Fiscal Sustainability and Diverging Fortunes in Atlantic Canada

Abstract

Aging populations create significant economic and fiscal challenges for many Canadian provinces. But these pressures will be larger for some regions than others, and the outlook for Atlantic Canada may be particularly concerning. Using a detailed model of provincial budgets combined with the latest fiscal data, this paper quantifies the gap between program expenditures and revenues that each province will face in the coming decades, with a focus on Atlantic Canada. I find a notable difference between Nova Scotia and Prince Edward Island, which have a relatively favourable outlook, and New Brunswick and Newfoundland and Labrador, which do not. I conclude by exploring some fiscal policy reforms, both at the federal and provincial levels, to address these challenges and to help ensure long-run sustainable finances.