Federal government’s fiscal record—one for the history books

Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war.

The Trudeau government tabled its 2024 budget earlier this month and the contents of the fiscal plan laid bare the alarming state of federal finances. Both spending and debt per person are at or near record highs and prospects for the future don’t appear any brighter.

In the budget, the Trudeau government outlined plans for federal finances over the next five years. Annual program spending (total spending minus debt interest costs) will reach a projected $483. billion in 2024/25, $498.7 billion in 2025/26, and continue growing in the years following. By 2028/29 the government plans to spend $542.0 billion on programs—an 18.4 per cent increase from current levels.

This is not a new or surprising development for federal finances. Since taking office in 2015, the Trudeau government has shown a proclivity to spend at nearly every turn. Prime Minister Trudeau has already recorded the five highest levels of federal program spending per person (adjusted for inflation) in Canadian history from 2018 to 2022. Projections for spending in the 2024 budget assert the prime minister is now on track to have the eight highest years of per-person spending on record by the end of the 2025/26 fiscal year.

Per-person federal spending is expected to equal $11,901 this year. To put this into perspective, this is significantly more than Ottawa spent during the global financial crisis in 2008 or either world war. It’s also about 28.0 per cent higher than the full final year of Stephen Harper’s time as prime minister, meaning the size of the federal government has expanded by more than one quarter in a decade.

The government has chosen to borrow substantial sums of money to fund a lot of this marked growth in spending. Federal debt under the Trudeau government has risen before, during and after COVID regardless of whether the economy is performing relatively well or comparatively poor. Between 2015 and 2024, Ottawa is expected to run 10 consecutive deficits, with total gross debt set to reach $2.1 trillion within the next 12 months.

The scale of recent debt accumulation is eye-popping even after accounting for a growing population and the relatively high inflation of the past two years. By the end of the current fiscal year, each Canadian will be burdened with $12,769 more in total federal debt (adjusted for inflation) than they were in 2014/15.

You can attribute some of this increase in borrowing to the effects of COVID, but debt had already grown by $2,954 per person from 2014 to 2019—before the pandemic. Moreover, budget estimates show gross debt per person (adjusted for inflation) is expected to rise by more than $2,500 by 2028/29.

As with spending, the Trudeau government is on track to record the six highest years of federal debt per-person (adjusted for inflation) in Canadian history between 2020/21 and the end of its term next autumn. Why should Canadians care about this record debt?

Simply put, rising debt leads to higher interest payments that current and future generations of taxpayers must pay—leaving less money for important priorities such as health care and social services. Moreover, all this spending and debt hasn’t helped improve living standards for Canadians. Canada’s GDP per person—a broad measure of incomes—was lower at the end of 2023 than it was nearly a decade ago in 2014.

The Trudeau government’s track record with federal finances is one for the history books. Ottawa’s spending continues to be at near-record levels and Canadians have never been burdened with more debt. Those aren’t the type of records we should strive to achieve.

Authors:

Jake Fuss and Grady Munro

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Numbers don’t lie—crime up significantly in Toronto and across Canada

Crime

Numbers don’t lie—crime up significantly in Toronto and across Canada

Published on October 14, 2024

Todayville

From the Fraser Institute

By Matthew Lau

It’s no secret that politicians often cherry-pick statistics instead of telling the full story when the full story doesn’t look great for them. For example, amid concerns of rising auto theft and crime, the federal Liberals recently highlighted that auto theft is down 17 per cent versus last year. But this statement deserves scrutiny.

It’s true, according to an insurance fraud prevention group, there was a 17 per cent year-over-year decline in auto thefts in the first half of 2024. But this doesn’t mean the number of stolen cars is low. The reason for the year-over-year decline is that auto thefts spiked significantly in 2023. While down in the first half of 2024, auto thefts remain at elevated levels relative to prior years.

For example, the Toronto Police Service reports 5,049 auto thefts in the first half of 2024—down 21 per cent year-over year, but still very high relative to the first half of 2022 (4,480 auto thefts) and the first half of 2021 (2,769 auto thefts). In light of an 82 per cent increase in auto thefts in Toronto compared to just three years ago, the Trudeau government shouldn’t celebrate too loudly its record at stopping auto theft.

In addition, cherry-picking auto theft stats ignores crime increases in other areas. In the first half of 2024 (again, according to Toronto Police Service data), assaults were up 8 per cent year-over-year, breaking and entering was up 6 per cent, homicides were up 36 per cent, robberies were up 21 per cent, and sexual violations were up 17 per cent.

And it’s not just Toronto.

Take York Region as another example. Faced with criticism that violent crime had risen dramatically in Ontario since the Liberals took office, a Liberal MP from York Region called such criticism “false and misleading” and declared “our community is safe,” citing the York Region Police’s published crime statistics. But what do York Region crime statistics actually show?

Like in Toronto, in the first half of 2024 auto thefts were down significantly versus the first half of 2023, and weapons violations and sexual violations were also down. However, assaults, breaking and entering, drug violations and robberies were all up. And again, the longer-term trend shows most types of crime on the rise. Despite the decline versus 2023, in the first half of 2024 auto thefts were 120 per cent higher than in 2021. And compared to 2021, the first half of 2024 in York Region saw 58 per cent more assaults, 99 per cent more breaking and entering incidents, 193 per cent more robberies, 69 per cent more firearm violations and 51 per cent more violations with other weapons.

Across Canada, That’s just a fact. Statistics Canada’s violent crime severity index in 2023 was 41 per cent higher than in 2014, and a recent report from the Ottawa-based Macdonald-Laurier Institute revealed a surge in violent crime in Canada’s largest urban centres.

However you crunch the numbers, the Trudeau government’s record on crime is nothing to boast about.

Author:

Matthew Lau

Adjunct Scholar, Fraser Institute

Economy

Canadians should understand costs of expanding Old Age Security

Published on October 13, 2024

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

In yet another high-stakes maneuver in the fall session of Parliament, the Bloc Québécois recently tabled a motion urging the Trudeau government to support Bill C-319, which would increase Old Age Security (OAS) payments for seniors aged 65 to 74 by 10 per cent. The motion passed and the Bloc is threatening to trigger an election if the Trudeau government doesn’t give the bill final approval before October 29.

Meanwhile, according to a new poll, 79 per cent of Canadians “support or somewhat support” the OAS increase. But crucially, the poll provided no information to respondents about the costs associated with expanding OAS, even though Canadians should understand the costs before they pledge support for any government program.

Consider this—according to past polling, more than two-thirds of Canadians expressed support for the Trudeau government’s national dental care, $10-a-day daycare, and pharmacare programs. Yet once respondents were made aware of potential tax increases (specifically, increases to the GST), support plummeted to less than 50 per cent for all three programs.

Clearly, support for government programs can change dramatically once Canadians understand the costs since they ultimately must pay those costs. So, that being said, what are the costs of a 10 per cent increase in OAS payments for seniors aged 65 to 74?

According to the Parliamentary Budget Officer Yves Giroux, the policy would cost more than $3 billion a year, with a five-year price tag of $16.1 billion—a “significant chunk of change” in his words.

Based on its latest budget, the Trudeau government expects to run deficits of at least $20.0 billion for the next five years and rack up more than $400 billion in new debt by 2028/29. If the government borrows more money to pay for increased OAS benefits, that debt number will grow even larger.

And again, Canadians will ultimately bear the costs of an expanded OAS through higher taxes in the future because Canadians must pay interest on government debt. This fiscal year (2024/25) federal debt interest costs are already expected to reach $54.1 billion—which is equal to the entire amount raised by the GST. These are taxpayer dollars that won’t go towards any services or programs for Canadians, and interest costs will continue to grow as the government adds more and more debt.

Finally, in addition to being costly, the plan is poorly targeted. While some programs such as the Guaranteed Income Supplement (GIS) provide additional income support to low-income seniors, OAS provides support to many upper middle-income seniors. Indeed, based on current thresholds, individual seniors (aged 65 to 74) earning up to $148,451 per year are eligible to receive OAS (though seniors earning more than $90,997 of income don’t receive the full amount). Therefore, if Bill C-319 becomes law, a senior couple with a combined household income of nearly $300,000 will receive an increase in their OAS payments.

Increasing OAS payments will cost billions each year while supplementing the income of many seniors who aren’t in need. Despite the political theatre in Ottawa, Canadians are ultimately the ones who will foot the bill.