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Canada’s big boom: government deficits

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8 minute read

From Resource Works

Mounting public debt isn’t just a number—it’s a warning about how today’s decisions could limit tomorrow’s options.

As government debt grows, we see numbers like this debated: Canada’s combined federal-provincial government debt is estimated to reach $2.3 trillion in 2025/26. And graphics such as this:

“Each Canadian is responsible.”

Each Canadian is responsible government debt
Each Canadian is responsible

That’s from the small-c conservative Fraser Institute, which has long rung alarm bells about government debt, deficits, and continued borrowing. The institute says in a new commentary: “The last decade was a time of spending and borrowing in good and bad times alike, with the only constant in the corridors of government being how can we borrow more so we can spend even more.”

“COVID, and the government’s response to it, obviously increased spending and borrowing. However, federal spending did not return to pre-COVID levels after the pandemic. Instead, Ottawa ratcheted up spending and borrowing permanently post- COVID.”

The Canadian think tank’s prime messages:

  • While Canada’s size of government is middle-of-the-pack, it saw the second-largest increase of any advanced economy during this period and the largest increase in the G7. This combined (federal and provincial) debt now equals 74.8% of the Canadian economy.
  • Budget deficits and increasing debt have become serious fiscal challenges facing the federal and many provincial governments. Since 2007/08, combined federal and provincial net debt (inflation-adjusted) has nearly doubled from $1.21 trillion to a projected $2.30 trillion in 2024/25.
  • Interest payments are a major consequence of debt accumulation. Governments must make interest payments on their debt similar to households that must pay interest on borrowing related to mortgages, vehicles, or credit-card spending. Revenues directed towards interest payments mean that in the future there will be less money available for tax cuts or government programs such as health care, education, and social services.
  • The federal and provincial governments must develop long-term plans to meaningfully address the growing debt problem in Canada. The Fraser Institute is not alone, and Ottawa is not the only target. For example, Canadian economists Jock Finlayson and Ken Peacock write in Business in Vancouver: “B.C. is on track to run five consecutive operating deficits.”

“This year, total taxpayer-supported debt has already doubled compared to where it stood under former premier John Horgan. The plan outlined in Budget 2025 will see B.C.’s debt reach $166 billion, which will be a staggering $105 billion increase since (David) Eby became leader. “Stated plainly, the Eby government has taken a wrecking ball to British Columbia’s public finances.”

BC’s finance minister, Brenda Bailey, defended the deficit as necessary to respond to US tariffs and not cut essential public services. But the Royal Bank of Canada said BC’s plan doesn’t incorporate US tariffs into economic assumptions. RBC’s analysis said this of BC’s government finances:

  • Significant risks threaten revenue and expenditure projections—the plan doesn’t incorporate U.S. tariffs into economic assumptions.
  • But it increased the contingencies vote to $4 billion per year to add protection against unexpected expenses.
  • Debt is forecast to soar 70% over the next three years.
  • B.C.’s fiscal situation is on a deteriorating path even though it compares well to most other provinces. The Fraser Institute, among others, also hits governments for increasing hiring and boosting bureaucracy.

The Carney government recently initiated a spending review intended to find ‘ambitious’ internal savings before the 2025 fall budget. “As promised in the government’s election platform, this review will likely involve capping the size of the federal public service to find savings. However, rather than simply capping it, the government should shrink the size of the bureaucracy while also revisiting compensation levels.”

All in all, says the Fraser Institute: “The fiscal mismanagement of the last decade and the utter failure to keep our fiscal powder dry has placed Canadian government finances in a total mess.” And: “Now that the Trump tariffs have arrived, and Canada’s economy is weakening, government finances will weaken even further. This is a lesson for voters and governments alike—that it’s critical for long-term financial sustainability to keep the fiscal powder dry during good times, meaning spending restraint and debt reduction, to ensure governments have the resources needed for the next downturn.”

It also noted: “Among the provinces, Newfoundland & Labrador has the highest combined federal-provincial debt-to-GDP ratio (88.4 percent), while Alberta has the lowest (40.8 percent). Newfoundland and Labrador has the highest combined debt per person ($68,861), followed by Quebec ($60,491) and Ontario ($60,408). In contrast, Alberta has the lowest debt per person in the country with $40,939.

For BC, the think tank put out some new numbers:

  • In its latest budget, the Eby government projected a record-breaking $10.9 billion deficit for this fiscal year 2025/26. Unfortunately, that’s just the tip of the iceberg.
  • For starters, this projected budget deficit does not account for the effect of President Trump’s 25 per cent tariff on most Canadian goods (and 10 per cent tariff on energy products), which—according to the Eby government—will cost provincial coffers $1.4 billion annually, boosting the projected deficit to $12.3 billion.
  • And then there’s the carbon tax. The Eby government effectively eliminated the consumer portion of the provincial carbon tax dropping the price to $0 effective April 1, 2025 (although B.C.’s carbon tax for industrial emitters will remain in effect). According to the government, this change will reduce provincial tax revenue by $2.0 billion this fiscal year, which increases the projected deficit further to a whopping $14.3 billion in 2025/26.

Some elders may recall that C.D. Howe, federal supply minister in the Second World War, when asked by the Opposition to cut $1 million from his budget estimates, supposedly sneered: “What’s a million?” Now, it seems, governments would respond with “What’s a billion?” The Fraser Institute reminds governments that “The basic idea is for governments to balance their budgets (or better yet, run surpluses) when the economy is growing, so resources are available when recessions hit.”

Yes, please.

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Liberals refuse to disclose the amount of taxpayer dollars headed to LGBT projects in foreign countries

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From LifeSiteNews

By Anthony Murdoch

The Liberal government of Prime Minister Mark Carney will not openly disclose how much money from its foreign-aid budget is going toward overseas “gender identity” and “decolonization” projects.

According to the government, there are “concerns” that disclosing the amount of funds could endanger certain LGBT organizations that get money from it.

On November 3, Global Affairs Canada, in response to a question on the order paper from a Conservative MP, said that the funding amounts could not be made public due to claimed “security concerns” and “confidentiality requirements.”

“These are the most common reasons projects are considered sensitive: the organization or individuals might be in danger if it becomes known that they are receiving funds from a foreign government; (or) implementing a project related to sensitive topics such as two-spirit, lesbian, gay, bisexual, transgender, queer, intersex and additional sexually and gender-diverse people rights, human trafficking, early/forced marriage, (and) human rights defenders,” Global Affairs noted. 

Continuing, Global Affairs said that there is a possible “danger” to partner organizations that could be “forced to close” or even “arrested” due to “harassment from the local population or government.”

As reported by LifeSiteNews, Carney’s budget will include millions in taxpayer money for “SLGBTQI+ communities,” gender equality, and “pride” safety.

Canada’s 2025 federal budget is allotting some $54.6 million to LGBT groups in a move criticized by Campaign Life Coalition as prioritizing activist agendas over struggling families’ basic needs.

Canadian taxpayers are already dealing with high inflation and high taxes due in part to the Liberal government overspending and excessive money printing, and even admitting that giving money to Ukraine comes at the “taxpayers’” expense.

As recently reported by LifeSiteNews, Bank of Canada Governor Tiff Macklem gave a grim assessment of the state of the economy, essentially telling Canadians that they should accept a “lower” standard of living.

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Carney’s Floor-Crossing Campaign. A Media-Staged Bid for Majority Rule That Erodes Democracy While Beijing Hovers

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In a majority government, an unprecedented and risky, course-altering national policy — deepening ties with Beijing while loosening ties with Washington — is considerably easier to execute.

On budget day, Ottawa’s reporters were sequestered in the traditional lock-up, combing through hundreds of pages, when Politico detonated a perfectly timed scoop: Conservative MP Chris d’Entremont was weighing a jump to Mark Carney’s Liberals. Within hours, he crossed, moving the government to within two seats of a majority — one that would guarantee Carney’s hold on power until 2029 — without Canadians casting a single ballot.

This was no ordinary budget day. By orchestrating a floor-crossing during a media lock-up, the Liberals blurred scrutiny of a historic spending plan while inching toward a de facto majority. That sequence raises deeper concerns about media–political entanglements and the democratic legitimacy of building a majority outside the polls.

Toronto Sun columnist Brian Lilley, in a deeply reported Substack post yesterday, captured months of palace intrigue. A well-sourced politics reporter with lines into Conservatives and Liberals alike, he lays out the knowns, the known unknowns, and the plausible backroom plays. Carney’s courting began right after the April 28 election that left him sitting at 169 seats, Lilley writes. For weeks, the Liberals probed for weak ribs in the Conservative caucus; and on November 4, they landed one.

“One thing is clear, the Liberals have been trying to poach a lot of Conservative MPs and doing everything they can to convince them to cross the floor,” he concluded.

Why? According to Lilley, Carney has been “governing for the most part like he has a majority, and he clearly doesn’t want to engage in the horse trading that a minority Parliament requires, so poaching MPs can solve his problem.”

The fallout was already clear to see last week. And it doesn’t look good for Canadian democracy or Canadian media, which receives significant government subsidies. Even at surface level, the press corps was visibly distracted from its first duty to citizens: scrutinizing a historically large budget packed with nation-building promises and unanswered questions about feasibility. Veteran reporters have already acknowledged this.

In another piece this weekend, Catherine Tunney, a solid CBC reporter, explained how Pierre Poilievre was undermined this way: “For the Opposition, budget week is a communications gift. It’s an easy way for the party to call out government spending,” she wrote. “For a leader who has built his brand on calling out Liberal spending, tabling a budget with a $78-billion deficit is the political equivalent of pitching a strike straight down the middle to Dodger slugger Shohei Ohtani.”

But instead, “of taking a victory lap around the bases, [Poilievre] ended the week facing questions about his leadership — after losing one MP to his rivals and another resigning from federal politics altogether.”

The messaging continued yesterday, with another CBC report amplifying the Liberals’ narrative that Conservative leaders were actively bullying MPs not to cross.

CBC had to issue a correction. After publishing d’Entremont’s account that senior Conservatives “pushed” his assistant, CBC later updated the story to clarify that Andrew Scheer and Chris Warkentin “pushed open the door,” and the aide stepped aside — a meaningful distinction.

Stepping back from the noise, there is a deeper problem.

Making honeyed promises to floor-crossers is legal in Canada’s democracy. But Canada is in a mounting trade war involving China and the United States, in an increasingly dangerous, cutthroat geopolitical environment. Already, the prime minister is pledging renewed engagement with Beijing as a strategic partner.

Doing so in a minority Parliament means facing tough accountability questions — and bruising inquiries in ethics committee hearings. In a majority government, an unprecedented and risky, course-altering national policy — deepening ties with Beijing while loosening ties with Washington — is considerably easier to execute.

And what kind of partner is Carney choosing? Yesterday, Japan lodged formal complaints after a senior Chinese diplomat took to social media and threatened to “cut [the] dirty neck” of Japan’s new leader over her stance on Taiwan. On Friday, Prime Minister Sanae Takaichi had said a Chinese attack on Taiwan could constitute “a survival-threatening situation” for Japan, potentially requiring the use of force.

“We have no choice but cut off that dirty neck that has been lunged at us without hesitation. Are you ready?” Chinese Consul General Xue Jian said in a message posted on X, which was later deleted.

This is the government Carney is rapidly sliding closer to. The same regime that jailed Canadians Michael Kovrig and Michael Spavor in the Meng Wanzhou affair — and a government that, Canadian intelligence has warned, attempts to shape media narratives in Canada.

As The Bureau reported in 2023, Canada’s own Privy Council Office warned in a January 2022 Special Report that Beijing’s United Front Work Department targets Canadian institutions.

In a section alleging Beijing “manipulates traditional media” in Canada, the report details press conferences held in January 2019 by former Toronto-area Liberal cabinet minister John McCallum, to argue that Canada’s detention of Huawei executive Meng Wanzhou was illegal. McCallum, then ambassador to China, was forced to resign after the Conservative opposition condemned his comments.

In the fallout, according to the Privy Council Office report, Canadian intelligence uncovered that several Chinese diplomats in Canada were voicing support for McCallum. One Chinese consulate official “sent information” to an unidentified Canadian media reporter indicating Chinese Canadians have favourable impressions of McCallum, the report says.

Now back to Ottawa media’s role. Why and how did Politico get the floor-crossing scoop during the budget lock-up — and then, that same evening, co-host a post-budget reception branded “Prudence & Prosecco” at the Métropolitain Brasserie, where Finance Minister François-Philippe Champagne and well-placed Liberals mingled with reporters? Every veteran reporter knows political parties try to influence the press — they’re called spin doctors for a reason. But darker forces can ride the same channels. In Brussels, for example, European security services are investigating a former Politico reporter over alleged ties to Chinese intelligence — still unproven, but a cautionary tale about the murkiness of media–political ecosystems.

Lilley also documents how coverage of another rumoured floor-crosser, Matt Jeneroux, became part of last week’s fog machine. The Toronto Star reported a private meeting between Jeneroux and Carney involving senior Liberal strategists Braden Caley and Tom Pitfield; Jeneroux issued categorical denials to senior Conservatives. “Someone is lying,” Lilley writes — and whether or not a second crossing was imminent, the destabilization served its purpose. Other names floated, such as Michael Chong, were so implausible as to raise suspicion of calculated disinformation.

“I didn’t buy Chong either, but Liberals kept pushing that narrative,” Lilley wrote. “As someone who knows Michael a bit, I simply didn’t believe it, didn’t even reach out to ask — he later called me to confirm the rumours were bogus.”

It is geopolitically notable that Michael Chong — sanctioned by Beijing and repeatedly targeted in PRC pressure campaigns, including a Chinese intelligence operation targeting Chong and his family that Justin Trudeau’s government failed to notify him about — saw his name tossed into this mess. Who benefits from saddling Chong with corrosive rumours?

It would seem that not only the Liberals benefit, but so do Carney’s new “strategic partners” in Beijing. None of this proves any newsroom has wittingly acted in bad faith, nor is there any evidence that Beijing’s shadow looms in the Liberals’ media playbook. But it does suggest how a coordinated political operation can be abetted by domestic media distraction.

Now, consider darker possibilities that could be in play. Not necessarily last week, but in any number of major events and stories shaping relations among Canada, China, and the United States.

The bipartisan NSICOP 2024 Review into allegations of Chinese election interference in Canada’s last two federal elections found that “during the period under review, the intelligence community observed states manipulating traditional media to disseminate propaganda in what otherwise appeared to be independent news publications.”

It added: “Foreign states also spread disinformation to promote their agendas and consequently challenge Canadian interests, which posed the greatest cyber-threat activity to voters during the time under review.”

The report continued: “These tactics attempt to influence public discourse and policymakers’ choices, compromise the reputations of politicians, delegitimize democracy, or exacerbate existing frictions in society.”

According to the intelligence community, “the PRC was the most capable actor in this context, interfering with Canadian media content via direct engagement with Canadian media executives and journalists.”

So what do we have here? Carney’s Liberals have a natural interest in destabilizing the Conservatives and sending Pierre Poilievre — a prosecutorial-style politician who excels at exposing his opponents’ weaknesses — into early political retirement. Arguably, they have a well-founded interest in dividing the Conservative Party itself.

But using the media to float names of opposition MPs who never intended to cross is disinformation, plain and simple. And when that name is Michael Chong — long targeted by Beijing — the stakes rise. If Carney is tilting toward a “strategic partnership” with Beijing, and if that delays the Foreign Influence Transparency Registry, as critics such as Dr. Charles Burton warn, then the tactics on display have moved from questionable to unacceptable — and risk entangling the interests of the Liberal Party of Canada with those of the Chinese Communist Party in Beijing.

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