Business
Cost of federal government debt rising for Canadians
From the Fraser Institute
As the federal deficit persists and government debt mounts, the burden of debt interest costs is growing for Canadian taxpayers.
The Trudeau government is on track for another large budget deficit forecasted at $40.0 billion, slightly larger than the $35.3 billion deficit last year. The government’s long-term forecast suggests deficits will continue throughout the projection period, which ends in 2028/29.
There’s nothing new about the federal books being splashed with red ink. The Trudeau government has run significant deficits every year of its tenure. What’s different this time, however, is that due to higher interest rates the cost of the government’s borrowing is much higher. As a result, debt costs are set to increase significantly in the years ahead, which will burden taxpayers today and in the future while also making it harder for future prime ministers and finance ministers to balance their books.
Let’s dig a bit deeper into the numbers. When the Trudeau government took power during fiscal year 2015/16, debt interest costs were $21.8 billion. In 2021/22, despite a long string of deficits and huge increase in debt, low interest rates during the period of intensive borrowing prevented a surge in debt interest costs, which stood at $24.5 billion.
But last fiscal year marked the start of a new chapter in Canada’s fiscal history as higher interest rates combined with significant debt accumulation caused debt interest costs to rise substantially, from $24.5 billion to $35.0 billion. Another similar increase is expected this year, with debt costs forecasted to rise to $46.5 billion—a 90 per cent increase in just two years with a further projected increase to $52.4 billion for next year.
This sudden increase in debt interest costs has important and immediate implications for federal finances. In 2021/22, 5.9 per cent of all federal revenue was spent on paying the interest on federal debt. By next year, according to Trudeau government forecasts, this will rise to 10.8 per cent.
Canadian history shows us how debt interest costs can quickly spiral out of control. During the debt crisis of the early 1990s, after many years of continuous deficits, debt interest costs were consuming one-third of every dollar Ottawa collected. Today’s debt interest costs are not as high as they were in the 1990s, but there’s no reason to wait until a crisis develops to take action.
The fact that debt interest is taking a bigger bite out of federal revenue should not just be a matter of academic concern for public finance economists. It affects all Canadian taxpayers. A larger share of the money collected from individuals and businesses being spent on debt leaves less for other priorities such as tax relief, which can help encourage economic growth, or core public services that Canadians value.
The Trudeau government has often spoken about the benefits of fiscal restraint but has thus far failed to exercise much of it. If the prime minister and his cabinet want to halt the growth in debt interest they must reverse the free spending that has characterized their time in government to slow the accumulation of debt.
Authors:
MxM News
Quick Hit:
On the 10-year anniversary of Donald Trump’s iconic campaign launch, the Trump family announced the debut of Trump Mobile, a new wireless company offering American-built smartphones, 5G coverage, and a values-driven alternative to Big Tech carriers.
Key Details:
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Donald Trump Jr. and Eric Trump introduced Trump Mobile’s flagship service Monday, calling it a “transformational” alternative aimed at “our nation’s hardest-working people.”
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The “47 Plan,” priced at $47.45/month, offers unlimited talk, text, and data, free international calls to U.S. military families, telehealth, roadside assistance, and no credit checks.
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Trump Mobile’s customer support is fully U.S.-based and live 24/7—“not automated,” the company says—while a new American-made “T1 Phone” is slated for release in August.
Diving Deeper:
Marking ten years since President Donald Trump descended the golden escalator to launch his first campaign, the Trump Organization on Monday announced its boldest private sector move yet: Trump Mobile.
Flanked by company executives, Donald Trump Jr. and Eric Trump unveiled the new cellular service, touting it as a patriotic, people-first alternative to legacy providers. “We’re building on the movement to put America first,” Trump Jr. said in a statement. “We will deliver the highest levels of quality and service.”
The cornerstone of Trump Mobile is the 47 Plan. Offered for $47.45/month, the plan includes unlimited data, full 5G coverage across all three major carriers, and a suite of benefits tailored to middle-class families, truckers, veterans, and anyone tired of paying premiums to companies that don’t share their values.
Among the key perks: 24/7 American-based customer service (with “real people,” not bots), comprehensive device protection, roadside assistance through Drive America, and telehealth services including mental health support and prescription delivery. Most notably, the plan includes free international calling to over 100 countries—an effort the Trump family says honors U.S. military families stationed abroad.
“We’re especially proud to offer free long-distance calling to our military members and their families,” said Eric Trump. “Those serving overseas should always be able to stay connected to the people they love back home.”
Unlike traditional providers, Trump Mobile advertises no contracts and no credit checks, appealing to a demographic long underserved by mainstream telecom giants. “Hard-working Americans deserve a wireless service that’s affordable, reflects their values, and delivers reliable quality they can count on,” Eric Trump added.
The company is also preparing to launch the T1 Phone in August—a sleek, gold smartphone “engineered for performance” and “proudly designed and built in the United States.” With that, the Trump Organization is not just entering the mobile market—it’s staking a claim as a direct competitor to Apple and Samsung.
From LifeSiteNews
Canada’s prime minister said it was a ‘great honor’ to host the U.S. president and praised him for saying Canada wants to work with the U.S. ‘hand-in-hand.’
During the second day of the G7 leaders meeting in the Kananaskis area in Alberta, Canadian Prime Minister Mark Carney praised U.S. President Donald Trump’s world “leadership” despite saying many negative things about him during his election campaign.
While speaking to reporters Monday, Trump hinted that a new trade deal between Canada and the United States was potentially only “weeks” away. This came after a private meeting with Carney before the official G7 talks commenced.
“We’ve developed a very good relationship. And we’re going to be talking about trade and many other things,” Trump told reporters.
Carney was less vocal, however. He used the opportunity to tell reporters he was happy Trump came to his country for the G7 meeting, saying it was a “great honor” to host him.
“This marks the 50th birthday of the G7, and the G7 is nothing without U.S. leadership,” Carney told reporters.
He then spoke about Trump’s “personal leadership” on world issues and praised him for saying Canada wants to work with the U.S. “hand-in-hand.”
Carney ran his election campaign by claiming the Conservative Party would bow to Trump’s demands despite the fact that the party never said such things.
During his federal election campaign, Carney repeatedly took issue with Trump and the U.S. that turned into an anti-American Canadian legacy media frenzy.
However, the reality is, after Carney won the April 28 federal election, Trump praised him, saying, “Canada chose a very talented person.”
Many political pundits have said that Carney owes his win to Trump, as the U.S. president suggested on multiple occasions that he would rather work with Carney than conservative leader Pierre Poilievre.
Trump has routinely suggested that Canada become an American state in recent months, often making such statements while talking about or implementing trade tariffs on Canadian goods.
As for Carney, he has said his government plans to launch a “new economy” in Canada that will involve “deepening” ties to the world.
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