Opinionated

Over in Myles Higgins’ sandbox, one of the many anonanismystic posters (hey Agnes, how ya doin’?) says:

In my opinion every dollar that Canada spent in Newfoundland and Labrador, it extracted $10 or more to pay for it.

In her opinion?

You see, this is one of those things that it is impossible — literally, impossible — to have an opinion about.

You can no more have an “opinion” about whether the federal government spent more in Newfoundland and Labrador than it received in taxes, than you can have the “opinion” that π=4.

Federal government revenues collected in Newfoundland and Labrador are either higher than its expenditures, lower, or exactly equal. One of these three possibilities must, mathematically, be objectively true, with no room for opinion.

Which is it?

At least insofar as the years 1981 to 2005 inclusive are concerned, the answer is that the federal government of Canada spent more in, or in respect of, Newfoundland and Labrador, than it collected in federal revenues, in every single year.

Federal revenues collected in Newfoundland and Labrador during this period from all sources – personal and corporate income taxes, EI and CPP premiums, import duties, federal sales taxes, etc. – amounted to roughly $39.9-billion. This represented between 1.15% and 1.35% of all federal revenues for any given year during this period, and totalled, during those 25 years, just over 1.21% of all federal revenues collected across the country.

For reference, the provincial population started this period at about 2.3% of the national population, and ended it at about 1.6%. In every single year, the province’s share of federal revenues was smaller than its share of the national population.

On the expenditure side of the ledger, the federal government spent $16.9-billion on procurement in the province between 1981 and 2005 inclusive.

It spent $36.1-billion on transfers to persons – CPP, OAS, UI/EI, etc. – which is ninety percent of what it collected in federal revenues.

It transferred $38-billion to the provincial government – net of the small amounts transferred from the province to the federal government – or an amount equal to 95 percent of what it collected in revenues.

The federal government paid out over $8.1-billion in wages and salaries to residents of Newfoundland and Labrador during that period.

And finally, two of the smaller line items, there were $2.8-billion in transfers to businesses, and $300-million in transfers to municipal governments.

From 1992 to 2005 inclusive, the provincial government, or the province as a whole, received more in expenditures under every one of those line items, as a share of pan-Canadian spending, than the province’s share of the population. Newfoundland and Labrador’s share of all federal transfers to persons and transfers to provincial governments was larger than its population share in ALL of those years. Procurement, transfers to businesses, transfers to local governments, and federal salaries, merely outstripped the provincial population share in most of that period.

In total the federal government paid out, to the provincial and local governments, to residents, and to local businesses and organizations, over $100-billion – that’s a “b” – a net “profit”, for those who feel governments should be run like a business, of over $62-billion.

Earlier and later data either isn’t available yet, or not completely available on an apples-to-apples, oranges-to-oranges, comparison. But, other than for the sake of data completism (mmmm…. completism), you don’t even need that data.

In order for the federal government to have “turned a profit”, or collected more in revenues than it spent in the province, it would have to completely reverse that $62-billion “profit” which accrued to the province in just 25 years.

In other words, it would have had to collect $62-billion MORE in revenues than it paid out in expenditures. The math tells you that that is unlikely.

The entire federal revenue in all of Canada in 1981 was $62-billion. In Newfoundland and Labrador, it was $716-million. Obviously, in past years, both numbers would have been smaller. But even if Newfoundland and Labrador had contributed, for the sake of argument, $716-million in revenues every year, all the way back to 1949, with the federal government having spent not a penny in the province, it would only reduce the province’s “profit” by less than $23-billion.

And, for the sake of argument, assuming that the province contributed $5-billion per year after 2005 – roughly double the 2005 figure – and again, for the sake of argument, assuming the province got nothing at all in return – the “profit” that the province would have taken in since Confederation, by reason of being part of Canada, would still be over $24-billion.

That’s a far cry from A.M.’s “opinion” that “every dollar that Canada spent in Newfoundland and Labrador, it extracted $10 or more to pay for it.”

That’s the math. Math, unlike the lazy, the intellectually dishonest, and those with lazy and intellectually dishonest agendas, doesn’t have “opinions”.

[Data sources: CANSIM tables 384-0004, 384-0011, and 183-0002.]