Former Bank of Canada governor David Dodge said Canadians have to choose between increased taxes or reduced services due to the growing federal debt. .Dodge described it as a "terrible job" to make this choice..According to Blacklock’s Reporter, while testifying at the Commons Finance committee, Dodge drew a comparison between the current financial outlook and the economic conditions of the 1970s..“That is the terrible job – and I use those words advisedly – the terrible job of governing,” said Dodge. .“You have to make the choices.”.“This is going to take time, to bring inflation down,” testified Dodge. .“Once we got off track, just as we know in the 1970s, it takes time, and it takes a lot of effort on the part of the government.”.In the federal budget A Made in Canada Plan, presented on March 28, it was estimated debt interest charges for this year would amount to $43.9 billion..Key interest rates increased from 4.5% to 5.0% since the budget was released..“Politically difficult as it may be, over the next few years, budgets are going to need to be roughly balanced,” said Dodge. .“To allow for additional public investment and support for private investment, the growth of government-provided current services or transfers need to be somewhat curtailed or alternatively taxes on private consumption increased.”.“The burden of past debt will increase year after year,” said Dodge. .“Governments cannot borrow their way out of these difficult choices.”.Conservative MP Adam Chambers (Simcoe North, ON) pointed out billions in maturing federal debt will need to be refinanced at higher interest rates soon..“The government is rolling over $421 billion this year of debt,” said Chambers. .“Debt service costs are going to explode.”.In her testimony on May 16 before the Finance committee, Finance Minister Chrystia Freeland mentioned the debt charges were "absolutely handleable" in the coming years..“I think it’s really important to put numbers in context,” said Freeland. .“Without context, numbers are meaningless. Our debt service charges are low in Canada’s historical context and they are low compared to what our peers in the G7 are paying.”.“Our debt service charges are absolutely handleable,” said Freeland..The Department of Finance projected debt servicing would cost taxpayers $45 billion in 2024, another $46.6 billion in 2025, another $48.3 billion in 2026 and a record $50.3 billion by 2027, double the pre-pandemic cost of $24.4 billion. .“We are investing,” Freeland told the Commons in her March 28 budget speech..Parliament in 2021 raised the federal debt ceiling by 56%. Amendments to the Borrowing Authority Act increased the debt cap from $1.168 trillion to $1.831 trillion.
