Alberta
Canadians in three provinces will spend roughly the same on debt interest as K-12 education
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From the Fraser Institute
By Grady Munro and Jake Fuss
From 2008/09 to 2023/24, the federal government is projected to have run deficits every single year, with no interruptions. This has resulted in federal net debt (total debt minus financial assets) increasing by $603.6 billion (inflation-adjusted).
For more than a decade, Canadian governments have increasingly relied on borrowed money to fund their excessive spending habits. However, as debt has continued to pile up so have the costs associated with this debt—namely interest costs. A recent study shows that in some of the largest provinces, governments now spend nearly as much or more on debt interest costs than on K-12 education.
Since the 2008/09 financial crisis, governments across Canada have fallen into the habit of utilizing debt to fund their spending habits. For example, consider the federal government.
From 2008/09 to 2023/24, the federal government is projected to have run deficits every single year, with no interruptions. This has resulted in federal net debt (total debt minus financial assets) increasing by $603.6 billion (inflation-adjusted). Conversely, from 1996/97 to 2007/08, the federal government actually lowered its net debt by $348.1 billion (inflation-adjusted). Clearly, there’s been a shift in the government’s approach towards debt accumulation.
This is not simply a federal problem, as provinces have also seen their debt burdens rise as well. Cumulatively, provincial and federal net debt has increased by $1.0 trillion (inflation-adjusted) from 2007/08 to 2023/24.
Government debt carries costs, primarily in the form of the interest payments, which represent money that doesn’t go towards paying down the actual debt amount, nor does it go towards providing government services or tax relief. And since governments must utilize tax revenues to pay interest, taxpayers are ultimately on the hook for servicing government debt.
But how much do Canadians actually pay in debt interest costs?
Using data from the most recent fiscal updates, a new study compares combined (federal and provincial) debt interest costs for residents in three of the largest provinces (Ontario, Quebec and Alberta) with what those provinces expect to spend on K-12 education in 2023/24. The study utilizes combined debt interest costs because Canadians are ultimately responsible for interest costs incurred by both the federal government and the province in which they live. The following chart summarizes the comparisons from the study.
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As is clear from the chart, combined interest costs for residents in these provinces are nearly as much or more than their province expects to spend on K-12 education in 2023/24. Specifically, combined interest costs are $31.5 billion for Ontarians, which is only $3.2 billion less than the province will spend on K-12 education in 2023/24. Combined interest costs for Quebecers ($20.3 billion) will actually exceed the $19.9 billion the province will devote towards K-12 education. And combined interest costs for Albertans are only slightly lower than the $8.9 billion that will be spent on K-12 education.
In other words, taxpayers in Ontario, Quebec and Alberta are paying nearly as much or more to service federal and provincial government debt than they are paying to fund K-12 education in their province. This budget season, it’s important to remember the costs associated with growing government debt.
Authors:
Alberta
Open letter to Ottawa from Alberta strongly urging National Economic Corridor
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Canada’s wealth is based on its success as a trading nation. Canada is blessed with immense resources spread across a vast country. It has succeeded as a small, open economy with an enviable standard of living that has been able to provide what the world needs.
Canada has been stuck in a situation where it cannot complete nation‑building projects like the Canadian Pacific Railway that was completed in 1885, or the Trans Canada Highway that was completed in the 1960s. With the uncertainty of U.S. tariffs looming over our country and province, Canada needs to take bold action to revitalize the productivity and competitiveness of its economy – going east to west and not always relying on north-south trade. There’s no better time than right now to politically de-risk these projects.
A lack of leadership from the federal government has led to the following:
- Inadequate federal funding for trade infrastructure.
- A lack of investment is stifling the infrastructure capacity we need to diversify our exports. This is despite federally commissioned reports like the 2022 report by the National Supply Chain Task Force indicating the investment need will be trillions over the next 50 years.
- Federal red tape, like the Impact Assessment Act.
- Burdensome regulation has added major costs and significant delays to projects, like the Roberts Bank Terminal 2 project, a proposed container facility at Vancouver, which spent more than a decade under federal review.
- Opaque funding programs, like the National Trade Corridors Fund (NTCF).
- Which offers a pattern of unclear criteria for decisions and lack of response. This program has not funded any provincial highway projects in Alberta, despite the many applications put forward by the Government of Alberta. In fact, we’ve gone nearly 3 years without decisions on some project applications.
- Ineffective policies that limit economic activity.
- Measures that pit environmental and economic objectives in stark opposition to one another instead of seeking innovative win-win solutions hinder Canada’s overall productivity and investment climate. One example is the moratorium on shipping crude through northern B.C. waters, which effectively ended Enbridge’s Northern Gateway proposal and has limited Alberta’s ability to ship its oil to Asian markets.
In a federal leadership vacuum, Alberta has worked to advance economic corridors across Canada. In April 2023, Alberta, Saskatchewan and Manitoba signed an agreement to collaborate on joint infrastructure networks meant to boost trade and economic growth across the Prairies. Alberta also signed a similar economic corridor agreement with the Northwest Territories in July 2024. Additionally, Alberta would like to see an agreement among all 7 western provinces and territories, and eventually the entire country, to collaborate on economic corridors.
Through our collaboration with neighbouring jurisdictions, we will spur the development of economic corridors by reducing regulatory delays and attracting investment. We recognize the importance of working with Indigenous communities on the development of major infrastructure projects, which will be key to our success in these endeavours.
However, provinces and territories cannot do this alone. The federal government must play its part to advance our country’s economic corridors that we need from coast to coast to coast to support our economic future. It is time for immediate action.
Alberta recommends the federal government take the following steps to strengthen Canada’s economic corridors and supply chains by:
- Creating an Economic Corridor Agency to identify and maintain economic corridors across provincial boundaries, with meaningful consultation with both Indigenous groups and industry.
- Increasing federal funding for trade-enabling infrastructure, such as roads, rail, ports, in-land ports, airports and more.
- Streamlining regulations regarding trade-related infrastructure and interprovincial trade, especially within economic corridors. This would include repealing or amending the Impact Assessment Act and other legislation to remove the uncertainty and ensure regulatory provisions are proportionate to the specific risk of the project.
- Adjusting the policy levers that that support productivity and competitiveness. This would include revisiting how the federal government supports airports, especially in the less-populated regions of Canada.
To move forward expeditiously on the items above, I propose the establishment of a federal/provincial/territorial working group. This working group would be tasked with creating a common position on addressing the economic threats facing Canada, and the need for mitigating trade and trade-enabling infrastructure. The group should identify appropriate governance to ensure these items are presented in a timely fashion by relative priority and urgency.
Alberta will continue to be proactive and tackle trade issues within its own jurisdiction. From collaborative memorandums of understanding with the Prairies and the North, to reducing interprovincial trade barriers, to fostering innovative partnerships with Indigenous groups, Alberta is working within its jurisdiction, much like its provincial and territorial colleagues.
We ask the federal government to join us in a new approach to infrastructure development that ensures Canada is productive and competitive for generations to come and generates the wealth that ensures our quality of life is second to none.
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Devin Dreeshen
Devin Dreeshen was sworn in as Minister of Transportation and Economic Corridors on October 24, 2022.
Alberta
Premier Smith and Health Mininster LaGrange react to AHS allegations
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