From the Fraser Institute

By Jake Fuss, Tegan Hill and William Dunstan

The Carney government plans to table its long-awaited federal budget on Nov. 4. In the summer, Prime Minister Carney announced billions of dollars in new spending that could push this year’s federal deficit above $90 billion, which would add significantly to the federal debt.

Indeed, the federal government, and the provincial governments, have racked up mountains of debt over the past decade and a half, with no end in sight.

According to a recent study, combined federal and provincial government net debt (total debt minus financial assets) nearly doubled (inflation-adjusted) from $1.2 trillion in 2007/08 to a projected $2.3 trillion at the end of 2024/25.

Putting this debt in per-person terms helps illustrate its scale.

Combined provincial and federal net debt per person ranges from a low of $40,939 in Alberta to a high of $68,861 in Newfoundland and Labrador. Combined federal and provincial net debt represents total provincial net debt plus each province’s share of federal net debt, which the study allocated to each province based on a five-year average (2020-2024) of their share of Canada’s population.

Of course, Canadians are ultimately responsible for financing this debt. Indeed, governments, like households, must pay interest on their debt, and taxpayers fund these debt interest payments. When tax dollars are spent on debt interest payments, those same dollars cannot be spent on important programs such as health care or used to provide tax relief.

The federal government spent a projected $53.8 billion on debt interest payments in 2024/25, more than it spent on the Canada Health Transfer ($52.1 billion), which supports provincial health-care systems. For many provinces, debt interest costs are the fourth-largest expense after health care, education and social services.

Many governments do not plan to stop adding to their net debt. Federally, the government’s recent tax and spending commitments will likely result in deficits of more than $70 billion each year through 2028/29. Additionally, six provinces—Alberta, British Columbia, Quebec, New Brunswick, Nova Scotia and Prince Edward Island—project budget deficits each year from 2025/26 to 2027/28. All provinces except Saskatchewan project deficits in 2025/26.

But there’s good news. Past governments have shown it’s possible to restrain spending and reduce debt. In fact, the 2008/09 recession marked a turning point for government deficits and debt in Canada. From the mid-1990s to the late-2000s, it was a different story, as the federal government and many provincial governments sought to restrain spending, balance their budgets and limit debt accumulation.

But now and for many years, many governments across Canada have run deficits and accumulated debt, at great cost to taxpayers. It’s time governments develop real plans to address their ballooning debt burdens. The upcoming Carney budget is a good place to start.

From the Fraser Institute

By Jake Fuss and Austin Thompson

Prime Minister Mark Carney recently launched his new “Build Canada Homes” federal agency, which will help build “4,000 factory-built homes” at an initial cost of $13 billion. In light of the affordability crisis that’s plagued large swaths of the country, many Canadians likely welcome more government involvement in the housing sector. But does Ottawa have the ability to efficiently and effectively build homes?

To help answer that question, it’s helpful to consider the federal government’s real estate record. Most Canadians probably aren’t aware that the government owns a bloated portfolio of underused office space, yet efforts to shrink this portfolio have moved at a glacial pace. In 2017, the government acknowledged that half of its office space was underused. But it took until 2019 to formulate a plan to sell off these properties, and by 2023 the federal office footprint (managed by the Department of Public Services and Procurement) was barely reduced—from 6.0 million to 5.9 million square metres.

In light of this failure, the government in 2024 dedicated $1.1 billion in taxpayer money, over 10 years, to hasten the sale of underused federal properties and save taxpayers $3.9 billion in the first decade and $0.9 billion annually thereafter.

Unfortunately, this initiative is already failing. The original goal was to cut the federal office footprint by 50 per cent by 2034, but the government’s current projections envision only a 33 per cent reduction. That means taxpayers will shoulder the cost of maintaining more underused office space each year. And even after a decade and $1.1 billion spent, Ottawa will still be left with roughly one million square metres of idle federal office space.

Why?

According to an auditor general report released in 2025, the federal government lacks even basic data on its own real estate portfolio, routinely misses internal targets for consolidation, and continues to rely on a lengthy process that takes six to eight years to offload surplus buildings. Poor cooperation between federal departments has made matters worse. Nearly half of the largest departments have refused to sign space-reduction agreements, especially those that paid no rent and therefore had no clear financial incentive to give up empty offices.

These failures raise a key question: If the federal government cannot efficiently downsize its own office footprint—despite ample funding and years of effort—how can it credibly promise to deliver complex housing projects?

Which takes us back to the Carney government’s new federal agency, Build Canada Homes (BCH), which plans to develop affordable housing and accelerate housing innovation. But BCH will likely face the same pitfalls that plagued Ottawa’s real estate downsizing effort—namely, poor coordination across the government, competing political priorities, and no real pressure to deliver.

The plan for BCH relies on federal departments to work smoothly with each other, the provinces, municipalities, Indigenous governments and the private sector. BCH is already weighed down by competing mandates. It promises to develop more affordable homes, but only if they’re built with Canadian-made and climate-friendly materials. These goals are at odds. If a product requires a government mandate to be used, it’s not the most cost-effective option.

And taxpayers will give BCH $3.5 billion a year without any clear indication of what we’ll get in return. BCH’s plan promises “significant” numbers of “affordable” homes—with no indication of how the government will measure progress or affordability. How will Canadians know whether the program is on track? Or if it provides good value for tax dollars? These are fundamental questions, especially since there’s a clear risk that BCH spending may simply compete with private-sector development rather than add greatly to the overall stock of houses.

The stakes are high. If Build Canada Homes underperforms, Canadians could be left with few new homes and a considerable bill. Ottawa cannot efficiently downsize its own office footprint despite ample funding and years of effort. That record hardly inspires confidence in its promise to deliver complex housing projects across the country.