Why Has Canada’s Deficit Exploded Since Harper?
Massive deficits, huge interest bills, and generous foreign aid. Where did accountability go?
Ottawa’s budget deficit is completely out of control and politicians treat it like a minor inconvenience. When Stephen Harper left office in 2015, he had steered Canada through the 2008 crash and brought the books close to balance. His peak deficit hit around 56 billion dollars during the recession, but his government cut waste and lowered the debt-to-GDP ratio. Discipline actually existed back then.
The Liberals changed everything. Justin Trudeau promised small temporary deficits and a quick return to surplus. Instead, he made red ink the new normal even before COVID arrived. The pandemic exploded the numbers with a monstrous 328 billion dollar hole in 2020, but the wild spending never really stopped afterward. Nine straight years of deficits followed. Now under Mark Carney the situation has worsened. His first budget projects a massive 78.3 billion dollar deficit for 2025-26, nearly double the previous forecast. Interest payments on the debt are heading toward 76 billion dollars soon, and total federal debt is racing toward 2.9 trillion dollars by 2030.
The causes are obvious. Endless new programs, immigration pushes, green initiatives, and responses to trade tensions keep pouring out cash while revenue growth lags. Politicians love announcing shiny projects but hate saying no to anything.
Take the foreign spending as a glaring example. Since 2022, Canada has committed more than 25.5 billion dollars in total aid to Ukraine, including 8.5 billion dollars in military assistance. In February 2026 alone, Ottawa announced another 2 billion dollars in military support for the coming year, complete with hundreds of armoured vehicles. At the same time, billions flow into economic partnerships with India through trade deals and investment promises. While these may have strategic value, many Canadians wonder why we borrow so heavily at home and rack up massive deficits just to fund generous overseas commitments when hospitals, housing, and infrastructure back home are under strain.
The real outrage is the total lack of accountability. No finance minister gets fired for missing targets. No prime minister suffers quick consequences. They shift spending into “capital investments” to make the numbers look better and repeat the same empty promise every cycle: restraint is coming soon. Voters hear the speech but watch the debt climb anyway.
The consequences hit hard. Huge interest bills crowd out funding for health care, infrastructure, and tax relief. Future generations inherit this mess with less room to maneuver during the next crisis. It weakens the economy and leaves ordinary Canadians paying the price while elites pat themselves on the back.This deficit addiction will not fix itself. Without real fiscal rules and actual penalties for overspending, Ottawa will keep kicking the can down the road until the bill becomes unbearable. Time for politicians to grow up.
BACKGROUNDER
Harper’s Fiscal Policies: Discipline in Good Times, Crisis Response, and a Quick Return to Balance
Stephen Harper served as Canada’s Prime Minister from 2006 to 2015 with a clear fiscal philosophy: low taxes, controlled spending, and a strong preference for balanced budgets. He inherited strong books from the Chrétien-Martin era, surpluses of about $13.8 billion in 2005-06 and $13.9 billion in his first year. Early on, his government kept running surpluses ($9.6 billion in 2007-08) while cutting the GST from 7 percent to 5 percent, trimming personal and business taxes, and delivering targeted tax relief like the child benefit.
Then came the 2008 global financial crisis. Harper’s team shifted to stimulus spending under the Economic Action Plan. The result was Canada’s largest peacetime deficit ever: $55.6 billion in 2009-10 (roughly 3.6 percent of GDP). Critics at the time said he had already started slipping into deficit territory with pre-crisis tax cuts, but the big red ink came from the recession response, temporary infrastructure projects, job programs, and automatic stabilizers.
What set Harper apart was the deliberate wind-down. Starting in 2010, his government froze operating spending in real terms, slowed program growth, and clawed the deficit down year by year: $33.4 billion, then $18.4 billion, $5.2 billion, and a projected $1.4 billion surplus by 2015-16. Debt-to-GDP, which had spiked during the crisis, was brought back toward pre-recession levels (around 28-31 percent net debt-to-GDP by the end). Harper even legislated a plan for future balanced-budget rules that would trigger automatic restraint if deficits appeared outside of recessions.
The approach was textbook fiscal conservatism with a pragmatic twist: spend big when the house is on fire, then tighten belts fast once the flames are out. Program spending rose modestly as a share of GDP overall, but the focus stayed on letting the private sector drive growth rather than permanent government expansion. Supporters point to Canada’s low debt burden compared to other G7 nations and over a million net new jobs created. Critics argue the early tax cuts reduced revenue room and that some infrastructure money felt more like political pork than smart investment.
In the context of today’s endless deficits, Harper’s record stands out for one reason: accountability. He treated the big crisis deficit as a temporary emergency, not a new baseline. By the time he left office, the books were nearly balanced again—something no federal government has managed since. It was not perfect, but it showed that restraint after stimulus was possible when politicians actually prioritized it.
