The parliamentary budget officer says Canada's current fiscal policy is sustainable over the long term.

The PBO's latest fiscal sustainability report finds that Canada's overall debt level is projected to decline steadily over time.

At the federal level, the report says, the government could permanently increase spending or reduce taxes by 1.8 per cent of GDP and remain fiscally viable. That amounts to $45 billion in current dollars.

"It's generally a pretty good news story overall, for the fiscal outlook for Canada," said Randall Bartlett, Desjardins' director of Canadian economics.

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 PBO's assessment includes federal and provincial budgets from the spring.

In its assessment of provincial, territorial, Indigenous and local governments, it cautions that the fiscal policies of some governments are not sustainable.

The report says that over the long term, relative to the size of their economies, provinces will face rising health-care expenses due to the aging population.

Canada's debt level sustainable over long term: @yzgiroux. #CDNPoli #PBO #FiscalSustainability

However, most provinces saw an improvement in their fiscal standing since last year.

"[It's] arguably a fairly substantial improvement," said Bartlett.

The report says fiscal policy in Quebec, Alberta, Saskatchewan and Nova Scotia is sustainable, while the remaining provinces and territories would need to cut spending or increase taxes to attain fiscal viability over time.

Bartlett said he was most surprised by the improvement in the fiscal standings of Alberta and Saskatchewan, noting that the changes are likely a result of higher oil prices.

The report also highlights how Canada's aging population will affect the economic outlook, with growth expected to slow as the share of Canadians retiring rises.

Bartlett said the demographic decline in Canada is "inescapable," but some of the decline is being offset by improving immigration levels.

"There's sort of a pan-partisan agreement, among the major parties anyway, that immigration is necessary to support long-term economic growth in Canada and to offset the aging population that we have here," he said.

The report also assessed the Canada Pension Plan and Quebec Pension Plan and found their structures to be sustainable over the long run.

This report by The Canadian Press was first published July 28, 2022.

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In its methodology, the Parliamentary Budget Office falls victim to a common fallacy - that the federal government is like a household whose spending is constrained by its debt burden. But since Canada has a government-owned central bank that can create money at will, the determinant restraint on spending should be the resource capacity of the economy, including available labour.

Canada currently has over one million Canadians actively seeking work, individuals whose talents should be employed to increase available goods and services, and help combat inflation.

Our children are threatened by lack of job opportunities, growing inequality, a fragile health system, and potential food crises arising from climate change. Solutions will require urgent action and should not be weighed down by phony notions of sustainability that have no economic justification.

Fiscal prudes are fretting about the wrong issues

"The left, the right and people who should know better, like the PBO, are wrong because they cannot escape thinking of the federal government as if it were a household whose credit card was maxed out.


What they all seem to forget is that the federal government has the power to create new money. In fact, it effectively creates new money every time it spends."

I am for one glad to hear that the sky is not falling, and there is a way out of our financial dilemma, and that the Provinces and Territories are for the most part on their way moving forward out of financial debt.
What I do find though is that those that are on assistance due to reasons beyond their control are on the rise and that is concerning, and we need to to get the people that are on assistance because of convenience need to be weeded out. And our healthcare workers that are heading to the private care for a better life work balance is going to be an issue for many years or until the problem is resolved.
It matters not whether the healthcare funding comes from Federal or Provincial taxes it still up to Canadians to pay the bill.
Just my rant!