Keep An Eye On That Government Cheese
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
Way, way back in the 1980s I purchased a CD by a band called the RainMakers. I’m not sure why–I must have liked one of the songs. Anyway, this band turned out to be quite political and most of the songs were, let’s say. right-of-centre.
For example, the band sang a song called Government Cheese that was full of little quips like “they’ll turn us all into beggars ’cause they’re easier to please / They’re feeding our people that government cheese.”
Of course, in Canada, for the most part, we believe government cheese is part of a balanced, healthy diet. Even folks like me say cheese is good in moderation. But what happens when we gorge ourselves on government cheese?
According to the census, the average Newfoundlander and Labradorian received $9,200 from government in 2020 (not family income – personal income), or about 19 percent of all income. This excludes any special Covid-19 benefits but includes all EI income that year. In New Brunswick it was 17 percent and in Nova Scotia 15 percent.
The municipalities least dependent on government cheese (at least direct cash transfers) are places like Westmount in Quebec (only 4 percent of income from government transfers), West Vancouver (5 percent) and Wood Buffalo (4 percent). That’s as a share of total income, but in absolute terms the places where the average tax filer gets the least actual cash from government include Whistler, BC (only $3,055 on average from government) and Tecumseh in Ontario ($3,160). The average taxpayer in Westmount got $6,000 from government but the average total income was $151,000.
This includes all government transfers: CPP, OAS, EI, workers’ comp, social assistance, and any cheques from Justin Trudeau or his counterparts in the provinces. So some communities are heavily skewed towards OAS income–retirement communities like Elliot Lake in Ontario ($12,500 per person in government cheese, 32 percent of all income) or skewed towards EI income like Shippagan ($13,600 in government transfers, 35 percent of total income).
My point here is not to discuss the robustness of the social safety net. I’m just saying that we need to have enough private sector economic activity to sustain that social safety net.
Here are some of the winners on the top end. St. Bride’s, a town in southern Newfoundland, earns the award for the most dependency (in absolute terms) with the average tax filer getting $19,800 from government in 2020 (excluding Covid-19 payments). That worked out to be 48 percent of total income for the average tax filer. Most of the top enders are in Newfoundland, which has a combination of heavy EI usage and heavy CPP/OAS (old and seasonal).
There are lots in New Brunswick, too. There were more than 60 communities in 2020 with at least 30 percent of income coming from government sources.
And this doesn’t include public sector wages. That analysis would be hard to do but if you assume 20-25 percent of workers in many of these communities are public sector (education, health care, public admin) you are mostly likely looking at dozens of communities across Atlantic Canada where 50 percent or more of income comes directly from government or indirectly through wages paid to government workers.
Again, there’s nothing wrong with the social safety net and certainly nothing wrong with public sector jobs. But you need private sector economic activity to fund it. As many of these communities are seeing less and less private sector activity, they will become even more dependent on Justin’s cheques.
I wouldn’t want to live in a country that didn’t have a social safety net that ensured that folks don’t live in penury. But I worry that you can have too much of a good thing. The average tax filer in Atlantic Canada gets more cash directly from government than the total GDP per capita in Mexico.
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