the National Post, National Report, and other publications.

 Essay - 2/9/1999

Politicians are fond of asking at election time, "Are you better off than you were four years ago?" In other words, is your family richer and the economy stronger than it was when you elected those jokers opposite.

As citizens and taxpayers, Canadians might be wise to ask, "Are we better off than we were 35 years ago?"

The multi-tentacled welfare state may have arrived in Germany in the late 19th Century, in Sweden in the ‘20s and Britain in the ‘50s, but it wasn’t until Liberal Prime Minister Mike Pearson in the early ‘60s that it made its debut in Canada.

What Canadian governments lacked in promptness, however, they made up for in enthusiasm. Over the past three decades social spending in Canada has tripled as a share of gross domestic product at a time when GDP has nearly tripled in real terms.

Put another way, GDP in 1965 was just over $301 billion (in 1998 dollars), and social spending by federal, provincial and municipal governments was about $21 billion. Last year, GDP was $830 billion, and social spending was over $155 billion.

After accounting for inflation, the sum spent annually by governments on welfare, health care, pensions, employment insurance, subsidized housing and so on, has increased more than seven-fold. The nation’s population has increased 10 million over the same period. Accounting for that, too, social spending has grown five-fold.

Canada may have come late to the welfare-state ball, but it has danced with abandon since arriving. In the past three decades, no other industrialized country has increased the size of its nanny sector faster.

So what are the results of this massive infusion of public cash? Undoubtedly we have less poverty than before? And since social engineers assure us constantly that poverty is the "root cause" of so many social ills, surely this huge ratcheting-up of welfare spending has led to less crime, fewer divorces and teen pregnancies, less spousal abuse, fewer suicides, and so on?

Of course, none of these ballyhooed benefits has arisen. Indeed, if welfare advocacy groups are to be believed (and they are not, but play along), there is three times as much poverty in Canada as there was in 1965. Crime, despite significant, recent and welcome declines to the contrary, is up nearly 300 per cent. And daily, the toll of marital breakdown, promiscuity, wife and husband battering, and suicide grows.

Perhaps someday the causal connection between the massive growth in social spending and the disturbing growth in social problems (social spending up three-fold versus GDP, poverty up three-fold) since the 1960s will dawn on the advocates of more welfare.

Surprisingly, though, the percentage of the federal budget given over to social spending has not advanced much in 35 years. Ottawa devoted 28 per cent of its spending to social programs in the 1965-66 budget, according to Joel Emes, research economist at the Fraser Institute, and 29.9 per cent in 1997-98, an increase of not quite two percentage points.

There’s a danger in looking at budgetary changes only in percentage terms: Doing so does not account, as the calculations above do, for changes in overall spending relative to such factors as GDP, inflation and population growth. However, it may offer a glimpse into a government’s spending priorities.

Emes’ calculations, presented in the January issue of Fraser Forum, show that a number of areas of federal spending have declined during the time social spending has risen. Education spending is down from 3.4 per cent of Ottawa’s budget to 2.4 per cent. Transportation and communications are down to 1.9 per cent from 6.8.

Resource conservation and industrial development began at 6.0 per cent, rose to 10.4 per cent of federal outlays in 1975-76, and has since fallen back to 4.4 per cent.

Yet the biggest changes up and down have been debt servicing and "protection of persons and property." Debt servicing - interest payments on all the money Ottawa has borrowed to fund its welfare-state experiment - has grown from 12.5 per cent of total expenditures to 27.0 per cent. While protection expenditures - spending on police, prisons and the military - are less than half of what they once were, 9.7 per cent today versus 19.7 per cent in 1965.

In just 35 years, Ottawa has gone from being an impartial guarantor of freedom, justice and national security, which occasionally provided a hand up to those most in need, to an active redistributer of income with only a marginal interest in the traditional core functions of government.

Canadians may decide for themselves the cause of the nation’s social ills: too little government spending, or too much?

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