International study estimates Canadian government waste at 25 per cent

    VANCOUVER, March 29 /CNW/ - The Canadian public sector wastes 25 per cent
of its money and should be able to achieve the same performance using only
75 per cent of the funding it currently spends, according to Public Sector
Efficiency: An International Comparison, a report from independent research
organization The Fraser Institute.
    "Canadian governments should be able to attain the same outcomes with
only 75 per cent of money currently being spent." said Vito Tanzi, former
Director of Fiscal Affairs at the International Monetary Fund (IMF) and
co-author of the report.
    "That means there's approximately 25 per cent waste in Canada's public

    Public Sector Performance

    Tanzi and his co-authors measure the performance of the public sector by
examining key economic and social indicators: educational achievement, health
care performance, public infrastructure outcomes, economic stability, economic
performance, income distribution, and administrative performance (i.e. quality
of judiciary & red tape).
    When it comes to overall public sector performance, Canada ranks 12th
among the 23 countries, tied with the United States. Both countries perform
slightly above the 23-country average. Luxembourg, Japan and Norway had the
highest public sector performance while Greece, Portugal and Italy had the
    Tanzi said Canada is below average in health performance, income
distribution and economic performance, but above average on administrative
performance, education and infrastructure.

    Public Sector Efficiency

    The report also analyzes government efficiency by examining the level of
government spending (measured relative to the size of the economy) used to
achieve the public sector performance.
    Canada ranks 10th among the 23 industrialized countries measured, with a
score slightly better than the average. However, on this measure Canada now
falls significantly behind the U.S., which ranked fifth overall for public
sector efficiency.
    "Although the public sectors in Canada and the U.S. achieve similar
levels of performance, Canada spends substantially more," Tanzi said.
    Tanzi found that countries with smaller levels of government spending
(measured relative to the size of the economy) achieved higher levels of
public sector performance. Countries with small governments are defined as
government spending as less than 40 per cent of GDP while countries with large
governments are defined as spending more than 50 per cent of GDP.

    Wastefulness in the Public Sector

    One of the most interesting findings of the report is its calculations on
the level of wastefulness within the public sectors. These were determined by
examining the most efficient combinations of public sector performance and
    The United States, Japan, and Luxembourg have the most efficient
governments because no other country achieves their level of public sector
performance with less government spending.
    The other 20 countries were compared to the most efficient countries
(United States, Japan, and Luxembourg) to determine the level of government
waste. Sweden has the most inefficient public sector with approximately
43 per cent waste followed closely by Finland (39 per cent waste), Denmark
(38 per cent waste) and France (36 per cent waste).
    Canada should be able to deliver the level of performance with
75 per cent of the money currently being spent, meaning there is approximately
25 per cent waste in Canada's public sector, the report notes.
    "Canada's public sector is inefficient relative to other industrialized
countries. With 25 per cent waste in the public sector, Canada clearly has
room to reduce government spending," Tanzi said.

    Public Sector Efficiency: An International Comparison used data from 2000
to measure public sector performance. Average government spending from 1990 to
2000 was used as public sector performance lags government spending.

    The Fraser Institute is an independent research and educational
organization based in Canada. Its mission is to measure, study, and
communicate the impact of competitive markets and government intervention on
the welfare of individuals. To protect the Institute's independence, it does
not accept grants from governments or contracts for research. Visit

For further information:

For further information: MEDIA CONTACTS: Vito Tanzi, consultant to the
Inter-American Development Bank, Tel. (202) 623-3442, Email:; Niels Veldhuis, Senior Economist, The Fraser
Institute, Tel. (604) 714-4546, Email:; Dean Pelkey,
Associate Director of Communications, The Fraser Institute, Tel: (604)
714-4582, Email

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