Federal Spending

What the federal government raises and spends: over time, by type, by department, and by function

This page looks at federal government spending: how it has grown, what it is spent on, and which departments it flows through. It complements the Public Finances page (which compares Canada’s general-government finances with OECD peers) and the Government Employment page (the people behind the payroll line).

Most federal spending is not the government operating itself: it is transfers, money moved to people (benefits like the Canada Child Benefit and elderly benefits) and to other governments (health and social transfers to the provinces).

Revenue and spending

Measured against the size of the economy, federal revenue and spending have been relatively stable for decades. Typically they have been in the mid-to-high teens as a share of GDP. There have been sharp, temporary jumps during recessions. The gap between the two lines is the budget surplus (revenue above spending) or deficit (spending above revenue).

In dollar terms the federal government is far larger than it was in 1961, but so are the economy and the population. To account for these changes, the share-of-GDP view above is arguably a better measure of size. (These are nominal dollars, not adjusted for inflation.)

The budget balance, by era

The gap between revenue and spending is the federal budget balance. A surplus occurs when revenue exceeds spending; a deficit occurs when spending exceeds revenue. This chart shows the balance as a share of GDP, with the periods of successive federal governments shaded for reference. (Shares of GDP begin in 1981; fiscal years are matched to governments approximately.)

What the money is spent on

The federal government’s own statement of operations splits spending by economic type. Transfers dominate: grants (largely to other governments and organizations) plus social benefits (to individuals) are well over half of all spending. The cost of the federal workforce (salaries and benefits) is a comparatively modest share.

A more detailed breakdown, by standard object (the categories used in the Public Accounts of Canada), tells the same story for the most recent year: transfer payments are about three-fifths of spending, personnel about a seventh, and public debt charges about a tenth.

Debt charges as a share of spending

Over the long run, the share of the budget consumed by interest on the public debt has swung widely. Every dollar spent servicing past borrowing is a dollar unavailable for programs. This ratio climbed through the high interest rate years of the 1980s and early 1990s, peaking at more than a quarter of all federal spending around 1990–91. At that time, roughly 27 cents of every dollar went to interest. It then fell steadily as interest rates declined and the debt shrank relative to a growing economy. Interest rates reached historically low levels in the 2010s; as they rose again from 2022, the share began climbing back.

Which departments the money flows through

Ranking departments by spending gives a very different picture from ranking them by headcount (on the employment page). The Department of Finance and Employment and Social Development Canada lead by a wide margin. This is not because they are large employers, but because the major transfers of money run through them: health and social transfers to the provinces and public debt charges (Finance), and elderly and family benefits (ESDC).

Spending is also strikingly concentrated. The two largest departments alone account for about half of all federal spending, while most departments, even sizeable science and regulatory bodies like Environment and Climate Change Canada, each make up well under 1%. Use the dropdown to change the view: the 25 or 50 largest departments, or thematic groups. The percentage on each bar is that department’s share of total federal spending.

What governments spend on — by function

A functional view: what the public sector funds, classified by purpose. Social protection (pensions, benefits) and health are the largest functions, followed by general public services (a category that includes interest on the public debt) and education.

ImportantThis chart is all governments combined, not federal alone

A clean federal-only functional breakdown is not published: Statistics Canada’s functional series consolidates federal, provincial/territorial, and local government (and the Canada and Quebec Pension Plans) together. This matters because the federal government funds much of health and education indirectly, through transfers to the provinces that deliver those services. So read the chart below as “what Canadian governments collectively spend on,” not “what Ottawa spends on.”

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