Government spending on social services

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An analysis of data on government finance released in The Daily on June 14, 2007, reveals that between 2002 and 2007, spending on health and environment had annual average rates of growth among the fastest of all spending components (see the note to readers).

Spending on health rose 6.8% on average each year between 2002 and 2007, while spending on the environment went up 7.8%. Social services spending, in comparison, increased at an annual average rate of only 4.0%.

While health expenditures are the second largest component of spending for all levels of government combined, social services expenditures represent the largest component.

Spending on social services has more than doubled in Canada during the past two decades, but it still represents only about one-third of total consolidated government program expenditures. (Program expenditures are defined as being total expenditures less debt charges.)

In the fiscal year ending March 2007, total social services spending in Canada amounted to $172.4 billion, compared with $79.5 billion in 1989.

In both years, this spending accounted for about 33% of total program expenditures.

Social services cover actions taken by a government to offset or to forestall situations in which the well-being of individuals or families is threatened by circumstances beyond their control.

While the federal government represents the largest share of social services spending in Canada, its relative importance has declined considerably during the past 18 years.

Of the $172.4 billion, federal government spending on social services, including transfer payments to other levels of government, accounted for roughly 49% of expenditures in 2007, compared with 59% in 1989.

In 2007, the provincial, territorial and local governments' share was 33% (34% in 1989) and the Canada and Quebec Pension Plans' (CPP/QPP) was 20% (14% in 1989).

While federal and provincial, territorial and local governments have seen their shares decline, the CPP/QPP's share increased as there are more and more people drawing pension benefits.

On a per capita basis, spending on social services in Canada rose from $2,951 in 1989 to $5,267 in 2007, a gain of nearly 80%. In comparison, health expenditures rose from $1,384 to $3,265, a gain of 136%.

During the same period, per capita spending on environment increased 116% and education 90%. On the other hand, spending on the labour, employment and immigration function declined 17% while spending on debt charges decreased 7%.

Federal government spending: Old Age Security and Employment Insurance are major components

The federal government is responsible for Old Age Security and Employment Insurance. Total spending for these two programs alone amounted to $44 billion, or 52% of gross federal spending on social services in 2007.

The other 48% was spent on a number of programs, including vocational rehabilitation for disabled persons, veteran's benefits, day care assistance and social services for First Nations, as well as on contributions as an employer to workers' compensation plans and to the CPP/QPP.

In 2007, the federal government spent $12.8 billion on Employment Insurance, representing 6.2% of program expenditures. This compares with $10.6 billion in 1989, or 9.6% of program expenditures.

This decline in the proportion of program expenditures reflects the strong Canadian economy, resulting in the lowest unemployment rate in over three decades.

Old Age Security, the other big component of social services spending at the federal level, amounted to $31.4 billion in 2007, or 15.1% of program expenditures. This is more than double the 1989 level of $15.2 billion, which represented 13.7% of program expenditures.

On a per capita basis, the federal government spent $2,583 on social services in 2007, compared with $1,741 in 1989.

Provincial, territorial and local government spending more than doubles

Between 1989 and 2007, social services spending at the provincial, territorial and local levels of government more than doubled to $56.3 billion. This is the third largest component of spending after health and education.

As a proportion of program expenditures, allocations for social services have fluctuated along with the economic cycle. In 1989, these allocations accounted for 18.0%. They peaked at 19.6% in 1994 following the recession of the early 1990s, then fell to 16.3% in 2007.

Among social services expenditures, spending on social assistance, which consists of transfer payments to help individuals and families maintain a socially acceptable level of earnings, represented 33% of expenditures on social services in 2007.

Between 1989 and 2007, only two provinces, Quebec and British Columbia, showed a proportional increase in their spending on social services relative to total program expenditures.

Among the provinces that have shown a decline in their proportional spending on social services, Prince Edward Island had the largest decrease (-5.0 percentage points), followed by Alberta (-4.2 percentage points).

In terms of per capita spending, Quebec spent the most on social services, $2,821 per person, which was about one-quarter (24.5%) of its program expenditures.

Quebec and the territories were the only public administrations showing per capita spending on social services above the national average of $1,721.

Available on CANSIM: tables 385-0001 to 385-0009, 385-0021 to 385-0024, 385-0027 and 385-0028.

Definitions, data sources and methods: survey numbers, including related surveys, 1709, 1713 and 1735.

Data tables on public sector finance are also available online in the National economic account module of our website.

Data are also available through custom and special tabulation. For more information on products and services, contact Jo-Anne Thibault (613-951-0767; jo-anne.thibault@statcan.gc.ca), Public Institutions Division.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Claude Vaillancourt (613-951-1820; claude.vaillancourt@statcan.gc.ca), Public Institutions Division.

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