Business
The Strange Case of the Disappearing Public Accounts Report

A few days ago, Public Services and Procurement Canada tabled their audited consolidated financial statements of the Government of Canada for 2024. This is the official and complete report on the state of government finances. When I say “complete”, I mean the report’s half million words stretch across three volumes and total more than 1,300 pages.
Together, these volumes provide the most comprehensive and authoritative view of the federal government’s financial management and accountability for the fiscal year ending March 31, 2024. The tragedy is that no one has the time and energy needed to read and properly understand all that data. But the report identifies problems serious enough to deserve the attention of all Canadians – and especially policy makers.
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Following the approach of my Parliamentary Briefings series, I uploaded all three volumes of the report to my AI research assistant and asked for its thoughts. Each one of the observations that came out the other end is significant and, in calmer and more rational times, could easily have driven a week’s worth of news coverage. But given the craziness of the past few weeks and months, they’re being largely ignored.
With that in mind, I’ve made this special edition of the Parliamentary Briefings series fully accessible to all subscribers.
We begin with a summary of the purpose and scope of the three uploaded volumes of the Public Accounts of Canada for 2023–2024:
Volume I: Summary Report and Consolidated Financial Statements
- Purpose: Provides a high-level overview of the federal government’s financial performance, presenting the consolidated financial statements audited by the Auditor General. It serves as the primary accountability report.
- Scope:
- Audited financial statements.
- Analysis of revenues, expenses, and the accumulated deficit.
- Overview of assets, liabilities, and financial position.
- Discussion of economic context, risks, uncertainties, and ten-year comparative financial data.
Volume II: Details of Expenses and Revenues
- Purpose: Presents the financial operations of the government, broken down by ministries and agencies, for detailed accountability.
- Scope:
- Financial transactions segregated by ministry.
- Details of appropriations, revenues, and transfer payments.
- Summary tables on ministerial expenditures by type, object, and other dimensions.
- Appendices providing additional details on budgetary authorities and their sources.
Volume III: Additional Information and Analyses
- Purpose: Offers supplementary analyses and financial data beyond what is included in the first two volumes, focusing on revolving funds, professional services, and shared-cost programs.
- Scope:
- Financial statements of revolving funds (e.g., Passport Canada, Canadian Grain Commission).
- Expenditure details on acquisitions, transfer payments, and public debt charges.
- Analyses of federal-provincial shared-cost programs and claims against the Crown.
- Miscellaneous financial and operational data for broader transparency.
The Audit: Based on these documents, could you identify the most serious threats to Canada’s economic stability?
From the Public Accounts of Canada 2023–2024, several serious threats to Canada’s economic security can be identified. These threats emerge from the broader fiscal and economic analyses, contingent liabilities, and uncertainties highlighted in the documents.
1. Growing Public Debt and Debt Servicing Costs
- Observation: Canada’s public debt charges increased significantly in 2024, rising by 35.2% year-over-year, largely due to higher interest rates on debt. The total accumulated federal debt stood at $1.24 trillion, representing 42.1% of GDP, up from 41.1% the previous year.
- Risk: Rising debt servicing costs reduce fiscal space for critical public investments, making the economy vulnerable to future economic shocks or downturns.
2. Contingent Liabilities and Indigenous Claims
- Observation: The government recorded $16.4 billion in contingent liabilities related to Indigenous claims in 2024, reflecting ongoing efforts to address past injustices. These liabilities have been increasing at an average annual growth rate of 30% since 2016.
- Risk: The unpredictable nature and scale of these liabilities could create significant financial pressures if settlements or court decisions require substantial payouts.
3. Legacy Costs from the COVID-19 Pandemic
- Observation: The government recorded $4.7 billion in pandemic-related expenses for 2024, including write-offs for expired vaccines and provisions for unrecovered loans and benefits.
- Risk: These costs highlight vulnerabilities in emergency financial planning and expose the government to further financial risks if similar large-scale public health crises occur.
4. Economic Pressures from High Inflation and Interest Rates
- Observation: Inflation returned to the Bank of Canada’s 2% target by mid-2024 after 41 consecutive months above this threshold. However, elevated interest rates (peaking at 5%) contributed to a softening economy.
- Risk: Prolonged periods of high interest rates could suppress household and business spending, slowing economic growth and increasing the likelihood of a recession.
5. Climate Change and Environmental Commitments
- Observation: Significant spending is allocated to addressing climate change, with over $1 billion dedicated to environmental programs in 2024, including pollution pricing proceeds and clean energy initiatives.
- Risk: Canada’s reliance on resource-intensive industries and increasing costs to meet climate targets create economic vulnerabilities, particularly in regions heavily reliant on fossil fuels.
6. Global Economic Instability
- Observation: Global supply chain disruptions, energy price volatility, and geopolitical events (e.g., Russia’s invasion of Ukraine) significantly impacted Canada’s economy, with slower GDP growth (1.5% in 2023) and reduced trade.
- Risk: External shocks could exacerbate domestic economic challenges, such as rising import costs or reduced demand for Canadian exports.
7. Labor Market and Productivity Challenges
- Observation: While job creation remained positive, population growth outpaced employment gains, leading to an increase in the unemployment rate to 6.5% by October 2024. Productivity improvements have been uneven.
- Risk: Labor shortages in key sectors and declining workforce participation among certain demographics (e.g., aging population) could undermine economic resilience.
8. Dependence on Resource Revenues
- Observation: Volatile global commodity prices impacted nominal GDP growth, with gains slowing to 2.9% in 2023 after double-digit growth in prior years.
- Risk: Fluctuations in resource revenues leave Canada exposed to external shocks, particularly in provinces like Alberta and Saskatchewan, heavily reliant on oil and gas.
These challenges underscore the need for proactive fiscal and policy measures to safeguard economic stability, manage liabilities, and address emerging risks.
The Audit: What would you recommend as the three most urgent areas to address to avoid deepening the economic crisis?
1. Manage Rising Public Debt and Debt Servicing Costs
- Why It’s Urgent: The rapid increase in public debt charges (35.2% in 2024) is crowding out fiscal space for essential programs. The federal debt, at 42.1% of GDP, has become a significant liability, with interest rate fluctuations posing an ongoing threat.
- Recommendations:
- Introduce stricter fiscal discipline by prioritizing expenditures that yield long-term economic benefits (e.g., infrastructure, innovation).
- Develop a comprehensive debt reduction strategy to stabilize the debt-to-GDP ratio in the medium term.
- Explore debt refinancing strategies to lock in lower interest rates where feasible.
- Impact: Reducing debt servicing pressures will free up resources for critical investments and improve Canada’s fiscal resilience.
2. Mitigate the Economic Impact of Contingent Liabilities
- Why It’s Urgent: Contingent liabilities related to Indigenous claims have grown exponentially (30% annually since 2016), creating fiscal unpredictability and potentially overwhelming future budgets.
- Recommendations:
- Accelerate settlement negotiations to limit litigation costs and interest on outstanding claims.
- Establish a transparent reserve fund specifically for contingent liabilities, ensuring predictable future payouts.
- Increase collaboration with Indigenous communities to address systemic issues and prevent further claims.
- Impact: Resolving liabilities promptly will reduce fiscal uncertainty and demonstrate Canada’s commitment to reconciliation.
3. Address Structural Labor Market and Productivity Challenges
- Why It’s Urgent: Despite job creation, rising unemployment (6.5% in late 2024) and productivity stagnation threaten long-term economic growth. Labor shortages in critical sectors further exacerbate vulnerabilities.
- Recommendations:
- Expand skilled immigration programs to address labor shortages in healthcare, technology, and green industries.
- Increase investment in workforce retraining programs, particularly for sectors undergoing automation or transition due to climate policies.
- Promote workplace flexibility and childcare access to increase labor force participation, particularly among women and aging workers.
- Impact: Enhancing workforce productivity and participation will strengthen the economic foundation and support GDP growth.
Rationale for Prioritization
These areas represent the most immediate threats to economic security and fiscal stability. Addressing them proactively can reduce vulnerabilities and position Canada for sustainable growth.
The Audit: What are the most surprising and disturbing details in these documents?
1. Rapid Growth of Public Debt Charges
- Detail: Public debt charges increased by 35.2% year-over-year to $47.3 billion, representing one of the fastest-growing expense categories. This reflects a combination of higher interest rates and the significant size of Canada’s debt.
- Why Disturbing: Such a rapid increase in debt servicing costs could divert funds from essential public services and programs. It also signals limited fiscal flexibility in the event of future economic shocks.
2. Ballooning Contingent Liabilities
- Detail: The federal government recorded $16.4 billion in expenses for Indigenous contingent liabilities in 2024. This is part of an ongoing surge, with liabilities increasing by 30% annually since 2016.
- Why Disturbing: While reconciliation efforts are vital, the sheer scale and rapid growth of these liabilities are fiscally unsustainable without structural changes or dedicated funding mechanisms. The risk of further liabilities emerging adds to fiscal uncertainty.
3. Significant Write-offs and Provisions for Pandemic Programs
- Detail: The government wrote off $1.2 billion in expired COVID-19 vaccines and therapeutics and recorded $3.5 billion in provisions for unrecovered pandemic-era loans.
- Why Disturbing: These figures highlight inefficiencies in planning and administration during the pandemic response, leading to substantial financial losses. The scale of unrecovered funds also raises questions about accountability in the deployment of emergency programs.
4. Rising Unemployment Despite Job Creation
- Detail: While 475,000 jobs were created in 2023, the unemployment rate rose to 6.5% by late 2024 due to population growth outpacing employment gains.
- Why Surprising: Despite strong job creation, an inability to keep pace with population growth signals structural issues in labor force integration. This poses a risk to Canada’s economic competitiveness and social cohesion.
5. Declining Corporate Income Tax Revenues
- Detail: Corporate income tax revenues decreased by 0.7%, driven by reduced taxable income despite an overall increase in total revenues.
- Why Surprising: The decline in corporate tax revenues during a period of economic recovery raises concerns about potential tax avoidance, economic inequality, or over-reliance on other revenue streams, such as personal income taxes.
6. Substantial Environmental and Climate Spending
- Detail: Over $1 billion was allocated to environmental programs, including pollution pricing proceeds. However, the documents note Canada’s slow progress toward net-zero targets and risks to resource-dependent provinces.
- Why Disturbing: While necessary, this spending may be insufficient given the scale of the climate challenge. The mismatch between spending and measurable progress on climate goals risks long-term environmental and economic consequences.
7. Unanticipated Costs of Indigenous Reconciliation
- Detail: Beyond contingent liabilities, the government is facing unpredictable settlement costs due to increasing litigation and the complexity of claims. These have already exceeded $60 billion since 2016.
- Why Disturbing: The ongoing financial impact of these settlements reflects Canada’s historical neglect of Indigenous issues. Resolving these claims is essential, but the lack of predictability or dedicated funding highlights systemic shortcomings in reconciliation strategies.
8. Softened GDP Growth and Inflation Challenges
- Detail: Real GDP growth slowed to 1.5% in 2023, and inflation remained high throughout the year, only reaching the Bank of Canada’s 2% target by mid-2024.
- Why Disturbing: The prolonged inflationary period and sluggish growth signal a fragile recovery. These economic conditions could exacerbate income inequality and lead to further fiscal strain.
9. High Provisions for Unrecovered Loans
- Detail: Provisions of $3.5 billion were recorded for emergency loans provided during the pandemic. The government continues to face difficulties in recovering these funds.
- Why Disturbing: This provision raises serious questions about the efficiency of loan administration and the government’s ability to safeguard public funds during emergencies.
10. Heavy Dependence on Volatile Resource Revenues
- Detail: Nominal GDP growth slowed to 2.9% in 2023, largely due to easing commodity prices after a surge in 2022. Resource dependence remains a key economic vulnerability.
- Why Surprising: Despite global shifts toward renewable energy, Canada’s reliance on resource revenues remains high, posing long-term risks to economic diversification and stability.
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Business
Tariff-driven increase of U.S. manufacturing investment would face dearth of workers

From the Fraser Institute
Since 2015, the number of American manufacturing jobs has actually risen modestly. However, as a share of total U.S. employment, manufacturing has dropped from 30 per cent in the 1970s to around 8 per cent in 2024.
Donald Trump has long been convinced that the United States must revitalize its manufacturing sector, having—unwisely, in his view—allowed other countries to sell all manner of foreign-produced manufactured goods in the giant American market. As president, he’s moved quickly to shift the U.S. away from its previous embrace of liberal trade and open markets as cornerstones of its approach to international economic policy —wielding tariffs as his key policy instrument. Since taking office barely two months ago, President Trump has implemented a series of tariff hikes aimed at China and foreign producers of steel and aluminum—important categories of traded manufactured goods—and threatened to impose steep tariffs on most U.S. imports from Canada, Mexico and the European Union. In addition, he’s pledged to levy separate tariffs on imports of automobiles, semi-conductors, lumber, and pharmaceuticals, among other manufactured goods.
In the third week of March, the White House issued a flurry of news releases touting the administration’s commitment to “position the U.S. as a global superpower in manufacturing” and listing substantial new investments planned by multinational enterprises involved in manufacturing. Some of these appear to contemplate relocating manufacturing production in other jurisdictions to the U.S., while others promise new “greenfield” investments in a variety of manufacturing industries.
President Trump’s intense focus on manufacturing is shared by a large slice of America’s political class, spanning both of the main political parties. Yet American manufacturing has hardly withered away in the last few decades. The value of U.S. manufacturing “output” has continued to climb, reaching almost $3 trillion last year (equal to 10 per cent of total GDP). The U.S. still accounts for 15 per cent of global manufacturing production, measured in value-added terms. In fact, among the 10 largest manufacturing countries, it ranks second in manufacturing value-added on a per-capita basis. True, China has become the world’s biggest manufacturing country, representing about 30 per cent of global output. And the heavy reliance of Western economies on China in some segments of manufacturing does give rise to legitimate national security concerns. But the bulk of international trade in manufactured products does not involve goods or technologies that are particularly critical to national security, even if President Trump claims otherwise. Moreover, in the case of the U.S., a majority of two-way trade in manufacturing still takes place with other advanced Western economies (and Mexico).
In the U.S. political arena, much of the debate over manufacturing centres on jobs. And there’s no doubt that employment in the sector has fallen markedly over time, particularly from the early 1990s to the mid-2010s (see table below). Since 2015, the number of American manufacturing jobs has actually risen modestly. However, as a share of total U.S. employment, manufacturing has dropped from 30 per cent in the 1970s to around 8 per cent in 2024.
U.S. Manufacturing Employment, Select Years (000)* | |
---|---|
1990 | 17,395 |
2005 | 14,189 |
2010 | 14,444 |
2015 | 12,333 |
2022 | 12,889 |
2024 | 12,760 |
*December for each year shown. Source: U.S. Bureau of Labor Statistics |
Economists who have studied the trend conclude that the main factors behind the decline of manufacturing employment include continuous automation, significant gains in productivity across much of the sector, and shifts in aggregate demand and consumption away from goods and toward services. Trade policy has also played a part, notably China’s entry into the World Trade Organization (WTO) in 2001 and the subsequent dramatic expansion of its role in global manufacturing supply chains.
Contrary to what President Trump suggests, manufacturing’s shrinking place in the overall economy is not a uniquely American phenomenon. As Harvard economist Robert Lawrence recently observed “the employment share of manufacturing is declining in mature economies regardless of their overall industrial policy approaches. The trend is apparent both in economies that have adopted free-market policies… and in those with interventionist policies… All of the evidence points to deep and powerful forces that drive the long-term decline in manufacturing’s share of jobs and GDP as countries become richer.”
This brings us back to the president’s seeming determination to rapidly ramp up manufacturing investment and production as a core element of his “America First” program. An important issue overlooked by the administration is where to find the workers to staff a resurgent U.S. manufacturing sector. For while manufacturing has become a notably “capital-intensive” part of the U.S. economy, workers are still needed. And today, it’s hard to see where they will be found. This is especially true given the Trump administration’s well-advertised skepticism about the benefits of immigration.
According to the U.S. Bureau of Labor Statistics, the current unemployment rate across America’s manufacturing industries collectively stands at a record low 2.9 per cent, well below the economy-wide rate of 4.5 per cent. In a recent survey by the National Association of Manufacturers, almost 70 per cent of American manufacturers cited the inability to attract and retain qualified employees as the number one barrier to business growth. A cursory look at the leading industry trade journals confirms that skill and talent shortages remain persistent in many parts of U.S. manufacturing—and that shortages are destined to get worse amid the expected significant jump in manufacturing investment being sought by the Trump administration.
As often seems to be the case with Trump’s stated policy objectives, the math surrounding his manufacturing agenda doesn’t add up. Manufacturing in America is in far better shape than the president acknowledges. And a tariff-driven avalanche of manufacturing investment—should one occur—will soon find the sector reeling from an unprecedented human resource crisis.
Jock Finlayson
Senior Fellow, Fraser Institut
Automotive
Trump warns U.S. automakers: Do not raise prices in response to tariffs

MxM News
Quick Hit:
Former President Donald Trump warned automakers not to raise car prices in response to newly imposed tariffs, arguing that the move would ultimately benefit the industry by strengthening American manufacturing. However, automakers are signaling that price increases may be unavoidable.
Key Details:
- Trump told auto executives on a recent call that his administration would look unfavorably on price hikes due to tariffs.
- A 25% tariff on imported vehicles and parts is set to take effect on April 2, likely driving up costs for U.S. automakers.
- Industry analysts predict vehicle prices could rise 11% to 12% in response, despite Trump’s insistence that tariffs will benefit American manufacturing.
Diving Deeper:
In a conference call with leading automakers earlier this month, former President Donald Trump issued a stern warning: do not use his new tariffs as an excuse to raise car prices. While Trump presented the tariffs as a boon for American manufacturing, industry leaders remain unconvinced, arguing that the financial burden will inevitably lead to higher costs for consumers.
Trump’s administration is pressing ahead with a 25% tariff on all imported vehicles and parts, set to take effect on April 2. The move is aimed at reshaping trade dynamics in the auto industry, encouraging domestic manufacturing, and reversing what Trump calls the damaging effects of President Joe Biden’s electric vehicle mandates. Despite this, automakers say that rising costs on foreign parts—which many depend on—will leave them little choice but to pass expenses onto consumers.
“You’re going to see prices going down, but going to go down specifically because they’re going to buy what we’re doing, incentivizing companies to—and even countries—companies to come into America,” Trump stated at a recent event, reinforcing his stance that the tariffs will ultimately lower costs in the long run.
However, industry insiders are pushing back, warning that a rapid shift to domestic production is unrealistic. “Tariffs, at any level, cannot be offset or absorbed,” said Ray Scott, CEO of Lear, a major automotive parts supplier. His concern reflects broader anxieties within the industry, as automakers calculate the financial strain of the tariffs. Analysts at Morgan Stanley estimate that vehicle prices could increase between 11% and 12% in the coming months as the new tariffs take effect.
Automakers have been bracing for the fallout. Detroit’s major manufacturers and industry suppliers have voiced their concerns, emphasizing that transitioning supply chains and manufacturing operations back to the U.S. will take years. Meanwhile, auto retailers have stocked up on inventory, temporarily shielding consumers from price hikes. But once that supply runs low—likely by May—the full impact of the tariffs could hit.
Within the Trump administration, inflation remains a pressing concern, though Trump himself rarely discusses it publicly. His economic team is aware of the potential for tariffs to drive up costs, yet the administration’s stance remains firm: automakers must adapt without raising prices. It remains unclear, however, what actions Trump might take should automakers defy his warning.
The auto industry isn’t alone in its concerns. Executives across multiple sectors, from oil and gas to food manufacturing, have been lobbying against major tariffs, arguing that they will inevitably result in higher prices for American consumers. While Trump has largely dismissed these warnings, some analysts suggest that public dissatisfaction with rising costs played a key role in shaping the outcome of the 2024 election.
With the tariffs set to take effect in just weeks, automakers are left grappling with a difficult reality: absorb billions in new costs or risk the ire of a White House determined to remake America’s trade policies.
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