Do you depend on the government to live?

The question is delicate, deserves to be nuanced, but remains nonetheless essential: to what extent do Canadians and Quebecers depend on the State to live? And where are taxpayers most dependent on government transfers?

This major politically divisive question finds its answer in a database that Statistics Canada produces each year. The indicator is called the “economic dependency ratio” and it is measured by regions.

This ratio expresses the total volume of government transfers received by taxpayers in a region, divided by their total employment income. All transfers are included: child benefits, social assistance, employment insurance benefits, Retraite Québec pensions and federal old age pension. Even the tax credits for the GST and the QST are there, as are the compensation paid for work accidents.

So what is it? First, let’s compare the Canadian provinces, according to the most recent data, released on January 15.

In Quebec, government transfers amounted to $25.80 per $100 of employment income in 2021 (the most recent year available), according to Statistics Canada. Please note, this is a report (ratio in English), and not a proportion, since employment income in the denominator does not include transfers in the numerator.

The sum of $25.80 is rather large, but it is halved, to $12.80, if we subtract QPP retirement pensions – for which workers (and their employers) have contributed throughout their lives. – and those of the federal old age pension and its supplements, offered to all Canadians.

At $25.80 per $100, Quebecers reach 5^e Canadian rank for the rate of economic dependence, behind taxpayers from the Maritime provinces, but ahead of Ontarians ($21.50) and Albertans ($18), the least dependent on the state in Canada^⁠1.

Quebec’s place can be explained by various elements. First, Quebecers receive significantly more pensions from the QPP, perhaps because of their earlier retirement than elsewhere and because there are proportionately more elderly people.

This last reason also applies to the federal old age pension, which Canadians receive at age 65. Another element: the greater poverty of Quebecers of this age allows a larger proportion of elderly Quebecers to receive the guaranteed income supplement (GIS).

In short, these two elements explain two-thirds of the gap between Quebec and Ontario.

In 2021, Quebecers received more employment insurance benefits than Ontarians, i.e. $4.40 per $100 of employment income, compared to $3.20 among our neighbors. On the other hand, social assistance weighs less here than in Ontario ($1 compared to $1.30), which will surprise some.

Quebec, with its social measures, also finances families better, offering the equivalent of $2.40 per $100 in 2021, compared to $1.50 in Ontario.

Note that work compensation, although relatively low overall, is twice as high in Quebec as in Ontario, all things considered ($0.80 versus $0.40). Do we have more work-related injuries or a more (or too) generous system?

If the gap seems large between the provinces, it is even greater between the regions of Quebec.

You would think that Montreal and some of its poor neighborhoods would move the metropolis quite high on the list, but it’s quite the opposite. Montreal is one of the least dependent (15^e out of 17) from the state to Quebec, with a rate of $23 per $100 in 2021, almost on par with Outaouais and the dynamic Montérégie.

At the top is the Gaspésie–Îles-de-La-Madeleine region, where the ratio was almost $50 per $100 of employment income in 2021. Bas-Saint-Laurent and Mauricie follow, at 38 respectively, $70 and $38.30.

What explains this summit in Gaspésie? The high unemployment rate, first, followed by the large proportion of residents who receive a public retirement pension.

Employment insurance benefits even represent $14.20 per $100 of employment income in this region, compared to an average of $4.40 in Quebec. Similar gap for public retirement benefits of all kinds: $24.30 per $100, compared to $14 for the Quebec average.

The findings on the importance of retirees are similar in Bas-Saint-Laurent and Mauricie, but the economic dependence linked to unemployment is half as much as in Gaspésie ($7 or less), but still twice as high. significant than the Quebec average ($4.40).

Finally, a word on child support, proportionally more generous for large families and low incomes.

It is in the Nord-du-Québec region, where there are many Aboriginal people, who receive the highest levels of support, and by a long way. The dependence in this regard is $12.20 per $100 of employment income, while the Quebec average is $4.60. It must be said that employment income (the denominator of the ratio) is probably much lower there.

That’s it for the findings. The data does not allow us to say what the ideal level of state support – or economic dependence – would be. A lack of social support can lead to disorder, but too high a level can hinder optimal solutions outside the state framework and thus siphon off public resources that could be used for other purposes.

This is the whole left-right debate that presents itself…

1. Note that government transfers for 2021 still included certain benefits related to COVID-19. In normal times, such as in 2019, approximately $3 in transfers must be subtracted per $100 of employment income. The Canadian average exploded during the abnormal pandemic year 2020. The dependency rate rose from $19.10 per $100 in 2019 to $28.80 in 2020, before falling to $22.60 in 2021.