Understanding the Scale of Canada’s Federal Deficit

— Published on September 17, 2024

For many years the federal government’s 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 family’s 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.