Federal budget understates shortfall, LU economist says

Prime Minister Mark Carney’s first budget is projecting a $78-billion deficit, but a Lakehead University economist says that’s understating the actual shortfall by quite a bit.

The estimated deficit of $78.3 billion is for Ottawa’s operating expenditures, Livio Di Matteo explained Wednesday in an interview with Dougall Media.

“But there’s another $45 billion in capital spending, so really if you add them together, it’s really like $120-odd billion,” he said. “It’s a lot bigger than the operating deficit that’s being put forth.”

Plus, he said, “interest costs are going to rise rather dramatically. The federal government will probably be spending, by 2030, 11 to 12 per cent of its budget on servicing the debt.”

Finance Minister François-Philippe Champagne tabled the 2025-26 federal budget Tuesday afternoon in Parliament.

The feds are coping with a tariff-happy U.S. president and “a long set of issues” besides that, Di Matteo said.

“I mean, productivity in Canada has been lacklustre for a decade and a half, two decades. It hasn’t been growing.

“We’ve had a decline in investment per capita in machinery, plants and equipment.

“So, I mean, in the end, a strong economy supports a strong set of social programs and public programs. But if the economy cannot support it, basically you will run larger and larger deficits, and that has its own costs in terms of debt charges and ultimately fiscal sustainability.”

A large deficit “was going to happen one way or another,” Di Matteo said. “And if the economy slows, revenues will drop and the deficit will just increase on its own.”

The government has shifted gears to spend more “on infrastructure, investment (and) measures to boost the economy,” he said.

“So, in terms of how that will impact the region, there is nothing specifically in a budget that says there will be this much money for Thunder Bay, but … communities in Northwestern Ontario are going to have to keep a pretty close eye on the various infrastructure programs that are going to be announced.”

The budget also includes tax incentives for critical mineral development, he said.

Northwestern Ontario is home to the mineral-rich Ring of Fire region and lithium projects including Frontier Lithium’s PAK project north of Red Lake. – snnewswatch.com

article website here

…“But there’s another $45 billion in capital spending, so really if you add them together, it’s really like $120-odd billion,” he said. “It’s a lot bigger than the operating deficit that’s being put forth.”

Plus, he said, “interest costs are going to rise rather dramatically. The federal government will probably be spending, by 2030, 11 to 12 per cent of its budget on servicing the debt.”…

This is how inflation works.  Add more money to the economy.  Money that comes out of nowhere.  Created out of thin air.  Devalues the existing currency.  Expect prices to go up.

W are soooo screwed.  The future generations are going to be stuck with thousands of billions of dollars of debt.   The Federal Debt sits at well over $1.2 trillion.

Governments can no longer  produce a balanced budget. Its not possible. It will never be possible.

Buy canned food.

Canadian Debt Clock here.

Ontario Debt clock here