Federal debt concerns grow as small businesses seek spending cuts and balanced budget path
The Canadian Federation of Independent Business (CFIB) reports that nearly 74 percent of small businesses are increasingly concerned by the absence of a federal plan to achieve a balanced budget.
Amid continued deficits, Canada’s federal debt has almost doubled over the past decade, from $602.4bn in 2012/2013 to $1.173tn by the 2022/2023 fiscal year.
Jasmin Guenette, CFIB’s vice-president of National Affairs, emphasized the need for a budget-balancing timeline, noting that Canada’s economy and entrepreneurs “cannot sustain this level of debt forever.”
Guenette highlighted that excessive debt management costs could otherwise “be used to reduce taxes and the cost of doing business.”
He also noted that “Ottawa needs to stop acting as if it has money to burn and, instead, work to avoid driving up the national debt.”
The report points out that annual interest on Canada’s national debt now consumes $54bn, an amount roughly equal to the combined provincial budgets of Manitoba, Saskatchewan, and Newfoundland and Labrador for 2024/2025.
This debt servicing cost is projected to climb even higher, reaching $64.3bn by 2028/2029, driven by rising interest rates and borrowing needs.
According to CFIB, that projected spending could have been directed towards eliminating the GST, energy taxes, customs duties, and excise taxes in 2022/2023 alone.
Highlighting the need for sustainable fiscal practices, Guenette stated, “Increasing taxes is not a sustainable solution. It's well beyond time for the government to get its fiscal house in order.”
CFIB recommends that the federal government take specific steps to address the debt and deficit, including:
-
Establishing a clear path to balancing the budget with defined progress indicators.
-
Setting a fiscal anchor to actively reduce deficit and debt levels.
-
Legislating spending limits for government outside of a global crisis.
-
Conducting thorough internal reviews to reduce federal public service costs.
-
Freezing departmental operating budgets at current levels.
-
Refraining from introducing new or expanded social programs, such as dental care or pharmacare.
-
Selling government assets, including Crown corporations, land, and buildings, where feasible.
Juliette Nicolaÿ, CFIB policy analyst and co-author of the analysis, underscored the effect of deficits on entrepreneurs. She pointed out that deficits today lead to “new or higher taxes” in the future, which discourages prospective entrepreneurs and limits current ones from investing to grow their businesses.
Nicolaÿ urged the government to rein in spending habits, suggesting that the Fall Economic Statement and the 2025 Budget could serve as key opportunities to implement stronger fiscal controls and establish “solid fiscal anchors.”
