Fraser Institute says governments paid almost $35,000 per Canadian.
VANCOUVER — Ever wonder how much Canada’s government debts are costing you? Quite a bit, according to a study by the Fraser Institute, and it’s leaving less money for priorities such as schools, hospitals, highways and lowering taxes.
The Cost of Government Debt in Canada examines the growth of government debt in Canada since the 2008/09 recession, and the cost of interest payments.
Since fiscal year 2007/08, combined federal and provincial debt has increased from $823 billion to more than $1.2 trillion in 2013/14 (or $34,905 for every Canadian). To service this debt, Canadian governments (federal, provincial and municipal) collectively spent $61.7 billion on interest payments in 2013/14, more than the $61 billion spent on primary and secondary education across the country in 2011/12 (the latest year of available data).
In 2013/14 the federal government, which is $688 billion in debt, spent $29.3 billion on interest payments (or more than 11 cents of every dollar of revenue). Meanwhile, it collected $29.9 billion in GST from taxpayers.
In Ontario, the provincial government spent $10.6 billion on interest payments, or 9.1% of overall revenue, eclipsing the entire budget for the Ministry of Community and Social Services ($10.1 billion), and nearly topping the province’s total infrastructure spending ($10.8 billion).
The Quebec government in 2013/14 also spent $10.6 billion on debt interest payments, far exceeding the amount ($7.8 billion) it received from equalization payments.
Charles Lammam, study co-author and resident scholar in economic policy at the Fraser Institute warns higher interest rates pose a real threat to indebted governments.
“Governments have been borrowing at historically low interest rates, so if interest rates rise, the cost of carrying debt will increase. Ontario and Quebec are especially vulnerable to interest rate hikes,” Lammam said.
The Fraser Institute is a public policy research firm with offices across Canada.
Click here for a copy of the study.