Prime Minister Justin Trudeau and former deputy prime minister and finance minister Chrystia Freeland pose for a photo before the tabling of the Fall Economic Statement in the House of Commons on Nov. 3, 2022.Justin Tang/The Canadian Press
Jake Fuss and Grady Munro are fiscal policy analysts at the Fraser Institute.
On Monday, after weeks of turmoil and speculation, Prime Minister Justin Trudeau told Canadians he will resign after the Liberal Party chooses a new leader. There will be much talk about his legacy, but the modern Trudeau era was distinguished by, among other things, unprecedented levels of government spending.
The numbers don’t lie.
For example, from 2018 to 2023, the Trudeau government recorded the six highest levels of spending (on a per-person basis, after adjusting for inflation) in Canadian history (even after excluding emergency spending during the pandemic) – higher than during the Great Depression, both world wars and the height of the global financial crisis in 2008-09.
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Unsurprisingly, the government was unable to balance the budget during Mr. Trudeau’s nine years in power. After first being elected in 2015, he promised to balance the budget by 2019 – then ran nine consecutive deficits, including an astonishing $61.9-billion deficit for the 2023-24 fiscal year, the largest of any year outside the pandemic.
The result? Historically high levels of government debt. From 2020 to 2023, the government racked up the four highest years of total federal debt per person (adjusted for inflation) in Canadian history. Compared with 2014-15 (the last full year under Prime Minister Stephen Harper), federal debt per person had increased by $14,127 as of 2023-24.
While a portion of this debt accumulation took place during the pandemic, a sizable chunk of federal COVID-related spending was wasteful. And federal debt increased significantly before, during and after the pandemic. In short, you can’t blame COVID-19 for the Trudeau government’s wild spending and borrowing spree.
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That spending defines Mr. Trudeau’s fiscal legacy, which will burden Canadians for years to come. Spending-driven deficits and debt accumulation impose costs on Canadians, largely in the form of higher debt interest costs, which will hit $53.7-billion in 2024-25, or $1,301 a person. That’s more than all the revenue collected via the GST.
And because government borrowing pushes the responsibility of paying for today’s spending into the future, today’s debt burden will fall disproportionately on younger generations of Canadians, who will face higher taxes to finance today’s borrowing. And that growing tax burden can hurt future economic performance and the country’s ability to compete with other jurisdictions for business investment and high-skilled workers.
Under Mr. Trudeau, Canada has had an abysmal investment record. From 2014 to 2022 (the latest year of available data), inflation-adjusted total business investment (in plants, machinery, equipment and new technologies, but excluding residential construction) in Canada declined by $34-billion. During the same period, after adjusting for inflation, business investment declined by $3,748 a worker – from $20,264 in 2014 to $16,515 in 2022. Owing in part to Canada’s collapsing business investment, incomes and living standards have stagnated in recent years.
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At the same time, the Trudeau government raised taxes on top earners – the very people who help drive job creation and prosperity across the income spectrum – and increased the tax burden on middle-class Canadians. Indeed, 86 per cent of middle-income Canadian families pay more in taxes now than they did in 2015.
After approximately a decade in office, Mr. Trudeau is stepping down. In his wake, he leaves behind a record of unprecedented spending, a mountain of debt and higher taxes. It’s no wonder many Canadians are looking for change.
