Monday, April 20, 2015

A Look at Canada's Deficit and Debt History

March 2016

For an updated version of this posting, please click here.

With the Trudeau government about to unveil its first budget, I thought that we should take this opportunity to look back in history and see how a series of governments have created a debt situation that is becoming worrisome.  For this posting, I have sourced my data from this TD Bank publication which is current to February 2016.

Let's open by looking at Canada's political history since 1980:

1980 to 1984 - Pierre Trudeau (Liberal)
1984 to 1984 - John Turner (Liberal)
1984 to 1993 - Brian Mulroney (Progressive Conservative)
1993 to 2003 - Jean Chretien (Liberal)
2003 to 2006 - Paul Martin (Liberal)
2006 to 2011 - Stephen Harper (Conservative - minority)
2011 to 2015 - Stephen Harper (Conservative - majority)
2015 to present - Justin Trudeau (Liberal - majority)

Now, let's look at a table that shows Canada's fiscal history since the fiscal year 1986 - 1987, during the later years of the Mulroney government:

While I do realize that the Trudeau I government was responsible for significantly overspending its revenue, unfortunately, TD does not supply data going back that far.

As we can see, out of the past 31 fiscal years (including the projections for 2015 - 2016), the federal government has run a surplus for only 13 years with all but four of them either under the leadership of Paul Martin or under his guidance as Finance Minister.  Over the 11 consecutive years that the budget was in a surplus situation, the average surplus was $9.521 billion with Canada's best fiscal performance occurring in 2000 - 2001 when the budget surplus hit $19.891 billion.  On the other hand, the federal government has run a deficit for 18 out of the 31 years or 58 percent of the time.  Over the 18 budget years that the government ran a deficit, the average deficit was $20.889 billion with Canada's worst nominal fiscal performance occurring in 2009 - 2010 when the budget deficit hit $55.598 billion.   That single deficit erased all of the positive fiscal gains made between 2001 - 2002 and 2007 - 2008.

Now, let's look at the data in graphical form, starting with the annual deficit information:

This graph very clearly shows how the federal government has spent relatively little time in a balanced budget situation.

Here is a graph showing how Canada's federal net debt has grown since 1986:

The level of debt rose quite rapidly during the period from 1986 to 1997, growing from $257.7 billion to $562.9 billion, an increase of $305.2 billion or 118.4 percent.  Between 1998 and 2009, the net federal debt dropped slowly, hitting a low of $457.6 billion in fiscal 2007 - 2008.  Over that particular 11 year period, the debt dropped by $105.3 billion or 18.7 percent.  Once the world economy began to experience the impact of the Great Recession, Canada, like many other nations, found it necessary to massively increase stimulus spending.  Over the six year period from fiscal 2008 - 2009 to 2013 - 2014, the government spent a total of $144.569 billion more that it received in revenue.  This pushed the net federal debt up to $611.9 billion in fiscal 2013 - 2014, an increase of $154.3 billion since the Conservatives took control of the nation.

As I posted way back in 2012, as a Reform MP, Stephen Harper had what might be considered a very strong opinion on government fiscal balance.  In reference to then-Alberta Premier Ralph Klein and his efforts to balance the province's budget back in 1994, Mr. Harper had this to say:

"Although I can't speak of the details because it is not my area of expertise, what Mr. Klein is doing in Alberta is, in principle, what governments need to do.  He is taking a look at a situation that is unsustainable financially and he is taking the steps necessary through expenditure reductions to eliminate that financial uncertainty on a permanent basis within the life of a single Parliament.  That is the only way it ever gets done.  Any politician who says he is going to do it over two Parliaments is never going to do it.  That's the golden rule.  That's something that you can learn from Ralph Klein." (my bold)

Apparently, it's easier to talk about something than it is to actually do it.

As we can see, Justin Trudeau's warnings about his projected series of budget deficits will be just business as usual when it comes to Canada's federal government.  Sad, isn't it?


  1. Conservative governments, whether Canadian or American intentionally run deficit budgets regardless of they talk. It transfers money from the poor to the rich in interest (as well as the tax cuts and defense spending) and gives them an excuse to cut social safety nets and services (health, education etc.) which benefit all the citizens. Getting re-elected while doing this is a remarkable feat but one that Republicans (who are running Harper's show) manage with God, guns and gays.

  2. In 2009, it was the start of the most recent recession. You know what the government of every county is supposed to do during this time, right? Spend money by providing stimulus to the economy! Look at the US and some of the major countries in Asia and Europe. They all did the same and the consequence of this if running large deficits. Ask yourself, what is more important during recession, running a balanced budget or ensuring the economy doesn't deteriorate?

  3. The fact you did not start the Data at 1968 (Person surplus) and not showing PET's carzy spending of 70's -- his debt build up is now $382 billion (compounding intrest is a bit$h) I will not trust this blog for fair info.

    1. That's all the data that TD supplied. If I go to another source, there might be inconsistencies in how the data is either calculated or presented.

    2. Trudeau's spending in the 70's would greatly alter your argument.
      Mr Harper may not be an ideal choice but given the global downturn of 2008 I would give him higher marks on fiscal management than say his US and most European counterparts.

  4. I agree with The Blog Fodder, except for the word 'Gays,' which is by far the least likely of any possibilities and should be removed. I'm straight, but Gays are people like the rest of us, and should not be singled out in a bad way!

  5. Highest deficit created by Pierre Trudeau (Liberal) (which is not showing in Table!), and approx. today's values is over 70B deficit. and highest closing the deficit gap (turning to surplus) happened since 2009 (recession) to 2015. The data collection and interpretation of the data is not fair and misleading.

  6. Canada’s National Debt
    by Prime Minister

    -Stephen Harper (Conservative)
    Feb 2006-Oct 2015
    492.5 billion-612.8 billion
    120.3 billion added to debt
    In 9 years during the “great recession”

    Reduced National debt by 28.5 billion (to 464 billion) in the first two years of his term before recession hit.

    -Paul Martin (Liberal)
    Dec 2003-Feb 2006
    507.5 billion- 492.5 billion
    15 billion reduced debt
    In 3 years with no recession

    -Jean Chretian (Liberal)
    Nov 1993-Dec 2003
    459 billion- 507.5 billion
    48.5 billion added to debt
    In 10 years no recession

    -Kim Campbell
    June 1993-Nov 1993
    451.8 billion -459.0 billion
    7.2 billion added to debt
    In 5 months recession uncertain

    -Brian Mulroney (Progressive Conservative)
    Sept 1984-June 1993
    135.3 billion -451.8 billion
    316.5 billion added to debt
    In 9 years possible recession for small portion

    -John Turner (liberal)
    June 1984-September 1984
    127.2 billion-135.3 billion
    8.1 billion added to debt
    In 3 months during a recession

    -Pierre Trudeau (Liberal)
    March 1980- June 1984
    60.1 billion-127.1 billion
    67 billion added to debt
    In 4 years during a recession

    -Joe Clark(Progressive Conservative)
    June 1979- March 1980
    46.4 billion-60.1 billion
    13.6 billion added to debt
    in 9 months during a recession

    -Pierre Trudeau (Liberal)
    April 1968- June 1979
    14.2 billion -46.4 billion
    32.2 billion added to debt
    in 9 years no recession

  7. I don't understand the comment about Pierre Trudeau's "crazy spending" compared with the evidently very "crazy spending" of Brian Mulroney and the spending of Stephen Harper!

  8. If we all together forget about who is in power at that period and put our energy to constantly discuss the issue of governance with our local federal and provincial MP, we might be more successful to push our point of controled budget by reducing spending. It is a large issue, but let us all do our part into driving the point home about debt and controled budgets. I am just saying ! It is not easy! We all take side but the talk is about cost and spending . Talk to your MP!!. That is our tool of democracy. Send letter to our government , talk our friend and family about deficit control not by attacking anyone or political agenda or ideology. Our next generation will be stuck with that debt!! Let get all onboard to change the way our government spend our taxe dollar. Have a good day

  9. Can't wait for PJ's take on TFSA cut ...if Lib's really wanted to make TAX impact they should have cut RRSP . April 5th we will find rolling 67 back to 65 OAS and back to 30% /60 CPP are just another lie...TD not giving you 68 to 80 data not a big surprise ;-)

  10. What never seems to get attention is Mulroney's introduction of the 7% GST. Martin seems to get a lot of credit for retaining the GST, but its not mentioned that he downloaded a lot of Federal costs to the provinces...