Debt and deficits are sometimes uncomfortable but necessary subjects to talk about. This is especially important in the context of the recent Federal Liberal Government’s budget, and some of the markers showing Canada could be headed to a crisis. Recently, Conservative Party of Canada leader Pierre Poilievre released the second in a series of in-depth documentaries that unpack some of Canada’s fiscal and monetary challenges. Coined “Debtonation,” it speaks to the challenges Canada could face. It builds a case confirmed by the release of the Liberals’ Budget and Justin Trudeau’s fiscal management over the last decade.
Over the last decade, Prime Minister Justin Trudeau has led the country, and we have seen four concerning trends in Canada’s fiscal and monetary health. These trends, which history has shown, lead to a debt crisis… asset price inflation, large account deficits, sustained debt buildups, and falling output. While Conservatives have been sounding the alarm on sustained debt and deficits for years, Canada may be reaching the crisis point sooner than we think.
Let’s look at the facts. As of today, Canada's total debt is estimated to be around $10.2 trillion, which is roughly 3.5 times our $2.6 trillion economy. This debt increased by 28.5% in the last nine years, while our GDP only grew by 14.1%. This debt is growing at almost twice the rate of economic growth and is split between government, corporate, and consumers; it is 347% of our GDP. Not only do we have the lowest GDP in the G7, but out of the 48 most significant financial crises in history, Canada is currently in the fourth worst position out of jurisdictions that saw a debt crisis.
The Liberal 2024 budget is almost universally panned, but the critics are, in some cases, surprising… including the former Liberal-appointed Governor of the Bank of Canada, who shared he thought it is the worst budget since 1982. With a 40+ billion-dollar deficit this year, we will spend more on servicing the debt than we are expected to collect in GST and more than we spend on healthcare or the military. Additionally, the budget lacks focus on promoting private sector investment and job creation, which are essential for a thriving economy. It clearly shows an “Ottawa knows best” attitude. Overall, the Liberal budget puts Canada on a dangerous path toward economic instability and dangerously close to a debt crisis.
Conservatives have criticized the Liberal government's handling of the economy and public finances, shedding some light on their overspending and mismanagement of taxpayer dollars. Prime examples are the ArriveSCAM, WE Charity, and the out-of-control costs on consultants… but we must be very concerned about the overall fiscal management. Pierre Poilievre has argued that the government's monetary management has brought Canada to the edge of a precipice.
The consequences do not affect the Liberals, the wealthy, or the connected. They are fine and even prospering with asset inflation and well-connected government contracts, but those who face the brunt of the pain are regular Canadians who are facing skyrocketing costs, can’t afford food and necessities, and are paying more because of rising interest rates on the debt they have. Canadians need better. Conservatives will balance the budget, keep spending in check, and focus on delivering for the people to ensure that Canadians once again have control of their lives.