Trudeau and Freeland put the soft pedal on spending

Surprise! Contrary to what many observers anticipated, myself included, Justin Trudeau’s minority government will not spend all of the additional revenue that solid economic growth and bank surcharges will bring in over the next five years.

And by the same token, it allows him to ultimately run deficits that are lower than what Finance Minister Chrystia Freeland predicted in her 2021 Economic and Fiscal Update last December. Here is the count.

For the five financial years from 1er April 2022 to March 31, 2027, the Trudeau government expects to collect $49.4 billion in additional revenue compared to the forecasts made by Minister Freeland in December.

Including the “strategic interventions” announced last December and the new measures contained in yesterday’s 2022-2023 budget, the Trudeau government will spend over the next five years some $29.6 billion more than the amount of expenditures forecast during of this update.

Results ? The next annual deficits promise to be lower than the amounts anticipated a few months ago. We are talking here about an “overall” decrease of some $19.8 billion for the next five fiscal years.


It is certainly not the end of the world since in the next five fiscal years, Minister Freeland will still accumulate deficits for a total amount of $147.5 billion.

But in the case of the government of Justin Trudeau, which has the reputation of being a big spender, it is an “effort” of budgetary adjustment that deserves to be highlighted.

After closing the last fiscal year 2021-2022 in the $113.8 billion hole, Minister Freeland plans for year 1 of Justin Trudeau’s “new” minority government to reduce the deficit below the $53 billion mark.

And the decline in deficits will continue over the next four fiscal years. In 2026-2027, if everything goes according to budget forecasts, the federal government will end up with a deficit of “only” $8.4 billion.

Which is in itself “peanuts” compared to the record deficit of $ 328 billion in the dramatic financial year 2020-2021, where Justin Trudeau supported the Canadian economy at arm’s length with his vast financial assistance program of some $500 billion.

A vast program which, let us remember, has helped all the victims of the pandemic, individuals, businesses and provincial governments.


While expenditures (programs, interest charges) will grow by 11.9% over the next four years, budgetary revenues will grow by 21.4%.

In concrete terms, spending will increase in four years by $53.8 billion, going from $452.3 billion in 2022-2023 to $506.1 billion in 2026-2027.

During this same period, revenues will increase by 87.6 billion, or from some 408.4 billion (2022-2023) to 496 billion in 2026-2027.


Casually, with spending growth lower than revenue growth, and deficits lower than last December’s forecast, this allows Minister Chrystia Freeland to present a lower level of federal debt than she had anticipated. a few months ago.

The Minister of Finance forecasts that the federal debt will reach $1.308 billion in five years, up $147.6 billion from the current debt level.

In the space of barely two years, since the start of the pandemic in March 2020, the federal debt has exploded by $439 billion, or even 61%, to reach $1,161 billion at the end of last March.

Obviously, the higher the debt, the higher the bill for interest charges. Federal debt charges will hit $43 billion in five years. This is double what it cost us in 2020-2021.

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