A new report by the Fraser Institute suggests that nearly $50 billion will be spent on interest payments this year for Canada’s ballooning debt.
The report found that interest will cost the federal and provincial governments a significant portion of their total budgets. Regardless of province, governments will spend over $1,000 per person on interest payments.
“In recent years, deficit spending and growing government debt have become a trend for many Canadian governments. Like households, governments are required to pay interest on their debt,” the report reads.
“Residents in Newfoundland & Labrador face by far the highest combined federal-provincial interest payments per person ($2,604). Quebec, Canada’s second-most populous province, is the next highest at $1,417 per person.”
The federal government will spend an estimated $20.2 billion on debt servicing changes. In addition, the federal government plans to spend $20.6 billion on equalization.
When all interest costs for all levels of government are considered, Canada spent as much on interest last year as it does on pension benefits and K-12 public education.
“This is money that has been shifted away from important public priorities like tax relief and spending on health care, education, and social services,” the Fraser Institute wrote.
“Post-COVID, Canadian governments should begin developing a plan to address the trend of growing debt and interest costs. Failure to do so will have adverse consequences for Canadian families in the coming years.”
In 2020, the Trudeau government took on unprecedented levels of debt. The government projects Canada’s national deficit could hit $381.6 billion this year and federal debt could reach a whopping $1.4 trillion by March 2021.