Debt interest is costing taxpayers $60 billion this year and is projected to reach $86 billion by 2030
Prime Minister Mark Carney is spending billions over budget, borrowing tens of billions more and offering taxpayers no plan to stop.
Budget 2026 shows government spending is spiralling out of control, sending the federal debt higher.
Carney is spending $14 billion over budget. The government originally said it would spend $588 billion this year. The government is now on track to spend about $602 billion, according to Budget 2026.
The debt is going up even though Ottawa is collecting a revenue windfall. Budget 2025 projected this year’s revenue to be $523 billion. The government now projects its revenue to be $540 billion.
Despite the extra cash, the government is still borrowing tens of billions of dollars this year.
And that costs taxpayers.
The government is borrowing $60 billion and increasing the debt to about $1.37 trillion this year. That works out to more than $32,000 worth of debt for every Canadian.
Every dollar Carney borrows needs to be paid back. Plus interest.
The government is wasting $60 billion on debt interest charges this year. That’s more than the federal government will send to the provinces in health-care transfers or take in from the GST.
That five per cent extra you pay for federal sales taxes on almost everything you buy doesn’t go to building roads, bridges or paying for overpriced airplane food for the prime minister and his entourage. Instead, it gets wasted paying interest on the debt because the federal government spends too much.
And it’s only going to get worse if the government keeps overspending.
Debt interest charges are the government’s “fastest-growing expense,” according to a recent Parliamentary Budget Officer report.
Again, Carney is wasting $60 billion this year on debt interest payments. That’s more than $1 billion every week. Next year the budget projects the government will waste $67 billion. By 2030, it will be about $86 billion.
It’s not a question of whether the government should stop its borrowing spree, but how fast it can get it done.
That’s because every year the government fails to rein in spending is another year of debt interest payments eating up a larger and larger chunk of the budget.
Former finance minister Paul Martin knew that spending cuts needed to happen when interest payments skyrocketed. He cut spending to tame the massive federal deficit of the 1990s.
“The debt and deficit are not inventions of ideology,” Martin said during his 1995 budget speech. “They are facts of arithmetic. The quicksand of compound interest is real.”
Carney needs to watch out for the quicksand of compound interest before it’s too late.
The Saskatchewan government learned the consequences the hard way. After years of overspending, debt interest charges got so large that the government went bankrupt in all but name in the 1990s. The government hiked three different taxes and closed 52 rural hospitals in a single budget because it could barely meet its financial obligations.
“We left a fiscal situation in Saskatchewan until it was a crisis and so we had to make dramatic cuts to fundamental programs and raise taxes to get out of the situation,” said former Saskatchewan finance minister Janice MacKinnon.
As long as the federal government keeps overspending, it will keep getting closer to the edge of a similar financial cliff and the painful consequences that come with falling off.
Carney can avoid the same pain by fixing the problem now instead of when it’s too late. That means not spending over budget. If Carney stuck to his original spending plan, he would be borrowing about $14 billion less this year.
That’s not perfect, but it’s a first step. Then he needs to start looking for further savings. Carney can’t repeat the mistakes of the past.
The plan for Carney is simple: Stop going over budget. Stop the borrowing spree. Stop wasting billions on debt interest payments. Nothing else is good enough for taxpayers.
Franco Terrazzano is the federal director and Gage Haubrich is the Prairie director for the Canadian Taxpayers Federation.
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