Official Hansard
Madam Speaker, the government’s economic plan is not working. We now have enough data coming in over the last 18 months of the Prime Minister’s tenure to know that its plan is not working. That is confirmed by the most recent report from the Parliamentary Budget Officer of October 20, which warns that the federal debt is growing at two times the pace of the federal deficit. That is because the government is capitalizing the borrowing it is doing and putting it on the balance sheet through the use of arm’s-length entities like Crown corporations rather than expensing it on the profit and loss statement, on the budget. This accounting is in some ways hiding the pace of the growth of the federal debt. As a result, the PBO projects that the federal debt will increase this year from 41% of GDP to 43% of GDP by decade’s end, going from $1.3 trillion to $1.67 trillion, an increase of some $367 billion. This is despite the fact that the Liberal Party and the Prime Minister promised in the last election to ensure, “debt-to-GDP declines over the budget horizon.” Clearly, the government is not abiding by its commitment in its last platform. This massive growth in the federal debt is having real consequences. As a result of this acceleration of the growth in the federal debt, two times the pace of the deficit, interest on the national debt is now starting to grow at an alarming pace. Just several years ago, interest on the national debt cost six cents for every tax dollar of revenue. Today, it is 10.5¢ for every tax dollar of revenue. By decade’s end, in a mere just over three years, it is going to be almost 14¢ of every tax dollar, which is projected to be approximately $83 billion a year. That is almost one and a half times what the federal government spends in cash transfers on public health care. For those who say that that amount is not nearly as high as the crisis we faced in the 1980s and 1990s, I looked at the interest expense ratio charts the government produces. When the interest on the national debt started to accelerate in the late 1970s, if I recall correctly, in 1977 it was a mere 14¢ of every tax dollar. A short six or seven years later, it had skyrocketed well beyond 20¢, hitting 30¢ per tax dollar in less than a decade, leading to the fiscal crisis of the mid-1990s. This growth in interest on the national debt is concerning. It is an alarm that has been raised by many of the folks who helped get Canada on the right fiscal track in the late 1990s, like Don Drummond, who has been saying that the government should abide by its fiscal anchors and keep the debt-to-GDP ratio on a declining track, and that we are putting the very hard-earned gains of the 1990s at risk. Those hard-earned gains led to a much lower cost of capital for this country relative to other economic peers such as the United States. That is being put at risk with the government’s reckless spending. Even though the government is borrowing at twice the pace and is spending way more than the previous Trudeau government, with deficits double that of the last budget of Minister Chrystia Freeland at almost 2% rather than 1% of GDP, and is spending tons of money and borrowing even more money, the economy is not doing well. In fact, economic growth is being downgraded. The PBO downgraded economic growth for this year to 0.9%. That follows on the heels of other economic projections, which have downgraded growth over the last couple of months. The Bank of Canada has downgraded growth, and bank economists have downgraded growth. We are now in a situation where growth has been downgraded to less than 1% this year, effectively zero, all while affordability and inflation continue to be a problem. In fact, the markets are projecting that the Bank of Canada is going to hike interest rates. We have somewhat of a stagflationary environment here, again, proof that the government’s economic plan is not working. I would like to finish by focusing on this fact: The previous Liberal government blew through every fiscal anchor it established. I reviewed all the fiscal anchors it established. Do we remember the 2015 Liberal promise of a fiscal anchor, the one that they campaigned on in that election, that we would run budget deficits just on a temporary basis, capped at no more than $10 billion a year and just for a couple of years, and would return to budget balance? When they came to office, the Liberals threw that plan out the window, just like they chucked out the plan to reduce the debt-to-GDP ratio they made in the last election. In the Liberals’ first budget, they replaced that temporary set of deficits with a new fiscal anchor of a shrinking federal debt-to-GDP ratio over the medium term. Then they abandoned that fiscal anchor. In the fall economic statement of 2020, Minister Freeland introduced new fiscal anchors tied to labour market indicators such as employment and unemployment. These guardrails were later dropped. Then the government came forward with a new fiscal anchor, which in some ways was the old fiscal anchor. The Liberals came forward with the fiscal anchor of refocusing on reducing the debt-to-GDP ratio. They introduced that fiscal anchor in budget 2022. That ratio did not move consistently downward, and so they later abandoned that pledge. The Liberals came up with a new pledge in the fall economic statement of 2023, where they decided that their new anchor would be to keep annual deficits below 1% of GDP. Then we got a new Prime Minister and a new Liberal leader who replaced that fiscal anchor with two new fiscal anchors, abandoning the fiscal anchor he had promised in the platform and in the last budget. Those two new fiscal anchors were a declining deficit-to-GDP ratio and to balance operating expenses with revenue by 2028-29. Here we are, less than a year later, and the government is going to blow through that umpteenth fiscal anchor that it established because the PBO projects that deficits to GDP are going to be increasing rather than decreasing, from 1.8% this year to 2% in 2027-28. I would note that this fiscal anchor is double the previous fiscal anchor that Minister Freeland had established. The government and the Prime Minister are putting us on a reckless path of spending and ever-increasing deficits. That is particularly worrying when we look at what is going on with countries that are facing high debt loads, such as France, and when we look at what is going on with the pace of growth of the U.S. deficit and debt. We are not an island, and we are not a reserve currency. If there is going to be a crisis in sovereign debt borrowing, Canada is particularly vulnerable, as we were in the mid-1990s, and we will be buffeted by whatever crisis takes place outside of this country because of this ever-increasing debt and this ever-increasing interest on the debt. The PBO is highlighting what many other reports have highlighted: that the government’s economic plan is not working, that the national debt is growing at double the pace of deficits, that economic growth is slowing, that inflation is starting to take hold again and that affordability remains a crisis. For all those reasons, I encourage the House to vote for the motion.
