5.6 The Provincial Role

As noted earlier, with the exception of First Nations education, provinces now provide almost all the funding for education in most of Canada. They provide financial support for education just as they do for other services such as health care or highways. These funds are usually drawn from the general (total) revenue of the province, which includes all federal government transfers and the revenue that the province collects through such means as income taxes, sales taxes, property taxes, fees of various kinds, taxes on products such as gasoline, tobacco, or alcohol, and so on.

Each provincial government determines as part of its annual budget how much money it will spend on education in that year, just as it does for any other service. The budget process generally involves the provincial Cabinet deciding how much money is available and how much of what is available should go to each of the various areas of expenditure. There is no simple or easy way of making these decisions, which have to do with the conflict between the desire to keep taxation levels as low as possible and the desire to have services that are of as high a quality as possible. Both are important political objectives that a government must balance in some way.

In determining how much revenue is available, a government must not only estimate the revenue from existing sources but also determine whether it wishes to change any tax rates, which will further alter revenue. In Canada, the prevailing climate of opinion (which we have tried to show is not necessarily well justified) has been that taxes are too high, which puts pressure on governments to reduce taxes and therefore limit expenditures. Several provinces have passed legislation that requires a balanced budget every year, though in the most recent economic recession most had to abandon this requirement, at least temporarily.

Governments must also balance many competing demands for expenditure. In making spending decisions, ministers have to consider various public priorities for services, the built-in increases in costs (such as inflation), changes in the demand for a service (e.g., an increase in the number of elderly people who require ongoing care), and the government’s own beliefs and commitments as expressed in election promises. For many years, governments across Canada have faced serious problems of trying to reconcile the demand for services with the desire to avoid tax increases. During the 1990s, most provinces cut spending sharply in order to eliminate their deficits. Then they allowed spending to rise again as conditions improved. Health care expenditures, which are the largest single item in provincial budgets, have grown especially rapidly because of public concerns about the quality of care. In 2020, particularly amidst the global economic recession caused by the pandemic, all provinces are again struggling to match revenues and expenditures, with most running considerable annual deficits. Moreover, many provinces cut taxes in the years of prosperity and now find it very difficult politically to raise them back to previous levels.

Table 5.6.1 shows provincial expenditures on education in total, student count, and amount spent per pupil. Expenditure per student is relatively equal among provinces except in the territories, which face much higher costs and have small numbers of students. It also has generally been on the increase, except in the cases of Newfoundland and Labrador, Saskatchewan, Alberta, and the Northwest Territories where there has been a move towards less spending per student since 2015/2016. In addition, some provinces have to spend more of their wealth to finance education than others; for example, Ontario can spend more per pupil than New Brunswick with much less strain on its overall economy. The reasons for this variation are complex. Some provinces are highly dependent on federal transfers. Newfoundland has very high-income tax rates but still doesn’t raise much revenue because average incomes are low. Alberta benefits greatly from oil revenues (when times are good) and has no provincial sales tax.

Table 5.6.1

Expenditure on Elementary-Secondary Education by Province

Sources. Statistics Canada. Table 37-10-0064-01. School board expenditures, by function and economic classification (x 1,000). https://doi.org/10.25318/3710006401-eng

Statistics Canada. Table 37-10-0007-01. Number of students in regular programs for youth, public elementary and secondary schools, by grade and sex. https://doi.org/10.25318/3710000701-eng