Federal government programs won’t make ‘life cost less’

Printer-friendly version
Appeared in National Newswatch, June 4, 2024
Federal government programs won’t make ‘life cost less’

According to the Trudeau government, it’s making “life cost less” and “improving affordability” for Canadians with federal programs such as $10-a-day child care, national dental care and national pharmacare. But while these programs might lower the amount of money some Canadians pay at the point of purchase, they will ultimately raise the amount families must pay in taxes.

Indeed, that’s the Trudeau government approach to improving access to goods and services. Rather than reduce the tax burden on families so they have more money to fulfill their own specific needs, this government has consistently chosen to tax and spend to directly provide these services—while failing to explain that Canadians will ultimately bear the cost through higher taxes for these programs.

And any additional tax burden will not simply fall on the wealthy or businesses—as the Trudeau government claims—but on a broad range of incomes. This means the average Canadian family, which already spends more of its income on taxes (45.3 per cent in 2022) than on basic necessities (food, shelter, clothing), will see its tax bill grow.

Moreover, the Trudeau government plans to run annual budget deficits of $20.0 billion or more for the next five years to pay for all its program spending, and Canadian taxpayers must pay interest on this debt each year.

These costs are significant—federal debt interest costs ($54.1 billion) are expected to equal the entirety of GST revenues this year—and they’re on the rise. This means (all else equal) the government has less money available for services such as health care or defence, and must raise taxes to maintain the same level of spending. Higher government debt also means higher taxes on future generations—as research shows, one dollar borrowed today must be paid for by more than one dollar in future tax revenues.

Finally, even if these programs reduced the amount some Canadians directly pay for some services, past experience tells us that centrally-organized government programs are often fraught with efficiency and implementation problems that cause cost overruns and/or poor quality of service (consider the cost of the ArriveCAN app or growing wait lists for day care). In other words, in addition to Canadians as a whole paying more in taxes due to increased spending and borrowing, they may also receive the same (or worse) level of service than they would if the private sector delivered these programs. Costs for families will likely rise, while the quality of services may decline.

The Trudeau government rhetoric has focused solely on the benefits of national child care, dental care and pharmacare, without acknowledging any of the costs. But when these benefits are eroded due to higher taxes, which already represent the largest single expense for Canadian families, can the government honestly say these programs make “life cost less.”

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.