00:00:00.880Today on the True Patriot Love Media Network, Under the Pillar Economy, we're going to look at Bucket 2 of the 2025 Federal Budget,
00:00:10.800capital expenditures budgeted by the Federal Government that are now being accounted for differently.
00:00:16.080In Part 1, we broke down the deficit numbers, understanding that the $507.5 billion in Federal Government revenues
00:00:24.280do not cover their expenses of $586.2 billion.
00:00:30.000This gives us a deficit, or as a corporation would say, a loss, of $78.3 billion for 2026.
00:00:38.580The 2025 budget was delivered months late, but was well-written.
00:00:44.900Lots of work went into changing the full accounting of the budget from a cash basis to an accrual basis.
00:00:50.840We followed the UK in changing our accounting, but most Canadians, mainstream media, and our MPs struggled to follow the budget,
00:01:00.680focusing on the Federal Government's operating deficits of $78.3 billion for 2026.
00:01:07.620Not on the new or old capital expenditures, nor on the fact that the debt ceiling was being raised to $2.54 trillion.
00:01:16.500We needed to borrow a whopping $137.9 billion in 2026, and it's going to grow to $147 billion in 2027.
00:01:30.160Believe it or not, our capital expenditures for 2026 are $45.4 billion and $56.7 billion in 2027.
00:01:42.300On top of the deficit, understand these capital expenditures are not part of bucket one.
00:01:50.260The $78.3 billion operating deficit or loss.
00:01:54.520These capital expenditures are added on top of the operating losses.
00:01:59.000That is why the country had to borrow so much.
00:02:02.080When we dug into it, over 80% of the capital expenditures are simply part of all budgeted projects that have been in place since the Trudeau government.
00:02:13.980About 20% of the capital expenditures budget are from new programs.
00:02:20.180Is this status quo, or are new projects really happening?
00:02:24.080Why are the Conservatives' bloc and NDP not asking for better accountability, reporting, and performance measures of these programs?
00:02:35.920Federal budget approvals always have a lot of political grandstanding.
00:02:39.820But with the U.S. moving away from Canada, we need to focus as a country and not take old projects and repurpose them with no increase in productivity or GDP.
00:02:49.000Doing so will have dire consequences for all of us, individually and as a nation.
00:02:56.300So stay tuned and let us know your thoughts.
00:02:59.600Today on True Patriot Love, we're going to dig into part three of the 2025 budget.
00:03:18.000I have Mike Wicks in here, again, to go through capital expenditures.
00:03:23.020So we kind of uncovered a bunch of stuff over the last two, and quite frankly, it's very interesting when we dug into the capital expenditures of the government.
00:03:35.520First of all, I'm going to recommend to people, go back to the other two episodes.
00:03:45.840You know, it's based on, I guess, budgeting and finance approaches that are very different from what we've looked at before.
00:03:55.620And when you get past that, there's a lot to understand here about what's really new and what's already in play as part of the government's ongoing expenditures.
00:04:11.900I tried to break down, you know, last program that we did, I tried to break down the budget into two buckets, operating bucket and a capital bucket.
00:04:23.000And what I did, the slide that's up right now shows you the operating deficits from 2025 to 2027.
00:04:31.280So, you know, I didn't go past 2027, quite frankly, because I didn't think, you know, the listeners would want to do much more after we got to 2027.
00:04:41.100Well, also, at that point, it seems a little pie in the sky.
00:04:45.080And I think we're going to have to, again, pivot.
00:04:47.780We're going to have to look at what's happening in 2027.
00:04:50.260And I think a lot of plans may be changing based on what we're finding at that time.
00:04:55.040So I think it's really important just to look at this year again.
00:04:59.200And for listeners, I won't spend a lot of time on it, but everyone remembers that the budget came out late.
00:05:05.080And quite frankly, 2026, we got the news that we're going to have a $78.3 billion operating budget deficit this month.
00:05:17.040So in November, you know, we found out, hey, by the way, it looks like we're going to have spent, overspent $78.3 billion on our operating deficit.
00:05:29.060And we're going to do some capital expenditures based on, as Mike said, a new accounting system.
00:05:36.640So we got a lot of news between October and November of what's happening in this budget.
00:05:43.760Before I kick off, I want to just say the important part of this, so in this capital expenditure program, is that we have to pay for the capital expenditure.
00:05:54.140And, you know, on the last show, I kind of used, you know, a personal finance analogy.
00:05:58.980Imagine this is, you know, your business is losing money, and then you actually go out and you buy a new home, and you decide to put a swimming pool in.
00:06:09.300Now you've got to cover the expenses that are so difficult now in your business, and you've got to cover the new wonderful home and pool that you have.
00:06:18.660But you've put it all into a different scenario that makes it financing feasible over a long period of time.
00:06:59.120I'm very impressed with the actual writing of the budget and the guys who put it together and the amount of work it took to actually put it together.
00:07:06.080It's amazing that they got it off and got it put together.
00:07:10.740Some challenges as we're going to go through.
00:07:13.180So, you know, again, capital expenditures for this year, so ending 2026, are going to be $45.4 billion.
00:07:34.100Because you have your operating deficit and your capital expenditures, and then you have some to and fro of pension liabilities and stuff you have to bridge.
00:07:42.680So, you know, when you do the math and you go through it all and you reconcile it all, that's what you need.
00:07:48.360In 2027, we have a $65.4 billion operating deficit, and our capital expenditures are $56.7 billion.
00:07:59.840We're going to need $149 billion to make it work.
00:08:38.460They used the U.K. and Singapore and some of the provincial budgets, quite frankly, they mentioned.
00:08:45.680But pretty much, you know, they followed what the U.K. is doing, except for a few small tinkering changes.
00:08:53.480But, you know, the government – and this is the statement of the government.
00:08:57.560The government is adopting a capital budget framework, a new way of budgeting that makes capital investment the national priority.
00:09:04.240This framework helps distinguish day-to-day operational spending from capital investment, broadly defined as spending that supports capital formation, allowing the government to identify and prioritize initiatives that deliver long-term economic returns.
00:09:22.560The framework also increases transparency, allowing Canadians to better understand what funds service today and what builds future prosperity.
00:10:58.760So, you know, and whether, you know, they had a budget out late, which they did.
00:11:03.540And so, quite frankly, you know, putting this on the balance sheet, you know, capitalizing some assets and then expensing having a large deficit, it is a way to kind of smooth it out.
00:11:59.440So, as you can see that, you know, we're going to have $58 billion in capital spend and we're going to have $58 billion roughly in deficits.
00:12:07.240So, you know, that's the goal is to kind of co-join them.
00:12:10.120So, you know, they're kind of converging.
00:12:12.920So, as your deficits are slightly going down, because our deficit right now is, you know, coming out of 2026, it's $78 billion.
00:13:26.200It's bizarre how small it was, actually, when you look at it, are now kind of going to go up to $60 billion.
00:13:32.960And they're going to stabilize at the $60 billion level.
00:13:36.520So, you know, the plan is in the future up until 2030 from starting, you know, to 24 is to increase, you know, to the end of 2027 and then stay roughly around $60 billion a year.
00:13:53.040So, doubling the projected capital investment.
00:14:04.260So, when we talk about this, it's almost like the headline, our generational investments, because people are calling this a generational budget.
00:14:12.560Yeah, it's out to 2030, and quite frankly, they did a good job, you know, and I commend, they did an excellent job on writing this budget.
00:14:20.620The guys who marketed this budget, put the marketing part of this budget together, did a really good job.
00:14:25.980There's lots of charts on the $280 billion five-year spend in capital and expenditures.
00:14:32.300Until you start to tie it into what that is, and that becomes the challenge.
00:14:37.500So, the detail, you know, the devil's in the detail, so you start to break that number down, and you say, okay, you know, because I got excited.
00:14:44.360You know, I was probably more excited at the beginning reading this budget than I was at the end.
00:14:51.920It's funny, I was a little shocked, Paul, that you came out, we were sitting there, and you said, I'll be honest with you, I like the budget.
00:14:57.120I don't dislike this budget, and I was like, wait, what just happened over there in that corner of the office?
00:15:01.600No, no, I did, and I said it on a couple shows, you know, I was excited.
00:15:05.400I had kind of predicted that they were going to try to spend out of it early on.
00:15:10.820I thought that was the right thing to do, and I thought new programs and new initiatives that increase productivity of the country was really the way to go.
00:15:21.460I was convinced that that was the direction they were going to go in, and so I was excited when I saw the announcement.
00:15:27.940When I saw this chart, you know, housing spend $25 billion over four years, defense spend, security spending, $30 billion over five years.
00:15:40.060$115 billion over five years for infrastructure, and $110 billion over five years for productivity and competitiveness.
00:15:47.940You know, it's interesting, Paul, we found out in a previous show that defense and security, that $30 billion will cover things that you may already think are infrastructure.
00:15:57.960So if you think it's tanks on the road, ships in the water, or guns in hand, it's not necessarily that.
00:16:04.440It could be repairing roads between Petawawa and Ottawa, for example.
00:16:08.620Yeah, the blend between infrastructure and security blend quite a bit, right?
00:16:13.800But there's, you know, there's interesting articles today that are out that are talking about that you can't keep increasing your defense spend to save the country.
00:16:24.800And what they mean is, are they going to cause an increase in GDP and productivity?
00:16:43.080It puts people to work, yes, but those are people that would otherwise be on the dole, potentially, or supported in some other way financially by the government.
00:16:49.880Right. And are you better to have to exploit them in an industry that is going to sell a product or, you know, export it abroad?
00:17:12.600Those are make work projects, you know, that go into the country to keep people active.
00:17:16.400And hopefully they go and they buy products with that money so that you're looking for the offshoot of the money you give them at that point.
00:17:23.020Which is minimal in comparison to doing import business and export business on the whole.
00:17:30.620So, you know, the employee, the company, everybody involved in the actual commerce and corporate version of this stand a better chance at longevity and, frankly, a better career.
00:17:44.640But one of the things you have to do at that point, if you, you know, and some of this is a little challenging because if you skew too much to projects that are not GDP, that do not enhance GDP growth.
00:18:41.140So there's some spends, but quite frankly, you know, if you're going to shift your government expenditure to too many infrastructure programs, then you have to say to yourself, I then need to almost reduce my number of imports.
00:18:57.000So therefore, do I then create a tariff program to slow down the number of imports?
00:19:02.400So then I, of course, but then you're being Trump, right?
00:19:05.940At that point, you're, at that point, you're really shutting down business internationally.
00:19:11.000Which is quite frankly, the Americans by, you know, if you look at what they do with their defense, with their trillion dollars spend on defense, you know, one of the reasons was the money was going all outside the country.
00:19:46.300It's not as simple as spend all your money on infrastructure and the country will be okay.
00:19:50.820No, that makes, it makes perfect sense to me that if we're just spending money on our own house and our own pool again, that there has to be some means for us to create income against that.
00:21:03.120And I thought, and it's funny because Christophe came to me and he was trying to, and he said, well, it's the problem because it's a reconciliation between cash and accruing, accrual accounting.
00:24:59.860They, uh, the team at, uh, federal government sits around a table and they basically smatter it and then they transfer it into the communities.
00:25:07.580And they, these are the ones that help the provinces stay afloat.
00:25:11.500That basically, uh, or, or, uh, keep the, the provinces flushing.
00:25:17.140Uh, another one that you pointed out to me was investing in Canada infrastructure program.
00:25:45.520So this is the partnership, uh, program with provinces, public transit, green infrastructure, community culture, and recreation, and rural and northern development.
00:25:54.060Man, recreation gets an awful lot of funding in different programs here, huh?
00:25:58.860Yeah, it seems to, it seems to pop up.
00:26:01.360You know, one of the, one of the recommendations that I would make, you know, if they're going to try to clean up all their programs and policies, I know these have been allocated into funds for accounting purposes.
00:26:11.620So what they do is they set up, uh, accounts and then they try to track what's happening through those.
00:26:17.320You know, a great thing would be to actually split these up into funding programs.
00:26:22.820And then actually track them through and start to talk about how beneficial they are and what their outcomes are.
00:26:30.120Give them, give them some markers, like basic targets.
00:26:33.060Say, you know, this one's going to increase productivity or this one's going to build a road that's going to go to a mine that's going to one day produce.
00:26:40.840Like, it'd be nice to see how it ties into the.
00:26:45.840Because we don't seem to do enough of that, frankly.
00:26:47.940You know, God bless urban planners, but with, uh, short-term governments like we have in a democracy, things change so dramatically from, from government to government.
00:26:57.240So, uh, if that's what it goes toward, fantastic.
00:27:02.600I mean, that's definitely something that we need, but, uh, but it needs to be managed.
00:27:08.080Yeah, it's got to be managed because now in this critical time, when you're taking the leap to increase these numbers, like we have an increase, these, uh, budget items, you really have to be careful because you're, now you have to actually track them through and say, is this program sustainable?
00:27:31.660So this is the challenge because you don't want to, number one, you don't want to have a program go sideways on you because then that'll hurt your credibility and you want to be able to actively pivot when one program's not working.
00:27:43.300So more than ever, I think, and, you know, nowadays with, you know, social media and everything happened, I don't think you can really get away with not like people are actively in these programs.
00:27:53.680So you can do that for a while, but everything comes out in the wash, right?
00:27:57.600So, but I do think some, uh, a little bit of oversight on, on this kind of money, um, in this many categories, because there's a lot of silos underneath, underneath each of these.
00:28:28.540The, uh, the strategic innovation fund provide, this was, uh, it's very, what I find difficult about this one, Paul, and I'll tell you the, uh, onset is once again, measurement of success.
00:28:40.960This, the strategic innovation fund provides large scale funding to Canadian businesses and industries to support high impact projects that drive innovation, clean growth, and economic transformation.
00:29:28.180You know, this is, we talked about yesterday on the operating expense show.
00:29:31.740We're going to go out and spend $260 million in 2027 to find people abroad who have specific skill sets to build.
00:29:41.340So you have to give them the resources to do that.
00:29:43.500So things like strategic innovation funds, if you do them well, there are countries that are very good at it.
00:29:48.760You know, uh, uh, I think, uh, Norway, I think is very good at it.
00:29:53.780There's some countries that do it really well.
00:29:55.440And quite frankly, you know, they identify projects, they find people, they bring engineers, they bring, uh, scientists, biologists, you know, they bring all those people in and then they set them loose on a specific project to advance whatever they want in their country so they can sell it.
00:30:13.780I was going to say that the net result of it is a pharmaceutical breakthrough or a patent that does benefit the economy overall.
00:30:25.600The other one, maybe walk me through this one.
00:30:27.320Other provincial, territorial, and municipal infrastructure investments.
00:30:30.160Under the Investing in Canada plan, the federal government supports more than $180 billion in infrastructure over 12 years.
00:30:37.020Uh, public transit, green infrastructure, boy, oh boy, uh, social infrastructure, trade corridors, which is obviously, uh, something that we'll need to do for, uh, doing trade with other countries.
00:30:48.660Uh, we can't just cross the border and rural and Northern development.
00:30:52.300And these contributions are designed to improve community resilience, reduce carbon emissions, Paul, and strengthen regional economies through cooperative investments with other levels of government.
00:31:14.300So, again, you know, strategic infrastructure is great.
00:31:18.020So, if you have, you know, always, you have a roading infrastructure that you have to fix, and then you have strategic infrastructure.
00:31:25.720So, you know, if you're going up north and you're going to create infrastructure to build homes because you want to move people up there to build mines and you need workers, it makes sense.
00:31:49.360They built infrastructure that made it appealing for people to be there.
00:31:52.500They created incentives for the, for the corporations, uh, which then brought investment because it was so favorable for the, for, for a risky industry in some cases, mining, for example, it's, you have to have the government behind you to get investors to buy in as well.
00:32:46.960I think it's, you know, in this environment.
00:32:50.400Which, which, you know, with everything going on in Canada right now, I think this is a little bit of a aggressive, a definitely aggressive number.
00:32:58.200Um, is it going to go to the right people at the right time in the right places?
00:33:13.700If you're, if you're, uh, um, Apotex or somebody like that, who's developing it, but you probably also have the research funding in place to do that.
00:33:22.620Um, so I don't think the right companies get this.
00:33:26.460And I wonder if maybe we would develop younger companies better by actually just investing this as grants, but.
00:34:00.660A hundred and, uh, 169.4 million investment in Linamar Corporation to expand AV parts and semiconductor packaging and up to $10 billion in production subsidies.
00:34:10.600For key industry partners like Stellantis, they're gone.
00:34:41.180And I think all these new developments that happened over the last month, I just think given everything they had on there, you can remember this team, this team putting the budget together.
00:35:16.940Well, there's sub layers of all these programs and there's the way to apply.
00:35:20.400And, you know, this goes on for pages and pages and pages.
00:35:23.720But, you know, at the end of the day for 2027, so we talked about capital budget in 2027 of $56.6 billion, $48.5 billion are projects that are baseline or whole one.
00:36:22.900My concern, here's my concern with that, and it's, if this was working really efficiently and we were knocking it out of the park and doing a great job on all these items, whether it be infrastructure, strategic innovation, shred, battery manufacturing, housing, then I'd say, great.
00:36:41.540Keep those rolling, put more money into them.
00:36:46.840So, you know, I guess my next question, which is, which, you know, I mentioned on the show yesterday is where I don't really understand where the opposition right now is not talking about this.
00:37:02.900Well, why don't they talk about guardrails and putting on reporting and accountability?
00:37:06.820You know, you can say, I want to vote down the budget, and I know I get why they're doing that.
00:37:13.240I understand, you know, I don't like this budget, whether the bloc or the conservatives.
00:37:18.000Did you put up any alternatives on how to monitor the budget?
00:37:22.660Or even which of these programs you'd like to see changed?
00:37:27.120Or how do we determine how they're working?
00:37:31.760In this day and age, with the technological developments and the things people can do, whether it be AI, all the things you can do to map, track, analyze, you should be able to quickly get across this budget and say, break this budget down and alter the components, measure it, and tell me which one's working based on the targets I set.
00:37:51.300I'm sure that's an easy task, actually.
00:38:17.600Let's sit down together and figure out how do we make sure that we identify key initiatives, track them, report on them, and keep driving to grow the country.
00:39:07.300We're not going to spend huge money on a new rocket ship program here in Canada.
00:39:12.580We're going to pay for what we've already promised properly for the first time and catch up.
00:39:17.780If that was the explanation that I was given, I think I'd, even as part of the opposition, I'd be more interested in participating in that.
00:39:52.600Like, you know, the amount of people that are talking to me about the budget on the weekend and talk as I move around.
00:39:57.860And they're, they're, they're asking the question.
00:40:00.080They don't understand probably why we started these shows is because the number of people who are having that conversation, it's not a small number.
00:40:07.780And what, what, this was the, what, the most downloaded budget in the history of budgets.
00:40:12.500It's so funny because we're lucky we have Paul.
00:40:15.760And so I noticed on that day, all the PDFs being printed out and it's 400 pages and we're going, wait, wait, wait, hold on, hold on.
00:40:22.940But we all kind of came to you right away saying, why so much?
00:40:29.620And I remember your, your reaction was, I don't know, but there's something to this.
00:41:15.020I don't think, I don't think in the two non-confidence votes we had, I think they would have been better served to ask for some things to be highlighted and agreed upon versus just saying no.
00:41:26.980And then, you know, so then if the third one goes through and the budget passes because, you know, the NDP abstains or whatever, you're not really going to know because you didn't ask for anything, anything constructive to be changed.
00:41:39.880Also, I don't see the opposition asking questions about what this or that means or challenging them on, this is not a new program.
00:41:47.440Because at that point, it gives the government a chance to say, no, we know we're doing this and we're increasing it in this way and we're staying the course.
00:42:38.880Well, the first one's not very small, but this is the adjustment that happens in the federal economic statements from 2024 to the current budget.
00:43:15.880So that's why, quite frankly, you know, you hear it all the time on different shows and, you know, very seldom do federal budgets end up being what they say they are.
00:43:27.380When they actually come in as actuals, they tend to be much higher.
00:43:30.920Now, in this one, I hope we're not much higher because it's a pretty high budget.
00:43:34.360But, you know, there's really two items.
00:43:38.040And so there's the funding for the high-speed rail.
00:43:44.580I always laugh when I hear that because it's been on the books for years.
00:43:48.420So who's using the not high-speed rail right now?
00:46:27.000I would, you know, it's a great question.
00:46:29.300We're going to do some future shows on it.
00:46:31.240And I think what we need to do now is we need to actually break down critical minerals and break down what we do have and start to ask the questions.
00:46:42.240I think it's a question, you know, I've always, you know, when you're sitting in a bar having a drink and people talk about Canada, the first thing almost everyone says is, well, we have lots of lumber, you know.
00:49:13.580Rebuilding, renaming, and reinvesting in Canadian Armed Forces.
00:49:16.500So this one's a head-scratcher to me every single time, I got to admit.
00:49:21.680Because I know, you know, we had $10 billion in the operating expenses on top of our existing.
00:49:29.540So for everyone, you know, we talked about it on the second show.
00:49:33.900There's standing expenses in government.
00:49:35.880So that's the $27, $30 billion we spend on the military.
00:49:39.940Then we said this year we're going to spend more money, so we added it as a project to go another $10 billion, basically, in operating expenses.
00:49:47.600And then we put $800 million aside for capital items.
00:49:53.640So these are items that they want to capitalize.
00:53:26.900Under the new accounting system, right?
00:53:28.980And then in 2020, so when all the smoke clears and we're finally get back on schedule and when we're delivering budgets and when we're reporting, we're going to spend $56.6 billion in capital expenses on top of our $65 billion operating deficit.
00:53:50.120Most of it is in baseline programs, that $48.5 billion I mentioned, on baseline programs that existed for the last five to 10 years.
00:54:09.760Then at hockey sticks up to, in election year allegedly, there's going to be money flying everywhere, $7 billion toward these new programs.
00:54:18.760The one thing I've noticed about the budget is it really does ramp up to, to the next election.
00:54:38.040Here's the issue, you know, with the economy and the way things are going in the U S tariffs and everything else, we do need to make these investments work.
00:54:46.480So these capital investments, I know they're hockey sticking up and as we talked about, but they need to start producing.
00:54:55.560Well, it doesn't, it looks like we're a couple of years away from really starting to see us beginning these programs, because if the money comes online in 2027, that's when you can apply for it.
00:55:06.040That's when the budgeting really occurs.
00:55:08.380So we're looking at 2028, 2029 before we start to even know.
00:55:13.880But that's the importance of prioritizing your key objectives and then driving them, cutting red tape.
00:55:20.040And that's what a lot of countries are doing right now.
00:55:22.760Quite frankly, we've, we're not leading the pack.
00:55:28.660Well, they're prioritizing, they're cutting red tape to it and they're going and getting, so they can export it around the world to get growth in their own economy.
00:55:36.460Paul, thanks for taking the time because I know I should point this out to anybody watching or listening many, many hours over your weekend and your evening.
00:55:47.120So since the budget came out, you, Christophe, Beacon, the whole gang, Nick, everybody involved in presenting this budget to Canadians.
00:55:55.080I appreciate it because we now, for the first time ever in my life, I've actually looked at a, at a budget.
00:56:01.240Now I will know moving forward, the things that we're looking at that are, okay, this is how much it's costing us just to operate.
00:56:08.620If that's what it's costing us to operate and it doesn't agree with me, I'd like to see our government shrink that.
00:56:14.080And if I'd like to see more new ideas, then we need to encourage the government to spend the money that way.
00:56:19.020But until you actually understand the budget, there's no way for you to be able to do that.
00:56:23.520And that was the purpose of the last few shows.
00:56:25.640I really, you know, and I, I hope everyone enjoyed them or listened in.
00:56:30.060And, um, and please, I always ask people if, uh, you have any questions or you have comments or you want to add to something we've had on the show, please, uh, send them in, you know, email us, send us your comments.
00:56:44.220We'd love to hear them and, and we'll answer them.
00:56:46.620Well, you know, and, and upcoming shows, we'll address them.