William Watson: ‘Public Sector Universe’, you bet. Spending accounts for 44% of our GDP
StatsCan titled its release last week of the latest public sector financial data: “Public Sector Universe, 2018.” You might be forgiven for thinking this means the public sector has taken over the universe. We aren’t quite there yet but from the looks of the following table it may not be long. The public sector financial data Statistics Canada reports are for fully 6,087 “institutional units,” which are economic entities “capable, in [their] own right, of owning assets, incurring liabilities, and engaging in economic activities and in transactions with other entities.” Apart from ministries, they include government enterprises, health boards, universities, colleges, community organizations and many other institutions and agencies.
Bottom line? Consolidating out transfers from one entity to another — such as equalization from the federal government to some provinces — total net spending of these 6,000 government entities accounts for 44 per cent of GDP. Their net worth looks pretty rosy, especially for the two public pension plans. Note, however, that the plans’ liabilities include their current debts but not their promised payouts to all future beneficiaries, which are gigantic. The Chief Actuary says (Table 19 of his 2016 report) that for the Canada Pension Plan alone the capital value of all those promises is more than 100 per cent of GDP — though under current assumptions the capital value of future CPP premiums and income from assets is greater. Just.