Independent Parliamentary Budget Officer rings alarm bell over Carney's deficit projections

As Carney heads off on yet another foreign trip, the PBO estimates that the Government's spending will exceed Justin Trudeau's

Canada’s Parliamentary Budget Officer (PBO) warns the nation is headed for a “sharply” increased deficit of up to $68.5 billion by year-end, calling the figures “definitely a cause for concern.”

Interim PBO Jason Jaques told the Standing Committee on Government Operations and Estimates on Thursday that “everybody should be concerned” about spending.

“It’s a really serious day. This is the first time in 30 years that we’ve tabled an economic and fiscal outlook where the general, and probably most important fiscal anchor for any government isn’t declining or at least stable debt-to-GDP ratio,” he said. “The first time in 30 years that I’ve seen one in which that ratio is going up over time. So that’s definitely a cause for concern.”

“On our end we’re hoping and certainly expecting that the government as part of Budget 2025 to clearly indicate what the government plans to do to address this problem because it’s certainly not sustainable,” said Jaques.

According to the PBO’s latest report, interest charges on the debt alone will cost taxpayers over $55 billion this year. That’s more than the federal government transfers to provinces annually for healthcare.

Additionally, debt interest charges are projected to cost Canadians $82.4 billion by the end of the decade.

According to the PBO, “The federal debt-to-GDP ratio is projected to increase from 41.7 per cent in 2024-25, rising above 43 per cent over the medium term.”

Although the Carney government won’t be releasing its federal budget until November 4, the PBO estimates spending that will far exceed that of former Prime Minister Justin Trudeau, based on the 2024 Fall Economic Statement.

Source: PBO

While the Liberals had intended to increase the debt by $131 billion over the next four years, annual borrowing will amount to $255 billion over the same period.

“The PBO report should be a five-alarm siren to end the government’s debt-fueled spending spree,” said Canadian Taxpayers Federation federal director Franco Terrazzano in a statement on Thursday.

“Carney must change course and cut spending because taxpayers can’t afford to pay more than $1 billion every week to cover the government’s debt interest charges.”

The PBO projects a nominal GDP of $12.9 billion lower annually, on average, from 2025 to 2029, “primarily due to the lasting impact of tariffs and less favourable trading conditions with the United States.”

The report also projects $115.1 billion in net new spending from 2024-25 to 2029-30.

Additionally, the budgetary deficit is expected to jump from $51.7 billion (1.7 per cent of GDP) in 2024-25 to $68.5 billion (2.2 per cent of GDP) in 2025-26.

“Carney sold Canadians on the idea he wasn’t like Trudeau and when it comes to the debt here’s the truth: Carney plans to borrow billions of dollars more than Trudeau,” Terrazzano said. “After a decade of out-of-control spending, Carney must make the government more affordable and cut spending.”

Minister of Finance François-Philippe Champagne was asked whether he thought the PBO report was “accurate” during a scrum on Parliament Hill on Thursday.

“Listen, the PBO released its own report but what I’ve been saying to Canadians is going to be a generational investment in our future,” responded Champagne.

“Canadians understand with everything that’s happened in the world we’ll need to invest to make sure we succeed. To make sure that we build this country like never before. Diversify our economy, industry, and people understand this is like 1945. The world has changed.”

Champagne was then pressed on the report’s contention that the Liberals had abandoned fiscal anchors.

“The Parliamentary Budget Officer can have his own view, my role is to ensure the long-term fiscal stability of Canada and make sure that the investments are there to support the Canadian economy for generations to come.”

One reporter called it a “pretty scathing report” and asked whether tax dollars were being spent efficiently. Champagne walked away without responding.