Buying Time or Buying Change?
New Brunswick, Nova Scotia and other Canadian provinces are increasing public debt to pay for public services on the promise of future earnings. Here's how to assess whether it's working.
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In January, at her annual State of the Province address, New Brunswick Premier Susan Holt laid out her province’s scorecard. It was a mixed result. Housing starts were at a record high, literacy was improving, but about one in four New Brunswickers didn’t have access to a family doctor or nurse practitioner.
Then, in March 2026, it was Finance Minister René Legacy’s turn. His 2026/27 budget speech told us the cost: a record $1.39 billion deficit budget and a provincial debt expected to increase over the next three years.
Considering these two presentations together is how citizens can evaluate whether the choices being made on our behalf are working. While I’m using New Brunswick as an example, the same approach to reading government announcements applies to any provincial agenda.
Eight provinces have now released their 2026-27 budgets, all of which carry large deficits. PEI and Newfoundland and Labrador have yet to release new budgets, but neither is likely to buck national trends.
The size of what governments are up against
Although the Strait of Hormuz dominates national headlines, one of the growing pressures on provincial budgets has been decades in the making.
The Atlantic Economic Council projects that the combined health expenditures of the Atlantic provinces could climb from $17 billion in 2023 to nearly $40 billion by 2046 – and those numbers assume governments will achieve a 20 per cent improvement in productivity and service delivery.
According to the Council’s April 2026 report, Key Forces Shaping the Future of Health Care Delivery, collectively, the four Atlantic provinces spent $19 billion on health-related costs in 2024-25, about 46 per cent of total provincial program spending.
The Council found that inflation – not population aging – drove more than 80 per cent of that expenditure growth between 2013 and 2023.
That begs the question: are governments using debt to fund a transformation, or are they just buying time?
Is the debt burden getting lighter or heavier?
The debt-to-GDP ratio, which is a measurement of the size of government’s net debt as a share of the overall economy, has become a key indicator of whether the financial risk provincial governments take is sustainable. It is one of the indicators credit rating agencies use to assess each province’s fiscal capacity.
Of the eight provinces that have released 2026/27 budgets, four of them received negative signals.
British Columbia has been downgraded twice in two years, most recently last week, when credit rating agency Fitch downgraded B.C. to AA- from AA+, which, along with Moody’s and Standard & Poor’s, assigned the province a negative outlook.
Nova Scotia’s long-term rating was cut a full notch by credit agency S&P to A+ from AA- in February 2026.
Ontario’s positive outlook was downgraded to stable in May 2025 due to tariff uncertainties and slower revenue growth, a soft warning.
Last week, Moody’s lowered New Brunswick’s baseline assessment, changing its outlook to negative, warning that deficits reduce the province’s capacity to absorb further negative budgetary pressures.
Lana Asaff, senior economist at the Atlantic Economic Council, says the concern is straightforward: rising debt costs crowd out everything else.
“As these debt servicing costs go up, that means governments have less money they can spend on the programs and services they want to deliver because they need to give more and more money to pay off that accumulation of debt.”
Is the economy actually expanding?
The debt-to-GDP ratio improves only when the economy is expanding. Rebekah Young, Scotiabank’s vice-president and head of inclusion and resilience economics, offers a useful frame: “At one level, GDP is a function of the hours people work, times the efficiency or productivity with which they work. You can add more people, or you can help them be more efficient by giving them more tools.”
The first test is population and labour force. Watch for increases in net migration, wages and labour force participation, the latter tracked monthly via Statistics Canada’s monthly Labour Force Survey.
In March 2026, New Brunswick’s unemployment rate was unchanged at 7 per cent, while the other three Atlantic provinces recorded slight changes: PEI rose by 0.3 per cent to 7.3 per cent, Nova Scotia fell by -0.6 per cent to 6.6 per cent and Newfoundland and Labrador rose by 0.1 per cent to 7.3 per cent. Overall, Canada’s unemployment rate was unchanged at 6.7 per cent.
The second test is productivity and private investment. According to the Atlantic Economic Council October 2025 report, Unlocking Atlantic Canada’s Potential for Prosperity, productivity improvements drove more than 85 per cent of real GDP per person growth in each Maritime province between 1997 and 2024.
However, fewer than 39 percent of Atlantic Canadian firms adopted an advanced or emerging technology in 2022, compared to over 47 percent nationally. Watch whether Atlantic Canadian private sector investment can close the gap with the rest of the country.
What to ask when the next budget drops
PEI and Newfoundland and Labrador still have their budgets to release. When they do, the deficit figures will lead every story, but the better examination will ask where each province’s government wants to go and how long it will take to get there.
Consider whether the debt-to-GDP ratio is projected to improve; if it isn’t, ask what the debt is funding: inflation or transformation?
Examine what assumptions governments are making about population and economic growth, and what specific quality of life outcomes are being tracked, such as access to doctors, housing, youth employment, and education.
Provincial governments have laid their bets, choosing to increase government debt to weather external storms. Holding governments to account for those choices is our responsibility as we search for solid ground amidst a world in flux.
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