Canada Budget 2025

 

Canada Budget November 2025

Based on the rhetoric, the Carney government's first budget was a "transformative" new plan that would overcome the "generational" challenges facing Canada.  In reality, this budget is nothing new and represents the same Liberal economic ideology that has been tried and failed for the last decade.

The budget speech was delivered with verbose claims.  Experts are now analyzing to understand that the delivered sandwich was not a satisfying meal.  The "nothing burger," with lots of word salad and no meat, had some hot sauce pushing the credit card over the limit, but little to relieve the hungry millions lined up at food banks.

Carney’s plan is similar to that of his failed predecessor.  The document titled “Canada Strong” plans to spend more, borrow more, and accumulate more debt than the Trudeau government envisioned.  However, we recall that the Trudeau government’s track record was one of reckless spending, harmful borrowing, and excessive debt accumulation.

This budget contains a deficit nearly twice the size forecast by the Liberals a year ago.  The budget projects a $ 78.3 billion total deficit — the amount of spending exceeding revenues.  The economic statement tabled last year had projected a hurtful deficit of $42.2 billion for this fiscal year, but the spendaholics outdid themselves.

The Liberals tried to use amplified rhetoric and a new accounting framework to obscure the bad numbers.  They falsely claim that Canada has the lowest net debt-to-GDP ratio among the G7 and that its strong fiscal position allows the government to run larger deficits.  Carney the banker has a serious spending problem, not a revenue problem.

There are two contrasting pathways to economic growth.  The first is to create the best possible economic environment for entrepreneurs, business owners, and investors by ensuring that the government only does what is necessary, maintains predictable and competitive taxes, and adheres to reasonable regulations.  It doesn’t try to pick winners and losers, but instead introduces policies to create a favourable climate for all businesses to succeed.  It gets out of the way wherever possible, and facilitates instead of operates.

The alternative is for the government to take an active controlling role in picking winners and losers through taxes, spending incentives, and regulations.  The idea is that a government can promote certain companies and industries as part of a comprehensive industrial policy, rather than allowing the market — comprising individual entrepreneurs, businesses, and investors — to make economic decisions.  The historical evidence is obvious.  Option one has always delivered the best results, and option two usually lags behind its potential, and sometimes brings utter misery.

Under Liberal ideology, every person has been given a pay cut or financial reduction, regardless of the source of income.  It is called “inflation” and is the dream killer of a nation.  Inflation always follows excessive repetitive government deficit spending.

Voters need to truly understand the dangerous magnitude of the cost of Canada’s indebtedness created by annual deficits.  Canadians must pay interest on federal debt.  The threat is that growing federal debt will reach an expected $2.9 trillion in 2029/30.  For perspective, federal debt stood at $1.0 trillion when the Trudeau Liberals took office in 2015.  Interest costs on that debt will rise from $53.4 billion last year to an expected $76.1 billion by 2029/30.  Interest payments are dead money that could have been spent on healthcare or public safety.

Over the last decade, Canada's total debt burden has grown faster than that of any other G7 country, increasing by 25 percentage points.  Next closest, France, grew by 17 percentage points.  A closer examination of Canada's total debt burden reveals a significantly weaker position than the government claims, and one that will deteriorate under the Carney ideology.  The government fiddles with the numbers by presenting "net debt" supported by non-liquid assets—a misleading presentation.  The cumulative evidence is that the Liberal Cabinet is not financially competent to govern.

To clarify, actual interest costs as a share of revenues must be counted - measure what comes in compared to what must be paid out.  When voters made their big mistake in the 2015 election, interest costs consumed 7.5 per cent of revenues.  This means taxpayers were losing 7.5 per cent of the resources they sent to Ottawa for spending on actual programs, because this money had to go to service the debt accumulated from previous overspending.

The horror is that under the new budget plan, the gap between what the government collects and what is spent will rise to 13.0 percent by 2029/30.  Slightly more than one in every eight dollars sent to Ottawa will be used to pay interest on debt for past spending.  This is how countries can get into serious financial trouble by continually losing revenues to interest payments, just to keep the doors open.  Interest payments build nothing and relieve nothing, especially when they are spent on operations instead of creating projects of lasting value that yield an enduring return, such as hydroelectric dams, pipelines, roads, bridges, waste treatment systems, and public transit.

Another instance of budget misrepresentation is the Build Canada Homes and Build Communities Strong Fund.  It claims to increase the number of new homes built annually and provide funding to provincial governments and municipalities for infrastructure spending.  However, it is highly questionable whether these programs will actually result in the construction of new homes.  As in the past, federal incentives will replace or crowd out existing private sector spending.  The homebuilding push by Ottawa will likely result in fewer homes being built than if the government just stayed out of the way of entrepreneurs and ended the economic and bureaucratic barriers for builders.

The measures raise serious concerns about the government's transparency and the actual impact of its budget.  After a decade of Liberal mismanagement, the government's Canada Mortgage and Housing Corporation forecasts a decrease in the overall number of housing starts every year for the next three years.  The more Liberals entangle themselves in housing, the housing start numbers actually decrease.  The plan is a clear indication of the government's failure to regulate effectively, opting for the unsuccessful 'option two' where they wrongly try to operate instead of beneficially regulate.

The CMHC predicts that housing starts will decline, with 40,000 fewer units started in 2025 compared to 2024.  It’s unclear whether infrastructure spending — providing funds to provinces and municipalities — results in an actual increase in total infrastructure projects.  There are historical examples, including reports by the auditor general, that describe how infrastructure initiatives are often plagued by mismanagement.  Often, the Provinces reduce their own infrastructure spending to save money, so the actual incremental increase in overall infrastructure is negligible, and not much new is built.

In reality, the budget deepens the deterioration of finances.  The plan will not deliver anything close to what the government boasts.  It is merely "sound and fury” to cover what Canadians should understand about the risks and challenges of these initiatives.  Along with the accumulated debt, minimal real-world benefits will follow.

The numbers themselves have no politics or favourites.  The bottom line of red ink is the predictable consequence of wrong beliefs and false claims.  There is a remedy available, but the headstrong and the prejudiced will have to change their ways at the ballot box.

Macbeth, Act 5, Scene 5

There would have been a time for such a word.

Tomorrow, and tomorrow, and tomorrow,

Creeps in this petty pace from day to day

To the last syllable of recorded time,

And all our yesterdays have lighted fools

The way to dusty death.  Out, out, brief candle!

Life’s but a walking shadow, a poor player

That struts and frets his hour upon the stage

And then is heard no more: it is a tale

Told by an idiot, full of sound and fury,

Signifying nothing.