A new study from the Fraser Institute reveals that combined government debt interest payments for both federal and provincial governments in Canada will cost $94.4 billion in 2025/26, translating to between $1,845 and $3,348 per Canadian taxpayer depending on their province of residence.
Study Highlights
The independent, non-partisan Canadian public policy think-tank published its findings in the report titled Federal and Provincial Debt Interest Costs for Canadians, 2026 Edition. According to the study, the federal government alone will spend $54.0 billion on interest payments for its debt this year. This amount exceeds the combined federal spending on the Canada Child Benefit and the Canada-wide Early Learning and Child Care benefit, which totals $38.1 billion. Furthermore, federal debt interest costs are nearly as high as the $54.7 billion Ottawa will transfer to provinces for healthcare.
Provincial Breakdown
The study highlights significant variations in per-person interest costs across provinces. Newfoundland and Labrador faces the highest combined federal and provincial interest costs at $3,348 per person. Manitoba follows at $2,816 per person. In contrast, Alberta has the lowest combined costs at $1,845 per person. For Ontario and Quebec, debt interest costs amount to $37.1 billion and $22.1 billion respectively, which are nearly equivalent to what these provinces spend on K-12 education annually.
Expert Commentary
Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the report, emphasized the opportunity cost of high debt interest payments. “Interest must be paid on government debt, and the more money governments spend on interest payments the less money is available for the programs and services that matter to Canadians,” Fuss said. He added that large government debts impose real costs on Canadians, not only through potential future tax increases but also through current high interest charges that divert funds from other priorities.
Implications for Taxpayers
The report underscores that money paid to creditors as interest on government debt is not available for other important public services. Fuss noted that governments across Canada continue to accumulate large debts, which carry significant financial burdens for taxpayers. The Fraser Institute, which has offices in Vancouver, Calgary, Toronto, and Montreal, maintains its independence by not accepting government grants or contracts for research. Its mission is to study and communicate the effects of government policies on the well-being of Canadians.
