菲沙研究所-加拿大日益增长的债务负担：2023年版（英）

BBULLETINJanuary2023FRASERbyJakeFussSummary1Budgetdeficitsandincreasingdebthavebecomeseriousfiscalchallengesfacingthefederalandmanyprovincialgovernmentsre-cently.Since2007/08,combinedfederalandprovincialnetdebt(inflation-adjusted)hasroughlydoubledfrom$1.1trilliontoaprojected$2.1trillionin2022/23.1Between2019/20(thelastyearbeforeCOVID)and2022/23,thecombinedfederal-provincialdebt-to-GDPratioisexpectedtogrowfrom65.7%to74.6%.Moreover,thefed-eralandprovincialgovernmentsareontracktohavecollectivelyaccumulated$395.9billion(inflation-adjusted)intotalnetdebtbetween2019/20and2022/23,anincreaseof23.4%.1Amongtheprovinces,NovaScotiahasthehighestcombinedfederal-provincialdebt-to-GDPratio(92.6%),whileAlbertahasthelow-est(43.5%).Newfoundland&Labradorhasthehighestcombineddebtperperson($64,579),closelyfollowedbyOntario($59,773).Incon-trast,Albertahasthelowestdebtperpersoninthecountryat$42,915.1Interestpaymentsareamajorconsequenceofdebtaccumulation.Governmentsmustmakeinterestpaymentsontheirdebtsimilartohouseholdsthatmustpayinterestonbor-rowingrelatedtomortgages,vehicles,orcreditcardspending.Revenuesdirectedtowardsin-terestpaymentsmeanthatinthefuturetherewillbelessmoneyavailablefortaxcutsorgov-ernmentprogramssuchashealthcare,educa-tion,andsocialservices.1Thefederalandprovincialgovernmentsmustdeveloplong-termplanstomeaningfullyaddressthegrowingdebtprobleminCanada.IntroductionBudgetdeficitsandthegrowthofgovernmentdebthaverecentlyre-emergedaskeyfiscalchallengesfacingCanadiangovernments.Al-thoughmanyprovincesrecordedsurplusesin2021/22,debthasrisensignificantlyforboththefederalandprovincialgovernmentssincethe2008/09recession.Specifically,therewasaparticularlysharpspikeindebtlevelsin2020duetospendingassociatedwiththeCOVID-19pandemic.Thefederalgovernmenthaschosentoconsistentlyrundeficitssincetheonsetoftheglobalfinancialcrisismorethanadecadeago.Overallnetdebt1forthefederalandall10provincialgovernmentsisprojectedtohavegrownconsiderablysince2008/09,whichwillposesignificantproblemsforCanadiansandourpublicfinancesinthefuture.ThisresearchbulletinexaminesthegrowthofgovernmentdebtinCanadasincethe2008/09recession,illustratesthedifferencesamongtheprovinces,andquantifiestheburdenofgovern-mentdebtcurrentlyheldbyCanadiancitizens.AccumulationofgovernmentdebtOverthepast15years,governmentdebtacrossCanadahasbeengrowingquickly.Thisaccu-mulationofdebthasreversedapositivetrendtowardsbalancedbudgetsandlowerdebtbur-densthatprevailedfromthemid-1990stothelate-2000satboththefederalandprovinciallev-els.Thistrendmoreorlesslasteduntil2007/08.Combinedfederalandprovincialnetdebtto-taled$1.1trillionthatyear(in2022dollars).However,the2008/09recessionbroughtthistrendtoahalt.Governmentspendingincreased1Throughoutthisbulletin,theauthorreferstodebtasnetdebt,whichisdefinedasfinancialassetsminustotalliabilities.dramaticallyin2009/10andeveryCanadiangovernmentrandeficitsineither2008/09or2009/10.Insubsequentyears,growingdebtandpersistentdeficitsagainbecamethenormforthefederalandprovincialgovernments.Whileseveralprovincesranoperatingsurplusesin2021/22,thisislikelytoonlybeatemporarydevelopment.Someofthesamegovernmentsareprojectingareturntodeficitsin2022/23andsubsequentyears.2Figure1demonstrateshowcombinedfed-eralandprovincialnetdebthasevolvedsince2007/08.Notably,dataindicatethattotalnetdebtwilllikelyreachnearly$2.1trillionin2022/23.Thegrowthingovernmentdebtisnotlimit-edtoonlyafewprovincesoronelevelofgov-ernment.Realdebtlevelshaverisenfederallyandineveryprovincebetween2007/08and2022/23.Table1displaysthechangeinnetdebt(inflation-adjusted)forthefederalandprovin-cialgovernmentsduringtheseyears.Injustoveradecade,combinedfederalandprovincialdebthasgrownbynearly$1.0trillion,or83.7%.Overthese15years,federalnetdebthasin-creasedby$582.7billion(in2022dollars),or83.2%.Thisstandsinstarkcontrasttothepe-riodbetween1996/97and2007/08whenthefederalgovernmentreduceditsnetdebt(in2022dollars)by$335.7billion.Putdifferently,inthepast15yearsthefederalgovernmenthasaccumulatednearlydoubletheamountofdebtthatitrepaidinthemid-1990stolate-2000s.Amongtheprovinces,Albertaexperiencedthelargestpercentageincreaseinitsdebtlevelat196.8%.Foranextendedperiod,Al-2Ontario,Manitoba,Newfoundland&Labrador,andNovaScotiaarejustafewexamplesofprovincesexpectingtoreturntodeficitsin2022/23.Billionsof2022dollars00Billionsof2022dollars00Figure1:CombinedFederalandProvincialNetDebt(inbillionsof2022dollars),02007/082009/102011/122013/142015/162017/182019/202021/22(i)Debtlevelsfor2022/23arebasedonthelatestgovernmentprojectionsavailableatthetimeofwriting.(ii)Netdebtispresentedonaconsolidatedbasisineachprovince.Sources:Sources:Canada,DepartmentofFinance(20222a;2022b);Alberta,MinistryofFinance(2022);BritishColumbia,MinistryofFinance(2022);Saskatchewan,MinistryofFinance(2022);Manitoba,MinistryofFinance(2022);Ontario,MinistryofFinance(2022);Québec,MinistèredesFinances(2022);Newfoundland&Labrador,DepartmentofFinance(2022);NewBrunswick,DepartmentofFinance(2022);NovaScotia,DepartmentofFinance(2022);PrinceEdwardIsland,DepartmentofFinance(2022);StatisticsCanada(2022c).bertahadconsistentlyincreasedrealprogramspendingandrannearlyuninterrupteddefi-citssince2008/09,regardlessofthestateoftheeconomy.3Infact,Albertahasmovedfrombeingtheonlyprovinceinanetfinan-cialassetpositionin2007/08tobeingthe3Albertahasforecastitwillrunasurplusin2022/23,largelyduetohigherthananticipatednaturalresourcerevenuesstemmingfromhighcommoditypricesforoilandvincewiththefastestgrowingdebtbur-denoverthelastdecade-and-a-half.How-ever,Albertarecordedabudgetarysurplusin2021/22andisprojectedtorunanothersur-plusin2022/23duetoaneconomicreboundandhigherthananticipatednon-renewableresourcerevenues(Alberta,MinistryofFi-nance,2022).OtherprovincessuchasMani-toba,Saskatchewan,Ontario,andBritishCo-lumbiahaveallincreasedtheirdebtlevelssignificantlyaswell.Table1:FederalandProvincialNetDebt(inbillionsof2022dollars),2007/08Comparedto022/23NetDebt2007/08NetDebt2022/23Change($billions)Change(%)ABSK90.4%ON87.6%QC22.0%9.7%39.5%FED83.2%FED+83.7%Sources:Figure1;calculationsbyauthors.Thissizeablegrowthinprovincialdebtisanim-portantdevelopmentforthefutureofCanada’spublicfinances.BeforeCOVID-19,thefederalgovernmenthadbeenincreasingitsdebtlev-el,whilemostprovinceshadbeenincreasingtheirdebtlevelsatanevenfasterrate.Figure2showsthattheportionoftotalnetdebtheldbythefederalandprovincialgovernmentshasshiftedsubstantiallyovertime.Forexample,thefederalportionoftotalgovernmentdebtshrunkfrom61.7%in2007/08toalowof53.3%in2018/19.However,thistrendofshiftingdebtburdenswashalted,atleasttemporarily,in2020and2021,asthefederalgovernmenttookonconsiderablymoredebtthanitsprovincialcounterpartsinresponsetotheCOVID-19pan-demic.Indeed,thefederalportionoftotalgov-ernmentdebtgrewmorethaneightpercentagepointsfrom2019to2021toreach61.4%.MeasuresofdebtGovernmentdebtiscommonlymeasuredrela-tivetothesizeoftheeconomyusinggrossdo-mesticproduct(GDP).Thedebt-to-GDPratioisausefulwaytocomparegovernmentdebtbetweendifferentjurisdictionsandevaluatethesustainabilityofgovernmentdebtaccumu-lation.Figure3showsfederal,provincial,andcombinedfederal-provincialnetdebtasashareoftheeconomyin2007/08and2022/23.Thefederalnetdebt-to-GDPratiohasgrownfrom32.7%to45.9%overthisperiod.Growthindebtasashareoftheeconomywasnotlimitedtothefederalgovernmentduringthisperiod.Provincialnetdebtasashareoftheeconomyhasincreasedbymorethaneightpercent-agepointsoverthelast15years,from20.3%to28.7%.Overall,thecombinedfederal-provincialdebt-to-GDPratioisprojectedtoclimbfrom53.1%in2007/08to74.6%in2022/23.DataindicatethatsevenprovincesarelikelytoseeanincreaseintheirratioofdebttoGDPbetween2007/08and2022/23(seetable2).AnalystsexpectAlbertatohavethelargestper-centagepointincreaseinthisratio,whichisprojectedtogrowfrom-13.4%to10.3%—anin-creaseof23.7percentagepoints.Manitobaisprojectedtohavethesecondlargestpercent-agepointincreaseinitsratio,risingby12.5points.Ontariohasthehighestdebt-to-GDPratioamongtheprovincesat38.7%andrecordedasubstantialincreaseinitsdebt-to-GDPratiobetween2007/08and2022/23.At37.8%,New-foundland&Labradorhasthesecondhighest90%68%45%23%0%Provincial90%68%45%23%0%ProvincialFigure2:ShareofTotalNetDebt(%)HeldbyProvincialvs.FederalGovernments,70%60%Federal50%40%30%2007/082009/102011/122013/142015/162017/182019/202021/22Sources:Figure1;calculationsbyauthors.Figure3:Federal,Provincial,andCombinedNetDebtasaShareofGDP,FederalProvincialFederal-provincialcombined.9%2007/08Sources:Figure1;StatisticsCanada(2022a);Gu(2022);calculationsbyauthors.2022/23Table2:ProvincialNetDebtasaPercentageofGDP(%),2007/082022/23PercentagepointchangeABSK21.2%33.7%ON26.6%38.7%QC40.6%35.9%724.9%26.0%35.6%32.6%29.0%27.6%35.0%37.8%SourcesFigurecalculationsbyauthors.Table3:FederalandProvincialNetDebtperPersonin2022$),2007/08Comparedto022/232007/082022/23Percentchange40.4%ABSK59.7%.0%ON58.5%QC4.4%0.6%FED54.8%Sources:Figure1;StatisticsCanada(2022b);calculationsbyauthors.debt-to-GDPratio,followedcloselybyQue-bec(35.9%).Quebec,however,isoneofonlythreeprovincestohavedecreaseditsdebtbur-denrelativetotheeconomysince2007/08,theothersbeingNovaScotiaandPrinceEdwardIsland.Analternativewaytoevaluategovernmentdebtistomeasureitperperson.Debtperpersonisimportantbecauseitdemonstratesjusthowmuchgovernmentdebt,onaverage,eachCa-nadiancitizenisresponsibleforrepaying.Table3presentstheestimatedfederalandprovincialdebtperperson(in2022dollars)in2007/08and2022/23.Newfoundland&Labradorhasthehighestdebtperpersonat$30,486.Ontar-iohasthesecondhighestat$26,952perper-son,whileQuebeccomesinthirdat$22,957perperson.Totalfederalnetdebtperpersonhasrisen54.8%since2007/08andisexpectedtoreach$32,954thisyear.Between2019/20and2022/23,thecombinedfederal-provincialdebt-to-GDPratioisex-pectedtogrowfrom65.7%to74.6%.Moreover,thefederalandprovincialgovernmentsareontracktohavecollectivelyaccumulated$566.0billioninnominalnetdebtfromthelastyearbeforeCOVID(2019/20)totheendofthecur-rentfiscalyear(2022/23).Ininflation-adjust-edterms,totalnetdebtisprojectedtoriseby$395.9billionbetween2019/20and2022/23,anincreaseof23.4%.Further,accordingtothefederalgovernment’s2022/23fallfiscalupdate,thisgrowthingov-ernmentdebtisfarfromover.Thefederalgov-Table4:CombinedFederalandProvincialNetDebt,2022/23ProvincialFederalportionCombinedNetdebtasaNetdebtnetdebtofnetdebtnetdebtpercentageofperperson($billions)($billions)($billions)GDP(%)1AB5SK0ONQC62Note:Thecombinedfederalandprovincialnetdebtisatotalofprovincialnetdebtandthefederalportion.Thefederalnetdebtisallocatedtoeachoftheprovincesbasedona5-yearaverage(2017-2021)oftheirpopulationasashareofCanada’stotalpopulation.Sources:Figure1;StatisticsCanada(2022aand2022b);Gu(2022);calculationsbyauthors.ernmentisexpectingthatnetdebtwillincrease6.8%by2027/28andreachalmost$1.4trillion(DOF,2022).Severalprovincesarealsopoisedtocontinueaccumulatingdebtfortheforesee-ablefuture.ThisincludesprovincessuchasOntario,whichisnotprojectedtobalanceitsbudgetuntilafter2024/25.Canadiangovernmentshavecollectivelyin-creaseddebtsince2007/08andhavedecisive-lybrokenfromtheeraoffiscalprudencethatlastedfromthemid-1990sthroughtothelate-2000s.Along-termplantoreturntobalancedbudgetspost-COVIDisnecessaryifCanadiangovernmentsaregoingtobeginthedifficulttaskofstemmingdebtaccumulationandeven-tuallyreducingthedebtburden.AllocatingfederaldebttotheprovincesCanadiansfacedifferentdebtburdensdepend-ingontheprovinceinwhichtheyliveandthereareseveraldifferentmethodsthatcanbeusedtoallocatefederaldebttoeachprovince.Prov-incescanbeallocatedfederaldebtbasedontheirshareoffederalrevenues,thetotalpop-ulation,orCanada’sgrossdomesticproduct(GDP).Forsimplicity’spurposes,thisbulletinallocatesfederaldebttoeachprovincebasedontheirshareofthetotalCanadianpopulation(percapitabasis).Table4showsthelevelofprovincialgovern-mentdebt,eachprovince’sshareofthefederaldebt,andthecombinedfederalandprovincialdebtineachprovince.Again,federaldebtisdistributedbasedoneachprovince’sshareofthetotalCanadianpopulation(5-yearaverage),whichisderivedfromStatisticsCanadadata(seeStatisticsCanada2022b).4Thetablealsodisplaysthecombinedfederal-provincialdebtineachprovincebothasashareofitsGDPandper-person.Thecombinedfederal-provincialdebtburdenasashareoftheeconomyrangesfromalowof43.5%inAlbertatoahighof92.6%inNovaScotia.QuebechasthesecondhighestdebtburdenrelativetoGDPat88.0%.Newfoundland&Labradorhasthehighestcombineddebtperperson($64,579),closelyfollowedbyOntario($59,773).Incontrast,Al-bertahasthelowestdebtperpersoninthecountryat$42,915.WhygrowinggovernmentdebtisaproblemVariousstudiesandreportshavefoundthatthereisanegativerelationshipbetweengov-ernmentdebtandeconomicgrowth(ReinhartandRogoff,2010;WooandKumar,2014;Chu-diketal.,2015;EberhardtandPresbitero,2015;Swamy,2015;Egert,2015;CongressionalBud-getOffice,2019).Inparticular,governmentdebthasasignificanteffectonprivateinvestment.Long-terminterestratescanrise,astheyaredoingnow,whengovernmentdebtexpands,whichincreasesthecostofborrowingintheprivatesector.Higherborrowingcostscanre-ducetheincentiveforprivatecapitalinvest-ment.Declininginvestmentlevelsthenposegreatchallengestothecountry’sabilitytoen-4Inapreviousversionofthisbulletin,federaldebtwasallocatedtoprovincesbasedona5-yearaver-age(2013-2017)ofnetfederaltaxpayablebyprov-incesasashareofCanada’stotalnetfederaltaxpayable.hanceproductivityandcanreducefutureeco-nomicperformance.Growingdebtcanalsocausegovernmentstoraisetaxestopaybackdebtorfinancetheirinterestpayments,whichinturnimpedeseconomicgrowth.Interestpayments,ordebtservicingcosts,areanotherconsequenceofdebtaccumulation.Likehouseholds,governmentsarerequiredtopayinterestontheirdebt.Revenuesdirectedto-wardsinterestpaymentsleavelessmoneyavail-ableforgovernmentprogramssuchashealthcare,education,socialservices,ortaxrelief.ConclusionThedebtburdenforfamiliesacrossCanadahasbeengrowingsubstantiallyformorethanade-cade.Aswasthecaseinthe1970stomid-1990s,deficitspendinganddebtaccumulationhavebecomethenormforthefederalandmanyprovincialgovernments.Since2007/08,totalnetdebt(inflation-adjusted)hasnearlydoubledinabsolutedollarterms.RisinggovernmentdebthassevereconsequencesforCanadiansasmoreandmoreresourcesaredirectedtowardinterestpaymentsandawayfromprogramsthathelpfamiliesorimproveCanada’secono-miccompetitiveness.AsweemergefromtheCOVID-19pandemic,thefederalandprovincialgovernmentsmustdeveloplong-termplanstomeaningfullyaddressthegrowingdebtprob-leminCanada.ReferencesAlberta,MinistryofFinance(2022).2022-23Mid-YearFiscalUpdateandEconomicState-ment.GovernmentofAlberta.BritishColumbia,MinistryofFinance(2022).SecondQuarterlyReportNovember2022.Gov-ernmentofBritishColumbia.Canada,DepartmentofFinance[DOF](2022a).FiscalReferenceTables2022.GovernmentofCanada.Canada,DepartmentofFinance[DOF](2022b).FallEconomicStatement2022.GovernmentofCanada.Chudik,Alexander,KamiarMohaddes,M.Ha-shemPesaran,andMehdiRaissi(2015).IsthereaDebt-thresholdEffectonOutputGrowth?IMFWorkingPaperWP/197.Interna-tionalMonetaryFund.CongressionalBudgetOffice(2019).The2019Long-TermBudgetOutlook.CongressoftheUnitedStates.Eberhardt,Markus,andAndreaF.Presbitero(2015).PublicDebtandGrowth:Heterogene-ityandNon-linearity.JournalofInternationalEconom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