What's Canada's current federal debt and where's the government spending money? (2024)

Canadian consumer debt hit an all-time high of $2.32 trillion in the first quarter of 2023, according to a TransUnion report. However, Canada’s national debt has also been rising steeply, giving economists and government leaders cause for concern.

Today, I’ll share some facts and figures about Canada’s current national debt and where the government spends money, so you can better understand how federal debt and spending have changed over recent years.

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What is the national debt?

Consumer debt is money owed by individuals for personal needs, whereas national debt is the total borrowing by a government for public purposes. They operate at different levels, with consumer debt impacting individual finances and national debt affecting a country's overall economic health.

The federal government reported a federal deficit of $1.13 trillion at the end of the 2021-2022 fiscacanadal year, an increase of 8.2 per cent from the previous fiscal year.

Adjusted for current inflation, Canada’s total provincial and federal debt increased from $1.1 trillion to $2.1 trillion between 2007-2008 and 2022-2023, according to a study by the right-wing think tank Fraser Institute.

Despite the government’s increased expenditure during the pandemic, this alone is not the primary cause behind the country’s debt problem.

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In short, Canada’s increasing national debt was a problem long before the global pandemic.

The public seems to agree. A recent survey conducted by Ipsos for the Montreal Economic Institute found that 55 per cent of Canadians believe government spending is too high, while just 27 per cent believe it’s acceptable. Eight per cent believe spending is too low, and 9 per cent declined to answer, according to the survey.

The federal government posted a $1.5 billion surplus in April and May, the first two months of the fiscal year, thanks to increased revenue from EI premiums, higher interest rates, a carbon price hike, and additional income tax revenue. However, this will hardly put a dent in the overall $1.1 trillion federal debt owing.

Breakdown of government spending in Canada: 2008-2021

Now, let’s take a quick look at how the government spends money, according to the 2021 federal spending report.

  • Social benefits: $158.16 billion
  • Grants: $134.94 billion
  • Subsidies: $29.48 billion
  • Interest: $23.98 billion
  • Other (employee compensation, goods/services, etc.): $127.29 billion

To give you a closer look, let’s take a quick look at the share of government expenses by category reported for 2021.

1. Social protection

Between 2008 and 2019, the federal government spent between 23 and 24 per cent of its revenue on social protection programs, such as EI and other low-income benefits. During the 2020 pandemic, this number jumped significantly to 31 per cent, as the government issued relief to Canadian residents and small businesses.

In 2021, however, the number dropped to 27 per cent as the economy began to reopen and Canadians returned to work.

2. Health

Between 2008 and 2019, the government spent between 23 and 25 per cent of its revenue on health care. Interestingly, this number dropped to 20 per cent in 2020 before rising back up to 24 per cent in 2021.

The reason for the sudden surprising drop in healthcare expenses during the 2020 pandemic could be due to Canadians staying at home and experiencing difficulty receiving healthcare, according to a study published in the Canadian Medical Association Journal.

3. General public services

In 2020, the federal government reported that it spent just 13 per cent of revenue on general public services, which include expenses like:

  • The postal services
  • Ferries
  • Citizenship/immigration
  • Public works

This category also includes interest payments on government loans.

Between 2008 and 2019, general public services accounted for between 16 and 18 per cent of the government’s share of expenses, indicating another pandemic-related decline in revenue in 2020. In 2021, however, this number increased to 15 per cent.

4. Education

Between 2008 and 2019, the government spent between 13 and 14 per cent of revenue on public education. Due to schools closing and the widespread adoption of online schooling during the pandemic, education expenses accounted for just 11 per cent of federal government expenditure in 2020.

In 2021, this number increased to 12 per cent, as students and teachers began returning to the classroom. The 2022 report has yet to be released, but I believe that education expenses will return to 13 or 14 per cent, as not all schools were fully open and operational as of 2021.

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5. Economic affairs

Government spending on economic affairs such as budgeting and implementation of financial regulations accounted for just 8 to 9 per cent of federal spending between 2008 and 2019.

In 2020, this number dramatically increased to 15 per cent as the government struggled to provide financial relief and implement policies to help the country make it through the pandemic. In 2021, economic affairs accounted for 11 per cent of government expenditure, significantly lower than the year before but still higher than it’s been for over a decade.

6. Other functions

This category includes expenses related to:

  • Defence
  • Public safety
  • Housing
  • Environmental protection
  • Public recreation
  • Culture/religion

Between 2008 and 2019, this expense category accounted for 13 to 14 per cent of government spending. During 2020 and 2021, the share of these expenses dropped to 10 per cent and 11 per cent respectively.

How crisis and global events affect the national debt

During times of economic crisis, such as pandemics, recessions, and wars, the national debt can fluctuate sharply as the federal government attempts to provide the necessary support for its residents.

For example, in 2020, the federal government collected 5.4 per cent less tax revenue than the previous fiscal year ($316.4 billion compared to $334.1 billion).

During the pandemic, total government expenses also increased considerably:

In times of economic crisis, the government often collects less tax revenue and incurs additional expenses, which can increase debt significantly. Governments often increase taxes or propose budget cuts in the following years to recuperate.

Rising debt and future generations

The true cost of the rising national debt may not be felt until future generations. If the country’s debt continues to increase out of control, national and international investors could lose faith in Canada’s economy.

To ensure a positive financial future for its residents, it’s imperative that Canada gets its national debt under control before it’s too late.

Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on hisWealth Awesome website.

What's Canada's current federal debt and where's the government spending money? (2024)


What is Canada's current debt? ›

Public debt of Canadian provinces, territories, and local governments (PTLG) The total financial liabilities or gross debt of the Canadian consolidated provincial, territorial and local governments (PTLG) was $1,460 billion in 2021 (the fiscal year ending 31 March 2022), as shown in the table below.

What is the current federal deficit in Canada? ›

OTTAWA, Feb 23 (Reuters) - Canada recorded a sharply higher C$23.61 billion ($17.51 billion) budget deficit for the first nine months of the 2023/24 fiscal year as government expenditures grew faster than revenues, the finance ministry said on Friday.

How much does the federal government spend in Canada? ›

Overall, the government expects to spend $449.2 billion in the coming year, up from the $432.9 billion it planned to spend this year and down from the $492.6 billion that it ended up allocating.

Is Canada or US in more debt? ›

While Canada and the U.S. may seem as if they're on different planets when it comes to what they owe – just over $1.1-trillion for Canada compared with roughly $40-trillion (in Canadian dollars) for the U.S. – both are now spending as much on interest payments as they do on programs they each hold dear.

What country owns Canada's debt? ›

By far, Canadian institutional investors hold most of Canada's debt. That includes insurance companies, banks, private pension funds, and government pension funds (including the Canada Pension Plan). Even the Bank of Canada holds Canadian debt. Together, they hold 76% of Canada's debt.

What country has the most debt? ›

Profiles of Select Countries by National Debt
  • Japan. Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP. ...
  • United States. ...
  • China. ...
  • Russia.

What country has the least debt? ›

Countries with the Lowest National Debt
  • Brunei. 3.2%
  • Afghanistan. 7.8%
  • Kuwait. 11.5%
  • Democratic Republic of Congo. 15.2%
  • Eswatini. 15.5%
  • Palestine. 16.4%
  • Russia. 17.8%

Which Canadian province has the most debt? ›

Newfoundland and Labrador has the highest debt-to-GDP ratio among the provinces at 41.6 per cent in 2023/24, while Alberta recorded the most substantial increase in its debt-to-GDP ratio between 2007/08 (-13.4 per cent) and 2023/24 (9.0 per cent)—a hike of 22.4 percentage points.

Where does Canada spend most of its money? ›

Payments that go directly to persons, to provincial and territorial governments, and to other organizations are called “transfers.” Transfers are the largest category of government spending. They made up about 60 cents of each tax dollar spent ($165.5 billion).

Where does most of Canada's government money come from? ›

The federal government collects revenues from various sources, including income taxes and taxes applied on goods and services in all Canadian provinces. It also spends in each province, including on programs that are widely available to all Canadians, regardless of their province of residence.

How much does Canada spend per person? ›

In 2022, overall health expenditure in Canada is predicted to be 331 billion Canadian dollars or 8,563 Canadian dollars per person.

Is Canada richer than the US? ›

As of 1981, per capita GDP in Canada was 92 per cent of that of the U.S.; by 2022 it had fallen to just 73 per cent. Drill down into the national data and it looks even worse. The economist Trevor Tombe has shown that Canada's richest province, Alberta, would rank 14th among U.S. states.

Are Canadians heavily in debt? ›

From another report, Canadian consumer debt has risen to $2.4 trillion, with an average debt load of approximately $21,131—excluding mortgages. And Canadians are using credit cards more, as there was a 9% increase in credit balances in June 2023 compared to the same time last year.

Is Canada in huge debt? ›

The federal debt has doubled from $619.3 billion in 2015-16, the first year of Trudeau's government, to $1.2 trillion last year. It's expected to climb to $1.4 trillion by 2028-29.

Is Canada 2 trillion in debt? ›

Budget deficits and increasing debt have become serious fiscal challenges facing the federal and many provincial governments recently. Since 2007/08, combined federal and provincial net debt (inflation-adjusted) has nearly doubled from $1.18 trillion to a projected $2.18 trillion in 2023/24.

What is the current debt in the US? ›

The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.

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