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Federal spending increases under Carney

To make a diamond dazzle, a skilled jeweller will slip a black cloth under it. The federal government pulled a similar tactic with its Spring Economic Update, setting the current state of the economy in the context of the ongoing instability in the world. In spite of trade disruptions with the USA, conflict in the Middle East, and fragile global supply chains, the government was keen to showcase that Canada’s economy grew by 1.7 percent in 2025 and is expected to have the second-fastest growth in the G7, next to the USA. But a careful examination shows a less dazzling picture. The deficit for 2025 is a staggering $66.9 billion, with no end to deficits in sight. The federal government is already $1.3 trillion in debt, and is on track to pile up $309 billion more in total debt by the end of this decade. Our cost to service all our debt is projected to increase from $54 billion this year, to $81 billion by 2030-31. History backs up the instruction from Proverbs 22:7 that “the borrower is a slave to the lender.” Just like family debt handcuffs a household from pursuing opportunities they might otherwise want to pursue, the same is true for countries. We severely limit what we can do when we have to pay billions, not even to pay off the debt, but just to pay the yearly interest.  But the federal government emphasizes that we are doing better than most G7 countries. After 9 consecutive budget deficits under Justin Trudeau, Prime Minister Carney promised:

“what we will do is to focus on reducing spending, if I’m elected…. The essence of this is to spend less, and invest more.”

When we hear our government wants to spend less to allow for more investment, we might conclude that means spending cuts will be accompanied by tax cuts to leave the private sector with more of their money. They can then invest those newly available funds in their businesses. But that’s not what Carney means by “spending less.” His plan is to have the government spend much more overall, but label some of it “investing.” Neat trick, but let’s not fall for it. His new Economic Update reveals a plan to increase spending by $83.2 billion more that the Trudeau government planned from 2025/26 through 2029/30.