EDITORIAL: Time for Freeland to restrain spending

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When Finance Minister Chrystia Freeland tables her fall economic statement later this month, we hope she heeds the recent warning from Bank of Canada governor Tiff Macklem that high government spending will fuel inflation.

We hope she will be doing what millions of Canadian households are doing given the affordability crisis — cutting spending and focusing on priorities.

In her first budget in April 2021, Freeland justified the massive spending and deficits it contained to help Canadians cope with the COVID-19 pandemic because, she said, “in today’s low-interest environment, not only can we afford these investments in Canada’s future, it would be short-sighted of us not to make them.”

She predicted the cost to the government of financing this added public debt would remain low throughout the forecast period up to 2025-26.

Following Freeland’s budget, annual inflation kept rising, reaching a 39-year of 8.1% in June 2022.

To control it, the Bank of Canada hiked its key interest rate — increasing interest rates on mortgages and other consumer and business loans — 10 times starting in March 2022, when it was 0.25%, up to 5.0% in July 2023, the highest rate since 2001, where it remains.

Just as this has dramatically increased the interest rates Canadians are paying on loans, it has increased the amount Canadians have to pay in interest on the federal debt.

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Freeland didn’t want to talk about that when she appeared before the Commons finance committee in May to answer questions on this year’s budget.

She dodged questions by Conservative MP Adam Chambers when he asked her what would be the interest on the federal government’s $1.22 trillion public debt during the 2023 fiscal year (April 1, 2023 to March 31, 2024).

Which was odd because the numbers were in her 2023 budget — an estimated $43.9 billion in 2023; $46 billion in 2024; $46.6 billion in 2025; $48.3 billion in 2026 and $50.3 billion in 2027, when the total debt will be $1.31 trillion.

Given that the Bank of Canada is now warning Canadians that interest rates won’t be returning to the historic lows of the recent past for the foreseeable future, this would be a good time for Freeland and theTrudeau government to start showing some spending restraint.