As Canada officially enters a recession, every single Canadian province is now running a deficit, and overall government spending comprises a whopping 42.3 per cent of our country’s total economy. As part of Ontario’s recent $244.2-billion budget, for one, the provincial deficit nearly doubled, to $13.8 billion.

Governments can’t blame super-events for deficit spending forever. At some point, they have to be courageous enough to structurally tackle health, education and social services reform—let alone tax reform. In the meantime, a ballooning public sector is driving up spending, reducing private investment and weakening productivity.

Governments aren’t the only ones struggling with debt. Canadians are carrying enormous debt loads of their own. According to Statistics Canada, household debt is now $3.2 trillion, with more than $2 trillion in mortgages. “After repeated economic shocks, there is declining confidence, rising reliance on credit for essentials, and growing emotional strain,” Calgary MNP president Grant Bazian recently told the federal Commons finance committee. “Many Canadians are within $200 of insolvency each month.”

Prime Minister Mark Carney may be promising to “work relentlessly to cut waste.” But federal gross debt is on track to hit $2.4 trillion, while debt interest is $59 billion. Currently, the debt is worth the equivalent of more than $33,000 for every Canadian. Carney has even managed to outspend his predecessor on the Privy Council Office, including on gourmet in-flight meals for him and his entourage, worth almost $200,000.

Meanwhile, the federal parliamentary budget officer and major credit rating agencies are flagging a worrying pattern: that major federal spending commitments are increasingly being made without basic details about delivery or future controls. In March, Finance Minister François-Philippe Champagne even announced that the federal government had “found” $60 billion in savings across different departments, without naming a single one. His Main Estimates, tabled in February, were no more explicit.

Such economic dilettantism is becoming embarrassing.

Cue the federal government’s launch of its “sovereign wealth fund” with $25 billion of borrowed money, which will also cost taxpayers $750 million in debt interest charges. Moreover, Norway’s sovereign wealth fund, built on surpluses, long-accumulated savings and resource revenues, and currently worth US$2 trillion, invests abroad. Canada’s proposed fund—which is more like a government-run mutual fund—will invest in politicians’ and bureaucrats’ domestic pet projects and imitate the work of already-existing entities such as the Canada Infrastructure Bank and Canada Growth Fund.

How did we get here? An endemic spending attitude. Some recent examples of serious overspending, big and small(er):

• Almost $1 billion for 13 FIFA World Cup games, shared among the federal government and host provinces.
• $4.2 billion to replace the troubled federal Phoenix pay system.
• $18 million to reopen the Canadian consulate in Milan, which showcases “efforts to combat climate change.”
• $300 million to federal digital service PrescribeIT, although fewer than five per cent of prescriptions flow through it.
• $1.2 million in cameras for homeless individuals to take photos for an arts-based exhibition approved under a “veteran homelessness” program.
• $194 million to the Nutrition North food subsidy program, despite “insufficient evidence” that it’s actually lowering grocery prices.
• $9 million for advertising in French-speaking countries such as Cameroon and Togo, approved by the Department of Immigration to promote immigration.
• $230 million in federal funding for northern community programs, including $50 million to support a first Inuit-led university.
• $1.4 million on a “net zero” government-owned garage in Whitehorse, which took 10 years to build.

We have to stop spending like this.

If governments are serious about growth, they must refocus on efficiency: curb spending, lower taxes, simplify regulations, cut red tape, accelerate approvals and remove barriers to private investment. Now.

Bronwyn Eyre is a senior fellow with the Montreal Economic Institute and Saskatchewan’s former minister of energy and of justice/attorney general.

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