Canada's Parliamentary Budget Officer (PBO) Yves Giroux, said Canada’s current fiscal policy can be sustained over the long term..Kevin Page, Canada's first parliamentary budget officer, is in agreement.."Notwithstanding the significant increases in federal and provincial debt related to the pandemic recession and fiscal response, the total government fiscal structure in Canada is sustainable over the long term. Debt relative to income will not rise in the face of aging demographics," Page said..The PBO’s latest fiscal sustainability report found Canada’s overall debt level is projected to decline steadily over time. The report said the federal government could permanently increase spending, or reduce taxes by 1.8% of GDP, and still remain fiscally viable..The annual report aims to identify any necessary changes to current fiscal policy to ensure government debt accumulation does not become unsustainable. It does this by assessing the net debt-to-GDP ratio..The report claimed the fiscal policies of the provinces of Quebec, Alberta, Saskatchewan and Nova Scotia are sustainable, while the remaining provinces and territories would need to cut spending or increase taxes to become fiscally viable over time..The report also said over the long term, relative to the size of their economies, the provinces will face rising health-care expenses due to their aging populations. But it said most provinces have seen an improvement in their fiscal standing since last year..At the federal level, the report says, the government could permanently increase spending or reduce taxes by 1.8% of GDP and remain fiscally viable. That would amount to $45 billion..The report also assessed the Canada Pension Plan and Quebec Pension Plan and found their structures to be sustainable over the long run.Page, who was PBO from 2008 to 2013, said the analysis, which is "akin to a long term fiscal stress test," allows political leaders to understand the intergenerational consequences of their fiscal spending. He said governments around the world will need good fiscal structures to address post-COVID-19 policy challenges, such as growth, sustainability, and inclusion."Generally speaking, Canada is in relatively good fiscal shape and well-positioned. Clearly some provinces, like Newfoundland and Labrador, are experiencing major demographic change and will need policy change to address the fiscal gap," Page said.Page added the Liberal government will like the report, as it confirms their analysis in Budget 2022, while some premiers will "look at this report and make the case that the federal government can do more on health care spending."Franco Terrazzano, federal director of the Canadian Taxpayer Federation, disagreed with the parliamentary budget officers' view of Canada's debt."Each Canadian is on the hook for about $30,000 in federal debt, and I don't know many people who have that much lying around to pay it off," Terrazzano said. "It's important for governments to show some financial restraint, but for this government, there has been none," Terrazzano added. "They have pushed up our debt to all-time-highs and have shown no plans to balance the budget."
