Connect with us

Business

You are paying for our governments’ debt addiction

Published

4 minute read

From the Fraser Institute

By Jake Fuss and Grady Munro

Ottawa and the provinces will together spend $82 billion on debt interest this year—equivalent to the total amount spent on K-12 education in Canada during 2020-21.

Budget season is approaching and while government debt has been increasing rapidly for years in Canada, today’s relatively high interest rates have made it more expensive to borrow money than in the recent past.

According to our new study published by the Fraser Institute, between 2007-08 and 2023-24 federal and provincial government net debt (i.e., total debt minus financial assets) has increased by roughly $1.0 trillion in inflation-adjusted dollars. Though pandemic-induced deficits explain part of that, fully 58 per cent of the run-up in debt occurred before COVID. That deserves emphasis: our current debt problems are not mainly the result of the pandemic.

Because both federal and provincial governments borrow—municipal governments not so much—Canadians face different government debt burdens depending on where they live. Newfoundland and Labradorians currently owe the largest combined (federal and provincial) government debt in Canada at $67,471 per person. Ontarians are not far behind at $60,609 while Albertans are in the best shape at $42,293.

In terms of debt-to-GDP ratios, the four Atlantic provinces are all currently above 85 per cent, which means it would take more than four out of every five dollars generated in the economy of each Atlantic province this year to pay off their combined federal and provincial debt.

Nova Scotians are worst off, with combined debt equivalent to 97 per cent of what their economy produces in a year. The national average debt-to-GDP ratio is projected to be 76 per cent this year, up significantly from before the pandemic.

Despite a surge in revenues, few Canadian governments are forecasting surpluses for the current fiscal year. Instead, Ottawa and the majority of provinces have chosen to increase their spending and debt and, in most cases, incur deficits for years to come.

This is a worrying trend, as many governments were already on unsustainable debt trajectories that they are now making worse. Governments need to restrain spending and move towards balanced budgets in the short term, while the economy is in relatively good shape, not put off difficult decisions for someone else to take at some future date.

Debt means always having to pay interest. Because their debts have grown and interest rates are higher than they have been for some time, Ottawa and the provinces will together spend $82 billion on debt interest this year—equivalent to the total amount spent on K-12 education in Canada during 2020-21.

Money that goes to interest can’t pay for tax cuts or spending on health care or education. It drives a wedge between the taxes we pay and the services we actually receive. And it burdens, not just today’s taxpayers, but future generations, too.

Growing government debt is not just another unpleasant COVID symptom. It was a problem well before COVID and it’s getting worse even though COVID is now mainly over. This budget season, our federal and provincial governments need to get their fiscal houses in order and stop their debt binging before it spirals even further out of control.

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

2025 Federal Election

Alcohol tax and MP pay hike tomorrow (April 1)

Published on

By Franco Terrazzano

The Canadian Taxpayers Federation is calling on all party leaders to stop a pair of bad policies that are scheduled to happen automatically on April 1: pay raises for members Parliament and another alcohol tax increase.

“Party leaders owe taxpayers answers to these two questions: Why do you think you deserve a pay raise and why should Canadians pay higher taxes on beer and wine?” said Franco Terrazzano, CTF Federal Director. “Politicians don’t deserve a raise while millions of Canadians are struggling.

“And the last thing Canadians need is another tax hike when they pour a cold one or uncork a bottle with that special someone.”

MPs give themselves pay raises each year on April 1, based on the average annual increase in union contracts with corporations with 500 or more employees.

The CTF estimates tomorrow’s pay raise will amount to an extra $6,200 for backbench MPs, $9,200 for ministers and $12,400 for the prime minister, based on contract data published by the federal government.

After tomorrow’s pay raise, backbench MPs will receive a $209,300 annual salary, according to CTF estimates. A minister will collect $309,100 and the prime minister will take home $418,600.

Meanwhile, the alcohol escalator automatically increases excise taxes on beer, wine and spirits every year on April 1, without a vote in Parliament. Alcohol taxes will increase by two per cent tomorrow, costing taxpayers about $40 million this year, according to Beer Canada estimates.

The alcohol escalator tax has cost taxpayers more than $900 million since it was imposed in 2017, according to Beer Canada estimates.

“Politicians are padding their pockets on the same day they’re raising beer taxes and that’s wrong,” Terrazzano said. “If party leaders want to prove they care about taxpayers, they should stop the MP pay raises.

“And if party leaders care about giving Canadian brewers, distillers and wineries a fighting chance against tariffs, it’s time to stop hitting them with alcohol tax hikes year after year.”

The CTF released Leger polling showing 79 per cent of Canadians oppose tomorrow’s MP pay raise.

Continue Reading

2025 Federal Election

Poilievre To Create ‘Canada First’ National Energy Corridor

Published on

From Conservative Party Communications

Poilievre will create the ‘Canada First’ National Energy Corridor to rapidly approve & build the infrastructure we need to end our energy dependence on America so we can stand up to Trump from a position of strength.

Conservative Leader Pierre Poilievre announced today he will create a ‘Canada First’ National Energy Corridor to fast-track approvals for transmission lines, railways, pipelines, and other critical infrastructure across Canada in a pre-approved transport corridor entirely within Canada, transporting our resources within Canada and to the world while bypassing the United States. It will bring billions of dollars of new investment into Canada’s economy, create powerful paycheques for Canadian workers, and restore our economic independence.

“After the Lost Liberal decade, Canada is poorer, weaker, and more dependent on the United States than ever before,” said Poilievre. “My ‘Canada First National Energy Corridor’ will enable us to quickly build the infrastructure we need to strengthen our country so we can stand on our own two feet and stand up to the Americans.”

In the corridor, all levels of government will provide legally binding commitments to approve projects. This means investors will no longer face the endless regulatory limbo that has made Canadians poorer.  First Nations will be involved from the outset, ensuring that economic benefits flow directly to them and that their approval is secured before any money is spent.

Between 2015 and 2020, Canada cancelled 16 major energy projects, resulting in a $176 billion hit to our economy. The Liberals killed the Energy East pipeline and passed Bill C-69, the “No-New-Pipelines” law, which makes it all but impossible to build the pipelines and energy infrastructure we need to strengthen the Canadian economy. And now, the PBO projects that the ‘Carney cap’ on Canadian energy will reduce oil and gas production by nearly 5%, slash GDP by $20.5 billion annually, and eliminate 54,400 full-time jobs by 2032. An average mine opening lead time is now nearly 18 years—23% longer than Australia and 38% longer than the US. As a result of the Lost Liberal Decade, Canada now ranks 23rd in the World Bank’s Ease of Doing Business Index for 2024, a seven-place drop since 2015.

“In 2024, Canada exported 98% of its crude oil to the United States. This leaves us too dependent on the Americans,” said Poilievre. “Our Canada First National Energy Corridor will get us out from under America’s thumb and enable us to build the infrastructure we need to sell our natural resources to new markets, bring home jobs and dollars, and make us sovereign and self-reliant to stand up to Trump from a position of strength.”

Mark Carney’s economic advice to Justin Trudeau made Canada weaker while he and his rich friends made out like bandits. While he advised Trudeau to cancel Canadian energy projects, his own company spent billions on pipelines in South America and the Middle East. And unlike our competitors Australia and America, which work with builders to get projects approved, Mark Carney and Steven Guilbeault’s radical “keep-it-in-the-ground” ideology has blocked development, killed jobs, and left Canada dependent on foreign imports.

“The choice is clear: a fourth Liberal term that will keep our resources in the ground and keep us weak and vulnerable to Trump’s threats, or a strong new Conservative government that will approve projects, build an economic fortress, bring jobs and dollars home, and put Canada First—For a Change.”

Continue Reading

Trending

X