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April 8, 2021

Tough Choices Needed to Prevent Fiscal Meltdown: C.D. Howe Institute's Federal Shadow Budget

  • The Federal Government’s spending and borrowing cushioned the impact of COVID-19 on Canada’s economy, but have put national finances on an unsustainable path. The upcoming budget must make tough choices to put Canada on a path back to fiscal stability.
  • As the health crisis abates, Canada faces two related challenges: supporting economic growth and slowing, and ultimately halting, increases in government debt. The authors note that the Fall Economic Statement anticipated a federal debt ratio in the 55 percent to 60 percent range for the next five years, and show that current commitments for new spending, and higher interest payments, will send the debt ratio higher in subsequent years. The federal/provincial debt burden could exceed 100 percent of GDP in about a decade and continue rising thereafter.
  • In this Shadow Budget, authors Don Drummond, Alexandre Laurin, and William B.P. Robson present initiatives to support the recovery and longer-term growth, while ensuring the federal government’s capacity to deliver services in the future.
Don Drummond

Don Drummond is a Stauffer-Dunning Fellow and Adjunct Professor at the School of Policy Studies at Queen’s University. In 2011-12, he served as Chair for the Commission on the Reform of Ontario’s Public Services. Its final report, released in February 2012, contained nearly four hundred recommendations to provide Ontarians with excellent and affordable public services.

Alexandre Laurin

Alexandre is the Director of Research and leads the fiscal policy program and the pension policy program at the C.D. Howe Institute. He joined the C.D. Howe Institute in 2008 and became Director of Research in 2014. From 1999 to 2008, Mr.

William Robson

Bill Robson took office as CEO of the C.D. Howe Institute in July 2006, after serving as the Institute’s Senior Vice President since 2003 and Director of Research from 2000 to 2003. He has written more than 270 monographs, articles, chapters and books on such subjects as government budgets, pensions, healthcare financing, inflation and currency issues.