An opinion piece by Jake Fuss and Grady Munro of the Fraser Institute argues that Prime Minister Mark Carney's spring fiscal update continues the high-deficit approach of the Trudeau government, despite campaign promises to address Canada's fiscal woes. The update reveals a large budget deficit this year and sustained high deficits in the coming years, with total projected deficits of $309.2 billion over five years—double what the previous government forecast.
Spending and Debt Projections
According to the fiscal update, from fiscal years 2025-26 to 2029-30, the Carney government plans to increase spending by $83.2 billion more than the Trudeau government had planned. Federal debt is projected to reach $2.9 trillion by the end of the decade. The authors argue that this will burden younger Canadians with higher taxes for decades to come.
Comparison with Trudeau Era
The piece notes that the Trudeau government borrowed historically large amounts, leading to record per-person spending and debt, along with nine consecutive budget deficits. Under Trudeau, per-person GDP growth lagged behind previous administrations, and business investment declined per worker. The authors contend that Carney's approach is a continuation, or even an acceleration, of these policies.
Tax System and Economic Impact
While the Carney government reduced the lowest personal income tax rate from 15 to 14 percent, the authors argue this does little to attract investment or skilled workers. Canada's top combined tax rates remain among the highest in the industrialized world. They emphasize that the spending and borrowing binge is largely a choice, not a necessity, as revenue growth is expected to be in line with pre-COVID levels.
Call for Reform
The authors call for difficult decisions to reduce spending and reform the tax system, similar to the Chrétien government in the 1990s, to repair Ottawa's finances and spur economic growth. They warn that delaying such measures will only worsen the burden for future generations.
