- Since 2015, federal public service employment in Canada has increased by nearly 31%, with the government adding almost 80,000 employees to its roster, contributing to an unprecedented growth in the size of the federal government.
- Federal spending has increased by $151 billion per year on Trudeau’s watch, with total expenses projected to be $496.9 billion in 2023-24 and $555.7 billion in 2027-28, attributed to the government’s plans to invest in infrastructure, climate change, and social programs.
- While some experts believe the spending is sustainable as long as the economy continues to grow, others warn that it threatens the financial security of future generations, and the opposition parties criticize the government’s spending plans and introduce new taxes.
Public Service Employment in Canada has increased by nearly 31%, with the government adding almost 80,000 employees to its roster, contributing to an unprecedented growth in the size of the federal government. Since Justin Trudeau became Canada’s Prime Minister in 2015, his government has repeatedly promised billions of dollars in new spending.
The result of these promises is an unprecedented growth in the size of the federal government, with federal public service employment increasing by nearly 31% in seven years, according to a review of federal finances. While these spending increases may appear concerning, they are sustainable as long as the economy continues to grow. In this analysis, we will examine the cost of running the federal government during Justin Trudeau’s government tenure and the impact it has on the economy.
Federal Public Service Employment Has Increased by Nearly 31% in Seven Years
According to the review of federal finances, the government has added nearly 80,000 employees to the roster during its tenure, an increase of nearly 31% in federal public service employment. This hiring spree has contributed to the federal budget’s growth over the years.
The Federal Public Service Employment And Budget Has Increased $151 Billion a Year on Trudeau’s Watch
Federal spending has ballooned under Trudeau, and it has led to a significant increase in the budget. Ottawa is projected to spend about $151 billion more next year than it did in 2014-15, the year before Trudeau and his party won government in November. This spending increase, coupled with the hiring spree, has led to concerns about the government’s ability to control its spending.
The Total Expenses of the Federal Government Have Significantly Increased
In 2014-15, the total expenses for the federal government were $280.4 billion, adjusted for inflation; it is roughly $345.5 billion in today’s dollars. Finance Minister Chrystia Freeland’s budget projects total expenses will be $496.9 billion in 2023-24, a year when there’s no extraordinary pandemic-related spending.
The Spending Will Move Higher in the Years to Come
Under Freeland’s current plan, the spending will continue to increase in the years to come. Her Public Service Employment budget projects spending will ring in at $555.7 billion in 2027-28. This spending increase is attributed to the Liberal government’s plans to invest in infrastructure, climate change, and social programs.
Total Program Expenses as a Share of the Economy Are at Its Highest Point in Three Decades
The total program expenses as a share of the economy, which includes all government spending other than public debt charges, have significantly increased in recent years. In 2014-15, program spending was 12.8% of gross domestic product (GDP), but it’s over 16% now. This increase is due to the Liberal government’s ambitious spending plans.
The Growth in Spending Is Sustainable as Long as the Economy Continues to Grow
While the spending increases may seem alarming, Sahir Khan, a former deputy parliamentary budget officer and the executive vice-president of the Ottawa Institute of Fiscal Studies and Democracy, believes that the growth in spending is sustainable as long as the economy continues to grow. According to Khan, “It will work; it’s functional and fiscally sustainable. We’re a $3-trillion dollar economy.”
The Cuts Made in the 1990s Have Given Room for Current Spending
The cuts made in the 1990s when Canada was in worse financial shape have given the government room for current spending. Khan said, “Chrétien-Martin did the heavy lifting. That’s what’s given us the room now.”
Federal Debt Climbs to $1.2 Trillion
Under former finance minister Bill Morneau and Freeland, Ottawa has always been in the red. That’s added to the federal debt, which, at last check, is roughly $1.2 trillion — double the $612.3 billion it was when Trudeau and his team took the reins of power.
The government no longer projects when it will return to a balanced budget
While the fall economic statement tabled last November suggested Ottawa’s budget might be back in the black in 2027-28, Freeland dumped that projection in Tuesday’s budget after announcing some new spending on health and dental care and a series of tax credits to spur green tech and energy development.
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The Opposition’s Criticisms
The opposition parties were quick to criticize the government’s spending plans. Conservative Leader Erin O’Toole said the budget “threatens the financial security of future generations.”
O’Toole promised to focus on reducing government spending, balancing the budget, and creating jobs. He also criticized the government’s plan to introduce new taxes, including a luxury goods tax and a digital services tax.
NDP Leader Jagmeet Singh, meanwhile, said the budget did not go far enough to help Canadians struggling during the pandemic. He called for the government to introduce a wealth tax and to provide more support to low-income Canadians which leads to an increase in public service employment.
Conclusion
The Trudeau government has overseen a significant increase in federal spending and public service employment. While some experts say this is sustainable as long as the economy continues to grow, others warn that the government’s spending plans threaten the financial security of future generations.
With the COVID-19 pandemic continuing to impact the country’s finances, the government has abandoned its previous goal of returning to a balanced budget by 2027-28. Instead, it plans to continue spending on programs and initiatives to support Canadians during the pandemic and spur economic growth.
As the country emerges from the pandemic, the Trudeau government will face the challenge of balancing its desire to support Canadians with the need to maintain fiscal responsibility. Only time will tell whether the government can strike the right balance and ensure the country’s long-term financial health.
