This report provides PBO’s assessment of the sustainability of government finances over the long term for the federal government, subnational governments and public pension plans.
Communications
Quotes
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Relative to the size of the Canadian economy, total net debt would ultimately rise above its initial level over the long term”. “That being said, government indebtedness is projected to remain well below its peak observed over the last 30 years.
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Healthcare makes up a large share of provincial and territorial spending and it will continue to outpace growth in the economy as the population ages. In most jurisdictions, the Canada Health Transfer will not keep pace with rising healthcare spending.
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Given their temporary nature, federal COVID-19 support measures do not have a material impact on long-term fiscal sustainability.
Yves
Giroux
Parliamentary Budget Officer
Infographic
News Release
{"id":17,"created_at":"2021-06-28T12:31:13-04:00","updated_at":"2021-06-30T11:29:03-04:00","slug":"COM-2122-017--federal-finances-sustainable-over-the-long-term-but-most-provinc--finances-publiques-viables-a-long-terme-au-niveau-federal-mais-p","title_en":"Federal finances sustainable over the long term\u2014but most provinces and territories are not","title_fr":"Finances publiques : viables \u00e0 long terme au niveau f\u00e9d\u00e9ral, mais pas dans la plupart des provinces et des territoires","body_en":"The Parliamentary Budget Officer (PBO) today released his assessment of the long-term sustainability of government finances. The assessment reflects all measures in recent federal and provincial-territorial budgets.\n\nThe PBO\u2019s Fiscal Sustainability Report 2021 finds that current fiscal policy, if maintained over the next 75 years, is not sustainable over the long term for the government sector as a whole. Increasing government indebtedness is primarily driven by the provincial-territorial sector, which will more than offset the fiscal flexibility at the federal level.\n\n\u201cRelative to the size of the Canadian economy, total net debt would ultimately rise above its initial level over the long term\u201d, says Yves Giroux, PBO. \u201cThat being said, government indebtedness is projected to remain well below its peak observed over the last 30 years.\u201d\n\nBased on the PBO\u2019s latest assessment, the federal government, and the provinces of Quebec, Nova Scotia, as well as Ontario, all have some fiscal room to increase spending or reduce taxes. Status quo fiscal policy is not sustainable in the remaining provinces and the Territories in light of the demographic projections.\n\nThe assessment identifies Canada\u2019s ageing population as a key pressure for all provinces and territories. \u201cHealthcare makes up a large share of provincial and territorial spending and it will continue to outpace growth in the economy as the population ages,\u201d adds Mr. Giroux. \u201cIn most jurisdictions, the Canada Health Transfer will not keep pace with rising healthcare spending.\u201d\n\nAccording to Mr. Giroux, \u201cGiven their temporary nature, federal COVID-19 support measures do not have a material impact on long-term fiscal sustainability.\u201d The estimate of federal fiscal room is effectively unchanged from the PBO\u2019s November 2020 assessment and reflects an improvement in the medium-term outlook for nominal GDP and revenues.\n\nThe PBO\u2019s Fiscal Sustainability Report is designed to identify whether changes in current fiscal policy are necessary to avoid unsustainable growth of government debt and estimate the magnitude of those changes using the fiscal gap.","body_fr":"Le directeur parlementaire du budget (DPB) a rendu publique aujourd\u2019hui son \u00e9valuation de la viabilit\u00e9 \u00e0 long terme des finances publiques. Son \u00e9valuation tient compte de l\u2019ensemble des mesures comprises dans les r\u00e9cents budgets f\u00e9d\u00e9ral, provinciaux et territoriaux.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re 2021 du DPB conclut que, en ce qui concerne le secteur des administrations publiques, la politique budg\u00e9taire actuelle, si elle est maintenue tout au long des 75 prochaines ann\u00e9e, n\u2019est pas viable \u00e0 long terme. L\u2019endettement croissant des administrations publiques est attribuable principalement au secteur des provinces et des territoires et contrebalancera largement la marge de man\u0153uvre financi\u00e8re de l\u2019administration f\u00e9d\u00e9rale.\n\n\u00ab Par rapport \u00e0 la taille de l\u2019\u00e9conomie canadienne, le total de la dette nette devrait d\u00e9passer \u00e0 long terme son niveau initial, affirme le DPB Yves Giroux. Cela dit, l\u2019endettement des administrations publiques devrait demeurer bien en de\u00e7\u00e0 du sommet des 30 derni\u00e8res ann\u00e9es. \u00bb\n\nD\u2019apr\u00e8s la plus r\u00e9cente \u00e9valuation du DPB, le gouvernement f\u00e9d\u00e9ral ainsi que les provinces du Qu\u00e9bec, de la Nouvelle-\u00c9cosse et de l\u2019Ontario disposent tous d\u2019une certaine marge pour augmenter les d\u00e9penses ou r\u00e9duire les imp\u00f4ts. La politique budg\u00e9taire de statu quo n\u2019est pas viable dans les autres provinces ni dans les territoires, compte tenu des projections d\u00e9mographiques.\n\nSelon l\u2019un des constats de l\u2019\u00e9valuation, le vieillissement de la population canadienne exerce une forte pression dans toutes les provinces et territoires. \u00ab Les soins de sant\u00e9 repr\u00e9sentent une part importante des d\u00e9penses provinciales et territoriales qui cro\u00eetra plus rapidement que l\u2019\u00e9conomie \u00e0 mesure que la population vieillira, a ajout\u00e9 M. Giroux. Dans la plupart des administrations, le Transfert canadien en mati\u00e8re de sant\u00e9 ne progressera pas au m\u00eame rythme que les d\u00e9penses en sant\u00e9. \u00bb\n\nDe l\u2019avis de M. Giroux : \u00ab En raison de leur nature temporaire, les mesures f\u00e9d\u00e9rales de soutien li\u00e9es \u00e0 la COVID-19 n\u2019ont pas une incidence importante sur la viabilit\u00e9 financi\u00e8re \u00e0 long terme. \u00bb L\u2019\u00e9valuation de la marge de man\u0153uvre financi\u00e8re du gouvernement f\u00e9d\u00e9ral est demeur\u00e9e inchang\u00e9e par rapport \u00e0 l\u2019\u00e9valuation produite par le DPB en novembre 2020. Ce r\u00e9sultat s\u2019explique par une am\u00e9lioration des perspectives \u00e0 moyen terme du PIB nominal et des recettes.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re du DPB vise \u00e0 indiquer s\u2019il convient de modifier la politique budg\u00e9taire actuelle pour \u00e9viter un alourdissement excessif de la dette publique, ainsi qu\u2019\u00e0 \u00e9valuer l\u2019ampleur des changements n\u00e9cessaires en fonction de l\u2019\u00e9cart financier.","release_date":"2021-06-30T11:30:00-04:00","is_published":"2021-06-30T11:29:03-04:00","internal_id":"COM-2122-017","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/COM-2122-017--federal-finances-sustainable-over-the-long-term-but-most-provinc--finances-publiques-viables-a-long-terme-au-niveau-federal-mais-p"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/COM-2122-017--federal-finances-sustainable-over-the-long-term-but-most-provinc--finances-publiques-viables-a-long-terme-au-niveau-federal-mais-p"}},"pivot":{"publication_id":479,"news_release_id":17}}
