Business
It’s time for an honest conversation about the costs of new federal programs

From the Fraser Institute
By Jake Fuss and Grady Munro
The Trudeau government will table its next budget on April 16, and with the government’s push on the initial steps of national pharmacare, it’s important to remember there’s a cost Canadians must pay for new and expanded government services.
In March, the Trudeau government and the NDP reached an agreement to introduce the first steps of a national pharmacare program that will initially cover diabetes drugs and contraceptives, but may eventually grow to cover far more. This marks the third major national social program introduced by the Trudeau government in recent years, accompanying the $10-a-day daycare and national dental care programs promised in Budget 2022.
These policies represent an approach by the federal government to expand its role in the funding and provision of social services—an approach which has support among Canadians. Polling data from 2022, which sought to understand Canadian views on new spending programs, revealed the majority of respondents supported $10-a-day daycare (69 per cent), pharmacare (79 per cent) and dental care (72 per cent)—when there were no costs attached.
The Trudeau government has chosen to fund these new programs primarily using debt. Through planned deficits and rising debt interest costs for the foreseeable future, Ottawa is shifting much of the burden of paying for today’s services onto future generations of Canadians. Put differently, the new services are not free, and must ultimately be paid for through higher taxes in the future because debt comes with costs.
It’s therefore informative to look at what happens to the popularity of these programs when the true costs are communicated to Canadians. Polling data clearly shows these new programs lose considerable support when linked to a direct cost in the form of an increase in the federal goods and services tax (GST). Indeed, support for government-funded pharmacare, dental care and daycare plummeted to well below 50 per cent of respondents if the services are paid for by increased taxes.
This is the key difference between Canada and countries such as Sweden or Denmark, which are often used as examples of countries that maintain expansive social services and income supports. These countries have gone much further than Canada regarding government provision of services, but have paid for it through corresponding tax increases applied to individuals and families today rather than through borrowed money. Moreover, the tax burden falls primarily on the middle class, which utilizes these services the most, as opposed to concentrating tax hikes on top income earners.
For example, Swedes earning more than US$62,000 per year face the country’s top marginal personal income tax rate of 52.3 per cent. In comparison, although Canada’s top marginal rate (53.5 per cent) is roughly the same level as Sweden’s, it doesn’t kick in until earnings of nearly US$177,000. Moreover, both Sweden and Denmark maintain a national sales tax rate of 25 per cent, while Canadians face sales taxes ranging from 5 per cent to 15 per cent (depending on the province). Simply put, the Nordic countries fund expansive government through high taxes on their citizens.
To put the cost of national dental care, day care and the first steps of pharmacare in context, an increase in the GST to 6 per cent from its current 5 per cent would be insufficient to pay for an estimated annual cost of at least $13 billion on these programs.
In recent years, the Trudeau government has introduced substantial social services without the corresponding tax increases required to pay for them. But increased federal spending will require higher taxes for families either today or in the future, and Canadians must remember this when deciding if they truly want these new programs.
Authors:
Business
It Took Trump To Get Canada Serious About Free Trade With Itself

From the Frontier Centre for Public Policy
By Lee Harding
Trump’s protectionism has jolted Canada into finally beginning to tear down interprovincial trade barriers
The threat of Donald Trump’s tariffs and the potential collapse of North American free trade have prompted Canada to look inward. With international trade under pressure, the country is—at last—taking meaningful steps to improve trade within its borders.
Canada’s Constitution gives provinces control over many key economic levers. While Ottawa manages international trade, the provinces regulate licensing, certification and procurement rules. These fragmented regulations have long acted as internal trade barriers, forcing companies and professionals to navigate duplicate approval processes when operating across provincial lines.
These restrictions increase costs, delay projects and limit job opportunities for businesses and workers. For consumers, they mean higher prices and fewer choices. Economists estimate that these barriers hold back up to $200 billion of Canada’s economy annually, roughly eight per cent of the country’s GDP.
Ironically, it wasn’t until after Canada signed the North American Free Trade Agreement that it began to address domestic trade restrictions. In 1994, the first ministers signed the Agreement on Internal Trade (AIT), committing to equal treatment of bidders on provincial and municipal contracts. Subsequent regional agreements, such as Alberta and British Columbia’s Trade, Investment and Labour Mobility Agreement in 2007, and the New West Partnership that followed, expanded cooperation to include broader credential recognition and enforceable dispute resolution.
In 2017, the Canadian Free Trade Agreement (CFTA) replaced the AIT to streamline trade among provinces and territories. While more ambitious in scope, the CFTA’s effectiveness has been limited by a patchwork of exemptions and slow implementation.
Now, however, Trump’s protectionism has reignited momentum to fix the problem. In recent months, provincial and territorial labour market ministers met with their federal counterpart to strengthen the CFTA. Their goal: to remove longstanding barriers and unlock the full potential of Canada’s internal market.
According to a March 5 CFTA press release, five governments have agreed to eliminate 40 exemptions they previously claimed for themselves. A June 1 deadline has been set to produce an action plan for nationwide mutual recognition of professional credentials. Ministers are also working on the mutual recognition of consumer goods, excluding food, so that if a product is approved for sale in one province, it can be sold anywhere in Canada without added red tape.
Ontario Premier Doug Ford has signalled that his province won’t wait for consensus. Ontario is dropping all its CFTA exemptions, allowing medical professionals to begin practising while awaiting registration with provincial regulators.
Ontario has partnered with Nova Scotia and New Brunswick to implement mutual recognition of goods, services and registered workers. These provinces have also enabled direct-to-consumer alcohol sales, letting individuals purchase alcohol directly from producers for personal consumption.
A joint CFTA statement says other provinces intend to follow suit, except Prince Edward Island and Newfoundland and Labrador.
These developments are long overdue. Confederation happened more than 150 years ago, and prohibition ended more than a century ago, yet Canadians still face barriers when trying to buy a bottle of wine from another province or find work across a provincial line.
Perhaps now, Canada will finally become the economic union it was always meant to be. Few would thank Donald Trump, but without his tariffs, this renewed urgency to break down internal trade barriers might never have emerged.
Lee Harding is a research fellow with the Frontier Centre for Public Policy.
2025 Federal Election
Carney’s budget is worse than Trudeau’s

Liberal Leader Mark Carney is planning to borrow more money than former prime minister Justin Trudeau.
That’s an odd plan for a former banker because the federal government is already spending more on debt interest payments than it spends on health-care transfers to the provinces.
Let’s take a deeper look at Carney’s plan.
Carney says that his government would “spend less, invest more.”
At first glance, that might sound better than the previous decade of massive deficits and increasing debt, but does that sound like a real change?
Because if you open a thesaurus, you’ll find that “spend” and “invest” are synonyms, they mean the same thing.
And Carney’s platform shows it. Carney plans to increase government spending by $130 billion. He plans to increase the federal debt by $225 billion over the next four years. That’s about $100 billion more than Trudeau was planning borrow over the same period, according to the most recent Fall Economic Statement.
Carney is planning to waste $5.6 billion more on debt interest charges than Trudeau. Interest charges already cost taxpayers more than $1 billion per week.
The platform claims that Carney will run a budget surplus in 2028, but that’s nonsense. Because once you include the $48 billion of spending in Carney’s “capital” budget, the tiny surplus disappears, and taxpayers are stuck with more debt.
And that’s despite planning to take even more money from Canadians in years ahead. Carney’s platform shows that his carbon tariff, another carbon tax on Canadians, will cost taxpayers $500 million.
The bottom line is that government spending, no matter what pile it is put into, is just government spending. And when the government spends too much, that means it must borrow more money, and taxpayers have to pay the interest payments on that irresponsible borrowing.
Canadians don’t even believe that Carney can follow through on his watered-down plan. A majority of Canadians are skeptical that Carney will balance the operational budget in three years, according to Leger polling.
All Carney’s plan means for Canadians is more borrowing and higher debt. And taxpayers can’t afford anymore debt.
When the Liberals were first elected the debt was $616 billion. It’s projected to reach almost $1.3 trillion by the end of the year, that means the debt has more than doubled in the last decade.
Every single Canadian’s individual share of the federal debt averages about $30,000.
Interest charges on the debt are costing taxpayers $53.7 billion this year. That’s more than the government takes in GST from Canadians. That means every time you go to the grocery store, fill up your car with gas, or buy almost anything else, all that federal sales tax you pay isn’t being used for anything but paying for the government’s poor financial decisions.
Creative accounting is not the solution to get the government’s fiscal house in order. It’s spending cuts. And Carney even says this.
“The federal government has been spending too much,” said Carney. He then went on to acknowledge the huge spending growth of the government over the last decade and the ballooning of the federal bureaucracy. A serious plan to balance the budget and pay down debt includes cutting spending and slashing bureaucracy.
But the Conservatives aren’t off the hook here either. Conservative Leader Pierre Poilievre has said that he will balance the budget “as soon as possible,” but hasn’t told taxpayers when that is.
More debt today means higher taxes tomorrow. That’s because every dollar borrowed by the federal government must be paid back plus interest. Any party that says it wants to make life more affordable also needs a plan to start paying back the debt.
Taxpayers need a government that will commit to balancing the budget for real and start paying back debt, not one that is continuing to pile on debt and waste billions on interest charges.
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