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Adjournment Proceedings

In an adjournment debate, Conservative member Greg McLean raised concerns about Canada’s debt, saying the government owes nearly $1.5 trillion, must refinance about a third of it in the coming year, and faces rising interest costs on top of the $57 billion it already pays. He argued the government should cut spending now to avoid cutting services like health care later. Liberal member Ryan Turnbull replied that Canada has the strongest fiscal position in the G7, with the lowest net debt-to-GDP ratio and a AAA credit rating, and said the government is investing in workers, businesses, and infrastructure while the economy grows, which he said will bring in more tax revenue and lower the deficit. The exchange remained focused on debt and spending throughout.Written by AI from the debate. Updated .

Official text

4 statements

Greg McLean

Conservative

Linked statement

“Canada has too much debt. The federal government owes nearly $1.5 trillion, and about one-third of that must be refinanced in the next year. With interest rates going up, our interest payments will skyrocket past the $57 billion we already pay. The government needs to cut back its spending.”
Official Hansard

Madam Speaker, I rise today to raise what I have raised in this House many times: the problem with Canada’s mounting debt. We talked about this back in the spring when I last asked a question about it. I have since heard throughout the summer about all kinds of spending the government wants to do that was not part of the $65-billion deficit that it indicated in last year’s spring update. Spending is continuing to mount with the government. It is as if we have a new economist as our Prime Minister who has not understood the problem with the escalating debt we have in this country. Let me give some examples, because we are a basket case when we look at the total amount of debt that Canadians have, not just government debt in Canada. The national government debt alone is approaching $1.5 trillion. Provincial debts on top of that amount to almost $1 trillion at this point in time. Of course, there is always the other debt, and that is the one that Canadians hold. Canadian individual household debt amounts to about $3.2 trillion, and then corporately Canadians have about $3.8 trillion outstanding. This is an amazing amount of debt. Combined, as an actual function of GDP, Canada, government-wise, has about 100% of its debt to GDP at the government level, about 101% at the household level and about 118% at the corporate level. That means 318% of Canada’s GDP is held in debt, debt that it has to pay interest on. We are concerned here about the federal government’s debt, because I cannot argue about all the rest. There are impacts throughout the rest of the debt based on what happens at the federal level. The more the federal government spends, the more it goes into debt and the more it is going to have to pay in interest. The more it pays in interest, the more debt outstanding causes other interest rates to go up, including for all the financial debt outstanding to corporations and all the debt outstanding for mortgages and loans to consumers. This is a massive amount of money. We have all seen that around the world, central banks are increasing their lending rates right now. That means that the debt profile is going to continue to go up and the amount of interest paid is going to continue to go up. Why is this so significant for the federal government? It is because fully 29% of the Government of Canada’s outstanding debt is due within the next year. If we think about how much money is going to have to be refinanced, 29% of almost $1.5 trillion is going to be refinanced within the next 12 months. That is an amazing amount of money, first of all, to go to debt markets. Some of that is expiring debt, and some of it is going to be new debt. I think there is going to be more new debt with the way the government is spending money, but that is just what is expected to be renewed at this point in time. That will mean that the $57 billion Canadians are actually paying in interest payments right now is going to skyrocket. Think about that. Think about the actual rate that the government pays right now, which is about 2.5%, as a debt profile across its full portfolio. Think about one-third of that falling off and paying 100 basis points more. This is fully one-third of $1.5 trillion, or $500 billion. Where we are paying 1% more, this is going to impact Canadians significantly. We are going to have higher debt payments and higher interest payments as a result of the government’s profligate spending. The issue we want to get to is how we get to a better spending profile. Short-term financing is not taken by the provinces. All the provinces have a much more flat, low-impact duration for when their payments are due. The federal government is the one that is the most ramped up toward the front end of the repayment schedule. When I heard the finance minister for the government talk this summer about—

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Ryan Turnbull

Liberal
“Our government manages money well. Canada has the lowest debt ratio and top credit rating among major economies, and our economy is growing fast. We cut spending where we could and cut business taxes to bring in huge new investments. This will bring in more tax revenue and lower our deficit.”

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  • A repeated line

    “Canada has the strongest fiscal position in the G7.”

    Said 14 times by 7 members since May 1.

    Every time it was said
Official Hansard

Madam Speaker, it is great to be here tonight to answer my colleague’s question. Let us put this in perspective. Canada has the strongest fiscal position in the G7. It has the lowest net debt-to-GDP ratio. It has a AAA credit rating, which only one other country in the G7 enjoys, which is Germany. This gives it a relatively low debt service cost. The IMF has confirmed that Canada is projected to have the second-strongest growth in the G7. When the current government came into power under the Prime Minister’s leadership, we launched a comprehensive expenditure review, which found $60 billion in savings in terms of optimizing operational budgets and looking for ways to optimize the way the government operates. It was a significant savings exercise. We are focused on a capital budgeting framework, which we developed, and capital formation in the economy is really why the government has moved forward with generational investments in housing, infrastructure and defence, as well as innovation- and productivity-boosting tax measures. This is all to create a virtuous circle within the economy of investment, higher growth and additional tax revenues, which can move us down the path toward reducing our deficit. An “investment supercycle” is what TD Bank has called it recently. I think RBC also called it the same, which is a positive feedback loop of additional investment. We are seeing that working. Canada has added 217,000 jobs, which is twice the rate of the United States. We have had 3.3% second-quarter growth of GDP, the fastest in the G7. Per capita GDP grew by 3.9% in Q2 as real GDP increased and population continued to decline in Canada. Business investment grew at 8.9%, and foreign direct investment is at a nearly 20-year high at $97 billion. We also saw, out of the Prime Minister’s investment summit just recently, that our government attracted from domestic investors, our major financial institutions and pension plans, commitments of almost $500 billion of new investment. Obviously now we have to work to ensure that there is a project pipeline of viable, bankable projects that can be financed by domestic and global investors, but these signs are good news. At the investment summit, as I am sure the member opposite can agree, the Prime Minister announced that we are reducing, cutting in half, our marginal effective tax rate on new business investment, making Canada the most tax-competitive advanced economy in the entire world. That is from a 13% marginal effective tax rate to a 6.4% marginal effective tax rate. That is 10% lower than in the United States, one-third of the OECD average and one-quarter of the G7 average, and it now will apply from 15% of capital assets to 65% of capital assets in our economy. That is going to bring more investment into this country and allow, again, that investment supercycle in Canada to take place. This is responsible fiscal management from our government. I understand the member opposite’s concerns, but I think we have this.

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Greg McLean

Conservative
“The government needs to deal with our debt now before it becomes a crisis. Canada must refinance almost a third of its debt this year, and interest costs are rising while the government keeps overspending. If we do not act early, the government will end up cutting services like health care later.”
Official Hansard

Madam Speaker, I thank my colleague for the numbers he is putting on the table. We do need to address this. I know that the government has been very good at always pointing out that it has to do something because there is a crisis. The crisis happens because its members have not paid attention to what is in front of them. They are always responding to what has happened behind them. This is something that has already happened. Twenty-nine per cent of our debt has to be refinanced at the Canadian government level this year. It is going to have huge impacts upon Canadians writ large. The amount of interest going out the door is going to continue to mount. The government continues to run deficits as if there is no tomorrow. We have to get ahead of this. This is my putting on the table for the government, “Address this now before it becomes a crisis and you have to do something in the rearview mirror.” This was faced by the Chrétien-Martin government way back when. The result was, of course, to cut health care funding for Canadians. We want to make sure the government is ahead of it this time.

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Ryan Turnbull

Liberal
“Our government is building a strong economy by investing in workers, businesses, and infrastructure. We are spending this money responsibly, and our economy has grown for two quarters in a row.”
Official Hansard

Madam Speaker, Canadians elected our government with a mandate to take bold action and build the strongest economy in the G7. That is exactly what we are up to. That is exactly what we are focused on. Budget 2025, of course, delivered on that mandate, and our government’s next budget will do the same. It will strengthen our plan to build the strongest economy in the G7 by making generational investments, while preserving Canada’s strong fiscal advantage. We are investing in the workers, businesses and nation-building infrastructure that will drive economic growth and strengthen Canada’s competitiveness, building the strongest economy that we can build and realizing our full potential. At the same time, we are ensuring that those investments are made responsibly, laying a clear path toward long-term prosperity and sustainability for our country. Canadians want the standard of living in this country to go up and that is exactly what we are focused on. That is why seeing real GDP growth in this country per capita for two quarters in a row is significant progress.

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