The Picture of Provincial Debt in Canada: Part 1
Canada’s total net debt, as of November 7, 2012, was $594,944,869,323.47 CDN. That number can seem overwhelming to just about anybody. But what about the provinces within the country? Where do they stand when it comes to the total amount of debt that they hold; and which province is Canada’s poorest?
These are the things that we’ll be looking at over the next two weeks. Today we’ll begin a miniseries that will look at the different debt each province holds, where they hold it, what they spend their money on, and what their future outlook is. We’ll spend our time delving deep into the picture of provincial debt for all of Canada’s ten provinces, and examine each province on their own. Today though, we’ll start off with a complete look at Canada, comparing provinces against provinces and seeing just where each stands currently with its debt.
As you can see from the chart above, which outlines the total amount of debt each province has had over the past five years, Quebec has the highest amount of debt – and they have consistently for the past several years.
Ontario is a close second when it comes to the most amount of total debt provinces hold, but before the recession hit in 2008, Ontario didn’t have nearly as much debt as either Quebec or Newfoundland and Labrador, which is currently Canada’s third most indebted province.
If you really examine the total amount of debt each province has, and consider where they are located within the country, you can make some interesting analyses. The provinces that are richer in resources, such as Saskatchewan and Alberta, have the least amount of debt. However, the provinces that rely heavily on manufacturing – such as Ontario and Quebec – are carrying the most debt, and are projected to continue doing so.
And while Ontario is often thought of the province that has the most debt per capita (per person), it turns out that the results are very similar. As you can see from the chart above, Quebec still takes the cake when it comes to the highest amount of debt per capita, and Ontario and Newfoundland are still the two provinces with the highest amount of debt per capita.
Even though the charts show different stats for different provinces, one thing remains true for all of them. Kevin Page, Parliamentary Budget Officer, has recently compiled a report indicating that if Canada’s provinces continue to accumulate more and more debt, in 70 years they’ll have accumulated a net debt that’s equivalent to 350 per cent of Canada’s GDP. That’s simply a level that’s too high for any province or country to maintain. Especially when you consider that Greece’s debt level was about 180 per cent before they went bankrupt.
But, even delving as deep as debt per capita isn’t enough to give a clear enough picture of provincial debt in Canada. In order to do that, you need to look at the total debt of all the provinces, as well as their revenues and what they are spending that money on that’s driving them deeper into debt.
This is why throughout this miniseries we’ll go deeper into each province’s numbers, including their debt. Tomorrow, we’ll begin with British Columbia. This is one of the provinces with the least amount of debt, yet also with some of the most troubling housing markets right now. Should these areas weaken further, as they’re expected to, that could change the total amount of debt in B.C. drastically.