The federal government’s fall economic statement blows past the previously announced “fiscal guardrail” that was supposed to keep the deficit below $40 billion.
The government’s revised deficit for the 2023-24 fiscal year is $61.9 billion – over 50% more than the limit Chrystia Freeland set out previously.
Freeland abruptly resigned as finance minister Monday morning – hours before she was supposed to table the economic statement – citing policy clashes over government spending she and Prime Minister Justin Trudeau have had in recent months.
The fall economic statement contains no mention of the $250 one-time cheque scheme Trudeau announced weeks ago. The policy would have added an additional $4.68 billion to the deficit and another $2 billion if NDP Leader Jagmeet Singh’s demands of expanding the rebate to seniors, people with disabilities, and injured workers were implemented.
Freeland, in her resignation letter, alluded to the plan as a “costly political gimmick” the country couldn’t afford.
The government is projecting next year’s deficit to be $42.8 billion, $3 billion more than previously projected. The government forecasts deficits of $37.4 billion and $27.9 billion in subsequent years, which are actually lower than previous budget projections.
The original budget proposed $111.2 billion in new spending over the next five years, without any plan to balance the budget.
The fall economic statement showcased an additional $24.2 billion in spending over the next six years. Over three quarters, 76% of that spending will be on Clean Growth, Innovation, and Infrastructure. Affordability and Housing will account for 13% of this new spending. Other spending will be on Justice and Security (8%), Strong Communities (2%), and Effective Government and Tax Fairness (1%).
In 2022-23, federal debt charges as a % of GDP were 1.2%. These charges are projected to rise to 1.6% in 2023-24, 1.8% in the subsequent year and reach 1.9% by 2029-30.
However, the statement highlighted that Canada’s interest rates are lower than the United States and the United Kingdom. If they mirror those levels, the public debt charges will rise $16.5 billion higher annually and up to $89.5 billion by 2029-30, or 2.4% of GDP.
The Canadian Taxpayers Federation revealed that the debt will nearly reach $1.3 trillion this year, more than doubling from the $616 billion when Trudeau took office.
“Interest charges on the government credit card are costing taxpayers more than $1 billion every week,” said CTF federal director Franco Terrazzano. “Years of massive deficits mean the government is waiting more money on debt interest charges than it’s sending to the provinces in health transfers.”
The statement added that recent changes to immigration will see 600,000 fewer temporary residents in Canada over the next three years, which is said to ease the housing market.
The fall economic statement, typically delivered in November, was finally released on Monday after the lockup and embargo descended into chaos in the wake of Freeland’s resignation.
Government House Leader Karina Gould tabled the statement, albeit without the fanfare and speech normally accompanying the document. Trudeau has faced mounting calls to submit his own resignation letter.
Minister of Public Safety Dominic LeBlanc was sworn in as finance minister shortly after the economic statement was tabled.
“Trudeau has lost control of the finances, and our kids and grandkids will be paying the price for years to come,” said Terrazzano. “Canadians can’t afford to keep paying for a reckless government in Ottawa. Canadians need our federal government to cut spending and balance the budget.”