In Canada, deficit spending keeps winning elections

No matter the party, governments run deficits because spending wins votes

Three provinces. Three parties. Three record deficits. When every party runs deficits, ideology isn’t the explanation. The political rewards for spending are.

In Alberta, a United Conservative government that once promised fiscal restraint is now projecting a $9.4-billion deficit, sidestepping its own fiscal laws to do so.

In New Brunswick, a Liberal premier who campaigned on balanced budgets has already delivered one multi-million-dollar deficit, with projections showing that we’re soon in for another.

And in British Columbia, the NDP, not even bothering to feign fiscal discipline, forecast a $13.3-billion deficit in the 2026 budget, the largest in the province’s history.

Why? Because in politics, the rewards for spending are immediate while the costs of borrowing are distant, or so they seem.

For politicians, the priority is getting elected, and since getting elected depends on giving voters what they want, fiscal discipline only matters if voters demand it.

Defending her government’s deficit, New Brunswick Premier Susan Holt argued that the alternative, not spending on other campaign promises, would have been worse. Worse for whom? The calculus is clear: balanced budgets have become politically costlier than borrowing.

And voters, if we are honest, make this too easy.

We cheer for tax cuts without offsetting savings, applaud new programs without sunset clauses, and accept “one-time” spending that soon becomes permanent.

So when every special interest with a lobbyist and a business case asks for public dollars, given those incentives, it would be surprising if politicians didn’t find reasons to spend.

Deep down, we all know the math doesn’t add up. So to make all this irresponsible borrowing sound responsible, almost everything is now rebranded as an “investment.” But while all investments are spending, not all spending is investment.

Actual investments generate future growth or reduce future costs. Yet so much of what gets called an “investment” in provincial budgets today does neither.

Business subsidies, preferential tax credits, guaranteed corporate loans, the list goes on.

You would think by now all this government “investing” would start paying off. Yet year after year, we’re told that still more “investments” are urgently needed.

But our ability to borrow is not infinite, whatever the behaviour of our politicians might suggest. All this “investing” comes at a cost.

In 2024–25, combined federal and provincial interest costs hit $92.5 billion, money that buys nothing, builds nothing and heals no one.

Of course, interest is just the visible cost of debt. The invisible costs are often worse.

In B.C., for example, they’re now “re-pacing” capital spending, which means delaying construction of seven long-term care facilities, the next phase of the Burnaby Hospital and Cancer Centre, and a student housing project at the University of Victoria.

These are the hidden costs of debt: the hospital wing that wasn’t built, the tax cut that didn’t happen, the class sizes that never shrank. That, on top of the weaker productivity and economic growth, leaves future workers with less opportunity and lower wages than they otherwise could have had.

So what can be done? Fiscal rules might help, but Alberta’s experience shows how easily they can be ignored. No, the only real enforcement mechanism is electoral punishment.

Running deficits is the path of least resistance only so long as it is also the path of least political cost.

If we want governments to keep our fiscal house in order, we must reward those that execute credible plans to balance the books and punish those that don’t.

Asking voters to care about debt ratios and interest costs may sound like a tough sell. Perhaps it is. But if we don’t impose fiscal discipline on our elected representatives, they won’t impose it on themselves. Alberta, B.C. and New Brunswick—three different provinces, three different parties, one outcome—make that abundantly clear.

Conrad Eder is a policy analyst at the Frontier Centre for Public Policy.