Vive le welfare state

Problems with Quebec’s social programs have been blamed on drastic funding cuts in the 1990s. In fact, Quebec is spending as much as ever

The debate over the future of the Quebec welfare state will be front and centre in next year’s general election. Various myths, however, prevent rational discussion.

We still often hear, for example, that the province has “dismantled” social programs following budget cuts that took place in the 1990s. We also hear that problems in the health-care sector and other areas of social policy stem from a lack of funds and not from structural or management failures on the part of government.

But what’s really happening? For starters, it is false to claim that the state has gone through a drastic slimming process. In 1994, the Quebec government faced a record annual deficit of nearly $6-billion. This was an untenable situation. Between 1994 and 1997, the government cut program spending by a mere $1.65-billion, representing a 4.5% reduction from the 1994 level (in comparison, cuts in Alberta amounted to 22% between 1993 and 1997).

Astoundingly, these cuts were more than offset in the following years. In fact, the $7.9-billion increase between 1997 and 2002 was more than four times greater than the previous reduction. Significantly, about 80% of program spending involves social programs provided by the departments of health and social services, education, employment and social solidarity, and family, childhood and the status of women.

Even after taking account of inflation, an 8.3% reduction occurred between 1994 and 1997, subsequently offset by an 11.3% increase between 1997 and 2002, meaning that since 2001 real spending levels have been higher than in 1994. Even taking into account demographic growth, real per-capita program spending was never affected significantly. This spending is estimated at $5,080 per inhabitant in 2002-03, only 1% less than before the cuts that began in 1994. Per-capita spending in Quebec remains among the highest in Canada. Quebec comes in fourth among the provinces, after Newfoundland, Alberta and Prince Edward Island.

The welfare state’s progress can also be seen in the social spending of the two levels of government combined. Between 1991 and 1998, per-capita social spending in Quebec did decline – but by a modest 0.6% in real terms (it increased in current dollars). However, the relative stagnation over that period followed spectacular increases during the three previous decades. Between 1961 and 1998, social spending per person increased by no less than 377%.

In addition, federal transfer payments have increased since 1998, as has provincial spending on health and education. Meanwhile, new and more generous family policies were implemented. Real social spending per person thus rose by 1.5%, reaching $6,368 in 2001. This recent increase wipes out the effect of cuts that took place in the middle of the 1990s. Today governments are spending as much as ever on social programs.

Spending in the health-care sector, in constant dollars, went down by 1.5% and 5% in 1995 and 1996 respectively, but was up by a total of 19% over the 10 years from 1991 to 2001. Real per-capita health-care spending went from $1,701 in 1991 to $1,931 in 2001, after hitting a low of $1,627 following the heaviest cuts. In this context, it does not seem very realistic to attribute all the problems of the health-care system purely to financial requirements.

In the end, any which way you look at it, nothing justifies the claim that the state went through a major retreat during the 1990s. Whatever problems exist in these areas of social intervention, the entire blame cannot be attributed to a lack of funds, despite the commentators who would have us believe that throwing money at them is the only available solution.

A more realistic debate on the role of the state versus the role of the private sector has belatedly started in Quebec. Let’s hope it will come up with rational and objective explanations.

Michel Kelly-Gagnon is President of the MEI, Norma Kozhaya is an economist at the MEI.

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