Fraser Institute News Release: Aging populations, higher taxes, increasing dependency on transfers from Ottawa put Atlantic Canada's provincial finances on shaky ground and vulnerable to fiscal shocks

HALIFAX, NS, April 8, 2025 /CNW/ - Public finances in all four Atlantic provinces are unsustainable and face several risks that threaten to make their fiscal situations even worse. So finds a new report published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"Across Canada most provinces have fiscal challenges but there are several reasons to be particularly worried about the fiscal future in the Atlantic region," said Ben Eisen, senior fellow at the Fraser Institute and co-author of Atlantic Canada's Precarious Public Finances, 2025 Update.

The study finds that the financial positions of the four Atlantic provinces are unsustainable, meaning they are forecasted to experience rising government debt as a share of the economy (debt-to-GDP ratios) in the coming years in the absence of policy changes. There are a number of unique economic and demographic factors that make the position of the Atlantic provinces more vulnerable than many other provinces. These include:

• Greater dependency on fiscal transfers from Ottawa: Prince Edward Island (38.7 per cent), New Brunswick (36.7 per cent) and Nova Scotia (33.4 per cent) have the highest shares of provincial revenue coming from the federal government nationwide, which makes their finances particularly vulnerable to any change in federal transfers policy.
• Aging population: The Atlantic provinces have the four highest shares of people 65 or older nationwide. With an average of roughly one-in-five people in the region being over 65, this puts upward pressure on health-care costs, and reduces labour force participation rates.
• High tax rates: The four Atlantic provinces have comparatively high tax rates in key areas including personal and corporate income taxes. The region's already high levels mean there is less room to raise tax rates in the future to meet immediate spending commitments.
• High interest rates: The current debt charges of Nova Scotia, Newfoundland and Labrador, and PEI (relative to their own-source revenue) are three of the five highest rates in the country

"Provincial governments across Canada are under fiscal pressure, but the financial situations of Atlantic provinces are particularly precarious," Eisen said.

"Policymakers in the region should keep these risks front of mind when developing fiscal plans for each of the Atlantic provinces in the years to come."

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, Montreal, and Halifax and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org

SOURCE The Fraser Institute

MEDIA CONTACT: Ben Eisen, Senior Fellow, Fraser Institute; To arrange media interviews or for more information, please contact: Drue MacPherson, Fraser Institute, [phone] Ext. 721, [e-mail]