Business
Spending sprees by governments across Canada help fuel inflation and high interest rates

From the Fraser Institute
By Jake Fuss and Grady Munro
While the prime minister and many premiers justified their high spending levels during the pandemic as merely a temporary development, the federal government and seven provincial governments still plan to run budget deficits this year
Earlier this year, premiers in Ontario, British Columbia, and Newfoundland and Labrador wrote letters to Tiff Macklem, Governor of the Bank of Canada, cautioning against further interest rate hikes, citing the potential negative effects on residents including homeowners with mortgages. But instead of blaming the central bank, Canadian premiers—and the prime minister—should stop their spending sprees, which help fuel inflation and increase interest rates.
Indeed, when governments increase spending, particularly when financed by debt, they add more money to the economy and can help fuel inflation. And high rates of government spending put pressure on the Bank of Canada to maintain interest rates at current levels, or even hike the rate further, to counteract inflation. According to a recent report from Scotiabank, government spending has contributed significantly to higher interest rates in Canada, accounting for an estimated 42 per cent of the increase in the Bank of Canada’s rate since the first quarter of 2022.
Yet the spending sprees continue.
While the prime minister and many premiers justified their high spending levels during the pandemic as merely a temporary development, the federal government and seven provincial governments still plan to run budget deficits this year. Government spending across the country remains at elevated levels or, in some cases, even increased beyond pandemic levels.
Ontario is a prime example. Provincial program spending (total spending minus interest costs) will reach an estimated $193.0 billion in 2023/24—$24.0 billion more than at the peak of COVID. Debt interest costs have also grown due to debt accumulation and rising interest rates.
Despite a considerable increase in revenue over recent years, the Ford government had planned for a $1.3 billion deficit in its spring budget. By November, the government increased spending again and quadrupled the projected deficit to $5.6 billion.
Similarly, British Columbia outlined plans in February to increase program spending and run a $4.2 billion deficit while adding $13.1 billion in debt to the books this year. Just over a half-year later, the B.C. government increased spending again and the deficit was revised to $5.6 billion with debt rising by $14.0 billion instead of $13.1 billion.
Prime Minister Trudeau and his government followed a similar path. According to the recent federal fiscal update, between 2024/25 and 2027/28, the government has increased projected spending by $30.7 billion more than previously forecasted.
According to projections, only two provinces (Alberta and New Brunswick) will run budget surpluses this year, but in Alberta this is largely due to elevated resource revenues stemming from high commodity prices rather than any significant spending restraint. If resource revenues declined to historical average levels, the Smith government in Alberta would likely run deficits similar to other provinces.
Simply put, the excessive spending habits of many premiers and the prime minister are a big reason why interest rates have climbed and inflation remains sticky.
If Canadian politicians want to help tame inflation and bring down interest rates, they should look in the mirror for solutions and show leadership. Complaining about elevated interest rates helps no one, but ensuring fiscal policy is rowing in the same direction as monetary policy would be a good start.
Authors:
2025 Federal Election
As PM Poilievre would cancel summer holidays for MP’s so Ottawa can finally get back to work

From Conservative Party Communications
In the first 100 days, a new Conservative government will pass 3 laws:
1. Affordability For a Change Act—cutting spending, income tax, sales tax off homes
2. Safety For a Change Act to lock up criminals
3. Bring Home Jobs Act—that repeals C-69, sets up 6 month permit turnarounds for new projects
No summer holiday til they pass!
Conservative Leader Pierre Poilievre announced today that as Prime Minister he will cancel the summer holiday for Ottawa politicians and introduce three pieces of legislation to make life affordable, stop crime, and unleash our economy to bring back powerful paycheques. Because change can’t wait.
A new Conservative government will kickstart the plan to undo the damage of the Lost Liberal Decade and restore the promise of Canada with a comprehensive legislative agenda to reverse the worst Trudeau laws and cut the cost of living, crack down on crime, and unleash the Canadian economy with ‘100 Days of Change.’ Parliament will not rise until all three bills are law and Canadians get the change they voted for.
“After three Liberal terms, Canadians want change now,” said Poilievre. “My plan for ‘100 Days of Change’ will deliver that change. A new Conservative government will immediately get to work, and we will not stop until we have delivered lower costs, safer streets, and bigger paycheques.”
The ’100 Days of Change’ will include three pieces of legislation:
The Affordability–For a Change Act
Will lower food prices, build more homes, and bring back affordability for Canadians by:
- Cutting income taxes by 15%. The average worker will keep an extra $900 each year, while dual-income families will keep $1,800 more annually.
- Axing the federal sales tax on new homes up to $1.3 million. Combined with a plan to incentivize cities to lower development charges, this will save homebuyers $100,000 on new homes.
- Axing the federal sales tax on new Canadian cars to protect auto workers’ jobs and save Canadians money, and challenge provinces to do the same.
- Axing the carbon tax in full. Repeal the entire carbon tax law, including the federal industrial carbon tax backstop, to restore our industrial base and take back control of our economy from the Americans.
- Scrapping Liberal fuel regulations and electricity taxes to lower the cost of heating, gas, and fuel.
- Letting working seniors earn up to $34,000 tax-free.
- Axing the escalator tax on alcohol and reset the excise duty rates to those in effect before the escalator was passed.
- Scrapping the plastics ban and ending the planned food packaging tax on fresh produce that will drive up grocery costs by up to 30%.
We will also:
- Identify 15% of federal buildings and lands to sell for housing in Canadian cities.
The Safe Streets–For a Change Act
Will end the Liberal violent crime wave by:
- Repealing all the Liberal laws that caused the violent crime wave, including catch-and-release Bill C-75, which lets rampant criminals go free within hours of their arrest.
- Introducing a “three strikes, you’re out” rule. After three serious offences, offenders will face mandatory minimum 10-year prison sentences with no bail, parole, house arrest, or probation.
- Imposing life sentences for fentanyl trafficking, illegal gun trafficking, and human trafficking. For too long, radical Liberals have let crime spiral out of control—Canada will no longer be a haven for criminals.
- Stopping auto theft, extortion, fraud, and arson with new minimum penalties, no house arrest, and a new more serious offence for organized theft.
- Give police the power to end tent cities.
- Bringing in tougher penalties and a new law to crack down on Intimate Partner Violence.
- Restoring consecutive sentences for multiple murderers, so the worst mass murderers are never let back on our streets.
The Bring Home Jobs–For a Change Act
This Act will be rocket fuel for our economy. We will unleash Canada’s vast resource wealth, bring back investment, and create powerful paycheques for workers so we can stand on our own feet and stand up to Trump from a position of strength, by:
- Repealing the Liberal ‘No Development Law’, C-69 and Bill C-48, lifting the cap on Canadian energy to get major projects built, unlock our resources, and start selling Canadian energy to the world again.
- Bringing in the Canada First Reinvestment Tax Cut to reward Canadians who reinvest their earnings back into our country, unlocking billions for home building, manufacturing, and tools, training and technology to boost productivity for Canadian workers.
- Creating a One-Stop-Shop to safely and rapidly approve resource projects, with one simple application and one environmental review within one year.
Poilievre will also:
- Call President Trump to end the damaging and unjustified tariffs and accelerate negotiations to replace CUSMA with a new deal on trade and security. We need certainty—not chaos, but Conservatives will never compromise on our sovereignty and security.
- Get Phase 2 of LNG Canada built to double the project’s natural gas production.
- Accelerate at least nine other projects currently snarled in Liberal red tape to get workers working and Canada building again.
“After the Lost Liberal Decade of rising costs and crime and a falling economy under America’s thumb, we cannot afford a fourth Liberal term,” said Poilievre. “We need real change, and that is what Conservatives will bring in the first 100 days of a new government. A new Conservative government will get to work on Day 1 and we won’t stop until we have delivered the change we promised, the change Canadians deserve, the change Canadians voted for.”
Automotive
Canadians’ Interest in Buying an EV Falls for Third Year in a Row

From Energy Now
Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index
Fewer Canadians are considering buying an electric vehicle, marking the third year in a row interest has dropped despite lower EV prices, a survey from AutoTrader shows.
Forty-two per cent of survey respondents say they’re considering an EV as their next vehicle, down from 46 per cent last year. In 2022, 68 per cent said they would consider buying an EV.
Meanwhile, 29 per cent of respondents say they would exclusively consider buying an EV — a significant drop from 40 per cent last year.
The report, which surveyed 1,801 people on the AutoTrader website, shows drivers are concerned about reduced government incentives, a lack of infrastructure and long-term costs despite falling prices.
Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index.
The survey, conducted between Feb. 13 and March 12, shows 68 per cent of non-EV owners say government incentives could influence their decision, while a little over half say incentives increase their confidence in buying an EV.
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