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

New children’s book demonstrates how the everyday world is connected to natural resources

conflict / 7 hours ago

Hamas, Palestinians paraded dead babies coffins through streets before handover to Israel

Health / 8 hours ago

RFK Jr: There’s no medical justification for vaccinating one-day-old babies for Hepatitis B

Business

Worst kept secret—red tape strangling Canada’s economy

Published on February 22, 2025

Todayville

From the Fraser Institute

By Matthew Lau

In the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S.

According to a new Statistics Canada report, government regulation has grown over the years and it’s hurting Canada’s economy. The report, which uses a regulatory burden measure devised by KPMG and Transport Canada, shows government regulatory requirements increased 2.1 per cent annually from 2006 to 2021, with the effect of reducing the business sector’s GDP, employment, labour productivity and investment.

Specifically, the growth in regulation over these years cut business-sector investment by an estimated nine per cent and “reduced business start-ups and business dynamism,” cut GDP in the business sector by 1.7 percentage points, cut employment growth by 1.3 percentage points, and labour productivity by 0.4 percentage points.

While the report only covered regulatory growth through 2021, in the past four years an avalanche of new regulations has made the already existing problem of overregulation worse.

The Trudeau government in particular has intensified its regulatory assault on the extraction sector with a greenhouse gas emissions cap, new fuel regulations and new methane emissions regulations. In the last few years, federal diktats and expansions of bureaucratic control have swept the auto industry, child care, supermarkets and many other sectors.

Again, the negative results are evident. Over the past nine years, Canada’s cumulative real growth in per-person GDP (an indicator of incomes and living standards) has been a paltry 1.7 per cent and trending downward, compared to 18.6 per cent and trending upward in the United States. Put differently, if the Canadian economy had tracked with the U.S. economy over the past nine years, average incomes in Canada would be much higher today.

Also in the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S., and only about two-thirds as much new capital (on average) as workers in other developed countries.

Consequently, Canada is mired in an economic growth crisis—a fact that even the Trudeau government does not deny. “We have more work to do,” said Anita Anand, then-president of the Treasury Board, last August, “to examine the causes of low productivity levels.” The Statistics Canada report, if nothing else, confirms what economists and the business community already knew—the regulatory burden is much of the problem.

Of course, regulation is not the only factor hurting Canada’s economy. Higher federal carbon taxes, higher payroll taxes and higher top marginal income tax rates are also weakening Canada’s productivity, GDP, business investment and entrepreneurship.

Finally, while the Statistics Canada report shows significant economic costs of regulation, the authors note that their estimate of the effect of regulatory accumulation on GDP is “much smaller” than the effect estimated in an American study published several years ago in the Review of Economic Dynamics. In other words, the negative effects of regulation in Canada may be even higher than StatsCan suggests.

Whether Statistics Canada has underestimated the economic costs of regulation or not, one thing is clear: reducing regulation and reversing the policy course of recent years would help get Canada out of its current economic rut. The country is effectively in a recession even if, as a result of rapid population growth fuelled by record levels of immigration, the GDP statistics do not meet the technical definition of a recession.

With dismal GDP and business investment numbers, a turnaround—both in policy and outcomes—can’t come quickly enough for Canadians.

Matthew Lau

Adjunct Scholar, Fraser Institute

Business

New climate plan simply hides the costs to Canadians

Published on February 20, 2025

Todayville

From the Fraser Institute

By Kenneth P. Green

Mark Carney, who wants to be your next prime minister, recently released his plan for Canada’s climate policies through 2035. It’s a sprawling plan (climate plans always are), encompassing industrial and manufacturing emissions, vehicle emissions, building emissions, appliance emissions, cross-border emissions, more “green” energy, more “heat pumps” replacing HVAC, more electric vehicle (EV) subsidies, more subsidies to consumers, more subsidies to companies, and more charging stations for the EV revolution that does not seem to be happening. And while the plan seeks to eliminate the “consumer carbon tax” on “fuels, such as gasoline, natural gas, diesel, home heating oil, etc.” it’s basically Trudeau’s climate plans on steroids.

Consider this. Instead of paying the “consumer carbon tax” directly, under the Carney plan Canadians will pay more—but less visibly. The plan would “tighten” (i.e. raise) the carbon tax on “large industrial emitters” (you know, the people who make the stuff you buy) who will undoubtedly pass some or all of that cost to consumers. Second, the plan wants to force those same large emitters to somehow fund subsidy programs for consumer purchases to offset the losses to Canadians currently profiting from consumer carbon tax rebates. No doubt the costs of those subsidy programs will also be folded into the costs of the products that flow from Canada’s “large industrial emitters,” but the cause of rising prices will be less visible to the general public. And the plan wants more consumer home energy audits and retrofit programs, some of the most notoriously wasteful climate policies ever developed.

But the ironic icing on this plan’s climate cake is the desire to implement tariffs (excuse me, a “carbon border adjustment mechanism”) on U.S. products in association with “key stakeholders and international partners to ensure fairness for Canadian industries.” Yes, you read that right, the plan seeks to kick off a carbon-emission tariff war with the United States, not only for Canada’s trade, but to bring in European allies to pile on. And this, all while posturing in high dudgeon over Donald Trump’s plans to impose tariffs on Canadian products based on perceived injustices in the U.S./Canada trade relationship.

To recap, while grudgingly admitting that the “consumer carbon tax” is wildly unpopular, poorly designed and easily dispensable in Canada’s greenhouse gas reduction efforts, the Carney plan intends to double down on all of the economically damaging climate policies of the last 10 years.

But that doubling down will be more out of sight and out of mind to Canadians. Instead of directly seeing how they pay for Canada’s climate crusade, Canadians will see prices rise for goods and services as government stamps climate mandates on Canada’s largest manufacturers and producers, and those costs trickle down onto consumer pocketbooks.

In this regard, the plan is truly old school—historically, governments and bureaucrats preferred to hide their taxes inside of obscure regulations and programs invisible to the public. Canadians will also see prices rise as tariffs imposed on imported American goods (and potentially services) force American businesses to raise prices on goods that Canadians purchase.

The Carney climate plan is a return to the hidden European-style technocratic/bureaucratic/administrative mindset that has led Canada’s economy into record underperformance. Hopefully, whether Carney becomes our next prime minister or not, this plan becomes another dead letter pack of political promises.