From the Fraser Institute

By Jake Fuss and Grady Munro

With a federal election on the horizon, it’s worth reflecting on the Trudeau government’s extraordinary fiscal legacy, which includes record-high levels of spending (even after excluding emergency COVID spending), an uninterrupted string of budget deficits, a near doubling of the federal debt from $1.1 trillion to $2.1 trillion, and sky-high federal debt interest payments, which will reach a projected $51.9 billion (more than all GST revenue) this fiscal year.

Clearly, the next federal government, whoever that may be, must get smarter about government spending. Fortunately, as noted in our new study  published by the Fraser Institute, there are many areas within the federal government to find savings.

For example, this fiscal year (2024/25) the government will spend a projected $3.5 billion through the Canada Infrastructure Bank (CIB). Established by the Trudeau government in 2017, the CIB is a federal Crown corporation tasked with investing and attracting investment in infrastructure projects across Canada. Despite approving “investments” totalling $13.2 billion (as of the fourth quarter of 2023-24), the CIB has demonstrated an alarming lack of progress. As of July 2024, only two (out of 76) CIB-funded projects had been completed—the purchase of 20 electric buses in Edmonton and the construction of two solar facilities in Calgary. Small wonder that a 2022 multi-partisan House of Commons committee report recommended the government abolish the CIB.

To find more savings, the government should look at its seven Regional Development Agencies (RDAs), which provide financial assistance (a.k.a. corporate welfare) to businesses in specific regions across the country. Total spending will reach a projected $1.5 billion this fiscal year. But research shows that corporate welfare does little to nothing to promote widespread economic growth but simply allows the government to pick winners and losers in the free market. And rather than using concrete objectives and results to justify their existence, the RDAs rely on vague platitudes such as “businesses are growing” and “communities are developing economically.”

The government should also eliminate its so-called “Strategic Innovation Fund,” which spends tax dollars (a projected $2.4 billion this fiscal year) to simply shift jobs and investment away from some firms and industries to firms and industries favoured by the government, with no net benefit for the overall economy. And “Global Innovation Clusters,” which incentivize firms to spend time and resources modifying their businesses to secure government grants (worth a projected $202.3 million this fiscal year) rather than developing new and improved goods and services.

Finally, there’s the Green Municipal Fund (GMF), which uses federal tax dollars (including a projected $530 million this fiscal year) to bankroll municipal projects that purportedly accelerate the transition to “net-zero” greenhouse gas (GHG) emissions. But several current projects (e.g. “climate-friendly” home tours, funding for climate advocacy groups in Ottawa) will not reduce GHG emissions in any measurable way. In other words, the GMF is spending taxpayer dollars on projects that make no progress towards the GMF’s stated goal.

In total, our study highlights eight areas where the federal government should cut spending, with potential savings totalling $10.7 billion this fiscal year alone. By cancelling these wasteful programs, the government could eliminate roughly one-quarter of the current budget deficit.

Until policymakers in Ottawa get serious about cutting wasteful spending, budget deficits will likely continue. Smaller and smarter government in Ottawa is both possible and necessary.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute

Premier Tim Houston says it’s time for Nova Scotia to develop its energy industry

In late January, Nova Scotia Premier Tim Houston announced that natural resources would become a major focus of his government, stating that it was time to, “We can’t expect Nova Scotia to prosper when we ban industry after industry after industry.”

It was announced that his government would look into fracking for natural gas, uranium mining, and lifting fossil fuel extraction moratoriums along the coast.

Atlantic Canada is poised to become the next major player in Canada’s energy expansion. With growing global demand for clean energy, a shift toward resource independence, and the looming threat of U.S. tariffs, provinces like Newfoundland and Labrador and Nova Scotia are taking bold steps to develop their energy sectors. Recent developments in liquefied natural gas (LNG), offshore oil, green hydrogen, and critical minerals are positioning the region as a crucial pillar of Canada’s energy future.

Donald Trump’s threats to impose tariffs on Canadian energy exports have forced Canada to reassess its reliance on the United States as its primary customer. This shift has already played out in Quebec, where the government is reconsidering its stance on LNG projects. Similarly, Atlantic Canada recognizes the need to diversify its energy exports to Europe and Asia. With vast offshore oil reserves and new LNG projects in the works, the region is set to capitalize on international markets.

Premier Houston has emphasized the importance of local resource development to secure the province’s economy. Though he has walked back on previous comments about revisiting the Georges Bank offshore drilling moratorium, his government is clearly focused on increasing natural resource production. The seafood industry, a vital component of the region’s economy, has expressed concerns about potential energy developments affecting fisheries, but a balance must be struck to ensure both industries thrive.

Newfoundland and Labrador Premier Andrew Furey has made it clear that offshore oil will continue to play a key role in the province’s economy for decades. Addressing industry leaders, Furey positioned Newfoundland as the future “energy capital of North America,” highlighting new offshore projects and hydrogen development. ExxonMobil’s $1.5 billion investment in offshore infrastructure underscores industry confidence in the region’s potential.

Despite dubious global forecasts suggesting oil demand will peak in the coming years, Newfoundland and Labrador believes its high-quality, low-emission crude will remain in demand, particularly in Europe and Asia. Additionally, the province is exploring hydrogen production, backed by federal incentives and private investment. Companies like World Energy GH2 are pushing forward with large-scale green hydrogen projects, despite local opposition from residents concerned about the environmental impact of wind farms.

As British Columbia emerges as an LNG powerhouse, Atlantic Canada is following suit. The region’s proximity to European markets gives it a significant advantage, particularly in light of geopolitical instability affecting global energy supplies. With European nations scrambling to secure reliable energy sources, Atlantic Canada’s LNG potential is more valuable than ever.

Much like British Columbia, where First Nations have played a central role in LNG expansion, Atlantic Canada has an opportunity to develop Indigenous-led energy projects. Federal tax incentives and emissions regulations will shape how LNG projects move forward, ensuring they align with Canada’s climate commitments while driving economic growth.

The combination of Trump’s tariffs, shifting global energy markets, and renewed provincial interest in resource development has created a perfect storm for Atlantic Canada’s energy sector. With strong government backing, significant private investment, and growing international demand, the region is well-positioned to become a major energy player.

As Canada navigates this new era of energy expansion, Atlantic Canada’s strategic location, resource wealth, and commitment to innovation make it a natural frontier for growth. Whether through LNG, offshore oil, hydrogen, or critical minerals, the region’s energy sector is set to thrive in the coming decades.