The problem with deficits and debt

This fiscal year (2024/25), the federal government and eight out of 10 provinces project a budget deficit, meaning they’re spending more than collecting in revenues. Unfortunately, this trend isn’t new. Many Canadian governments—including the federal government—have routinely ran deficits over the last decade.

But why should Canadians care? If you listen to some politicians (and even some economists), they say deficits—and the debt they produce—are no big deal. But in reality, the consequences of government debt are real and land squarely on everyday Canadians.

Budget deficits, which occur when the government spends more than it collects in revenue over the fiscal year, fuel debt accumulation. For example, since 2015, the federal government’s large and persistent deficits have more than doubled total federal debt, which will reach a projected $2.2 trillion this fiscal year. That has real world consequences. Here are a few of them:

Diverted Program Spending: Just as Canadians must pay interest on their own mortgages or car loans, taxpayers must pay interest on government debt. Each dollar spent paying interest is a dollar diverted from public programs such as health care and education, or potential tax relief. This fiscal year, federal debt interest costs will reach $53.7 billion or $1,301 per Canadian. And that number doesn’t include provincial government debt interest, which varies by province. In Ontario, for example, debt interest costs are projected to be $12.7 billion or $789 per Ontarian.

Higher Taxes in the Future: When governments run deficits, they’re borrowing to pay for today’s spending. But eventually someone (i.e. future generations of Canadians) must pay for this borrowing in the form of higher taxes. For example, if you’re a 16-year-old Canadian in 2025, you’ll pay an estimated $29,663 over your lifetime in additional personal income taxes (that you would otherwise not pay) due to Canada’s ballooning federal debt. By comparison, a 65-year-old will pay an estimated $2,433. Younger Canadians clearly bear a disproportionately large share of the government debt being accumulated currently.

Risks of rising interest rates: When governments run deficits, they increase demand for borrowing. In other words, governments compete with individuals, families and businesses for the savings available for borrowing. In response, interest rates rise, and subsequently, so does the cost of servicing government debt. Of course, the private sector also must pay these higher interest rates, which can reduce the level of private investment in the economy. In other words, private investment that would have occurred no longer does because of higher interest rates, which reduces overall economic growth—the foundation for job-creation and prosperity. Not surprisingly, as government debt has increased, business investment has declined—specifically, business investment per worker fell from $18,363 in 2014 to $14,687 in 2021 (inflation-adjusted).

Risk of Inflation: When governments increase spending, particularly with borrowed money, they add more money to the economy, which can fuel inflation. According to a 2023 report from Scotiabank, government spending contributed significantly to higher interest rates in Canada, accounting for an estimated 42 per cent of the increase in the Bank of Canada’s rate since the first quarter of 2022. As a result, many Canadians have seen the costs of their borrowing—mortgages, car loans, lines of credit—soar in recent years.

Recession Risks: The accumulation of deficits and debt, which do not enhance productivity in the economy, weaken the government’s ability to deal with future challenges including economic downturns because the government has less fiscal capacity available to take on more debt. That’s because during a recession, government spending automatically increases and government revenues decrease, even before policymakers react with any specific measures. For example, as unemployment rises, employment insurance (EI) payments automatically increase, while revenues for EI decrease. Therefore, when a downturn or recession hits, and the government wants to spend even more money beyond these automatic programs, it must go further into debt.

Government debt comes with major consequences for Canadians. To alleviate the pain of government debt on Canadians, our policymakers should work to balance their budgets in 2025.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

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Digital ID in sports: Detroit Pistons Partner with Digital ID Company to Implement Biometric Verification

Published on January 13, 2025

Todayville

By Ken Macon

Digital ID is entering more aspects of everyday life.

The Detroit Pistons, enjoying one of their most competitive seasons in years, are embracing a digital transformation with a partnership with ID.me, a company specializing in biometric ID verification and digital identity wallets. This move reflects a growing trend in professional sports, where teams are adopting digital identity tools under the guise of enhancing fan experience but also expanding the use of biometric systems in everyday activities.

More: Biometric Entry For Major League Baseball Games is Becoming More Prevalent

Through this collaboration, the Pistons will deploy ID.me’s technology to streamline services for their community, including season ticket holders, loyalty program members, and groups like teachers, nurses, and military personnel. According to the Pistons, biometric verification will ensure that benefits, tickets, and exclusive offers reach actual fans rather than being snatched up by bots and scalpers.

“ID.me is thrilled to help Detroit Pistons fans access tickets and special offers in a more secure, frictionless way,” said Taylor Liggett, chief growth officer at ID.me. He emphasized how digital identity wallets combat increasingly sophisticated fraud attempts by bad actors in the ticketing market.

Adam Falkson, Vice President of Business Intelligence for the Pistons, framed the partnership as a response to evolving threats. “Like most industries, the risk and sophistication around fraud continues to be a threat and a challenge,” he said. Falkson added that the shared vision with ID.me is to protect customers while enhancing services in a secure and gated manner.

However, critics have noted that the growing adoption of digital ID systems in sports goes beyond ticket security, potentially normalizing the use of biometrics in everyday transactions. Sports franchises are increasingly positioning biometric verification as essential for modern fan experiences, extending its use to concessions, merchandise, alcohol purchases, and VIP access.

ID.me, which has recently seen a surge in partnerships, views sports as a fertile ground for advancing its technology. The adoption of these systems aligns with the industry’s broader trend of integrating biometrics into live events, framing it as a way to “strengthen fan relationships” and streamline services. While the Detroit Pistons and ID.me tout the convenience and security of such systems, the broader implications of tying everyday activities to biometric verification risks the growth of a checkpoint society.

Alberta

Alberta’s Danielle Smith meets with Trump at Mar-a-Lago for ‘friendly and constructive’ meeting

Published on January 13, 2025

Todayville

From LifeSiteNews

By Anthony Murdoch

Meetings of these kinds in the past would normally have included Canada’s official ambassador, however, Smith has not waited for the Trudeau government to advocate for Canadian energy and instead has gone at it alone.

Premier of Alberta Danielle Smith met with incoming U.S. President Donald Trump at his Mar-a-Lago home to champion “ethically” sourced Albertan oil and gas only days before the president-elect is set to be inaugurated, in what she said was a “friendly and constructive” meeting.

“Over the last 24 hours I had the opportunity to meet President @realdonaldtrump at Mar-a-Lago last night and at his golf club this morning. We had a friendly and constructive conversation during which I emphasized the mutual importance of the U.S. – Canadian energy relationship, and specifically, how hundreds of thousands of American jobs are supported by energy exports from Alberta,” wrote Smith on X about her weekend meeting with Trump.

The unprecedented meeting came at the same time Trump appears to have soured relations with Canadian Liberal elites over his annexation talk.

It also comes after soon-to-be-gone Prime Minister Justin Trudeau met with Trump at Mar-a-lago last month and appeared to refuse to step up and defend the interests of Canadian energy over Trump’s threats to slap high tariffs on Canadian goods once he takes office.

Smith noted about her meeting with Trump that she was able to have “similar discussions” about championing Albertan energy “with several key allies of the incoming administration and was encouraged to hear their support for a strong energy and security relationship with Canada.”

“On behalf of Albertans, I will continue to engage in constructive dialogue and diplomacy with the incoming administration and elected federal and state officials from both parties and will do all I can to further Alberta’s and Canada’s interests,” she wrote.

Since taking office in 2015, the Trudeau government has continued to push a radical environmental agenda like the agendas being pushed by the World Economic Forum’s “Great Reset” and the United Nations’ “Sustainable Development Goals.”

Smit, on the other hand, has been a fierce opponent of Trudeau’s green energy agenda and an advocate for the oil and gas industry.

She will be attending Trump’s inauguration later next week.

Observer notes Trump made ‘beeline’ for Smith to meet her at Mar-a-Lago event

Political analyst for the Calgary Sun Rick Bell, who knows Smith and speaks with her regularly, noted about her meeting with Trump that when “Trump and his family and entourage” arrived he made “a beeline for Smith. He has obviously been told she is the premier of Alberta.”

“Smith, as you know, has recently been speaking non-stop about oil and gas and is no fan of tariffs,” Bell wrote.

Bell noted how Smith and Trump spoke about “energy, about oil and gas, about Alberta and Canada,” adding that she told him that production of Alberta oil is “ramping up in a big way and the U.S. buys a lot of Alberta oil.”

“Smith asks if Trump wants more of our oil. Trump does. It is by far Canada’s biggest export to the Americans,” wrote Bell.

Smith, in her message about her meeting with Trump, noted that Canada and the United States are both “proud and independent nations with one of the most important security alliances on earth and the largest economic partnership in history.”

She emphasized how Alberta needs to preserve its “independence while we grow this critical partnership for the benefit of Canadians and Americans for generations to come.”

Canada has the third largest oil reserves in the world, with most of it being in Alberta, which is produced ethically, unlike in other nations.

Smith’s meeting with Trump is unusual in that it has happened right before he will become president. Meetings of these kinds in the past would normally have included Canada’s official ambassador, however, Smith has not waited for the Trudeau government to advocate for Canadian energy and instead has gone at it alone.

Recently, Trump has drawn the ire of many Canadian politicians, including Conservatives, after he said rather brazenly last week that he was considering using “economic force” to make Canada the 51st U.S. state.

He claimed that there is a $200 billion trade deficit between Canada and the U.S. regarding spending on “subsidies” and the fact the U.S. military is there to also “protect Canada.”

Smith and others did not seem too offended by Trump’s remarks, most likely realizing they may be part of his negotiating strategy.

Conservative Party of Canada leader Pierre Poilievre, who likely will soon be the nation’s next prime minister, however, had choice words for Trump.

Trump’s comments came only a day after Trudeau announced he plans to step down as Liberal Party leader once a new leader has been chosen. He was approved by Governor General Mary Simon to prorogue parliament until March 24. This means he is still serving as prime minister, but all parliamentary business has been stopped.

Smith was against forced COVID jabs, her United Conservative government has in recent months banned men from competing in women’s sports came and passed a bill banning so-called “top and bottom” surgeries for minors as well as other extreme forms of transgender ideology. 