Are Canadian governments addicted to debts and deficits?

Andy Radia
Politics Reporter
Canada Politics

The Harper government is promising to balance their budget by 2015.

The B.C. government says they did it last year.

And the government in Ontario — well, they'd like us to believe that they'll be able to balance the books by 2017/18.

Regardless of their prognostications, a new Fraser Institute report suggests that Canadian governments are actually having a lot of trouble reigning-in their spending.

During the recession, the federal and provincial governments boosted their expenses as a means to stimulate the fragile economy. The so-called stimulus funds were only supposed to last a couple of years but, according to the free-market think tank's study, the spendthrift regimes continued well passed then.

The report's authors, Sean Speer and Joel Emes, specifically looked at the spending of four governments — the Feds along with the provincial governments in Alberta, British Columbia and Ontario — after the recession starting in 2011/12.

"These four governments have run larger and more protracted budgetary deficits than they would have if they withdrew stimulus spending and returned to pre-stimulus spending trends," the report claims.

"The result is $63.5 billion in higher cumulative deficits and $2.9 billion in additional annual debt service costs that could have been avoided.

"All four governments have delayed their initial projections for eliminating their budgetary deficits by at least two years and in some cases the return to a balanced budget remains precarious. Many of these governments have attributed revenue shortfalls as the source of ongoing deficit spending. But the real cause of their current deficits and debt accumulation is high spending."

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While the Fraser Institute report only looked at the spending of the four governments, it's clear that other provinces have debt and deficit problems of their own.

Total debt Your share
Canada $617.73 billion $17,570
British Columbia $60.7 billion $13,087
Alberta $8.06 billion $2,003
Saskatchewan $5.71 billion $5,215
Manitoba $29.78 billion $23,316
Ontario $262.11 billion $19,296
Quebec $197.62 billion $23,696
New Brunswick $11.56 billion $15,324
Newfoundland & Labrador $8.97 billion $17,461
Nova Scotia $14.36 billion $15,200
Prince Edward Island $1.97 billion $13,523


According to some experts, if you combine federal and provincial debt levels, Canada's financial outlook, relative to the rest of the world, doesn't look too rosy.

"With $660 billion in federal debt, Canada’s national debt-to-GDP ratio looks reasonable at 36 per cent, compared to, say, America’s 72 per cent," Tamsin McMahon, an Associate Editor at Maclean's, noted in a February 2013 article.

"But add in the estimated $589 billion in provincial debt and we’re suddenly at around 86 per cent, putting us close to the 90 per cent debt burden analysts say begins to harm economic growth. Factor in other debts, such as pension liabilities and the debts of Crown corporations, and Canada’s debt suddenly rises to 104 per cent of GDP, according to the International Monetary Fund. (By comparison, Italy stands at 126 per cent.)"

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For most Canadians, those figures are probably easy to glaze over.

What might be more tangible is what the debt levels mean in terms of our taxes.

According to a recent Huffington Post article by Speer, the annual debt service burden — the cash required to cover the repayment of interest and principal on our debts —now stands at $29.5 billion for federal taxpayers.

The province of Ontario has an annual debt service charge of $10.6 billion while in Quebec it's $8.6 billion — or 12.3 per cent of total annual revenue.

In other words, in Quebec, $0.12 cents out of every tax dollar goes toward interest payments on the debt and not for education, health care or infrastructure.

Might as well face it, our governments have been addicted to debt.

(Photo courtesy of the Canadian Press)

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