COMMENTARY: Justin Trudeau’s Legacy – Record-High Spending and Massive Debt

By: Jake Fuss and Grady Munro

On Monday, after weeks of turmoil and speculation, Prime Minister Justin Trudeau told Canadians he’ll resign after the Liberal Party choses a new leader. There will be much talk about Trudeau’s legacy, but the modern Trudeau era was distinguished—among other things—by unprecedented levels of government spending.

The numbers don’t lie.

For example, from 2018 to 2023 Justin Trudeau recorded the six-highest levels of spending (on a per-person basis, after adjusting for inflation) in Canadian history, even after excluding emergency spending during the pandemic. For context, that means the Trudeau government spent more per person during those six years than the federal government spent during the Great Depression, both world wars and the height of the Global Financial Crisis in 2008-09.

Unsurprisingly, the Trudeau government was unable to balance the budget during his nine years in power. After first being elected in 2015, Trudeau promised to balance the budget by 2019—then ran nine consecutive deficits including an astonishing $61.9 billion deficit for the 2023/24 fiscal year, the largest deficit of any year outside of COVID.

The result? Historically high levels of government debt compared to previous prime ministers. From 2020 to 2023, the government racked up the four highest years of total federal debt per person (inflation-adjusted) in Canadian history. Compared to 2014/15 (the last full year under Prime Minister Harper), federal debt per person had increased by $14,127 (as of 2023/24).

While a portion of this debt accumulation took place during the pandemic, a sizable chunk of federal COVID-related spending was wasteful. And federal debt increased significantly before, during and after the pandemic. In short, you can’t blame COVID for the Trudeau government’s wild spending and borrowing spree.

This fiscal record, marked by record-high levels, defines Prime Minister Trudeau’s fiscal legacy, which will burden Canadians for years to come. Spending-driven deficits and debt accumulation impose costs on Canadians—largely in the form of higher debt interest costs, which will hit $53.7 billion in 2024/25 or $1,301 per person. That’s more than all revenue collected via the federal GST.

And because government borrowing pushes the responsibility of paying for today’s spending into the future, today’s debt burden will fall disproportionately on younger generations of Canadians who will face higher taxes to finance today’s borrowing. And a growing tax burden (due to debt accumulation) can hurt future economic performance and the country’s ability to compete with other jurisdictions worldwide for business investment and high-skilled workers.

Under Trudeau, Canada has had an abysmal investment record. From 2014 to 2022 (the latest year of available data), inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by $34 billion. During the same period, after adjusting for inflation, business investment declined by $3,748 per worker—from $20,264 per worker in 2014 to $16,515 per worker in 2022. Due in part to Canada’s collapsing business investment, incomes and living standards have stagnated in recent years.

At the same time, Trudeau raised taxes on top-earners who help drive job-creation and prosperity across the income spectrum, and increased the tax burden on middle-class Canadians. Indeed, 86 per cent of middle-income Canadian families pay more in taxes than they did in 2015.

After approximately a decade in office, Prime Minister Justin Trudeau is stepping down. In his wake, he leaves behind a record of unprecedented spending, a mountain of debt, and higher taxes. It’s no wonder many Canadians are looking for change.

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