REGINA — A new Fraser Institute study this week is sounding the alarm bells on growing federal-provincial debt.
According to its report published Tuesday, titled The Growing Debt Burden for Canadians, 2026 edition, Canada’s combined federal and provincial government debt has nearly doubled from $1.24 trillion in 2007-08, right before the 2008 financial crisis, to a projected $2.44 trillion in 2025-26.
“It's been not a unique thing to any one province in the country. It's been really happening across the board, and it's something that's continuing to happen now, even if we look at, you know, the latest year of government budgets. You know, we're seeing budget deficits basically projected in every province in Ottawa at the federal level as well,” said Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the study.
“And this is going to continue to be a huge problem unless policymakers can rein in their spending and get their budgets back to balance sooner rather than later.”
What has been happening, he said, is that in the case of most provinces and the federal government, spending has been growing much faster than revenues, and that has ultimately contributed to provinces and the federal government borrowing money to make up the difference between the spending being higher than the revenue.
“And that ultimately is putting a lot of pressure on taxpayers, as they're ultimately the ones responsible for paying the interest payments resulting from that borrowing, as well as potentially paying higher taxes in the future due to borrowing.”
The Fraser Institute says its study specifically measures net debt, a measure of the total debt of the federal and provincial governments minus financial assets held by the governments.
They note that not only has Canada’s projected combined federal debt and the provincial debt of all 10 provinces nearly doubled since 2007-08, but it now equals a projected 75.4 per cent of the Canadian economy, or GDP. That compares to debt representing 53.2 per cent of GDP in 2007-08.
Fuss also points to Manitoba having the highest combined federal and provincial debt as a share of the economy among provinces at 91.3 per cent in 2025-26.
“Yeah, Manitoba stands out,” Fuss said. “But there's also like Newfoundland and Labrador, you know, has the highest debt per person as well among the provinces. So, and Ontario is up there as well among the most indebted. So, we have a lot of provinces trending in the wrong direction right now.”
On a per-person basis, the combined debt, including provincial debt plus a portion of the federal debt, in 2025-26 reaches a high of $71,611 in Newfoundland and Labrador, while Ontario has the second-highest combined debt per person at $63,574 in 2025-26.
The study also pointed to Alberta recording the largest increase in its provincial government debt as a share of the economy between 2007-08, at -13.4 per cent of GDP, and 2025-26, at 8.1 per cent, for an increase of 21.5 percentage points. But its provincial debt as a share of the economy is still the lowest in the country.
Fuss points specifically to policy decisions by governments as the reason for debt levels rising across the country.
“That's the primary reason why spending is going up faster than revenues. It's mainly due to their policy choices that they're making. That's increasing health care, education, social service spending, or other categories at rapid paces. These are ultimately discretionary choices from the different political leaders in Canada.”
Fuss is warning of the consequences from all of this spending for Canadians down the road, with the likelihood that they will ultimately have to foot the bill.
“It's going to be rising interest payments over time if you have more borrowing that you're adding. And that's money that's not going towards health care, education, social services, or money going back to taxpayers in the form of tax relief. It's money that's just going to bondholders and bankers at the end of the day with those interest payments,” said Fuss.
“And then at the same time, you also are putting a burden on future generations of Canadians, because taxes are likely going to have to increase in the future to pay for all of today's spending. And we're essentially kicking the can down the road and hoping for another government or another group of individuals in Canada to pay for this bill. And that's going to become a big problem right now.”
