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 percent
of the Canadian economy.
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 75.4per
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).
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.
“As budget season approaches, governments across Canada should
remember that deficits and
debt today ultimately mean higher taxes tomorrow,” Fuss said.
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