Finance Department unsure how much it spends annually on debt interest

Finance Minister Chrystia Freeland estimated debt charges at $43.9 billion this fiscal year in Budget 2023 — nearly equivalent to the $49.4 billion allocated for medicare.

Finance Department unsure how much it spends annually on debt interest
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Canada’s Finance Department does not know how much taxpayers are on the hook for in debt interest costs — yeah, you heard that right. 

Finance department managers testified at the Senate finance committee October 3 and provided no reason why the figure eluded them.

Senator Elizabeth Marshall, a former provincial auditor, expressed disbelief over the fact, reported Blacklock’s Reporter

“I just made that statement that you can’t give us a number for revised public debt charges,” she told the committee. “I find the government is very secretive about information.”

Finance Minister Chrystia Freeland testified May 16 at the Commons finance committee that debt charges are “handleable” but did not elaborate.

“I am really opposed to fiscal fear mongering by the Conservatives,” she told MPs. “I think it’s important to put all numbers in context. Our debt service charges are absolutely handleable.”

Interest rates have risen a half point since Parliament tabled the budget March 28, segwaying to Marshall’s next question.

The senator asked finance if they had a revised estimate for public debt charges this year given that interest rates are up from 2022.

Evelyn Dancey, assistant deputy finance minister, told the senator they did not, reported Blacklock’s Reporter.

“Is it that you have the number and won’t disclose it, or you don’t have the number?” asked Marshall. She replied: “Currently we are undertaking our fall forecast.” 

“We [will] update the forecast,” assured the deputy finance minister.

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

In Budget 2023, the finance department projected debt servicing would cost taxpayers $50.3 billion by 2027, but that figure could jump depending on the fall forecast.

At the Senate banking committee on October 5, former Bank of Canada governor David Dodge testified that Parliament must curb deficit spending now or “pick up the pieces” later.

He said Canadians may be left with no choice but to confront an “unpleasant” future, reported Blacklock’s Reporter.

“Charges for public debt incurred in the past eat up an even larger share of revenues as interest rates rise,” continued Dodge. 

“Borrowing is resulting in increased upward pressure on prices and interest rates and this will likely continue over the next decade,” said the former bank governor. 

“There are no quick fixes,” he added. “Markets are forcing an adjustment however unpleasant that adjustment may be.”

According to Blacklock’s Reporter, Parliament raised the federal debt ceiling from $1.168 trillion to $1.831 trillion (56%) in 2021 by introducing amendments to the Borrowing Authority Act.

Cabinet has not set any target to balance the budget, having last done so in 2007.

Dodge in earlier testimony September 25 at the Commons finance committee warned taxpayers had no option but to pay more for fewer services, calling it a terrible outlook. 

“That is a terrible job, and I use the words advisedly,” he said.

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