Ottawa's fiscal watchdog Jason Jacques projects the federal government will post an annual deficit of $68.5 billion this year, up from $51.7 billion last year.
The Canadian Press
Lucy Hargreaves is the co-founder and CEO of Build Canada.
Canada’s fiscal situation isn’t a wake-up call. It is a five-alarm fire. The numbers shared by the interim parliamentary budget officer last week are stark, projecting a near $70-billion deficit for this fiscal year, that the debt-to-GDP ratio will climb past 43 per cent, and that annual interest costs will hit $82-billion by 2030 – nearly as much as we’re projected to spend on health and social transfers combined.
The interim PBO Jason Jacques put it plainly: “Everybody should be concerned.”
This isn’t an accounting issue; it’s a competitiveness issue. Every dollar we spend servicing yesterday’s debt is a dollar we cannot use to build housing, modernize infrastructure or support the innovators who create jobs. Debt charges don’t grow the economy. They punish it.
For builders – entrepreneurs, investors and risk-takers – fiscal credibility isn’t optional. It is the foundation on which long-term decisions are made. If Canada signals that it is comfortable running large structural deficits without a credible plan to bring them down, we risk driving away the very people and capital we need most. Why build here if the government looks like it will eventually need to raise taxes to feed an unsustainable debt burden?
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Canada already suffers from weak productivity growth. Our GDP per capita is stagnant, investment is leaving and too many of our brightest founders are heading south to scale their companies. Fiscal drift adds yet another reason for talent and capital to go elsewhere.
Some will argue that growth alone will solve the problem, but growth doesn’t materialize out of thin air – it requires deliberate choices. We need a tax system that rewards work and risk-taking, regulatory processes that move at the speed of innovation, and infrastructure that enables global competitiveness. Growth and fiscal discipline are two sides of the same coin. Without one, you don’t get the other.
Fiscal responsibility is not about austerity for its own sake. It is about freeing up space for the investments that matter. That means cutting waste, resisting program creep, and narrowing the focus of the government to do fewer things better. It also means creating a predictable fiscal environment so businesses can invest with confidence. Mr. Jacques’s warning is clear: If we fail to change course, interest costs will crowd out everything else.
This should alarm not only economists, but anyone who wants Canada to remain a country of opportunity. Imagine explaining to a young entrepreneur that Ottawa can’t support the incentives that help small businesses grow because interest payments are swallowing the budget. That is the path we are on.
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It is also a question of fairness across generations. Today’s students and young workers already face higher housing costs and tougher labour markets than their parents did. Layering a mountain of public debt on top of those challenges means they will pay more in taxes for fewer future services. As a mother of three kids in middle school, I find this deeply concerning.
We have faced this kind of reckoning before. In the 1990s, when deficits and debt service consumed unsustainable shares of the federal budget, governments of all stripes confronted reality. They made difficult decisions to restore balance and Canada emerged stronger, with lower borrowing costs and renewed investor confidence. That period of discipline paved the way for years of growth and opportunity. We should not wait until markets force us to relearn this lesson.
Canada has the resources, talent and ambition to be the most prosperous country in the world. But ambition without responsibility is just rhetoric. A credible fiscal plan paired with bold, pro-growth reforms would send the right signal to the world: Canada is serious about building.
The alternative is clear, too. We can ignore the warning lights, let debt charges eat into our prosperity, and watch as capital, talent and opportunity migrate elsewhere.
The PBO’s office has done its job by showing us the math – it’s up to us to act. A country that lives beyond its means cannot lead in the century ahead. If Canada wants to be a magnet for builders and innovators, we must get our fiscal house in order.