Business
Federal government keeps violating self-imposed fiscal rules

From the Fraser Institute
By Jake Fuss and Grady Munro
By continually violating its own fiscal anchor, the Trudeau government has rendered the rule meaningless and abandoned the discipline it’s meant to impose.
Last week, after tabling the Trudeau government’s fall fiscal update, which includes evermore spending and borrowing, Finance Minister Chrystia Freeland called it a “responsible fiscal plan.” Upon closer scrutiny, however, the finance minister has once again abandoned her self-imposed fiscal rules and continues to spend, borrow and tax at unsustainable levels.
Fiscal rules, also known as “fiscal anchors,” help guide policy on government spending, taxes and borrowing. They’re supposed to prevent a deterioration in government finances, with an eye on ensuring debt is sustainable for future generations.
After taking office in 2015, the Trudeau government announced its fiscal anchor—balance the budget by fiscal year 2019-20. When the government quickly realized it would not achieve this goal, it dropped a new fiscal anchor—reduce Canada’s debt-to-GDP ratio, a common measure of a country’s ability to pay back its debt. However, the 2019 fall fiscal update revealed the government had violated its new fiscal anchor before the pandemic, as debt-to-GDP ticked up slightly from 30.8 to 31.0 per cent. In other words, federal debt grew slightly faster than the Canadian economy.
Then the government spent and borrowed hundreds of billions during COVID, driving debt-to-GDP up to 47.2 per cent in 2020-21. Afterwards, as the economy rebounded, the ratio levelled off and stabilized around 42 per cent in 2022-23.
Last week, Minister Freeland indicated the government will violate its own fiscal anchor at least two more times—debt-to-GDP will increase to 42.4 per cent in 2023-24 then climb higher in 2024-25. Again, federal debt is growing faster than the Canadian economy.
By continually violating its own fiscal anchor, the Trudeau government has rendered the rule meaningless and abandoned the discipline it’s meant to impose. There’s little direction for federal finances and almost nothing to ensure the government is disciplined with spending and debt growth. In such a scenario, politics—not responsible fiscal principles—governs decisions over the public purse.
So, what are the consequences to this wholly undisciplined approach to fiscal policy?
All else equal, a rising debt-to-GDP ratio means that debt interest costs will rise relative to the size of the economy. Spending on rising debt interest costs will divert money away from government programs and/or crowd out any fiscal room for tax relief for Canadian families.
And debt interest costs are rising rapidly. In 2020/21, when interest rates were at historic lows, the federal government spent $20.4 billion on debt interest. This year, interest costs will reach a projected $46.5 billion, more than double what they were three years ago. And will hit a projected $60.7 billion by 2028/29—double what the government plans to spend on employment insurance benefits that year.
Finally, according to last week’s fiscal update, debt-to-GDP will begin to decline after 2024/25, but this should be taken with a huge grain of salt since this government has consistently increased spending and debt beyond its original projections. And there’s nothing preventing the government from scrapping these commitments like they have with all their other fiscal anchors. Given the government’s clear preference for spending financed by borrowing, our debt-to-GDP ratio will likely continue to grow.
Unfortunately, there are few signs the Trudeau government will transform into a responsible steward of public finances and take meaningful steps to control debt and debt interest costs. And of course, Canadian taxpayers will pay the price.
Authors:
2025 Federal Election
Carney’s budget means more debt than Trudeau’s

The Canadian Taxpayers Federation is criticizing Liberal Party Leader Mark Carney’s budget plan for adding another $225 billion to the debt.
“Carney plans to borrow even more money than the Trudeau government planned to borrow,” said Franco Terrazzano, CTF Federal Director. “Carney claims he’s not like Trudeau and when it comes to the debt, here’s the truth: Carney’s plan is billions of dollars worse than Trudeau’s plan.”
Today, Carney released the Liberal Party’s “fiscal and costing plan.” Carney’s plan projects the debt to increase consistently.
Here is the breakdown of Carney’s annual budget deficits:
- 2025-26: $62 billion
- 2026-27: $60 billion
- 2027-28: $55 billion
- 2028-29: $48 billion
Over the next four years, Carney plans to add an extra $225 billion to the debt. For comparison, the Trudeau government planned on increasing the debt by $131 billion over those years, according to the most recent Fall Economic Statement.
Carney’s additional debt means he will waste an extra $5.6 billion on debt interest charges over the next four years. Debt interest charges already cost taxpayers $54 billion every year – more than $1 billion every week.
“Carney’s debt binge means he will waste $1 billion more every year on debt interest charges,” Terrazzano said. “Carney’s plan isn’t credible and it’s even more irresponsible than the Trudeau plan.
“After years of runaway spending Canadians need a government that will cut spending and stop wasting so much money on debt interest charges.”
Business
Canada Urgently Needs A Watchdog For Government Waste

From the Frontier Centre for Public Policy
By Ian Madsen
From overstaffed departments to subsidy giveaways, Canadians are paying a high price for government excess
Not all the Trump administration’s policies are dubious. One is very good, in theory at least: the Department of Government Efficiency. While that term could be an oxymoron, like ‘political wisdom,’ if DOGE is useful, so may be a Canadian version.
DOGE aims to identify wasteful, duplicative, unnecessary or destructive government programs and replace outdated data systems. It also seeks to lower overall costs and ensure mechanisms are in place to evaluate proposed programs for effectiveness and value for money. This can, and usually does, involve eliminating some departments and, eventually, thousands of jobs. Some new roles within DOGE may need to become permanent.
The goal in the U.S. is to lower annual operating costs and ensure that the growth in government spending is lower than in revenues. Washington’s spending has exploded in recent years. The U.S. federal deficit exceeds six per cent of gross domestic product. According to the U.S. Treasury Department, annual debt service cost is escalating unsustainably.
Canada’s latest budget deficit of $61.9 billion in fiscal 2023–24 is about two per cent of GDP, which seems minor compared to our neighbour. However, it adds to the federal debt of $1.236 trillion, about 41 per cent of our approximate $3 trillion GDP. Ottawa’s public accounts show that expenses are 17.8 per cent of GDP, up from about 14 per cent just eight years ago. Interest on the escalating debt were 10.2 per cent of revenues in the most recent fiscal year, up from just five per cent a mere two years ago.
The Canadian Taxpayers Federation (CTF) continually identifies dubious or frivolous spending and outright waste or extravagance: “$30 billion in subsidies to multinational corporations like Honda, Volkswagen, Stellantis and Northvolt. Federal corporate subsidies totalled $11.2 billion in 2022 alone. Shutting down the federal government’s seven regional development agencies would save taxpayers an estimated $1.5 billion annually.”
The CTF also noted that Ottawa hired 108,000 more staff in the past eight years at an average annual cost of over $125,000. Hiring in line with population growth would have added only 35,500, saving about $9 billion annually. The scale of waste is staggering. Canada Post, the CBC and Via Rail lose, in total, over $5 billion a year. For reference, $1 billion would buy Toyota RAV4s for over 25,600 families.
Ottawa also duplicates provincial government functions, intruding on their constitutional authority. Shifting those programs to the provinces, in health, education, environment and welfare, could save many more billions of dollars per year. Bad infrastructure decisions lead to failures such as the $33.4 billion squandered on what should have been a relatively inexpensive expansion of the Trans Mountain pipeline—a case where hiring better staff could have saved money. Terrible federal IT systems, exemplified by the $4 billion Phoenix payroll horror, are another failure. The Green Slush Fund misallocated nearly $900 million.
Ominously, the fast-growing Old Age Supplement and Guaranteed Income Security programs are unfunded, unlike the Canada Pension Plan. Their costs are already roughly equal to the deficit and could become unsustainable.
Canada is sleepwalking toward financial perdition. A Canadian version of DOGE—Canada Accountability, Efficiency and Transparency Team, or CAETT—is vital. The Auditor General Office admirably identifies waste and bad performance, but is not proactive, nor does it have enforcement powers. There is currently no mechanism to evaluate or end unnecessary programs to ensure Canadians will have a prosperous and secure future. CAETT could fill that role.
Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy.
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