Upon the release of the annual budgets by the federal and provincial, increasing debt and budget deficits are key issues. We have seen an increase in the combined federal and provincial net debt from $833 billion in 2007 to a projected $1.4 trillion in 2017. The combination of the net debt equates to 67.5% of Canada’s economy.
With debt accumulations comes costs and one major outcome is that the government makes interest payments on their debt. This is similar to households that have to pay interest on borrowing; mortgages, vehicles, or spending on credit cards. Spending on interest payments will lead to less money available for other priorities such as spending that goes towards health care, education, or tax relief.
The Canadian government (both local and federal) spent $62.8 billion collectively on interest payments in 2015-2016, which works out to be 8.1% of their total revenue in that year. The total amount spent on interest payments is the equivalency of Canada’s spending on public primary and secondary education.