Ottawa is projecting a $40 billion deficit, something that doesn’t surprise many who have been watching government spending climb since the pandemic.
That has some concerned, while others say it’s part of a growing economic reality.
The federal government delivered its fall fiscal update last week, projecting a $20.8 billion increase in spending over the next six years.
Financial Advisor Larry Short of Short Financial, a branch of IA Private Wealth, says federal spending has increased exponentially over the last decade.
Since taking over in 2015, the Liberal government has increased spending by $150 billion each year, which he says “is pretty much in tune with what they’ve done in the past.”
He says it appears as though the Trudeau government is adopting the Modern Monetary Theory, whereby governments don’t have to worry about balancing a budget like they did in the past, as long as they continue to service the deficit, then they don’t have to worry about paying down or balancing the budget. That is a departure from past beliefs, with countries like Japan borrowing 259 per cent of their GDP and continuing to operate. Years ago, if that were the case, the country would potentially go bankrupt.