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0 The federal Liberal government tabled a budget Tuesday that calls for billions of dollars in new spending — something they’ve done in every other fiscal document for the last seven years.
A review of federal finances shows just how big the government has become in recent years as a result. Ottawa is projected to spend about $151 billion more next year than it did in 2014-15, the year before Prime Minister Justin Trudeau and his party won government in November.
It’s not just expenses — federal public service employment has increased by 31 per cent in seven years. The government has added nearly 80,000 employees to the roster during its tenure.
Total expenses for the federal government were $280.4 billion in the 2014-15 fiscal year.
Adjusted for inflation, that’s roughly $345.5 billion in today’s dollars.
Finance Minister Chrystia Freeland’s budget projects total expenses will be $496.9 billion in 2023-24 — a year when there’s no extraordinary pandemic-related spending.
And under Freeland’s current plan, the spending will move higher in the years to come. Her budget projects spending will ring in at $555.7 billion in 2027-28.
Total program expenses as a share of the economy — a figure that includes all government spending other than public debt charges — is at its highest point in three decades.
In 2014-15, program spending was 12.8 per cent of gross domestic product (GDP). It’s over 16 per cent now.
“This Liberal government has put their stamp on the state and the economy — they’ve taken us in a new direction. Even before the pandemic, they had pretty big budgets,” Sahir Khan, a former deputy parliamentary budget officer and the executive vice-president of the uOttawa Institute of Fiscal Studies and Democracy, told CBC News.
“The state has gotten bigger, there’s no question. They abandoned the Chrétien-Martin-Harper political consensus as soon as they got into power,” said Khan, pointing to previous governments that kept spending in the 12-13 per cent range of GDP.
The eye-popping spending increases may seem like a problem but Khan said it’s sustainable as long as the economy continues to grow.
“It will work, it’s functional and it’s fiscally sustainable. We’re a $3-trillion dollar economy,” he said.
A lot of this spending is possible because of cuts made in the 1990s when Canada was in worse financial shape.
“Chrétien-Martin did the heavy lifting. That’s what’s given us the room now,” Khan said.
Trudeau himself mounted a similar defence this week when asked if he can really describe his budget as “fiscally responsible” given the plan to spend more now and into the future.
“We have the lowest deficit in the G7, the best debt-to-GDP ratio and we’ve preserved our AAA credit rating. We’re one of the three largest economies in the world with a AAA credit rating, which means that our plan is responsible,” he said.
Federal debt climbs to $1.2 trillion
The current Liberal government has never posted a budget surplus.
Under both former finance minister Bill Morneau and Freeland, Ottawa has always been in the red.
That’s added to the federal debt, which, at last check, is roughly $1.2 trillion — double the $612.3 billion it was when Trudeau and his team took the reins of power.
The government is no longer projecting when it will return to a balanced budget.
While the fall economic statement tabled last November suggested Ottawa’s budget might be back in the black in 2027-28, Freeland dumped that projection in Tuesday’s budget after announcing some new spending on health and dental care and a series of tax credits to spur green tech and energy development.
Franco Terrazzano is the federal director of the Canadian Taxpayers Federation, a group that advocates for lower spending and a smaller government.
He said he doesn’t think the Liberal government will ever balance the budget.
“Fiscal management, it’s like a muscle, if you don’t flex it and if you don’t use it, you lose it. They just don’t have the skill set anymore. The government wants to spend more on everything forever and that’s not a good way to manage the public purse,” Terrazzano said.
“The government is spending so much that they could win the lottery every single day of the year and they’d still never pay down the deficit. They’d just spend more.”
The COVID-19 pandemic was a massive shock to the country and its finances.
In an effort to keep the economy afloat, Ottawa rolled out a stimulus program to backstop business and send cheques to the unemployed, among other initiatives.
But it wasn’t just the $327-billion deficit in 2020-21 that added to the national debt. It’s grown every year this government has been in power — in good economic times and bad.
The party that promised “real change” in the 2015 election has delivered on its commitment to fundamentally shift the role of government in Canadian life.
“I don’t think this big spending has been hidden. This is what was advertised. They promised a centre-left shift after the Harper years,” Khan said.
Under Trudeau, for example, the government has rolled out a more generous Canada Child Benefit, created a national child care program, increased Guaranteed Income Supplement (GIS) payments for impoverished seniors, hiked Old Age Security payouts for some of the elderly and spent tens of billions of dollars on Indigenous programming.
It has invested more in infrastructure, housing, health care and, with Tuesday’s budget, it’s poised to stand up a dental care program that will see the federal treasury cover the cost of dentistry for millions of Canadians.
The government also has resettled tens of thousands of refugees and introduced a new Canada Workers’ Benefit for low-wage people, among many other measures.
While some of this spending has been offset by tax increases (the government increased income tax rates for higher income earners, for example) and higher revenues from a growing economy, a lot of it has been paid for by taking on more debt.
The cost to service all that debt has increased. Interest charges on the debt will cost taxpayers almost $44 billion in 2023. Interest charges are expected to reach $50 billion in 2027.
While relatively high in numerical terms, public debt charges as a percentage of GDP are still lower than they were in the 1990s.
The government projects debt charges will be about 2 per cent of GDP compared to nearly six per cent in 1991.
That’s cold comfort to Terrazzano.
“Every year, there’s more money wasted on interest charges. That’s money that can’t be used to improve health care or lower taxes. It’s just a bunch of money going to bond fund managers,” he said.
Public service employment has grown by 31 per cent
Now that the government does a lot more than it did before Trudeau took over, the size of the bureaucracy has increased in lockstep.
Federal statistics on the size of the public service show that the number of people on the government’s payroll has climbed considerably in seven years.
In 2015, there were 257,034 federal workers — a figure that includes people working in what the government calls “core public administration” and “separate agencies.”
Separate agencies include the Canada Revenue Service, Parks Canada, the Canadian Nuclear Safety Commission, the Canadian Food Inspection Agency and more than a dozen others.
These numbers, however, do not include the Canadian Armed Forces (CAF), the RCMP, political staff and some people working overseas.
Also excluded are workers at federal Crown corporations like Canada Post, CBC/Radio-Canada and Via Rail, which generate revenue to cover some of their costs.
In 2022, there were 335,957 federal public servants — an increase of 30.7 per cent compared to seven years before.
Canada’s population, meanwhile, grew by about 8.5 per cent in the same time period.
That means the federal public service’s employment growth rate is three times greater than the population growth rate.
