EDITORIAL: Carney betting we can spend ourselves rich

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We already know from Prime Minister Mark Carney’s campaign platform that his new Liberal government will be making an attempt to spend ourselves rich.

Carney says it’s necessary to fund the capital investments needed to boost our economy in tough economic times, but the impact will be significantly higher deficits that must be paid for by federal taxpayers.

Carney intends to increase government spending by $130 billion over the next four years, in the wake of the previous Liberal government headed by Justin Trudeau, which overshot its deficit target for the 2023-24 fiscal year of $40.1 billion by 54%, coming in at $61.9 billion.

In its fall economic statement in December, the Trudeau government projected a deficit for this fiscal year, which began on April 1 and ends March 31 2026, of $42.2 billion, followed by a $31-billion deficit in 2026-27, $30.4 billion in 2027-28 and $27.8 billion in 2028-29.

In contrast, Carney anticipates deficits of $62.3 billion for this fiscal year (48% higher than Trudeau’s projected deficit), $59.9 billion in 2026-27 (93% higher than Trudeau’s projected deficit), $54.8 billion in 2027-28 (80% higher than Trudeau’s projected deficit) and $47.8 billion in 2028-29 (72% higher than Trudeau’s projected deficit).

Carney’s campaign platform, contrary to previous practice, divides the deficit into operational spending (the cost of running the government) and capital spending (the cost of building infrastructure).

On that basis, it says, the operating deficit, at $9.2 billion for this fiscal year, will decrease to $9.1 billion in 2026-27 and $8.6 billion in 2027-2028, with a $222.4 million surplus in 2028-29.

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The difference from the Trudeau government, Carney says, is that he will invest more in capital spending — strengthening the economy and creating more jobs as Canada faces a tariff war with U.S. President Donald Trump.

But it all has to be financed by debt and it all has to be paid by taxpayers eventually.

This week, Deloitte Canada predicted Canada will enter a recession in the second quarter of this year while the Fitch rating service said the amount of spending by Carney’s government could put downward pressure on Canada’s AAA credit rating.

A downgrade in our rating would increase the amount of money taxpayers will have to pay to finance the federal debt.