Liberal Budget Fail

Liberal Budget Fail   April 21, 2025

The Liberal platform promises $130 billion in new measures over four years, adding $225 billion to federal debt. It is hurtful that Justin Trudeau's style of economics is repeated. Mark Carney, the banker, is revealed to be worse at financial management than the previous Liberal finance minister, Chrystia Freeland. There was no timeline to balance the federal budget to end Canada’s downward spiral.

The Liberals are adding new measures over the next four years, that when combined with existing spending, will add $225 billion to the federal debt. This is all borrowed money that Canada does not have. Carney also had to admit that the federal public service had grown at an unsustainable rate of 40% over the last decade under the Liberal administration, but he offered no plausible remedy. This significant increase in debt could lead to higher taxes, reduced government services, and increased interest payments, all of which will have profound implications for Canada's financial future.

One of the largest spending initiatives in the election platform unveiled Saturday is a 1%-point reduction in the lowest income tax rate from 15% to 14%.

There is also a promise to increase defense spending by $18 billion to meet the 2% NATO spending target.

Carney's plan to increase home building is to create a new agency called Build Canada Homes (BCH), which will cost about $3 billion annually. However, there are concerns that this will likely create another inefficient bureaucracy rather than properly incentivize the private sector for home building. The problem is that a government agency is not as efficient or innovative as the private sector in addressing the housing crisis, and the $ 3 billion annual cost could be better spent on other initiatives.

If re-elected, the Liberals promise to provide municipalities with $1.5 billion per year in funding to help reduce the development charges they impose on new construction.

The Liberals describe spending in four main areas:

Social: This category includes supporting the arts, rural transit, Indigenous loan guarantees, and CBC/Radio-Canada. When taken together, infrastructure funding for projects such as high-speed rail, community, and health infrastructure comes to $20 billion over four years.

Security: This file includes the $18 billion in defense spending and more than $4 billion in tariff response funding. It includes about $1.7 billion in additional spending for the RCMP to train more personnel, establish a new training academy, and boost basic pay for recruits.

Protection: This category includes healthcare initiatives such as medical school residencies and youth mental health. When combined, the healthcare initiatives will cost $3.5 billion over the next four years.

Building: The last category includes the $22 billion for housing. It also consists of the $12.5 billion for scrapping their previous mistake on capital gains taxation and the $12.5 billion to extend the Accelerated Investment Incentive.

Revenues: The Liberals only account for tariff revenue in the first year of the four-year plan. Their fantasy wish is that the consequences of the Trump tariffs will have passed by in a year or so.

This year's operating budget deficit is predicted to be just over $9 billion, a staggering figure that the Liberal platform predicts can be reduced to a mere $220 million by 2028-29. This significant deficit raises serious concerns about Canada's financial future, underscoring the urgency.

Overall, in 2025-26, the Liberal platform predicts that the annual deficit will be $62.3 billion. They hope the debt-to-GDP ratio will drop the following year as the annual deficit shrinks to $60 billion. They overlook how rising interest payments crowd out available funds for healthcare support.

In the fall economic statement, the deficit in 2025-26 was projected to be $42.2 billion before dropping to $31 billion in 2026-27. Consequently, the Liberals' financial projections prove to be little more than wishful thinking.

In traditional Liberal fashion, the gap between promise and reality is never reconciled. This lack of transparency and accountability is disappointing, as Conservative Leader Pierre Poilievre pointed out that Carney's platform would make life even more expensive. Mr. Carney plans to run an even bigger inflationary deficit than Justin Trudeau had budgeted, which should make us more skeptical and cautious about the Liberals’ financial promises.

Pierre Poilievre said Mark Carney’s fiscal plan is a ’sneaky accounting trick’ to avoid balancing the budget. Carney promised to split the budget into two streams—capital and operating spending—by balancing the operating side while running capital spending deficits. Given the new Liberal document, Canada would be seriously hurt financially with Carney Liberals at the helm.