The Carney government’s second budget, tabled Thursday, projects a $62.3 billion deficit this year and deficits every year after that through 2030-31. Together they add up to nearly $289 billion in new borrowing over five years. Writing for the Fraser Institute the day before, Jake Fuss predicted more spending and large deficits, and it was not a hard call to make. The more useful question is who ends up paying for it. The answer is people who are in school, starting careers or trying to buy their first home today.
Mark Carney campaigned on a “very different approach” to federal finances and promised to spend less than his predecessor. Instead, the government posted a $66.9 billion deficit last year. By Fuss’s count, the deficits it has planned through the end of the decade are about double what the Trudeau government projected before it left office. A government elected partly on the promise of fiscal competence has gone further down the same road.
The budget leans on an accounting distinction the government introduced last year, splitting “operating” spending from “capital” spending and promising to balance only the operating side. It now says that will happen in 2027-28. But every dollar of both kinds is borrowed. The Parliamentary Budget Officer has already warned that the definition of capital is loose enough to let the government move spending between columns to hit its target. A balanced operating budget alongside a $60 billion overall deficit is not a balanced budget in any sense that matters to the people who will repay the debt.
That is where younger Canadians come in. Fuss notes that federal debt interest is projected to reach $75.7 billion by 2029-30. That is more than Ottawa plans to spend on Employment Insurance and the Canada Child Benefit combined. Interest buys nothing, and it has to be paid before anything else. The bill will land on today’s 20- and 30-somethings for decades, as higher taxes, thinner services or both. It also lands sooner than that. When Ottawa borrows this heavily, it competes for the same pool of capital as families and businesses, which helps keep interest rates higher on the mortgages young buyers are already struggling to carry.
Baby boomers grew up while Ottawa was paying down debt in the late 1990s and 2000s. Their children and grandchildren are being handed the opposite. A budget that set a real date to balance, counting every dollar, would be a start. This one does not.
