Despite Prime Minister Mark Carney's promises of a "transformative" budget to tackle generational challenges, a new Fraser Institute analysis exposes it as more of the same failed fiscal policy from the Trudeau era—only worse.
The Carney government plans to spend more, borrow more, and accumulate greater debt than even its predecessor, notorious for reckless finances. Yet, it hides behind a misleading claim: Canada boasts the G7's lowest net debt-to-GDP ratio at 13%, compared to Germany's 49%, justifying "fiscal space" for deficits. This metric is deceptive.
It includes $890 billion in Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) assets—funds untouchable without slashing pensioners' benefits. Canada is nearly alone among industrialized nations in counting these to offset debt, artificially inflating its "strong" position.
A truer measure—total debt-to-GDP—paints a grim picture. Canada's stands at 113%, fifth-highest in the G7, surpassing the UK (103%) and Germany (64%), and trailing only France (117%). Over the past decade, Canada's total debt burden surged 25 percentage points—the fastest in the G7—ahead of France's 17 points.
G7 nations already rank among the world's most indebted. Under Carney, Canada's weakening finances promise further decline. The Institute urges Carney to honour his pledge for straight talk: abandon this flawed metric and end justifications for unchecked spending and deficits.
Carney's 2025 budget aims to stimulate Canada's economy amid U.S. tariffs through $141 billion in new spending over five years, targeting $1 trillion in public-private investments.
Key measures include targeted tax incentives like accelerated expensing for machinery and enhanced SR&ED credits; major infrastructure via $51 billion Build Communities Strong Fund and trade corridors; talent attraction with $1.7 billion to recruit researchers; and pro-competition reforms. This offsets $52 billion in operational cuts for growth-focused deficits.