Justin Trudeau projected to be the largest debt accumulator in Canada’s history: Fraser Institute

Excluding Prime Ministers who served during a world war or a major economic downturn, Justin Trudeau is projected to go down as the biggest debt accumulating Prime Minister Canada has ever seen.

A new report from the Fraser Institute detailing federal spending by Prime Ministers shows that Justin Trudeau is projected to raise the federal debt per person by 5.6% by the end of his first term. Sir Mackenzie Bowell and Sir John Abbott are the only other Prime Ministers to have increased the federal debt without facing an economic downturn or global conflict.

While the debt has skyrocketed since the 1980’s, a concerted effort by the Chretien, Martin and early Harper governments brought the debt down during the late 1990’s and early 2000’s. However, since the Great Recession in 2008, the debt has continued to climb.

The report’s authors focuses in on the debt per person metric because they deem it to be the most accurate way to measure government spending across time. While the Trudeau government often defends its fiscal record citing the debt to GDP ratio, the authors offer an explanation as to why that metric isn’t so reliable.

To focus on changes in the debt-to-GDP ratio would therefore penalize prime ministers who served during recessions and would benefit, by happenstance, prime ministers who served during periods of economic expansions. When recessions occur, the debt-to-GDP ratio tends to rise due to automatic increases in government spending (e.g., employment insurance), any stimulus spending, and the decrease in economic output. Conversely, prime ministers who preside over strongly positive economic growth may be more likely to record falling debt-to-GDP ratios.  Fraser Institute Report: Prime Ministers and Federal Debt, 2019.

For the early parts of Canada’s history, the per person debt levels stayed quite low, reaching only $1,950 (2019 dollars) in 1913. However, by the end of WWI in 1918, that number had grown to $5,583. A similar pattern followed during WWII, with per person debt rising from $7,149 in 1938 to $26,340 by 1945.

From 1966, per person debt grew 225% from $11,387 to its all time high in 1995 of $37,054. After years of debt reduction, per person debt fell to $25,267 in 2007, the lowest it had been since 1984.

Following the 2008 recession, per person debt started to rise again during the remainder of the Harper government and into the Trudeau government, with the report projecting that it will hit $32,589 by the end of 2019.

However, when compared to the spending binges that took place under Prime Ministers who oversaw world wars and recessions, the spending increases by Trudeau, Bowell, and Abbot don’t appear so drastic.

Excluding Sir Robert Borden and William Lyon Mackenzie King, the two wartime Prime Ministers, Trudeau’s father, Pierre Trudeau, who dealt with a prolonged recession in the early 1980’s, oversaw the largest spending increase of any Canadian Prime Minster ever, boosting the per person debt by 58.8%.

The Prime Minster who reduced per person debt the most was Louis St. Laurent, dropping it by a remarkable 34.3% from 1949 to 1958, despite facing two recessions during his time in office. Other notable decreases came from Sir Wilfred Laurier (14.5%) and from Jean Chretien (13.3%).