National
Federal debt interest will consume nearly one quarter of income tax revenue in 2024

From the Fraser Institute
By Grady Munro and Jake Fuss
The Trudeau government will table its next budget on April 16. In recent years, the government has overseen a substantial rise in the amount of interest it must pay to service federal debt, reversing a long-standing trend of interest costs declining relative to personal income tax revenues. By 2024/25, according to projections, nearly one in four dollars of personal income tax revenue will go towards debt interest.
Just like how individuals must pay interest when they take out a mortgage, the government must also pay interest when it borrows money. These interest payments represent taxpayer dollars that don’t go towards programs or services for Canadians.
When interest costs rise faster than the government’s ability to pay—i.e. the revenues it brings in—the government will face pressure to take on more debt to maintain funding for programs and services. And by taking on more debt, this places additional upward pressure on interest costs (all else equal) and the cycle repeats.
A useful way to track this is to measure debt interest costs as a share of federal personal income tax (PIT) revenues, which represent Ottawa’s single-most important revenue source. In 2024/25, they’re expected to comprise just under half (46.4 per cent) of total revenues and therefore provide a useful gauge of the government’s ability to pay interest on its debt. As such, the chart below includes projections for federal debt interest costs as a share of PIT revenues for the two decades from 2004/05 to 2024/25.
As we can see from the chart, for many years federal debt interest costs had been declining as a share of Personal Income Tax revenues. In 2004/05, 34.6 per cent of PIT revenues went towards servicing federal debt, but by 2015/16 that share had fallen to 15.1 per cent. In other words, during the Trudeau government’s first year in office, federal interest costs consumed less than one in six dollars of personal income tax revenue paid by Canadians. Interest costs as a share of PIT revenues continued to fall for the next several years, down to a low of 11.7 per cent in 2020/21. However, this marked the end of the decline, and the years since have seen rapid growth in debt interest costs that far exceeds growth in PIT revenues.
In the two years from 2020/21 to 2022/23, federal interest payments rose from 11.7 per cent of PIT revenues to 16.8 per cent. And by the end of the upcoming fiscal year in 2024/25, debt interest payments will reach a projected 23.4 per cent of PIT revenues. In four years, debt interest payments are expected to have gone from consuming about one in nine dollars of PIT revenue to nearly one in four dollars. Put differently, nearly one quarter of the money taxpayers send to Ottawa in the form of personal income taxes will not go towards any programs or services in 2024/25.
The causes of this sudden rise in interest costs as a share of PIT revenues are the combined effects of a substantial accumulation of debt under the Trudeau government, and a recent rise in interest rates. From 2015/16 to 2022/23, the Trudeau government added $820.7 billion in gross federal debt, and by 2024/25 total debt will reach a projected $2.1 trillion—roughly double the amount inherited by the current government. Meanwhile, from 2022 to 2023, the Bank of Canada increased its policy interest rate from a low of 0.25 per cent to the current rate of 5.00 per cent.
Simply put, federal debt interest costs have risen and are expected to eat up almost one quarter of federal PIT revenues by 2024/25. To help prevent taxpayers from devoting an even larger share of their tax dollars towards debt interest, the Trudeau government should cease its heavy reliance on borrowing in this year’s federal budget.
Authors:
2025 Federal Election
The Liberals torched their own agenda just to cling to power

This article supplied by Troy Media.
By Pat Murphy
The Liberals just proved they’ll do anything to win, including gutting key Trudeau-era policies
With the general election safely in the rear-view mirror, here are some observations.
The Liberal will to power
To me, the most surreal moment came during Mark Carney’s speech on the night he won the Liberal leadership. Raucous cheers ensued when he
declared the abolition of the consumer carbon tax and the retreat from the increase in capital gains inclusion rates. If you knew nothing about Canadian politics, you’d think this jubilation was in response to the assertion of long-cherished Liberal policies and principles.
But, of course, it was nothing of the sort.
In fact, the policies being jettisoned were Liberal in origin and had been hitherto fiercely defended. If you criticized the carbon tax, you were labelled a climate change “denier.” And if you were opposed to the capital gains changes, you were indifferent to increased inequality, the spread of child poverty and various other social ills.
This ability to shamelessly execute dramatic policy flips is indicative of the Liberals’ intense passion for power. And however cynical it may be, it’s one of the keys to their status as Canada’s “natural governing party.”
Thus we have Mark Carney presenting as someone who “just got here,” a tactic designed to disassociate himself from the previous Liberal government. It was immaterial that he was an adviser to that same government, has stocked his team with its alumni and was an early advocate of carbon taxes. Instead of the enthusiastic net-zero hawk, he ran as the sober, economics-savvy technocrat whose banking and private sector experience is tailor-made for the current trade-war turbulence.
Does this mean that Carney has abandoned the ideological agenda of his unpopular Liberal predecessor? Not necessarily—and probably not at all.
Still, it worked politically. Will to power isn’t something to be sneezed at.
Conservative blues
There’s no sugar-coating the fact that it’s been a deeply disappointing election for the Conservatives. After being the “inevitable” government-in-waiting just four months ago, the combination of Justin Trudeau’s departure and Donald Trump’s trade war totally upended the electoral landscape. And to add insult to injury, their leader, Pierre Poilievre, lost his seat. That said, not everything is doom and gloom.
Compared to the actual results from the previous (2021) election, the Conservatives gained 25 seats. Or if you prefer adjusting the 2021 results to
reflect the new electoral boundaries, the seat gain comes to 18. Either way, the direction is non-trivially positive.
The popular vote share of 41.4 per cent is similarly impressive. Looking over the past 60 years, the Conservative median vote was in the 35 to 36 per cent range. You might call that their natural base. Only Brian Mulroney’s fragile coalition ever brought them north of 40 per cent.
And as Poilievre has been criticized for simply playing to the base, it’s fair to ask whether 41 per cent or thereabouts is the party’s new base. If it is, the
Conservative future is potentially promising.
Mind you, Poilievre might not be around to personally reap the rewards.
The NDP debacle
It was the worst of times for the NDP. Their support collapsed, dropping to its lowest ever level in terms of vote share, and they lost official party status. In the process, they shed over 70 per cent of their caucus and were wiped out in voter rich Ontario. Some of this misfortune may be attributed to their propping up the Trudeau government, thus tending to blur the difference between the two parties. So when Trump’s trade war hit, it was easy for NDP voters to flee to Carney’s perceived safe pair of hands.
To the extent that’s true, there’s a historical echo. Between 1972 and 1974, the NDP supported Pierre Trudeau’s Liberal minority in return for various policy concessions. Then the Liberals pulled the plug, winning a majority in the ensuing election while the NDP lost almost half of their seats. It was that will to power again!
This underlines the dilemma confronting parties like the NDP. Do they want to ruthlessly compete for power? Or are they content with shaping public debate, gradually making once-radical ideas seem mainstream and pushing the boundaries of what society sees as politically acceptable?
It’s a very real—and honourable—trade-off choice.
The pollsters
In a post-election interview, poll aggregator Philippe J. Fournier was generally satisfied with his model’s performance. And if you take margins of error into account, he was justified in doing so.
Nonetheless, his final projection had the Liberals at 186 seats and the Conservatives at 124. The respective actuals were 169 and 144. And he
significantly underestimated the Conservatives in Ontario while overestimating the Liberals in Alberta.
Vindication is sometimes in the eye of the beholder.
Troy Media columnist Pat Murphy casts a history buff’s eye at the goings-on in our world. Never cynical – well, perhaps a little bit.
The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.
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.
Business
Canada urgently needs a watchdog for government waste

This article supplied by Troy Media.
By Ian Madsen
From overstaffed departments to subsidy giveaways, Canadians are paying a high price for government excess
Canada’s federal spending is growing, deficits are mounting, and waste is going unchecked. As governments look for ways to control costs, some experts say Canada needs a dedicated agency to root out inefficiency—before it’s too late
Not all the Trump administration’s policies are dubious. One is very good, in theory at least: the Department of Government Efficiency. While that
term could be an oxymoron, like ‘political wisdom,’ if DOGE proves useful, a Canadian version might be, too.
DOGE aims to identify wasteful, duplicative, unnecessary or destructive government programs and replace outdated data systems. It also seeks to
lower overall costs and ensure mechanisms are in place to evaluate proposed programs for effectiveness and value for money. This can, and often does, involve eliminating departments and, eventually, thousands of jobs. Some new roles within DOGE may need to become permanent.
The goal in the U.S. is to reduce annual operating costs and ensure government spending grows more slowly than revenues. Washington’s spending has exploded in recent years. The U.S. federal deficit now exceeds six per cent of gross domestic product. According to the U.S. Treasury Department, the cost of servicing that debt is rising at an unsustainable rate.
Canada’s latest budget deficit of $61.9 billion in fiscal 2023-24 amounts to about two per cent of GDP—less alarming than our neighbour’s situation, but still significant. It adds to the federal debt of $1.236 trillion, about 41 per cent of our estimated $3 trillion GDP. Ottawa’s public accounts show expenses at 17.8 per cent of GDP, up from about 14 per cent just eight years ago. Interest on the growing debt accounted for 9.1 per cent of
revenues in the most recent fiscal year, up from five per cent just two years ago.
The Canadian Taxpayers Federation (CTF) consistently highlights dubious spending, outright waste and extravagant programs: “$30 billion in subsidies to multinational corporations like Honda, Volkswagen, Stellantis and Northvolt. Federal corporate subsidies totalled $11.2 billion in 2022 alone. Shutting down the federal government’s seven regional development agencies would save taxpayers an estimated $1.5 billion annually.”
The CTF also noted that Ottawa hired 108,000 additional staff over the past eight years, at an average annual cost of more than $125,000 each. Hiring based on population growth alone would have added just 35,500 staff, saving about $9 billion annually. The scale of waste is staggering. Canada Post, the CBC and Via Rail collectively lose more than $5 billion a year. For reference, $1 billion could buy Toyota RAV4s for over 25,600 families.
Ottawa also duplicates functions handled by provincial governments, often stepping into areas of constitutional provincial jurisdiction. Shifting federal programs in health, education, environment and welfare to the provinces could save many more billions annually. Poor infrastructure decisions have also cost Canadians dearly—most notably the $33.4 billion blown on what should have been a relatively simple expansion of the Trans Mountain pipeline. Better project management and staffing could have prevented that disaster. Federal IT systems are another money pit, as shown by the $4-billion Phoenix payroll debacle. Then there’s the Green Slush Fund, which misallocated nearly $900 million.
Even more worrying, the rapidly expanding Old Age Supplement and Guaranteed Income Security programs are unfunded, unlike the Canada Pension Plan. Their combined cost is already roughly equal to the federal deficit and could soon become unmanageable.
Canada is sleepwalking toward financial ruin. A Canadian version of DOGE—Canada Accountability, Efficiency and Transparency Team, or CAETT—is urgently needed. The Office of the Auditor General does an admirable job identifying waste and poor performance, but it’s not proactive and lacks enforcement powers. At present, there is no mechanism in place to evaluate or eliminate ineffective programs. CAETT could fill that gap and help secure a prosperous future for Canadians.
Ian Madsen is a senior policy analyst at the Frontier Centre for Public Policy.
The views, opinions, and positions expressed by our columnists and contributors are solely their own and do not necessarily reflect those of our publication.
© Troy Media
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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