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GOLDSTEIN: Study accuses Carney Liberals of 'substantially' worsening federal finances

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GOLDSTEIN: Study accuses Carney Liberals of 'substantially' worsening federal finances

Combined deficits from 2025-26 to 2029-30 will total $321.7 billion, compared to $154.4 billion projected by Trudeau

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Prime Minister Mark Carney plans to spend more and run deficits more than twice as large over the next five years compared to those planned by the previous Liberal government, according to a new study by the Fraser Institute.

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As a result, Carney’s combined deficits are projected to total $321.7 billion from 2025-26 to 2029-30 — $167.3 billion higher than the $154.4 billion former prime minister Justin Trudeau was projected to spend during the same period, according to the report by the fiscally conservative think-tank.

GOLDSTEIN: Study accuses Carney Liberals of 'substantially' worsening federal finances Back to video

The study says that will increase the total federal debt to a projected $2.9 trillion in 2029-30 or 79% of GDP.

In addition to running higher deficits, the Fraser Institute report says the Carney government plans to increase spending by $67.6 billion over five years compared to the Trudeau government’s projections — $47.8 billion more for new programs and $19.8 billion more for servicing the debt.

Carney vowed ‘different approach’ to spending

This despite expecting slower total annual revenue growth from 2024-25 to 2029-30 of 14.2% or $72.3 billion, compared to 19.9% or $101.8 billion projected under Trudeau.

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The study — “Comparing Federal Fiscal Plans: Is the Carney Government Truly Taking a Different Approach than its Predecessor? — is based on a comparison of the Trudeau government’s last fall economic statement or “mini-budget” in December 2024 and Carney’s first budget in November 2025.

“During the 2025 election, the Carney government promised to take a very different approach to federal finances than its predecessor,” said study co-author Jake Fuss, noting Carney criticized Trudeau for “spending too much.”

“But based on his first budget, spending is higher and deficits are double what even Trudeau planned to spend, which substantially worsens the state of federal finances.”

Spending ‘inappropriately’ shifted?

The study is also critical of how Carney’s budget divides government spending into operational spending — the cost of running the government — and capital spending on new infrastructure, while projecting a balanced operating budget by 2028-29.

While this is sensible in theory, the Fraser Institute study notes, the Parliamentary Budget Office has reported that 30% or $94 billion of the capital spending proposed in Carney’s budget isn’t, in fact, capital spending, but increased operating spending that may or may not lead to the creation of new assets.

“Simply put, nearly a third of the Carney government’s planned capital investments should not be considered as such and instead represent operating spending or tax credits that have been inappropriately shifted over to the capital side of the budget,” the Fraser Institute report says.

“Correcting this miscalculation shows that the Carney government is set to fall short of its commitment to balance operating spending against revenues.”

Study acknowledges economic challenges

The Fraser report acknowledges the Carney government has different priorities compared to the Trudeau government — such as boosting Canada’s spending on defence to 2% of GDP this year — and that its budget is aimed at accelerating $1 trillion in new total investments, while Trudeau’s main goal which was to redistribute income.

It also notes Trudeau’s last fall economic statement was written more than a year before Donald Trump became U.S. president and launched his tariff war, making it likely the Trudeau government would have increased projected spending and deficits had he stayed on to fight last year’s election.

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