Canadian taxpayers spent an unprecedented $68.6 billion on interest payments for federal and provincial government debt in 2022-2023.
A new report by the Fraser Institute delves into the details of how government spending and deficits are driving up the country’s interest payments.
“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 Fraser Institute associate director of fiscal studies Jake Fuss.
According to Fuss, government debt was already high prior to the Covid-19 pandemic and it’s impacting access to services.
“Even before the COVID-19 pandemic and recession, governments across Canada and in Ottawa were racking up large debts, and this debt imposes real costs on Canadian taxpayers in the form of interest payments,” said Fuss in a press release.
“Interest payments across the country are substantial, and that takes money away from other important priorities.”
When broken down to a per-person rate, Newfoundland and Labrador taxpayers were the hardest hit with $2,727 being spent on interest payments per person. Quebec followed with $2,110 per person.
Federal debt made up about half of the total sum spent on interest, coming it at $34.7 billion – substantially more than the $29.4 billion allotted for child care benefits.
Meanwhile in Alberta, a total of $6.7 billion was spent on interest payments alone which is more than what it spends on physicians.
Projections show that Canada’s debt is expected to reach a record high of $2.1 trillion by this year.
“It is expected that this trend will continue for the foreseeable future, as some governments project they will continue running deficits,” read Federal and Provincial Debt-Interest Costs for Canadians, 2023 edition.
“It is also important to mention that these interest payments come at a time when interest rates have been rising. Should interest rates rise more in the future, the cost of borrowing would increase over time.”