Mr. Speaker, I will be sharing my time with the member for Barrie South—Innisfil.
Today, the opposition moves that the House call on the Prime Minister to appear as a witness at the finance committee. For 11 years, the cost of government has driven up the cost of living. The result of these accumulated deficits is that interest on the national debt is the fastest-growing cost of the government. The Liberals now spend more on debt than they do on the Canada health transfer. This works out to $6,000 in federal taxes per Canadian family of four. The Prime Minister promised that he would reduce the debt-to-GDP ratio and the deficit-to-GDP ratio, but the Liberal government has broken every fiscal promise, has jettisoned every fiscal anchor and has smashed through every fiscal guardrail that it has ever set for itself. In the wake of a truly horrific Parliamentary Budget Officer's report, it is time for the Prime Minister to explain himself at the finance committee.
It is worth remembering how we got here. In 2015, on page 12 of their campaign document entitled “Real Change: A New Plan for a Strong Middle Class”, the Liberals promised modest short-term deficits of less than $10 billion in each of the next two fiscal years. They immediately broke that promise when they tabled a $30-billion deficit in 2016 and another $30-billion deficit the next year. They acted like they had never promised maximum modest short-term deficits and a return to balance by 2019. That is a return because that is where they started from. They said not to worry because they had a fiscal anchor. They promised, “a low and consistently declining debt-to-GDP ratio”.
They made that promise in 2015 and again in the 2016 budget, when Bill Morneau actually said, “our interest rates have never been lower, so we can borrow on excellent terms”. Never mind that he was breaking a campaign promise from only a few months earlier, never mind that the deficits would only get worse, never mind that without a plan to ever return to balance, they might eventually have to refinance their debt at higher rates and never mind that despite Justin Trudeau's claim, budgets do not ever just balance themselves.
They cut loose this first fiscal anchor in the fall 2018 economic statement when their debt-to-GDP ratio jumped up. Then in 2019, they again promised to reduce debt as a function of our economy “each and every year”, and they failed to keep that promise, too, because even before the pandemic began in March 2020, the Liberals were already on track to break that promise. They had already baked in a structural deficit and added $100 billion to the national debt before COVID without any COVID spending. After the pandemic, they went back to claiming that a declining debt-to-GDP ratio was their fiscal anchor, “a line we shall not cross, and that will ensure that our finances remain sustainable so long as it remains unbreached.” So said Chrystia Freeland in 2022.
Of course, they breached it again. They breached it in the very next budget in 2023 and again in 2024. By late 2024, the finance minister resigned rather than table a fall economic statement that blew through her own promise, breaking projections that she had made just six months earlier regarding new spending. Then the new Prime Minister arrived. Their 2025 platform again promised declining debt to GDP “over the budget horizon”, but right after he won the election and ran on that promise, he ignored it and came back with a new plan. He resorted to accounting trickery, a promise to balance the operating budget and to do so by 2028-29.
He promised a declining deficit to GDP, but their spring economic statement earlier this year already projects that the debt-to-GDP ratio will continue to rise and will not decline until 2029, at which time it will still be higher than it was in that 2024 fall economic statement that precipitated the resignations of both Freeland and Trudeau. We have seen that for 11 years, the government has broken every fiscal promise, smashed through every fiscal guardrail and repeatedly cut loose every fiscal anchor, which brings us to this month's Parliamentary Budget Officer's report, the “Economic and Fiscal Outlook”.
According to the PBO, “The federal debt-to-GDP ratio...is projected to rise each year...[through] 2030-31.” So much for the line they shall not cross. So much for their finances remaining sustainable so long as that line goes unbreached. So much for another fiscal anchor cut loose and sunk to the bottom of the ocean.
The PBO projects that “the Government will not meet its second [fiscal] anchor of...a declining deficit-to-GDP ratio”. Anchors away. The report goes on to say that “the two fiscal anchors have imposed limited fiscal discipline on government spending and borrowing.”
It continues:
Public debt charges are the fastest-growing expense. They are projected to more than double from $24.5 billion in 2021-22 to $59.3 billion in 2026-27 and are projected to reach $83.0 billion by 2030-31....
On a per capita basis, public debt charges [climbed] from $640 in 2021-22 to $1,419 in 2026-27 and are projected to reach $1,952 in 2030-31....
This is a terrible report. The short-term outlook, though, for the balance of this year actually reflects higher than projected revenues, but the higher revenues are because of world oil prices, not increasing economic output. In fact, the higher revenue comes “Despite weaker real economic activity”. The government receives higher revenues, and consumers face higher prices. A brief sugar high of unexpectedly higher revenue will not pay down the national debt, and it is not going to anchor the government's finances.
The rapidly rising cost of debt service on the national debt is entirely due to accumulating deficits. It is not from higher than projected interest rates, but the possibility of higher interest rates in the years to come has been identified by the PBO as an emerging risk to Canada's fiscal health. The report states, “Public debt charges are now...twice as sensitive to higher interest rates as in pre-pandemic outlooks, mainly because the Government carries a larger stock of interest-bearing debt.”
We must remember, this is the government that was willing to pile on debt long before COVID and continues to do so long after, and these are the same Liberals who said back in 2016 that low interest rates meant it was safe to run deficits. Now we are twice as vulnerable to factors beyond our control because interest is now the fastest-growing government expense. We now spend more on interest than we do on national defence. We now spend more on interest than we do on the health transfer. It is now over 13% of the federal budget and rapidly rising.
The per capita interest cost is rising faster than per capita income. An average family is already paying nearly $6,000 in taxes just for interest on the national debt, and the number is going to grow quickly in the next four years. Canadians cannot afford to pay more taxes in order to pay more interest, and this government continues to rack up debt. Canadians are not getting ahead. Their incomes are not keeping pace with inflation. They are already highly taxed, and the portion of their taxes that is going straight to bondholders is increasing.
As for the portion of Canadian taxes that goes to interest, the government's options narrow. The room to lower taxes, increase services, increase defence capability or pay down debt is more and more limited. That is why Conservatives want the finance minister to come to the finance committee and testify on saving Canadians money by cutting spending, debt interest and taxes. It is time for the Prime Minister to take responsibility for his broken promises and his government's failed approach to budgeting.
This government inherited a balanced budget. The Liberals inherited a rapidly declining per capita interest expense. It is right there in the report. They inherited what The New York Times called the world's most prosperous middle class. They had every advantage that a new government could possibly ask for back in 2015, and they blew it.
This PBO report should be a wake-up call to the government. It is time for the Prime Minister to admit that up until now, the Liberals' fiscal anchors and campaign promises were not kept. Some say it is never too late to do the right thing. I would hope that the Prime Minister may actually welcome the opportunity to attend the finance committee. He can apologize to Canadians for his broken promises, and he can still reverse course and save Canadians money.
