- For many years the federal governmentâs approach to government finances has relied on spending-driven deficits and a growing debt burden, causing a deterioration in the state of federal finances.
- While deficits can sometimes be justified in certain circumstances, perpetual spending-driven deficits have become the norm rather than a temporary exception for the federal government. The $39.8 billion deficit expected in 2024/25 is the 17th consecutive annual deficit, and deficits are expected to continue into the foreseeable future.
- Deficits have helped drive federal gross debt from 53.0% of the economy ($1.1 trillion) in 2014/15 up to an expected 69.8% ($2.1 trillion) in 2024/25.
- This increase in the level of federal debt comes with costs and will result in higher taxes on Canadians.
- It may be hard to comprehend the scale of the deficits and debt, so to contextualize the current state of federal finances this bulletin provides an example of what a median familyâs household budget would look like in 2024 if it managed its finances the way the federal government does.
- The median family earning $101,821 in 2024 would be spending $109,982 if it spent the way the federal government does. To cover the difference, it would put $8,161 on a credit card, despite already being $427,759 in debt.
- Of the total amount spent, $11,066 would go towards interest on the debt this year. Simply put, a Canadian family that chose to spend like the federal government would be in financial trouble.
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