Federal government’s fiscal record—one for the history books

Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war.

The Trudeau government tabled its 2024 budget earlier this month and the contents of the fiscal plan laid bare the alarming state of federal finances. Both spending and debt per person are at or near record highs and prospects for the future don’t appear any brighter.

In the budget, the Trudeau government outlined plans for federal finances over the next five years. Annual program spending (total spending minus debt interest costs) will reach a projected $483. billion in 2024/25, $498.7 billion in 2025/26, and continue growing in the years following. By 2028/29 the government plans to spend $542.0 billion on programs—an 18.4 per cent increase from current levels.

This is not a new or surprising development for federal finances. Since taking office in 2015, the Trudeau government has shown a proclivity to spend at nearly every turn. Prime Minister Trudeau has already recorded the five highest levels of federal program spending per person (adjusted for inflation) in Canadian history from 2018 to 2022. Projections for spending in the 2024 budget assert the prime minister is now on track to have the eight highest years of per-person spending on record by the end of the 2025/26 fiscal year.

Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war. It’s also about 28.0 per cent higher than the full final year of Stephen Harper’s time as prime minister, meaning the size of the federal government has expanded by more than one quarter in a decade.

The government has chosen to borrow substantial sums of money to fund a lot of this marked growth in spending. Federal debt under the Trudeau government has risen before, during and after COVID regardless of whether the economy is performing relatively well or comparatively poor. Between 2015 and 2024, Ottawa is expected to run 10 consecutive deficits, with total gross debt set to reach $2.1 trillion within the next 12 months.

The scale of recent debt accumulation is eye-popping even after accounting for a growing population and the relatively high inflation of the past two years. By the end of the current fiscal year, each Canadian will be burdened with $12,769 more in total federal debt (adjusted for inflation) than they were in 2014/15.

You can attribute some of this increase in borrowing to the effects of COVID, but debt had already grown by $2,954 per person from 2014 to 2019—before the pandemic. Moreover, budget estimates show gross debt per person (adjusted for inflation) is expected to rise by more than $2,500 by 2028/29.

As with spending, the Trudeau government is on track to record the six highest years of federal debt per-person (adjusted for inflation) in Canadian history between 2020/21 and the end of its term next autumn. Why should Canadians care about this record debt?

Simply put, rising debt leads to higher interest payments that current and future generations of taxpayers must pay—leaving less money for important priorities such as health care and social services. Moreover, all this spending and debt hasn’t helped improve living standards for Canadians. Canada’s GDP per person—a broad measure of incomes—was lower at the end of 2023 than it was nearly a decade ago in 2014.

The Trudeau government’s track record with federal finances is one for the history books. Ottawa’s spending continues to be at near-record levels and Canadians have never been burdened with more debt. Those aren’t the type of records we should strive to achieve.

Authors:

Jake Fuss and Grady Munro

Up Next

Alberta threatens to fight Trudeau government restrictions on Canada’s plastics industry

Don't Miss

“The Numbers Favour Our Side”

Todayville

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Michigan could be a winner as companies pull back from EVs

Business / 6 hours ago

Deportations causing delays in US construction industry

Crime / 6 hours ago

Canadian teacher showed Charlie Kirk assassination video to young students, said he deserved to die

Business

Carney government’s housing GST rebate doesn’t go far enough

Published on September 15, 2025

Todayville

From the Fraser Institute

By Austin Thompson

While there are many reasons for Canada’s housing affordability crisis, taxes on new homes—including the federal Goods and Services Tax (GST)—remain a major culprit. The Carney government is currently advancing legislation that would rebate GST on some new home purchases, but only for a narrow slice of the market, falling short of what’s needed to improve affordability. A broader GST rebate, extending to more homebuyers and more new homes, would cost Ottawa more, but it would likely deliver better results than the billions the Carney government plans to spend on other housing-related programs.

Today, Ottawa already offers some GST relief for new housing: partial rebates for homes under $450,000, full rebates for small-scale rental units (e.g. condos, townhomes, duplexes) valued under $450,000, and a full rebate for large-scale rental buildings (with no price cap). Rebates can lower costs for homebuyers and encourage more homebuilding. However, at today’s high prices, these rebate programs mean most new homes, and many small-scale rental projects, remain burdened by federal GST.

The Carney government’s new proposal would offer a full GST rebate for new homes—but only for first-time homebuyers purchasing a primary residence at under $1 million (a partial rebate would be available for homes up to $1.5 million). Any tax cut on new housing is welcome, but these criteria are arbitrary and will limit the policy’s impact.

Firstly, by restricting the new GST rebate to first-time buyers, the government ignores how housing markets work. If a retired couple downsizes into a new condo, or a growing family upgrades to a bigger house, they typically free up their previous home for someone else to buy or rent. It doesn’t matter whether the new home is purchased by a first-time buyer—all buyers can benefit when a new home appears on the market.

Secondly, by limiting the GST rebate to primary residences, the government won’t reduce the existing tax burden on rental properties—recall, many small-scale projects still face the full GST burden. Extending the rebate to include rental properties would reduce costs, unlock more construction and expand options for renters.

Thirdly, because the proposed GST rebate only applies in-full to homes under $1 million, it will have little effect in Canada’s most expensive cities. For example, in the first half of 2025, 31.8 per cent of new homes sold in Toronto and 27.4 per cent in Vancouver exceeded $1 million. Taxing these homes discourages homebuilding where it’s most needed.

Altogether, these restrictions mean the Carney proposal would help very few Canadians. According to the Parliamentary Budget Officer, of the 237,324 housing units projected to be completed in 2026—the first full year of the proposed GST rebate program—only 12,903 (5.4 per cent) would qualify for the new rebate. With such limited coverage, the policy is unlikely to spur much new housing or improve affordability.

The proposed GST rebate will cost a projected $390 million per year. However, if the Carney government went further and expanded the rebate to cover all new homes under $1.3 million, it would cost about $2 billion. That’s a big price tag, especially given Ottawa’s strained finances, but it would do much more to improve housing affordability.

Instead, the Carney government plans to spend $3 billion annually on “Build Canada Homes”—a misguided federal entity set to compete with private builders for scarce construction resources. The government has earmarked another $1.5 billion per year to subsidize municipal fees on new housing projects—an approach that merely shift costs from city halls to Ottawa. A broader GST rebate would likely be a more effective, lower-risk alternative to these programs.

Finally, it’s important to note that exempting new homes from GST is not a slam dunk. GST is one of the more efficient ways for the federal government to raise revenue, since it doesn’t discourage work or investment as much as other taxes. GST rebates mean the government may increase more economically harmful taxes to recoup the lost revenue. Still, tax relief is a better way to increase housing affordability than the Carney government’s expensive spending programs. In fact, the government should also reform other federal taxes on housing-related capital gains and rental income to help encourage more homebuilding.

The Carney government’s proposed GST rebate is a step in the right direction, but it’s too narrow to meaningfully boost supply or ease affordability. If Ottawa is prepared to spend billions on questionable programs such as “Build Canada Homes,” it should first consider a more expansive GST rebate on new home purchases, which would likely do more to help Canadian homebuyers.

Business

Upcoming federal budget likely to increase—not reduce—policy uncertainty

Published on September 12, 2025

Todayville

From the Fraser Institute

By Tegan Hill and Grady Munro

The government is opening the door to cronyism, favouritism and potentially outright corruption

In the midst of budget consultations, the Carney government hopes its upcoming fall budget will provide “certainty” to investors. While Canada desperately needs to attract more investment, the government’s plan thus far may actually make Canada less attractive to investors.

Canada faces serious economic challenges. In recent years, the economy (measured on an inflation-adjusted per-person basis) has grown at its slowest rate since the Great Depression. And living standards have hardly improved over the last decade.

At the heart of this economic stagnation is a collapse in business investment, which is necessary to equip Canadian workers with the tools and technology to produce more and provide higher quality goods and services. Indeed, from 2014 to 2022, inflation-adjusted business investment (excluding residential construction) per worker in Canada declined (on average) by 2.3 per cent annually. For perspective, business investment per worker increased (on average) by 2.8 per cent annually from 2000 to 2014.

While there are many factors that contribute to this decline, uncertainty around government policy and regulation is certainly one. For example, investors surveyed in both the mining and energy sectors consistently highlight policy and regulatory uncertainty as a key factor that deters investment. And investors indicate that uncertainty on regulations is higher in Canadian provinces than in U.S. states, which can lead to future declines in economic growth and employment. Given this, the Carney government is right to try and provide greater certainty for investors.

But the upcoming federal budget will likely do the exact opposite.

According to Liberal MPs involved in the budget consultation process, the budget will expand on themes laid out in the recently-passed Building Canada Act (a.k.a. Bill C-5), while also putting new rules into place that signal where the government wants investment to be focused.

This is the wrong approach. Bill C-5 is intended to help improve regulatory certainty by speeding up the approval process for projects that cabinet deems to be in the “national interest” while also allowing cabinet to override existing laws, regulations and guidelines to facilitate such projects. In other words, the legislation gives cabinet the power to pick winners and losers based on vague criteria and priorities rather than reducing the regulatory burden for all businesses.

Put simply, the government is opening the door to cronyism, favouritism and potentially outright corruption. This won’t improve certainty; it will instead introduce further ambiguity into the system and make Canada even less attractive to investment.

In addition to the regulatory side, the budget will likely deter investment by projecting massive deficits in the coming years and adding considerably to federal debt. In fact, based on the government’s election platform, the government planned to run deficits totalling $224.8 billion over the next four years—and that’s before the government pledged tens of billions more in additional defence spending.

A growing debt burden can deter investment in two ways. First, when governments run deficits they increase demand for borrowing by competing with the private sector for resources. This can raise interest rates for the government and private sector alike, which lowers the amount of private investment into the economy. Second, a rising debt burden raises the risk that governments will need to increase taxes in the future to pay off debt or finance their growing interest payments. The threat of higher taxes, which would reduce returns on investment, can deter businesses from investing in Canada today.

Much is riding on the Carney government’s upcoming budget, which will set the tone for federal policy over the coming years. To attract greater investment and help address Canada’s economic challenges, the government should provide greater certainty for businesses. That means reining in spending, massive deficits and reducing the regulatory burden for all businesses—not more of the same.