Finance Minister Suggests Increasing Borrowing Limit to Historical $2.1 Trillion
Finance Minister Chrystia Freeland is proposing a second increase in the national borrowing limit in three years, this time to a record $2.1 trillion.
Ms. Freeland is suggesting that Ottawa’s debt limit be raised by 16 percent from $1.83 trillion to $2.13 trillion, as per a document presented in the House of Commons on April 30 and initially reported by Blacklock’s Reporter.
“I urge my parliamentary colleagues to approve this promptly,” stated Ms. Freeland in the document, which did not provide a reason for the need to expand the limit under the Borrowing Authority Act.
Referred to as the Ways and Means Motion, the document submitted will help advance the government’s 2024 budget priorities.
The budget unveiled by Ms. Freeland on April 16 proposes $53 billion in new expenditures over the next five years. This includes $8.5 billion allocated for housing, such as a $6 billion investment in housing infrastructure, a $1.5 billion rental fund aimed at making rents more affordable, and $600 million in loans and funding for home construction.
The $535 billion budget also proposes an increase in the capital gains inclusion rate, or tax rate, to raise an additional $20 billion over the next five years. The budget predicts a $40 billion deficit for this fiscal year.
Related Stories
“Budget 2024 seeks to construct a Canada that offers more opportunities for each generation, where younger generations can progress, where hard work pays off, and where owning or renting a home is achievable—where everyone has an equitable chance at a decent middle-class life,” Ms. Freeland declared in a statement on April 30 when announcing the Ways and Means Motion.
“We are doing this because providing a fair opportunity to forge a thriving, middle-class life has always been Canada’s pledge,” she added.
Legislators expressed their apprehensions regarding federal finances on April 30.
Tory MP Jasraj Singh Hallan remarked that federal leaders and the 2024 budget are disconnected from average Canadians who are struggling to meet basic needs amid elevated inflation and cost-of-living difficulties.
“Right now, there is no light at the end of this tunnel,” he stated. “There is absolutely no hope that their mortgage, rent, or grocery expenses will decrease. It will only be more of the same.”
“Canadians are extremely anxious,” he added.
Senator Elizabeth Marshall told the Senate national finance committee that Canadian debt has markedly escalated.
“Since 2015, the debt has doubled,” noted Ms. Marshall. “No assessments have been conducted. No evaluations have been carried out.”
Ms. Freeland stated in budget 2024 that it “would be irresponsible and unfair to burden future generations with more debt” but has not specified a deadline to eradicate deficit spending.
Budget 2024 projects that the government’s bonded debt will exceed a historic $1.3 trillion in 2026, with debt interest payments reaching $65 billion annually by the end of the decade.
The finance minister previously raised Canada’s borrowing limit by 56 percent three years ago.
“What this does is establish a cap on the government’s spending capacity,” Ms. Freeland explained to the Commons finance committee at that time.
“The increase in borrowing authority does not serve as a blank check,” she added. “Every government expenditure must be authorized by parliament.”
Matthew Horwood contributed to this report.
