Federal government poised to pile on more spending and debt

Next week, the Trudeau government will release its fall fiscal update, which, considering the sorry state of federal finances, should demonstrate a newfound approach to spending and borrowing. But don’t hold your breath.

Although the Trudeau government describes itself as “fiscally responsible,” in reality it has a track record of unrestrained spending and large budget deficits. And it’s overseen the five highest years (2018 to 2022) of per-person program spending (adjusted for inflation) in Canadian history. Even excluding COVID-related spending, 2020 and 2021 remain the two highest years of per-person spending on record.

The Trudeau government has also run deficits every year since it took office in 2015—according to forecasts, this year’s deficit will eclipse $40 billion even though COVID is in the rearview mirror. Consequently, federal debt will have increased nearly $900 billion since 2014/15, up to $1.9 trillion for 2023/24.

While the prime minister and Finance Minister Chrystia Freeland often downplay the level of debt accumulation by noting that Canada has the lowest net debt-to-GDP ratio among the G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States), this is misleading.

Net debt is calculated as total (gross) debt minus all financial assets, with the implicit assumption that those assets could be used to offset debt. However, the Canada and Quebec Pension Plans (CPP and QPP) are included in the financial assets used to calculate net debt in Canada. But because CPP/QPP assets are needed for existing and future retirees, in reality they can’t be used to offset government debt.

Therefore, a better measure is gross debt, which measures all liabilities that require future payment of interest and/or principal by the debtor to the creditor. Compared to 29 other advanced economies, including the G7 countries, Canada’s gross debt as a share of the economy ranks 20th—meaning Canada is among the most indebted countries.

Clearly, the Trudeau government has been anything but fiscally responsible. And the current levels of spending and borrowing impose real costs on Canadians.

For example, since 2014/15 federal government debt interest costs have nearly doubled—reaching an estimated $43.9 billion, or 9.6 per cent of total revenues, for 2023/24. This means roughly one in every 10 dollars Ottawa collects from Canadian taxpayers this year will go towards debt interest costs, rather than government services or tax relief.

In light of these fiscal realities, if the Trudeau government wants to move anywhere close to a balanced budget in the foreseeable future, it must take meaningful steps in the upcoming fall fiscal update to restrain spending growth.

Unfortunately, this is unlikely to happen.

In a recent report, the Parliamentary Budget Officer (PBO) estimated that, due to spending increases, the federal government will run a deficit of $46.5 billion for 2023/24—$6.4 billion more than the government’s budget projections in March.

The government will also likely include new spending in the upcoming fiscal update meant to address housing and affordability. And will likely soon table legislation on national pharmacare, which the PBO estimates will cost $11.2 billion in 2024/25 alone.

Finally, not only does this unprecedented level of spending rack up mountains of debt, according to Bank of Canada Governor Tiff Macklem, “government spending is starting to get in the way of getting inflation back to target.” In other words, more spending by the federal government to address affordability concerns could actually worsen the problem by keeping inflation (and interest rates) higher than would otherwise be the case, eroding the purchasing power of Canadians.

While Ottawa’s fiscal situation demands a fiscally responsible fall fiscal update, it’s likely we’ll see much of the same next week from the Trudeau government—more spending and more borrowing.

Authors:

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Junior Policy Analyst, Fraser Institute

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Salary costs in Prime Minister’s Office increase under Trudeau

Published on November 8, 2024

Todayville

From the Canadian Taxpayers Federation

By Ryan Thorpe

Like all areas of Ottawa’s ballooning bureaucracy, the cost and size of the Prime Minister’s Office has increased under the Trudeau government.

The inflation-adjusted cost of staffing the PMO has risen by 16 per cent under the watch of Prime Minister Justin Trudeau, according to access-to-information records obtained by the Canadian Taxpayers Federation.

Salary costs for the 103 staffers in the PMO came to $10.5 million in 2022-23. That figure does not represent overall compensation for PMO staff (including benefits), but rather base salary, according to the records.

Taxpayers are now on the hook for an additional $3.2 million in annual PMO salary costs over 2014-15, the last full year former prime minister Stephen Harper was in office.

“The cost of running the PMO has increased under Trudeau, but it’s a good bet most Canadians don’t think they’re getting any better performance from the prime minister,” said Franco Terrazzano, CTF Federal Director. “If Trudeau can’t find savings right under his nose, how can taxpayers trust him to cut the fat across government?”

The growth in PMO staff comes at a time when the Trudeau government has been ballooning the federal bureaucracy across the board.

Both the number and cost of the federal bureaucracy has exploded under Trudeau’s watch, according to other government records obtained by the CTF.

The number of federal bureaucrats increased by 42 per cent under Trudeau, with more than 108,000 new bureaucrats added to the government payroll.

Spending on federal bureaucrats hit a record high $67.4 billion in 2022-23, representing a 68 per cent increase since 2016.

The size of the federal c-suite has also expanded, with the number of executives increasing by 42 per cent under Trudeau.

The Trudeau government has handed out more than $1 billion in bonuses since 2015 and more than one million pay raises in the last four years.

Meanwhile, spending on consultants also reached a record high, with planned expenditures for 2023-24 sitting at $21.6 billion.

“Everywhere you look – the PMO, the federal c-suite, the bureaucracy – the cost and size of government is out of control,” Terrazzano said. “Trudeau must take air out of Ottawa’s ballooning bureaucracy and the place to start is his own office.”

PMO staff costs, government records obtained by the CTF

Fiscal year	Number of PMO staff	PMO salary costs
2014-15	94	$7,258,436
2015-16	74	$6,353,188
2016-17	84	$7,462,686
2017-18	99	$8,155,068
2018-19	100	$8,479,353
2019-20	90	$8,536,672
2020-21	99	$9,840,834
2021-22	94	$9,383,328
2022-23	103	$10,536,649
Total		$76,006,214

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Parks Canada right to back down from deer-cull boondoggle

Published on November 7, 2024

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From the Canadian Taxpayers Federation

By Carson Binda

Taxpayers are glad to see Parks Canada backing away from a $12-million deer cull on Sidney Island.

“Parks Canada’s plan to blow $12-million on a deer cull was ridiculous from day one,” said Carson Binda, B.C. Director for the Canadian Taxpayers Federation. “Parks Canada is right to cancel the project, but it’s worrying that it took them this much wasted money to figure it out.”

Parks Canada used so-called sharpshooters in helicopters, firing down on invasive fallow deer from above, during phase one of the cull which occurred last December. The so-called sharpshooters killed 84 deer, but only 63 were the correct species. The cost for phase one came in at $834,000, roughly $10,000 per deer.

Subsequently, Parks Canada erected fencing made of fish nets around the 12-square-kilometer Island to trap the deer, in anticipation for a second round of culls which were scheduled for Nov. 15.

Several animals became entangled in the netting, painfully thrashing themselves to death.

“Seeing deer thrashing to death because of bureaucratic incompetence is heartbreaking,” Binda said. “Parks Canada needs to explain how this happened and how much taxpayer cash was wasted on this project before the cancellation.”

Residents of Sidney Island and local hunters have been culling deer on the island for years, for free. Last fall 54 deer were culled by local hunters at no cost to the taxpayer.

“Local hunters filling their freezers at no cost to the taxpayer is obviously better than Parks Canada blowing millions of dollars to shoot the wrong deer from helicopters and leaving others to suffer in a net,” Binda said. “Hopefully the bureaucrats learn from their mistakes with this boondoggle.”