Federal debt interest costs up 30% since 2023: StatsCan

Alex Dhaliwal
  |   September 26, 2024   |   Be the first to comment

The Canadian Taxpayers Federation (CTF) is calling on the Trudeau government to cut spending after a Statistics Canada report showed interest charges climbed 29% year over year.

StatsCan released its Government Finance Statistics report for the second quarter on Tuesday, revealing the substantial increase in financial interest.

“About 11 cents out of every single dollar from taxpayers is now going to pay interest charges on the debt,” said Franco Terrazzano, CTF Federal Director. “Taxpayers are losing out on more than $1 billion every week that can’t be used to lower taxes or improve services because that money is going to pay interest on the government credit card.”

“This report should be a wake-up call for Prime Minister Justin Trudeau,” Terrazzano said. “The feds need to cut spending and balance the budget before debt interest charges blow an even bigger hole in the budget.”

Finance department managers testified at the Senate finance committee last October 3 but could not relay debt interest costs at the time.

October 5 testimony by David Dodge, a former Bank of Canada governor, conveyed that Parliament must curb deficit spending now or “pick up the pieces” later.

One study estimates Canadians aged 16 can expect to pay the equivalent of $29,663 over their lifetime in additional personal income taxes thanks to reckless Liberal spending.

The study, Pandemic Outlook And Recovery, identified the cost of living as a primary concern for Canadians. Of 2,000 respondents surveyed, 36% acknowledged they may be worse off financially than their parents.

Dodge said Canadians may have to confront an “unpleasant” future where they pay more for fewer services.

A prior letter penned for the Budget Office by finance managers claimed budget forecasts “should not be viewed as a prediction of the future.”

On May 16, 2023, Finance Minister Chrystia Freeland testified at the Commons Finance Committee that debt charges are “handleable,” but failed to elaborate. “I am really opposed to fiscal fear-mongering by the Conservatives,” Freeland told MPs at the time. 

Federal debt servicing charges rose 80% last fiscal year from pre-pandemic levels, up $19.5 billion. National debt totalled $1.2 trillion at the end of 2023. 

Minister Freeland estimated debt charges at $43.9 billion last year in her budgetary document A Made In Canada Plan — nearly equivalent to the $49.4 billion allocated for Medicare.

In fiscal year 2024/25, the Trudeau government is expected to pay $54.1 billion in debt interest — $2.0 billion more than on provincial health care transfers.

The Department of Finance also raised the debt ceiling again in June to $2.13 trillion in amendments tabled to the Borrowing Authority Act. That marks a trillion-dollar increase over the previous three years.

Minister Freeland has yet to explain the rising debt ceiling and rejected the claim they had written a blank cheque, contending that government spending is under control.

In a 2020 speech at the Toronto Global Forum, she said cabinet would have to cut spending at some point but did not clarify a spending limit. “There are no free lunches,” she said.

In the 2022 Fall Economic Statement, Minister Freeland said she would balance the budget in 2027. This marked an amendment to Prime Minister Justin Trudeau's campaign promise in 2015 of a balanced budget four years later. 

A balanced budget was then predicted for 2035 last year, at which point the feds would rack up $487 billion in interest charges on the national debt.

“Waiting until 2035 to balance the budget is too long,” Terrazzano said. Parliament has not balanced a budget since 2007.

Now, the Trudeau government is not expected to balance the budget until 2040, according to supplementary data released by the Budget Office in its most recent Fiscal Sustainability Report. 

“This government has given taxpayers every reason to believe it will never balance the budget,” the CTF added.

Alex Dhaliwal

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