Government spending by function, 2023
Released: 2024-11-27
Canadian General Government spending reaches a record high in 2023
Spending by the Canadian General Government (CGG)—that is, all levels of government including the federal, provincial, territorial, local and other government entities combined—reached its highest level in 2023 on a nominal basis. Excluding consumption of fixed capital, spending totalled $1,083.8 billion. This is an increase of 10.1% or $99.6 billion from 2022 and marks the second time spending has surpassed the trillion-dollar threshold, following record spending of $1,049.3 billion in 2020 in response to the COVID-19 pandemic.
The growth in 2023 was driven primarily by increased spending on social protection, which became the highest spending category by function (26.4% of total spending) for the CGG after being surpassed by health in 2022. However, growth in spending on general public services, on health, and on economic affairs were also key contributors in 2023.
Canadian General Government spending on social protection rises
Social protection includes programs such as Old Age Security, family benefits, disability payments and unemployment benefits, as well as initiatives to address social exclusion, which refers to the marginalization of individuals or groups from full participation in society.
Spending on social protection increased $49.3 billion or 20.8% from 2022 to $286.4 billion in 2023. This increase was mostly driven by social exclusion spending (+$36.2 billion or +101.8%), largely due to the First Nations Child and Family Services, Jordan's Principle and Trout Class Settlement Agreement ($23.3 billion), as well as an agreement by the federal government and the Government of Ontario to pay compensation for underpaid annuities under the Robinson-Huron Treaty ($10.0 billion).
The growth in social protection made it the largest expense category in 2023, surpassing health. In 2023, health spending increased by 5.6% or $13.5 billion to $253.2 billion. Combined, nearly half (49.8%) of all spending, by all levels of government, was represented by social protection (26.4%) and health (23.4%) in 2023.
Government interest payments continue to climb
General public services represented the third largest expense by function (14.8%), increasing $16.7 billion or 11.6% from 2022 to $160.5 billion in 2023. General public services include spending on items like executive and legislative branches of government, fiscal affairs, foreign aid, and public debt transactions.
Interest payments were the leading driver of the increase in spending on general public services, rising $17.1 billion in 2023, due to upward pressure on borrowing costs. This represents an annual increase of 22.3% for interest costs for the CGG. In 2023, interest payments accounted for 8.7% or $93.9 billion of total spending for all levels of government combined.
Excluding the federal government, interest payments for all provincial, territorial, and local governments combined increased by 13.0% or $5.8 billion in 2023. Higher public debt charges correspond to the Bank of Canada raising its benchmark interest rate from a low of 0.5% in March 2022 to a high of 5.0% in July 2023.
Chart 1
Share of consolidated Canadian General Government expenses, by function, 2008 to 2023
Health care accounts for over one-third of consolidated provincial, territorial, and local government spending
Spending on health at the consolidated provincial, territorial, and local government (PTLG) level grew 6.7% from 2022 to $242.6 billion in 2023. As a function of government spending, health was the largest expense for these governments, at over one-third (34.2%) of PTLG spending.
On a per capita basis, spending on health in the provinces in 2023 was highest in Newfoundland and Labrador ($7,823), followed by Nova Scotia ($6,783) and Manitoba ($6,573). The lowest health expenses per capita were in Ontario ($5,357), followed by Alberta ($5,556) and Prince Edward Island ($5,634).
Provincially, hospital services accounted for the largest proportion of health expenses in 2023, at just over two-thirds (67.6%), followed by outpatient services (16.1%) and medical products, appliances, and equipment (7.0%).
Chart 2
Share of consolidated provincial, territorial and local government expenses, by function, 2023
Federal spending on environmental protection increases
Environmental protection includes programs such as pollution abatement, waste management and protection of biodiversity and landscape. Federally, spending on environmental protection increased by $3.6 billion or 27.2% from 2022 to reach $16.7 billion in 2023. This followed a previous increase in 2022 of 41.1% or $3.8 billion to reach $13.1 billion. For both years, the main driver for increased spending in this category was pollution abatement.
Spending on pollution abatement has increased in recent years, primarily due to the rise in federal fuel charge revenues collected by the federal government. In 2019, the federal government implemented carbon pricing as a strategy to reduce greenhouse gas emissions. As federal fuel charge rates have gradually increased, associated remittances such as the Canada Carbon Rebate for individuals (formerly the Climate Action Incentive Payment) have also increased.
Ontario expands transit, while Alberta and Saskatchewan respond to natural disasters
The economic affairs category covers a range of programs including labour, transport, mining, manufacturing, energy, agriculture, and forestry. At the PTLG level, spending on economic affairs increased 5.6% or $4.1 billion in 2023. Transport spending in Ontario and agriculture spending in Alberta and Saskatchewan were the main drivers behind the increase.
In Ontario, spending on transport increased by $2.0 billion from 2022 to reach $15.8 billion in 2023. This increase was related to higher transfer payments for municipal transit projects. This growth represents an increase of 14.5% compared to 2022.
In 2023, Alberta and Saskatchewan experienced higher spending on economic affairs due to several adverse weather and climate events including drought, wildfires, and flooding. Alberta increased spending by 58.9% or $1.4 billion from 2022 to reach $3.8 billion in 2023, while Saskatchewan increased spending 32.3% or $0.6 billion to reach $2.6 billion. Expenses were higher due to increased indemnities paid by government insurance providers for both provinces for crop and livestock insurance as well as farm income support measures.
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Note to readers
The Canadian Classification of Functions of Government (CCOFOG) organizes government expenses into their main socioeconomic functions. This information provides an important picture of how governments spend money and the role governments play in delivering services.
The CCOFOG is a variant of the international functional expenditure classification that was developed by the Organisation for Economic Co-operation and Development. The CCOFOG replaced the Financial Management System that was used by Statistics Canada until 2008.
Currently, CCOFOG data excludes the acquisition of non-financial assets and the consumption of fixed capital. Future data improvements may include the functionalization of capital expenditures and the consumption of fixed capital.
The consolidated provincial, territorial and local government (PTLG) estimates are recommended for provincial and territorial comparisons since there can be different delineations of responsibilities between levels of government in different jurisdictions. These estimates combine provincial and territorial governments, health and social service institutions, universities and colleges, municipalities and other local public administrations, and school boards, while removing interparty transactions. The consolidated Canadian General Government estimates combine the federal government data with PTLG data. They exclude data for the Canada Pension Plan and the Quebec Pension Plan, and for federal and provincial government business enterprises.
The constitutional framework of PTLGs in the territories differs from the framework in the provinces. This leads to differences in the roles and financial authorities of government. These differences, as well as other geographic, demographic and socioeconomic dissimilarities between the North and the rest of Canada, give rise to significant differences in government finance statistics.
Since the size of PTLG estimates varies significantly across jurisdictions because of different population sizes, per capita data are used for expense comparisons. Per capita data are based on population estimates for Canada, the provinces and the territories, available in table 17-10-0009-01.
Annual data correspond to the end of the fiscal year closest to December 31. For example, data for the federal government fiscal year ending on March 31, 2024 (fiscal year 2023/2024) are reported as the 2023 reference year.
Products
The Canadian Classification of Functions of Government classification structure and descriptions are now available under the related information module of the Statistics Canada website.
Additional information can be found in the Latest Developments in the Canadian Economic Accounts (13-605-X). The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available. This publication has been updated with Chapter 9. Government Finance Statistics.
Contact information
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