Alex MacDonald

The CD Howe Institute recently projected that the federal deficit, to be announced in the fall budget, could reach as high as $92 billion. While appalling, it should not be surprising. This isn’t simply because of Liberals’ sustained profligacy. It also has to do with the political licence which the Canadian electorate has afforded our politicians both federally and provincially.

Our governing politicians don’t have to worry about debt and deficits because the Canadian electorate doesn’t care enough about them. Our politicians ought to care about stewarding the economy, but there is almost no political incentive to do so.

Canadians’ lack of interest in public debt and deficits might be because Canadians themselves constitute some of the most indebted households in the developed world, having the highest household debt to disposable income ratio in the G7 as of 2024. This is not to imply that Canadians are comfortable with their personal debt levels. In fact, Canadians routinely attest in polling that money is their greatest stressor, more so than health or relationships or work.

More telling, however, is how the electorate has responded to deficits and balanced budgets. Some recent examples include:

• In 2024, Premier Blaine Higgs of New Brunswick suffered a staggering defeat despite having dug the province out of a substantial debt situation, producing six balanced budgets (some with surpluses!) while lowering taxes. Even the finance minister lost his seat.
• Susan Holt, the new Premier of New Brunswick ran on an explicit campaign promise of balanced budgets to then post a $599 million deficit in her government’s first budget (of which $50m is for a tariff impact contingency).
• The self-styled “fiscally responsible” Ontario PCs have spent their way to three consecutive majorities and crowned their recent victory with a projected $14.6 billion operating deficit for this fiscal year.
• In 2015, Justin Trudeau famously committed to running a “modest short term deficit” and a balanced budget by 2019-2020. While failing to uphold this commitment Trudeau’s Liberals were re-elected twice thereafter.

As of late, the electorate has not been chastening profligate governments nor rewarding fiscal stewards.

One can also make the case that the electorate’s fiscal obstinance provides a structural political advantage to liberal-progressive parties, allowing them to shamelessly buy votes through enhanced deficit financed spending which in turn makes it increasingly difficult for conservatives to pledge a reasonable path back to balance, something which they are ideologically wedded to.

While politics is downstream from culture, politicians nonetheless can play an educative and influential role. Pierre Poilievre went on a multi-year sustained public campaign of prosecuting the case against government induced inflation. He used inflation as a political battering ram against the government while also educating Canadians about inflation, how to understand it and what it means in concrete terms to the average person in Canada. In doing so, he not only informed and invigorated the electorate about the issue, but also shaped the elite consensus opinion on the issue too, forcing the governing Liberals address the issue head on.  Despite the election loss, polling indicates that in the minds of Canadians the Conservatives are understood as better equipped to address the cost of living crisis and manage the economy.

Think tanks and advocacy groups routinely tell Canadians how their tax dollars are spent and misspent, but they often stop short of helping the average person understand how government deficits makes their life more expensive.  While political platforms and announcements often showcase the economic benefits of tax cuts and credits – this policy will save a family of three x amount per year – information on how government spending drives up the cost of mortgages or car payments, for example, is rarely highlighted in an intuitive way for the average Canadian.

At present, the fiscal debt situation in Ottawa and our provincial capitals is too obtuse and impersonal for the ordinary Canadian to appreciate and be motivated by. Our culture and politics both need to change to alter this reality. Or a debt crisis will force this change upon us, and it will be uncomfortable.

Alex MacDonald is the Associate Vice President of Counsel Public Affairs and has regularly contributed to the public square of ideas through opinion pieces and articles on a variety of topics including housing, drug policy, Arctic security and defence.