Taxpayers left writhing under crushing weight of governments’ fiscal mismanagement

The federal and provincial governments are failing the public when it comes to managing taxpayers’ dollars. Both announced Monday that their deficits have grown wildly out of control.

Taxpayers will pay a price for that. To some degree, they already have.

The federal government unveiled a fiscal update that projects a budget deficit originally pegged at $40 million for 2023-24 will balloon to $61.9 billion. The projected deficit of $39.8 billion for 2024-25 has increased to $48.3 billion.

MIKAELA MACKENZIE / FREE PRESS
Health minister Uzoma Asagwara (left) and finance minister Adrien Sala provided a provincial fiscal update on Monday. The projected deficit of $39.8 billion for 2024-25 has increased to $48.3 billion.

That will be added to federal debt, which has more than doubled to a staggering $1.4 trillion since the Liberal government took office in 2015. Much of that was driven by unavoidable COVID-19 pandemic costs. But not all of it. The Liberal government has missed its deficit targets every year since it has been in office. It has never balanced the books.

As the national debt grows, so too does the cost of servicing it. Federal debt servicing costs have skyrocketed from $20.3 billion in 2020-2021 to more than $54 billion in 2024-2025. That money is no longer available for program spending.

The news was just as bad at the provincial level, maybe worse. Finance Minister Adrien Sala announced that this year’s projected deficit is a shocking $513 million over budget. The shortfall was originally projected at $796 million when the NDP government unveiled its 2024-25 budget earlier this year. The deficit has since grown to $1.309 billion.

Health-care costs are, by far, the single biggest driver behind the growing deficit. Health costs are over budget by $438 million. The NDP blames previous governments for “long-standing failures to deliver services within funding or anticipate clinical pressures.”

It says there has been a breakdown in accountability between government service delivery organizations, such as regional health authorities, that “have created an environment where overages in health spending are not only accepted but assumed unavoidable.”

That’s a cop-out. The NDP has been in office for well over year. It is responsible not only for ensuring service delivery organizations follow budgets, but also for doing a better job of projecting demand for clinical services. Government failed spectacularly on that front this year. Of the $438 million over-expenditure in health, $230 million was from regional health authorities.

Blaming previous governments for failing to manage spending this year is poor governance.

“The expense forecast contained in the budget was based on department and service delivery organization plans,” the second-quarter report says. “Major risks include changes in planning assumptions such as demand for government services in health care, education and community social services sectors and supply cost increases and inflationary pressures.”

That’s called budgeting. It’s an ongoing process. The unveiling of a budget at the beginning of a fiscal year is just a starting point. It takes hard work throughout the year to manage costs and to make adjustments along the way when conditions change, such as lower than projected revenues or cost pressures in certain departments such as health care.

It’s the job of Treasury Board to stay on top of those changes and to make tough decisions to manage costs and ensure resources are being used in the most efficient and effective way possible.

Blaming previous governments for failing to manage spending this year is poor governance.

Both the provincial and federal governments suggest that because debt as a percentage of the size of the economy (called debt-to-GDP) is stable and declining somewhat, that massive deficits are acceptable. What they don’t say is that debt-to-GDP at both the provincial and federal levels are at historically high levels.

When the Liberals took office in 2015, the federal debt-to-GDP was about 31 per cent. It’s now well over 40 per cent.

When former federal finance minister Paul Martin in the mid-1990s declared that the deficit had to be eliminated “come hell or high water,” the debt-to-GDP was 67 per cent. It’s nowhere near that today but it has crept closer to that level over the past nine years.

Provincially, debt-to-GDP is also at historically high levels. It has grown from 35 per cent in 2022-2023 to a projected 36.4 per cent this year. The 2024 budget projected it would grow to 39.1 per cent in 2025-2026.