What the right refuses to acknowledge is that capital investment in long-term economic growth results in increased revenue and smaller deficits down the road.
As expected when the government declared it would balance the operational budget, it redefined capital investment to include inappropriate items and is overly broad. For example, residential housing is typically excluded as capital but measures to increase housing will be included in the new framework (including tax credits!?). PBO has indicated the new definition exceeds international practice but the good news is that the government will still have to adhere to Public Sector Accounting Standards and we'll all be able to see the real numbers.
The government insists on using gross debt vs net debt to GDP vs other nations. The net debt figure deducts government assets like the pension plan which are entitlements that can't be used for any other purpose. It's extraordinarily dishonest to pick this figure. If one uses gross debt to GDP, canada isn't the best in the G7, it falls to third. Moreover, it falls from 5th of 32 advanced economies to 26th. And, technically, Canada hasn't qualified as a G7 country in some time.
Revenue is not going to increase as a result of continuous deficit spending, regardless of how one classifies it. Canada is suffering from a productivity and growth crisis. In 2025, the OECD projected Canada's real GDP growth to be 1.1%, with global OECD growth projected at 3.2%. Canada ranks 3rd last in the OECD. The OECD has projected Canada to have the lowest average annual growth rate among OECD countries for the period of 2020 to 2060. This was before Trump set our industrial and agricultural sectors on fire and the immigration system was abused to the point where GDP per capita declines regularly on a quarterly basis.
Regardless of capital investment by the government, the explosion of spending in recent years without increasing revenue generation means the government is running structural deficits in the neighbourhood of $60B. This can only go on for so long - Fitch has already downgraded our credit rating which is the beginning of borrowing becoming more expensive and a positive acceleration loop. The debt service charge is projected to double in the next five years as a result of runaway spending. There's no evidence that debt-fuelled capital spending will produce returns greater than the costs it imposes.
If business leaders, the PBO, the OECD and thinktanks are saying we should be worried about an unsustainable deficit situation, we should be probably be worried. Remember, Carney stopped being an economist when he left the Bank of England - he's a politician now. Trust the professionals.
There's a lot left out here:
As expected when the government declared it would balance the operational budget, it redefined capital investment to include inappropriate items and is overly broad. For example, residential housing is typically excluded as capital but measures to increase housing will be included in the new framework (including tax credits!?). PBO has indicated the new definition exceeds international practice but the good news is that the government will still have to adhere to Public Sector Accounting Standards and we'll all be able to see the real numbers.
The government insists on using gross debt vs net debt to GDP vs other nations. The net debt figure deducts government assets like the pension plan which are entitlements that can't be used for any other purpose. It's extraordinarily dishonest to pick this figure. If one uses gross debt to GDP, canada isn't the best in the G7, it falls to third. Moreover, it falls from 5th of 32 advanced economies to 26th. And, technically, Canada hasn't qualified as a G7 country in some time.
Revenue is not going to increase as a result of continuous deficit spending, regardless of how one classifies it. Canada is suffering from a productivity and growth crisis. In 2025, the OECD projected Canada's real GDP growth to be 1.1%, with global OECD growth projected at 3.2%. Canada ranks 3rd last in the OECD. The OECD has projected Canada to have the lowest average annual growth rate among OECD countries for the period of 2020 to 2060. This was before Trump set our industrial and agricultural sectors on fire and the immigration system was abused to the point where GDP per capita declines regularly on a quarterly basis.
Regardless of capital investment by the government, the explosion of spending in recent years without increasing revenue generation means the government is running structural deficits in the neighbourhood of $60B. This can only go on for so long - Fitch has already downgraded our credit rating which is the beginning of borrowing becoming more expensive and a positive acceleration loop. The debt service charge is projected to double in the next five years as a result of runaway spending. There's no evidence that debt-fuelled capital spending will produce returns greater than the costs it imposes.
If business leaders, the PBO, the OECD and thinktanks are saying we should be worried about an unsustainable deficit situation, we should be probably be worried. Remember, Carney stopped being an economist when he left the Bank of England - he's a politician now. Trust the professionals.