04:23 PM EDT, 08/29/2024 (MT Newswires) -- Over at National Bank of Canada, Warren Lovely on Thursday noted the Parliamentary Budget Officer's Fiscal Sustainability Report (FSR) has been published.

Admittedly, Lovely said, this year's report identifies a bit less excess fiscal room at the federal level than in 2023. All the same, Lovely added, the new baseline implies Ottawa's budgetary masters could permanently lower taxes and/or increase spending by 1.5% of GDP without driving the federal debt burden higher over time. "In current dollars, that's equivalent to $46 billion a year! Inspired by the 'fun with numbers' school of thought, you could theoretically do a lot with $46 billion a year....putting this notional excess capacity into a current budgetary perspective."

"Let us be clear,", Lovely said, "We are NOT actively encouraging Ottawa to squander hard-won fiscal sustainability, at least not without a clear/unambiguous mandate from Canadians. But it certainly highlights the relative advantage Canada's sovereign possesses vs. many advanced nations."

From a fiscal sustainability perspective, the 'good news' didn't end there, according to Lovely. Collectively, he noted, Canada's sub-national government sector remains on a sustainable footing. Digger deeper, the PBO deems current policies sustainable in five of 10 provinces, Lovely said.

Then, Lovely also noted, there's the public pension system -- an essential piece of Canada's general government picture. He said: "If the long-term health of the Canada Pension Plan (CPP) is really your focus, the triennial actuarial report is surely required reading. But the PBO's FSR is informative too, where an already healthy outlook got a bit brighter (vs. 2023), as a higher rate of return more than offsets reduced net cash flow projections. None of the

alternative scenarios presented in the FSR upend the CPP's long term sustainability, the Quebec Pension Plan (QPP) assessed similarly."

"That," Lovely added, "stands in stark contrast to US Social Security. Conveniently, the Congressional Budget Office (CBO) just offered its own long-term outlook for Social Security, where trust fund depletion continues. The 'surprise factor' attached to CBO's latest findings? 0%. On US Social Security then, 'no news is bad news'. Sad but true."