Shifting gears

Governments around the world face large budget deficits, some of which are structural. Addressing them will require significant fiscal and operational changes within governments. Some countries are undertaking radical cuts to spending to return to a path of fiscal sustainability. These efforts are reducing the footprint of government and altering some of the basic social benefits that citizens have been receiving from their governments for decades. Although Canadian governments are in the midst of stimulus spending and are posting high deficits, they do not face a short-term fiscal crisis on par with some European and US state governments. However, the impending demographic challenges and the structural nature of deficits in most provinces will require Canadian governments to ensure that they can continue to meet public expectations with respect to programming and services while keeping these affordable.