Barkova, Lisa; Cléophat, Régine; Creighton, Mark; Kho, Albert; Laurin, Marianne; Matier, Chris; Nahornick, Nora; Nicol, Caroline; Stanton, Jason

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Fiscal Sustainability Report 2024

Lisa Barkova ; Régine Cléophat ; Mark Creighton ; Albert Kho ; Marianne Laurin ; Chris Matier ; Nora Nahornick ; Caroline Nicol ; Jason Stanton

Published on August 28, 2024 PDF

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.

Highlights

From the perspective of the total general government sector, that is federal and subnational governments and public pension plans combined, current fiscal policy in Canada is sustainable over the long term. Relative to the size of the Canadian economy, total general government net debt is projected to decline steadily over the long term due to fiscal room at the federal level and to rising net asset positions in the public pension plans.
Current fiscal policy at the federal level is sustainable over the long term. We estimate that the federal government could permanently increase spending or reduce taxes by 1.5 per cent of GDP ($46 billion in current dollars, growing in line with GDP thereafter) while maintaining fiscal sustainability.
For the subnational government sector, which includes provincial-territorial, local and Indigenous governments, current fiscal policy is sustainable over the long term. Under current policy, projected subnational government revenues and program spending are sufficient to keep the subnational government net debt-to-GDP ratio below its 2023 level over the 75-year projection horizon.
The current structure of the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) is sustainable over the long term. Under the current structure of the plans, projected contributions and benefits are sufficient to ensure that the net asset-to-GDP position is above its 2023 value after 75 years.

PDF

Communications

Quote

Although we saw a record population growth in 2023, we must bear in mind that many Canadians will be retiring from their peak working years, resulting in slower workforce and GDP growth. This aging population will put upward financial pressure on government programs such as health care, Old Age Security and public pension benefits.

Yves Giroux
Parliamentary Budget Officer

News Release

{"id":65,"created_at":"2024-08-27T08:39:48-04:00","updated_at":"2024-08-28T08:57:06-04:00","slug":"government-finances-still-sustainable-over-the-long-term-under-current-policy-says-pbo-dans-le-cadre-de-la-politique-actuelle-les-finances-publiques-restent-viables-a-long-terme-selon-le-dpb","title_en":"Government finances still sustainable over the long term under current policy, says PBO","title_fr":"Dans le cadre de la politique actuelle, les finances publiques restent viables \u00e0 long terme, selon le DPB","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 federal, provincial and territorial government budgets in 2024.\n\nThe PBO\u2019s 2024 Fiscal Sustainability Report finds that current fiscal policy, if maintained over the long term, is sustainable for the government sector as a whole, that is the federal and subnational governments and public pension plans combined. \n\nWe now estimate the federal fiscal room to be 1.5% of GDP, down from our previous estimate of 1.7% of GDP. This adjustment is due to increased program spending that more than offsets higher revenues, along with an upward revision to the effective interest rate, which reduces the fiscal room available. This fiscal room does not include the potential impact of other financial pressures such as increasing defence spending or government commitments that are yet to be reflected in budgetary documents.\n\nRelative to the size of the Canadian economy, total general government net debt is projected to decline steadily over the long term due to fiscal room at the federal level and to rising net asset positions in the public pension plans.\n\nIn addition to the federal government, the PBO finds that governments in the provinces of Quebec, Saskatchewan, Nova Scotia, Ontario and Alberta, all have fiscal room to reduce taxes or increase spending. \n\n\u201cAlthough we saw a record population growth in 2023, we must bear in mind that many Canadians will be retiring from their peak working years, resulting in slower workforce and GDP growth. This aging population will put upward financial pressure on government programs such as health care, Old Age Security and public pension benefits,\u201d explains Yves Giroux, PBO. \n\nOur report assesses the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) and finds, however, that both plans are sustainable over the long term. Given benefits projected under the current plans\u2019 structure, status quo contribution rates are sufficient to ensure that the net asset-to-GDP position of each plan is above its 2023 value after 75 years.\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.\n\nA search tool, FSR At-a-Glance, is available to visualize and summarize key drivers of fiscal sustainability for each province and territory over the long term.","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. Cette \u00e9valuation tient compte de toutes les mesures figurant dans les budgets f\u00e9d\u00e9raux, provinciaux et territoriaux de 2024.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re du DPB pour 2024 conclut que la politique budg\u00e9taire actuelle, si elle est maintenue \u00e0 long terme, est viable pour l\u2019ensemble du secteur public, c\u2019est-\u00e0-dire tant pour le gouvernement f\u00e9d\u00e9ral que pour les administrations infranationales et les r\u00e9gimes de retraite publics. \n\nSelon nos estimations, la marge de man\u0153uvre budg\u00e9taire du gouvernement f\u00e9d\u00e9ral est d\u00e9sormais de 1,5 % du PIB, contre 1,7 % du PIB selon notre estimation pr\u00e9c\u00e9dente. Cet ajustement est d\u00fb \u00e0 l\u2019augmentation des d\u00e9penses de programmes qui fait plus que contrebalancer l\u2019augmentation des recettes, ainsi qu\u2019\u00e0 une r\u00e9vision \u00e0 la hausse du taux d\u2019int\u00e9r\u00eat effectif, qui r\u00e9duit la marge de man\u0153uvre budg\u00e9taire pour le gouvernement f\u00e9d\u00e9ral. Cette marge de man\u0153uvre n\u2019inclut pas l\u2019effet possible d\u2019autres pressions financi\u00e8res, par exemple un accroissement des d\u00e9penses en mati\u00e8re de d\u00e9fense ou d\u2019autres engagements des gouvernements qui ne sont pas refl\u00e9t\u00e9s dans leurs budgets.\n\nPar rapport \u00e0 la taille de l\u2019\u00e9conomie canadienne, la dette nette de l\u2019ensemble des administrations publiques devrait diminuer r\u00e9guli\u00e8rement \u00e0 long terme en raison de la marge de man\u0153uvre budg\u00e9taire au niveau f\u00e9d\u00e9ral et de l\u2019augmentation de l\u2019actif net des r\u00e9gimes de retraite publics.\n\nEn plus du gouvernement f\u00e9d\u00e9ral, le DPB constate que les gouvernements des provinces du Qu\u00e9bec, de la Saskatchewan, de la Nouvelle-\u00c9cosse, de l\u2019Ontario et de l\u2019Alberta disposent tous d\u2019une marge de man\u0153uvre financi\u00e8re pour r\u00e9duire les imp\u00f4ts ou augmenter les d\u00e9penses. \n\n\u00ab Bien que nous ayons connu une croissance d\u00e9mographique record en 2023, nous devons garder \u00e0 l\u2019esprit que de nombreux Canadiens prendront leur retraite apr\u00e8s leurs meilleures ann\u00e9es de travail, ce qui se traduira par un ralentissement de la croissance de la main-d\u2019\u0153uvre et du PIB. Le vieillissement de la population exercera une pression financi\u00e8re accrue sur les programmes gouvernementaux tels que les soins de sant\u00e9, la s\u00e9curit\u00e9 de la vieillesse et les prestations de retraite publiques \u00bb, explique Yves Giroux, DPB. \n\nLe rapport s\u2019int\u00e9resse aussi au R\u00e9gime de pensions du Canada et au R\u00e9gime de rentes du Qu\u00e9bec. Il conclut que les deux sont viables \u00e0 long terme. \u00c0 la lumi\u00e8re des projections actuelles et de la structure des deux r\u00e9gimes, les taux de cotisation actuels devraient suffire pour que le ratio des actifs nets de chacun par rapport au PIB demeure encore longtemps \u00e0 un niveau sup\u00e9rieur \u00e0 leur valeur de 2023 apr\u00e8s 75 ans.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re du directeur parlementaire du budget sert \u00e0 d\u00e9terminer si des changements doivent \u00eatre apport\u00e9s \u00e0 la politique financi\u00e8re afin d\u2019\u00e9viter que la dette gouvernementale ne croisse de mani\u00e8re insoutenable, et \u00e0 estimer l\u2019ampleur des changements \u00e0 apporter \u00e0 la lumi\u00e8re du d\u00e9s\u00e9quilibre financier.\n\nUn outil de recherche, RVF en un coup d\u2019\u0153il, est disponible pour visualiser et r\u00e9sumer les principaux facteurs de viabilit\u00e9 financi\u00e8re \u00e0 long terme pour chaque province et territoire.","release_date":"2024-08-28T09:00:00-04:00","is_published":"2024-08-28T08:57:06-04:00","internal_id":"COM-2425-065","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/government-finances-still-sustainable-over-the-long-term-under-current-policy-says-pbo-dans-le-cadre-de-la-politique-actuelle-les-finances-publiques-restent-viables-a-long-terme-selon-le-dpb"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/government-finances-still-sustainable-over-the-long-term-under-current-policy-says-pbo-dans-le-cadre-de-la-politique-actuelle-les-finances-publiques-restent-viables-a-long-terme-selon-le-dpb"}},"pivot":{"publication_id":819,"news_release_id":65}}