Canada’s combined federal–provincial debt will exceed $2 trillion in 2022/23, says Fraser Institute, an independent Canadian public policy research and educational organization.
Credit: Fraser Institute
According to Fraser Institute, the combined federal and provincial debt in Canada has nearly doubled from $1.1 trillion in 2007/08 with Ontario as the most indebted province relative to the size of its economy.
The findings were released today in a report — The Growing Debt Burden for Canadians — which measures net debt, which is a measure of the total debt of the federal and provincial government minus financial assets held by the government.
The report finds that not only has Canada’s projected combined government debt (the federal debt and the provincial debt of all 10 provinces) nearly doubled since 2007/08, the year before the last recession, but the combined debt now equals 74.6 per cent of the Canadian economy.
Ontario has the highest debt-to-GDP ratio among the provinces at 38.7 per cent in 2022/23 and recorded a substantial increase in its debt-to-GDP ratio between 2007/08 (26.6 per cent) and 2022/23.
Credit: Fraser Institute
Fraser Institue says this translates to a combined debt from a low of $42,915 in Alberta to a high of $64,579 in Newfoundland & Labrador. Ontarians have the second-highest combined debt per person at $59,773.
The study finds Nova Scotia now has Canada’s highest combined federal–provincial debt burden as a share of the economy at 92.6 per cent. The other Atlantic provinces of Prince Edward Island (86.0 per cent), New Brunswick (85.2 per cent), and Newfoundland and Labrador (80.0) were among the most indebted provinces as well.
Alberta’s provincial debt-to-GDP in 2022/23 is just 10.3 per cent, the lowest in the country and Quebec, which was the longstanding most indebted province now has a debt-to-GDP ratio of 35.9 per cent.
Though Alberta has the least debt, the province went from the only province in a net financial asset position (-$13,526 per Albertan) in 2007/08 to the province with the fastest–growing provincial debt burden nationwide during the 2010s due to falling oil prices.
Fraser Institute says, Alberta also experienced the largest percentage increase in its debt level as the province consistently increased spending and ran nearly uninterrupted deficits since 2008/09 irrespective of the state of the economy.
Credit: Fraser Institute
Fraser Institute says as Alberta recently recorded a budgetary surplus in 2021/22 and is projected to run another surplus in 2022/23, the provincial debt as a share of its economy is expected to nearly decrease by half, from 20.1 per cent in 2020/21 to 10.3 per cent in 2022/23.
The non–partisan Canadian public policy think–tank says the federal and provincial governments must develop long-term plans to meaningfully address the growing debt problem in Canada as revenues directed toward interest payments mean that in the future there will be less money available for tax cuts or government programs such as health care, education, and social services.
You can read the complete report here.