Barkova, Lisa; Cléophat, Régine; Creighton, Mark; Kho, Albert; Laurin, Marianne; Nicol, Caroline

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Fiscal Sustainability Report 2023

Lisa Barkova ; Régine Cléophat ; Mark Creighton ; Albert Kho ; Marianne Laurin ; Caroline Nicol

Published on July 27, 2023 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 1.7 per cent of GDP ($49.5 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 2022 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 2022 value after 75 years.

Revised on September 19, 2023 (Quebec Pension Plan results only).

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PDF

Communications

Infographic

Quote

Canada’s ageing population will result in more and more Canadians transitioning into their retirement years. This will lead to slower growth in the economy and government revenues. At the same time, population ageing will put financial pressure on government programs such as health care, Old Age Security and public pensions.

Yves Giroux
Parliamentary Budget Officer

News Release

{"id":52,"created_at":"2023-07-25T14:39:53-04:00","updated_at":"2023-07-27T08:57:04-04:00","slug":"government-finances-sustainable-over-the-long-term-under-current-policy-says-parliamentary-budget-officer-les-finances-publiques-sont-viables-a-long-terme-dans-le-cadre-de-la-politique-actuelle-declare-le-directeur-parlementaire-du-budget","title_en":"Government finances sustainable over the long term under current policy, says Parliamentary Budget Officer","title_fr":"Les finances publiques sont viables \u00e0 long terme dans le cadre de la politique actuelle, d\u00e9clare le directeur parlementaire du budget","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 2023.\n\nThe PBO\u2019s 2023 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\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, New Brunswick and Alberta, all have fiscal room to reduce taxes or increase spending. \n\n\u201cCanada\u2019s ageing population will result in more and more Canadians transitioning into their retirement years,\u201d adds Mr. Giroux. \u201cThis will lead to slower growth in the economy and government revenues. At the same time, population ageing will put financial pressure on government programs such as health care, Old Age Security and public pensions.\u201d\n\nThe report also assesses the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) and finds that both plans are sustainable. 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 2022 value over the long term.\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 publi\u00e9 aujourd\u2019hui son \u00e9valuation de la viabilit\u00e9 \u00e0 long terme des finances gouvernementales. Cette \u00e9valuation tient compte de l\u2019ensemble des mesures figurant dans les budgets f\u00e9d\u00e9raux, provinciaux et territoriaux de 2023.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re de 2023 du DPB conclut que, si elle est maintenue telle quelle, la politique financi\u00e8re actuelle devrait \u00eatre viable dans l\u2019ensemble du secteur gouvernemental. \n\nProportionnellement \u00e0 la taille de l\u2019\u00e9conomie canadienne, la dette nette totale des gouvernements devrait diminuer de mani\u00e8re r\u00e9guli\u00e8re \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\nSelon la plus r\u00e9cente \u00e9valuation du DPB, le Qu\u00e9bec, la Saskatchewan, la Nouvelle-\u00c9cosse, le Nouveau-Brunswick et l\u2019Alberta ont tous la marge de man\u0153uvre n\u00e9cessaire pour augmenter leurs d\u00e9penses ou r\u00e9duire les imp\u00f4ts.\n\nM. Giroux fait le constat suivant : \u00ab Le vieillissement de la population canadienne fera en sorte que de plus en plus de Canadiens vont atteindre l\u2019\u00e2ge de la retraite, ce qui va entra\u00eener un ralentissement de la croissance de l\u2019\u00e9conomie et une diminution des recettes publiques. En parall\u00e8le, le vieillissement de la population va exercer une pression financi\u00e8re \u00e0 la hausse sur les programmes gouvernementaux tels que les soins de sant\u00e9, la S\u00e9curit\u00e9 de la vieillesse et les prestations de r\u00e9gimes de retraite publics \u00bb.\n\nLe rapport conclut \u00e9galement que le R\u00e9gime de pensions du Canada et le R\u00e9gime de rentes du Qu\u00e9bec sont tous les deux 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 \u00e9gal ou sup\u00e9rieur \u00e0 leur valeur de 2022.\n\nLe Rapport sur la viabilit\u00e9 financi\u00e8re du DPB 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.","release_date":"2023-07-27T09:00:00-04:00","is_published":"2023-07-27T08:57:04-04:00","internal_id":"COM-2324-052","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/government-finances-sustainable-over-the-long-term-under-current-policy-says-parliamentary-budget-officer-les-finances-publiques-sont-viables-a-long-terme-dans-le-cadre-de-la-politique-actuelle-declare-le-directeur-parlementaire-du-budget"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/government-finances-sustainable-over-the-long-term-under-current-policy-says-parliamentary-budget-officer-les-finances-publiques-sont-viables-a-long-terme-dans-le-cadre-de-la-politique-actuelle-declare-le-directeur-parlementaire-du-budget"}},"pivot":{"publication_id":755,"news_release_id":52}}