Canada's New Federal Budget - What's Up Doc?

What's up Doc?

Stephen Harper - Love of Power - No Deficit

Justin Trudeau - Abuse of Power - Staggering Deficit

Mark Carney - Victim of Power - Astronomical deficit

When Trudeau took power Canada's national debt approximated $616,000,000,000.00 (billion). When Trudeau exited politics Canada's national debt doubled to $1,273,000,000,000.00 (trillion).

$43.2 billion - deficit 04/24 - 03/25

$78.3 billion - projected budgeted deficit 04/25 - 03/26

That's an 81% increase in the deficit. This deficit will likely create a national debt of $2,320,000,000,000.00 (trillion). Almost double what it is now. The average annual interest rate on our debt approximates 3.4%. Half of the deficit spending will be spent on servicing the debt.

A deficit is the excess of government spending versus its total revenue, but spending does include the current portion payable of Canada's national debt. That number could rise to over $75 Billion. Oh-Oh - you were not told that.

The big question - How will Liberals spend ($2.320T - $1,273T) $1,050,000,000,000.00 (trillion) of taxpayer funds and will Canadians receive a full accounting - military, pipelines, data centres, nuclear reactors, mining, and the magical "government waste".

The projected five-year cost of capital investments is about $450,600,000,000.00 (billion). Budget documents show annual capital investment increasing from about $32.2 billion in 2024-25 to about $59.6 billion in 2029-30. That would leave approximately ($1,050T - $450.6B) $600,000,000,000.00 for the operational budget.

What does it mean?

Over the next five years, the projection is that the deficit will gradually decline to around $56.6 billion by 2029-30.

The capital investment budget is not declining over that period; in fact it is increasing (almost doubling) in the five-year horizon. So the drop in the deficit is not achieved by cutting capital spending.

The operational side is being controlled and aligned with revenues so that by about 2028-29 the operating budget is essentially balanced. Thus after that point, the remaining deficit is largely driven by capital investment.

Because the capital budget rises, the projected declining deficit primarily reflects improvements in the operational side (and stronger revenues) rather than a reduction in investment spending.

As I have stated numerous times, CUSMA and Trump are the great unknowns. Canada's fate will likely be determined in July 2026. Will national and international private/corporate investment respond to Carney's call?