Bad math in the provincial budget?

The CAW’s Corey Vermey has done some interesting math around Finance Minister Dwight Duncan’s assertion that health care could reach 70 cents of each program dollar the province spends within 12 years.

Vermey writes:

The 2010 Ontario Budget contains one clear example of faulty math and logic that wouldn’t fool a sixth grader. 

Here is the example as noted in the provincial budget:

Just 20 years ago, 32 cents of every dollar spent on government programs were spent on health care. Today, it is 46 cents.  In 12 years, if we don’t take action, it could be 70 cents.”

That is alarmist to say the least.  If health care spending expressed as cents per dollar of government program spending increased from 32 cents to 46 cents over 20 years; that is an increase of 14 cents over 20 years and an average annual increase of 0.7 cents per year. 

Therefore if that trend continued, in 12 years at 0.7 cents per year health care spending would be only at 54.5 cents. That has much less impact than 70 cents. We need to ask where did the 70 cents projection come from? 

Check the facts on health care spending. In 2008 and 2009 the provincial budget reported that health care spending represented 43 cents for every dollar of program spending.  In 2007, the budget reported that health care spending represented 46 cents for every dollar of program spending.  Over the past three budgets, the annual average net increase in health care spending relative to program spending has been zero.  If it is 46 cents currently, that is the level it was at in the 2007 budget.

To get to our mythical 70 cents of every dollar in program spending being directed to health care in 12 years, health care spending would need to increase by 2 cents of program spending in each and every year. There is no evidence that that has ever happen over the last 20 years.

Ironically, the 2010 Budget in fact indicates that health sector spending as a percentage of program expense will only be 40 cents – at $46.1 billion.  A footnote reveals that it is only after controlling for time-limited investments and the method of presenting education sector expenses that health sector expenses account for 46 cents in 2009.  Even on that accounting basis – health sector expense falls to 45 cents in 2010 — trending back to 34 cents and not 70 cents.

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