Canada’s fiscal position has deteriorated significantly compared to other high-income countries over the past decade, driven by a rapid expansion in government spending and a growing debt burden. Compounding these economic challenges, Canada is grappling with a rising health crisis and increasing drug and criminal activities, signaling turbulent times ahead. This article examines Canada’s government size and debt levels relative to 40 advanced economies from 2014 to 2024, alongside these emerging social crises.
Rising Government Spending
In 2014, total government spending in Canada accounted for 38.4% of the national economy, as measured by Gross Domestic Product (GDP). This placed Canada 25th out of 40 advanced economies in terms of government size. By 2024, however, this figure had surged to 44.7% of GDP, elevating Canada’s ranking to 17th highest.
This increase represents the second-largest expansion in government spending relative to GDP among advanced economies during this period. Within the G7, Canada experienced the largest increase in government size, underscoring a significant shift toward greater government involvement in the economy. While Canada’s government size remains middle-of-the-pack globally, the pace of its growth is unmatched by most peers.
Escalating Debt Burden
Canada’s government debt has also risen sharply. In 2014, gross government debt stood at 85.5% of GDP, ranking 14th highest among the 40 advanced economies. By 2024, this figure had climbed to 110.8% of GDP, pushing Canada to the 7th highest debt burden globally.
This increase in the debt-to-GDP ratio was the third-largest among advanced economies and the highest within the G7. Notably, while Canada’s debt burden grew, 20 advanced economies managed to reduce their debt-to-GDP ratios over the same period. This contrast highlights Canada’s outlier status in accumulating debt relative to its economic output.
Emerging Health and Social Crises
Beyond fiscal challenges, Canada faces a worsening health crisis and escalating drug and criminal activities. Rising rates of opioid overdoses and mental health issues have strained healthcare systems, demanding increased public spending at a time when fiscal resources are already stretched. Concurrently, growing drug-related crime and gang activities in urban centers have raised public safety concerns, further complicating government priorities. These social issues exacerbate Canada’s economic woes, diverting attention and resources from long-term fiscal planning.
Economic and Social Implications
The rapid growth in government spending and debt, coupled with these health and social crises, imposes significant costs on Canadians. Higher debt levels increase interest payments, diverting resources from critical services like healthcare and law enforcement. A larger government footprint can crowd out private investment, stifling economic growth. The health crisis and rising crime further strain public budgets, creating a vicious cycle that risks undermining long-term fiscal sustainability and public safety. Together, these trends suggest Canada is heading toward increasingly turbulent times.
Conclusion
Over the past decade, Canada has outpaced nearly all advanced economies in the growth of its government spending and size and debt burden. By 2024, with government spending at 44.7% of GDP and gross debt at 110.8% of GDP, Canada ranks among the highest in both categories within the G7. As 20 advanced economies have successfully lowered their debt-to-GDP ratios since 2014, Canada’s fiscal trajectory remains precarious. Compounded by a rising health crisis and increasing drug and criminal activities, the country faces windy roads ahead. Policymakers must address these interconnected fiscal and social challenges urgently to restore balance and ensure sustainable economic growth and social stability for future generations.