Economy
Federal budget’s scale of spending and debt reveal a government lacking self-control

From the Fraser Institute
By Jake Fuss and Grady Munro
Had the government simply limited the growth in annual program spending to 0.3 per cent for two years, it could have balanced the budget by 2026/27 and avoided significant debt accumulation.
Instead, the government chose to increase annual program spending by an average of 4.4 per cent over the next two years and kick the debt problem down the road for another government to solve.
Time and time again, Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland have emphasized the importance of being fiscally responsible with federal finances. Unfortunately, this year’s federal budget ensures once again their rhetoric rings hollow due to their ongoing mismanagement of federal finances.
This mismanagement is rooted in the government’s insatiable appetite for new and expanded programs or services, which has endured for nine years and will continue for the foreseeable future. The budget introduces billions of dollars in additional spending for a national school food program, housing initiatives and artificial intelligence. As such, program spending (total spending minus debt interest costs) is now expected to be $77.2 billion higher over the next four years than the government forecasted last spring.
In 2024/25 alone, federal program spending will reach a projected $483.6 billion—an increase of $16.1 billion compared to the previous budget’s estimates. On a per-person inflation-adjusted basis, federal program spending is forecasted to reach $11,901, which is approximately 28.0 per cent higher than during the final full year of Stephen Harper’s tenure as prime minister (2014/15). The Trudeau government has already recorded the five (2018 to 2022) highest levels of federal program spending per person in Canadian history (inflation-adjusted), and budget projections suggest it’s now on track to possess the eight highest levels of per-person spending by the end of its term next autumn.
This is despite recent polling data that shows the majority of Canadians (59 per cent) think the Trudeau government is spending too much. Nearly two-thirds (64 per cent) of Canadians are also concerned about the size of the federal deficit.
As it has done nine times before, the Trudeau government will borrow to fund some of its spending spree, resulting in a projected budget deficit of $39.8 billion this year, which is $4.8 billion higher than previously forecasted. And it doesn’t intend to stop borrowing, with annual deficits exceeding $20 billion planned for the subsequent four years. This represents a notable increase in deficits compared to what was expected in the last year’s budget. Simply put, there’s no plan for a return to balanced budgets any time soon. As a result, federal debt (net debt minus non-financial assets) is expected to climb $156.2 billion from now until April 2029.
To make matters worse, the government is also increasing the capital gains inclusion tax rate from 50.0 per cent to 66.6 per cent for capital gains realized above $250,000. This will act as a huge disincentive for individuals and businesses to invest in Canada at a time when the country already struggles to attract the very investment we need to improve productivity, economic growth and living standards. Businesses and individuals will now simply invest their capital elsewhere.
There’s a large body of research that finds low or no capital gains taxes increase the supply and lower the cost of capital for new and growing firms, leading to higher levels of entrepreneurship, economic growth and job creation—precisely what Canada needs more of today and in the future.
While the government did boast about its ability to hold the 2023/24 deficit at $40.0 billion, this had little to do with responsible fiscal management. Instead, the government enjoyed higher-than-anticipated revenues of $8.3 billion, but repeated its all too frequent and ill-advised approach of spending that money and wiping out any chance to reduce the deficit.
Growing federal debt leads to higher debt interest costs, all else equal, which eat up taxpayer dollars that could otherwise have provided services or tax relief for Canadians. For context, the government now spends more ($54.1 billion) on debt interest as on health-care transfers to the provinces ($52.1 billion). Accumulating debt today also increases the tax burden on future generations of Canadians who are ultimately responsible for paying off this debt. Research suggests this effect could be disproportionate, with future generations needing to pay back a dollar borrowed today with more than one dollar in future taxes.
But again, it didn’t have to be this way. As we pointed out before the budget, had the government simply limited the growth in annual program spending to 0.3 per cent for two years, it could have balanced the budget by 2026/27 and avoided significant debt accumulation.
Instead, the government chose to increase annual program spending by an average of 4.4 per cent over the next two years and kick the debt problem down the road for another government to solve. Simply put, the government’s fiscal strategy is not all that different from an overzealous child that eats all their Halloween candy in one night even though they fully understand it won’t end well.
Yet for all this spending and debt, living standards have not improved for Canadians. In fact, inflation-adjusted GDP per person was actually lower at the end of 2023 than it was nine years prior in 2014. And going forward, the OECD predicts Canada will record the lowest growth rates in per-person GDP up to 2060 of any industrialized country—meaning countries such as New Zealand, Italy, Korea, Turkey and Estonia would all surpass Canada with higher living standards.
The combination of tax hikes and scale of spending and debt in this year’s federal budget demonstrate the Trudeau government has no interest in being fiscally responsible or improving living standards for Canadians. Instead of showing restraint, the government chose to repeat its mistakes and lead federal finances down an increasingly perilous path.
Authors:
Economy
Trump opens door to Iranian oil exports

This article supplied by Troy Media.
U.S. President Donald Trump’s chaotic foreign policy is unravelling years of pressure on Iran and fuelling a surge of Iranian oil into global markets. His recent pivot to allow China to buy Iranian crude, despite previously trying to crush those exports, marks a sharp shift from strategic pressure to transactional diplomacy.
This unpredictability isn’t just confusing allies—it’s transforming global oil flows. One day, Trump vetoes an Israeli plan to assassinate Iran’s supreme leader, Ayatollah Khamenei. Days later, he calls for Iran’s unconditional surrender. After announcing a ceasefire between Iran, Israel and the United States, Trump praises both sides then lashes out at them the next day.
The biggest shock came when Trump posted on Truth Social that “China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the U.S., also.” The statement reversed the “maximum pressure” campaign he reinstated in February, which aimed to drive Iran’s oil exports to zero. The campaign reimposes sanctions on Tehran, threatening penalties on any country or company buying Iranian crude,
with the goal of crippling Iran’s economy and nuclear ambitions.
This wasn’t foreign policy—it was deal-making. Trump is brokering calm in the Middle East not for strategy, but to boost American oil sales to China. And in the process, he’s giving Iran room to move.
The effects of this shift in U.S. policy are already visible in trade data. Chinese imports of Iranian crude hit record levels in June. Ship-tracking firm Vortexa reported more than 1.8 million barrels per day imported between June 1 and 20. Kpler data, covering June 1 to 27, showed a 1.46 million bpd average, nearly 500,000 more than in May.
Much of the supply came from discounted May loadings destined for China’s independent refineries—the so-called “teapots”—stocking up ahead of peak summer demand. After hostilities broke out between Iran and Israel on June 12, Iran ramped up exports even further, increasing daily crude shipments by 44 per cent within a week.
Iran is under heavy U.S. sanctions, and its oil is typically sold at a discount, especially to China, the world’s largest oil importer. These discounted barrels undercut other exporters, including U.S. allies and global producers like Canada, reducing global prices and shifting power dynamics in the energy market.
All of this happened with full knowledge of the U.S. administration. Analysts now expect Iranian crude to continue flowing freely, as long as Trump sees strategic or economic value in it—though that position could reverse without warning.
Complicating matters is progress toward a U.S.-China trade deal. Commerce Secretary Howard Lutnick told reporters that an agreement reached in May has now been finalized. China later confirmed the understanding. Trump’s oil concession may be part of that broader détente, but it comes at the cost of any consistent pressure on Iran.
Meanwhile, despite Trump’s claims of obliterating Iran’s nuclear program, early reports suggest U.S. strikes merely delayed Tehran’s capabilities by a few months. The public posture of strength contrasts with a quieter reality: Iranian oil is once again flooding global markets.
With OPEC+ also boosting output monthly, there is no shortage of crude on the horizon. In fact, oversupply may once again define the market—and Trump’s erratic diplomacy is helping drive it.
For Canadian producers, especially in Alberta, the return of cheap Iranian oil can mean downward pressure on global prices and stiffer competition in key markets. And with global energy supply increasingly shaped by impulsive political decisions, Canada’s energy sector remains vulnerable to forces far beyond its borders.
This is the new reality: unpredictability at the top is shaping the oil market more than any cartel or conflict. And for now, Iran is winning.
Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country.
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