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Canada’s combined federal-provincial debt

Canada’s combined federal-provincial debt

Ontario debt highest among provinces

#LSN_Opinion  Fraser Institute 

TORONTO, ONTARIO  - January 16, 2020  (LSN) ——Since 2007/08, the year before the last recession, combined federal and provincial debt has grown from $837.0 billion to a projected $1.5 trillion in 2019/20, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Government debt—federally and in every province—has grown over the past 12 years, creating serious fiscal challenges for Ottawa and many provincial governments,” said Jake Fuss, economist at the Fraser Institute and co-author of The Growing Debt Burden for Canadians.

The study also finds that in 2019/20, Canada’s projected combined government debt (again, the federal debt and the provincial debt of all 10 provinces) will equal 64.3 per cent of the Canadian economy. And on a per-person basis, the combined debt in 2019/20 will equal $39,483 for every Canadian.

Among the provinces, Ontario’s combined government debt in 2019/20 will equal 75.4 per cent of Ontario’s economy—the highest percentage in Canada. In other words, it would take three out of every four dollars in Ontario’s economy to eliminate the province’s combined government debt.

Ontario also has the highest combined debt ($668.5 billion) and the second-highest combined debt per person ($45,891), second only to Newfoundland and Labrador ($48,478). “As budget season approaches, governments across Canada should remember that deficits and debt today ultimately mean higher taxes tomorrow,” Fuss said.

Canada Growing Debt  Fraser Institute   Lake Superior News

Summary

  • Budget deficits and increasing debt have become serious fiscal challenges facing the federal and many provincial governments today. Since 2007/08, combined federal and provincial nominal net debt has grown from $837.0 billion to a projected $1.5 trillion in 2019/20.
  • In 2019/20, combined federal and provincial net debt is expected to equal 64.3% of the Canadian economy or $39,483 for every Canadian.
  • Among the provinces, Ontario has the highest combined federal-provincial debt-to-GDP ratio (75.4%), while Saskatchewan has the lowest (44.3%). Newfoundland & Labrador has the highest combined debt per person ($48,478), closely followed by Ontario ($45,891). In contrast, Prince Edward Island has the lowest debt per person in the country with $28,394.
  • Interest payments are a major consequence of debt accumulation. Governments must make interest payments on their debt similar to households that must pay interest on borrowing related to mortgages, vehicles, or credit card spending. Revenues directed towards interest payments mean that there is less money available for tax cuts or government programs such as health care, education, and social services.

Authors:

Jake Fuss

Economist, Fraser Institute

Milagros Palacios

Associate Director, Addington Centre for Measurement, Fraser Institute


More from this study

Adobe PDF Read the Full Report

image View the Infographic

Adobe PDF Read the News Release - National

Adobe PDF Read the News Release - Alberta

Adobe PDF Read the News Release - Atlantic Canada

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Fraser Institure  Lake Superior NewsThe Fraser Institute
 

https://www.fraserinstitute.org

 

Disclaimer
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by Lake Superior News / Lake Superior Media.

 

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