Budget 2023 confirms no balanced budget by 2027, tens of billions in debt interest payments

According to Budget 2023, federal debt servicing charges rose 80% this fiscal year from pre-pandemic levels in 2020, with interest charges on national debt costing $43.9 billion this year — up $19.5 billion.

  • Rebel News
  • April 04, 2023
  • News Analysis
Budget 2023 confirms no balanced budget by 2027, tens of billions in debt interest payments
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"This budget is giving taxpayers big deficits, more money wasted on interest charges and higher taxes," said Franco Terrazzano, Federal Director of the Canadians Taxpayers Federation (CTF). "This government doesn't care about fiscal prudence or helping taxpayers."

According to Blacklock's Reporter, the budget forecasts debt costs will continue to rise year over year through 2028.

The debt will total $1.2 trillion by the end of 2023. Debt interest charges will cost taxpayers almost $44 billion in 2023 and reach $50 billion in 2027.

On March 28, cabinet pledged to cut spending on travel and private consultants by "roughly 15%" and "eligible spending by departments and agencies" by about 3%. 

The Ministry of Finance claimed it would save $14 billion through painless cuts to internal budgets.

However, the federal deficit is expected to reach $40 billion in 2023, almost $10 billion higher than forecast in the fiscal update. 

"The government overspent its own 2022 budget by $18 billion. The government promises to find $3.95 billion in savings in 2023, but total spending is increasing by another $20 billion in 2023 to $490.5 billion," stated the taxpayers' group in a release.

Prime Minister Justin Trudeau initially said he would run a few "modest" deficits before returning to budget balance in 2019. Before the COVID pandemic, Ottawa was projected to miss that balanced budget by $20 billion. 

The most recent fiscal update projected a $4.5 billion surplus in 2027. Budget 2023 is now forecasting a $14-billion deficit that year.

On April 1, the government increased the carbon tax to 14 cents per litre of gasoline and 12 cents per cubic metre of natural gas. Federal alcohol taxes will also increase by 2%. 

Budget 2023 also includes a tax on share buybacks, taxation on dividends received by financial institutions, higher taxes on top earners and intergenerational business transfers.

The CTF noted the need for a plan to balance the budget because "indefinitely raising taxes and running deficits" won't cut it.

"If you're spending more money, you're doing a bad job of finding savings," said Terrazzano.

"Those [$14 billion] savings will come from government operations," Freeland told reporters. "I think those savings are eminently obtainable." It was "really important to be a fiscally responsible government," she added.

"Where are these savings going to come from? Does that include layoffs or hiring freezes?" asked a reporter. "No, it does not," replied Freeland.

On March 28, Opposition leader Pierre Poilievre called Freeland "the Minister of Inflation" and said taxpayers would face higher costs. 

"A year ago, she said we're determined that the debt-to-GDP ratio must continue to decline — it's going up," said Poilievre at the House of Commons.

"Our pandemic deficits are and must continue to be reduced — they're going up."

The Fraser Institute uncovered that total federal spending increased 27% in 2022/2023 compared to 2019/20 — an average annual increase of 9%. 

The COVID pandemic expenditures partly increased federal spending by 73% to $644.2 billion in 2020/21 before declining by 21% to an estimated $508 billion in 2021/22. 

According to the Institute, much of the increased federal spending remained independent of the pandemic, "representing a permanent long-term ramping up of federal expenditure."

"The extraordinary debts we incurred must be paid down," continued Poilievre. "They're not only not being paid down but also going up." 

Cabinet's last pre-pandemic budget in 2020 totalled $373.5 billion. This year's federal spending is projected at $496.6 billion, with half-trillion budgets forecast in future years.

This year's deficit is estimated at $40.1 billion. Parliament has not balanced a budget since 2007.

"The deficit is projected to decline yearly," claimed Associate Finance Minister Randy Boissonnault. "Public debt charges, as a share of the economy, will remain historically low."

Poilievre responded: "Deficits drive inflation."

"They promised restraint, but instead, what they delivered was $60 billion in new spending [or] $4,200 for every family in Canada," he added. 

"These are already families who are skipping meals because they can't afford food — whose [adult children] are living in their basements because they can't afford housing."

Budget 2023 proposed two new measures for low-income families. Cabinet will increase GST credits by $2.5 billion this year, equivalent to $467 for families.

While the government provides some one-time GST rebates, no broad-based tax cuts exist.

"Giving a few families back some of their GST money is just an admission there's a problem without looking for a serious solution," said Terrazzano. "Taxpayers need real tax relief."

"All they have delivered is more debt, more inflation and more costs on the backs of the hardworking and beleaguered people of this country," said Poilievre. "That is why Conservatives…voted against this [budget]."

Minister of Families Karina Gould claimed the Conservatives voted against Canadians by voting against Budget 2023.

“What he’s voting against is grocery rebates for $11 million Canadians…and a tax-free savings account for first-time homebuyers,” she said. “[Poilievre] is not there for Canadians — we are.”

“We’ve had 8 years of these multi-billion dollar government programs, and what has it given us?” Poilievre posed to Gould. 

“Forty-year highs in inflation. One in five Canadians skipping meals because they can’t afford groceries. Nine in ten young people are stuck in their parents’ basement because they can’t afford housing.”

“These hard-working people deserve a country that works for them - not an out-of-control, tax-squandering NDP budget like we have [in 2023].”

Canada Liberal Party of Canada Economy News Analysis
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