The current fiscal policy of most provinces is "not sustainable" according to the parliamentary budget office report, which seemed to directly contradict Canada's Parliamentary Budget Officer (PBO)..A budget office Fiscal Sustainability Report 2022 said two provinces are in such dire financial shape their net debt will run close to 100% of GDP or more within a generation. Most others face steep tax hikes or spending cuts if current trends continue..“Over the long term, primary deficits combined with rising public debt charges lead to excessive debt accumulation in some provinces and territories,” The “current fiscal policy is not sustainable,” it said..However, Canada's Parliamentary Budget Officer Yves Giroux, said yesterday Canada’s current fiscal policy can be sustained over the long term. And Kevin Page, Canada's first parliamentary budget officer, was 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 told the Western Standard..According to Blacklock's Reporter, analysts predicted by 2046 Manitoba’s net debt will reach 79% of its GDP. Manitoba projected a $1.39 billion deficit this year..Worst of all provinces was Newfoundland and Labrador with its net debt projected to reach 118% of its GDP by 2046, said the Budget Office. Newfoundland in its April 8 budget projected a $400 million deficit despite a 15% harmonized sales tax. Tax rates on individual incomes for Newfoundland residents run to a top rate of 55%..Analysts predicted over a longer term Prince Edward Island will also face catastrophic debts due mainly to rising medicare costs with an aging population. “Net debt in three provinces and in the territories is projected to exceed 100% of GDP by 2096″ – Manitoba, Prince Edward Island and Newfoundland and Labrador, said Fiscal Sustainability..READ MORE: Current and former parliamentary budget officers say Canada's debt sustainable over long term.“Our assessment indicates current fiscal policy in four provinces is sustainable: Alberta, Saskatchewan, Québec and Nova Scotia,” wrote analysts. “We estimate that governments in fiscally sustainable provinces have fiscal room to increase spending or reduce taxes.”.“Current fiscal policy is not sustainable in the remaining provinces,” said the report. The list of “unsustainable” provinces included Ontario where the legislature has not balanced a budget since 2005..Current net debt as a share of economic output among provinces ranges from 4% in British Columbia to 14% in Alberta, 18% in Saskatchewan, 23% in Prince Edward Island, 25% in Nova Scotia, 28% in New Brunswick, 32% in Québec, 33% in Ontario, 35% in Newfoundland and Labrador and 41% in Manitoba..High debt ratios spell tax hikes or service cuts, analysts wrote in an earlier Fiscal Sustainability Report. “The longer this adjustment is delayed the greater will be the required adjustment,” wrote analysts..“In order to bring debt-to-GDP ratios to a sustainable level measures have to be taken,” Mostafa Askari, former assistant budget officer, said in an earlier interview. Corrections should be “immediate and permanent,” he said.
