Each Canadian taxpayer owes $171,032 in federal, provincial, and local liabilities, according to Canadian Government Debt 2006, an updated report released today by The Fraser Institute.

Federal, provincial, and local governments have accumulated $798 billion in direct debt and more than $2.7 trillion in total government liabilities. Total liabilities include direct debt and programs that the government has committed to provide such as Old Age Security (OAS) and Medicare.

Net direct debt (liabilities minus assets) of all three levels of government fell from $832 billion to $798 billion between 1999/2000 and 2003/2004. However, this is a miniscule decline compared to the growth of Canada’s debt since 1990/1991 when our net debt stood at $533 billion.

“The decline in direct government debt is certainly a welcome development,” said Niels Veldhuis, senior research economist and co-author of the report. “However, the greatest concern for taxpayers is the growing unfunded liabilities associated with programs such as Old Age Security and Medicare.”

The report shows that the unfunded liabilities of Medicare, OAS, and the Canada Pension Plan (CPP) total $1.5 trillion and have increased by 19.7% during the five-year period covered in the study. The unfunded liability of Medicare alone grew by more than 28.5% between 1999 and 2003.

“Unless governments take action to address the growing unfunded liabilities of these programs, Canadians will be faced with reduced benefits and/or tax increases,” Veldhuis concluded.

Among Canadian provinces, Ontario carries the largest total liabilities per person at $92,490, followed by Quebec ($88,778) and Alberta ($87,630). Prince Edward Island has the smallest total government liabilities per capita at $64,841.

With the exception of Alberta, all provinces have total liabilities greater than 200% of annual gross domestic product (GDP). If the government of Quebec, which has the largest total liabilities compared to GDP, taxed 100% of all income, it would still take more than two and a half years to pay off all of its debt and program obligations.

When compared to other high income nations, Canada has the ninth-highest debt burden among 20 high-income countries. (The World Bank defines high-income nations as those with average incomes exceeding US$9,386).