Canadians in every province will pay more than $1,300 per person in 2022/23 on government interest costs, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Interest must be paid on government debt, and the more money governments spend on interest payments the less money is available for the programs and services that matter to Canadians,” said Jake Fuss, associate director of fiscal studies at the Fraser Institute and author of Federal and Provincial Debt Interest Costs for Canadians, 2023 edition.
The study finds that taxpayers across Canada will pay a total of $68.6 billion on interest payments for the federal and provincial debts in 2022.
The federal government will spend $34.7 billion on debt servicing charges in 2022/23, which is more than the government expects to spend on childcare benefits ($29.4 billion) and employment insurance benefits ($24.8 billion).
Nationally, Newfoundland and Labrador’s combined federal and provincial interest costs is the highest in the country at $2,727 per person. Quebec, Canada’s second most populous province, is the next highest at $2,110 per person.
In Ontario, taxpayers will pay $27 billion in federal and provincial interest costs, which is nearly equivalent to what the provincial government will spend on hospitals ($30.4 billion). On a per person basis, each Ontarian will pay $1,790 in interest this year to service the federal and provincial debt. That’s more than $7,000 for a family of four.
“Even before the COVID-19 pandemic and recession, governments at Queen’s Park and in Ottawa have been racking up large debts, and this debt imposes real costs on
Ontario taxpayers,” said Fuss.
Meanwhile, total expenditures on interest costs for Albertans ($6.7 billion) is more than what the province will spend on physicians this year, and combined federal-provincial interest costs for British Columbians ($7.4 billion) are nearly equivalent to what the province expects to spend on its social services this year.
“Interest payments across the country are substantial, and that takes money away from other important priorities,” added Fuss.