00:01:33.200And quite frankly, when you're running a $61 billion deficit, and that's what we did do in 2024, you know, $130 million counts.
00:01:42.040And so, you know, whether it be the Green Slush Fund, whether it be the Entrepreneurship Fund, whether it be Arrive Scan, quite frankly, those are the challenges.
00:01:51.980And so what I wanted to do is, you know, I brought it up.
00:01:54.380It really bothered me when I was coming in.
00:01:56.080So let's kick it off, and I look forward to having a good show.
00:02:02.200Paul, before the show, and by the way, this has got to be the most prepped I've ever been for a show because this is disturbing.
00:02:24.100And before the show, you and I went around asking the crew and everyone in the lobby downstairs what the federal government spent in fiscal 2024 was.
00:03:02.660Why are all of them not talking about it more?
00:03:05.200I find it ridiculous how Canadians and their government, all conservatives, liberals, NDP, and bloc, just do not know what the numbers are.
00:03:14.800Nobody seems to understand what the numbers are in this fiscal spend.
00:03:21.340Canadians are mostly conservative when it comes to spending.
00:03:32.220No, take us through why we don't have a better understanding of this.
00:03:36.520To me, it just seems ridiculous that as Canadians, we don't have an understanding immediately of what our debt is and what our spending levels are.
00:03:57.820Let's be candid, you know, and the deficit's grown and grown.
00:04:02.580And it's bizarre that the population doesn't know why.
00:04:05.600So, you know, we get knocked around the world for being fairly frugal, right?
00:04:10.620You know, you go down to Florida and you watch a bunch of people walking on the beach and all the Americans are making fun of Canadians and how bad tippers we are and everything else.
00:05:25.580The question I was asking, you know, when we were going around asking people in the building and outside the building and friends, you know, how much did the federal government spend?
00:05:34.260They spent $521 billion, so that's the expenditure.
00:05:39.460So half a trillion dollars we spend on an annual basis.
00:05:44.180And I broke that down in the two shows, you know, and quite frankly, the biggest expenditure in that amount is government.
00:05:50.740So government's biggest client is government now, and that's where most of the money goes from a federal perspective.
00:06:35.340The net debt, the net debt grew $609 billion.
00:06:40.120So from the beginning of the, let's call it the Trudeau era, we actually grew from 2015-16 to 2024 by $609 billion, which doubled our debt for the country.
00:07:02.100And we're projecting, which we'll talk about more as we go through, we're now projecting on keeping that pace.
00:07:08.960So, you know, the statements by the existing government, you know, the prime minister, were that in the next four years, he anticipated having deficits about $250 billion.
00:07:20.700There's 343 electrical, electrical, electoral seats, and politicians, in essence, they're our board of directors here in Canada, are they not?
00:08:10.900So if you look at, you know, the major expenditures that the federal government makes, it's transfers, the biggest couple, couple of the biggest categories, one being major transfers to people, right?
00:08:23.880So these are the ones we kind of say, okay, seniors, kids, EI, you know, and these just keep going up.
00:08:31.580So quite frankly, they just keep going and going and going.
00:08:34.000You know, like, I was shocked, to tell you the truth, when I look at 2019 to 2024, that our seniors, our elder benefits went up by 42% and went up by 22 billion.
00:08:47.260When, in fact, the number of people in that category that had gone into the age, the number of people that turned 65, was only 5% more.
00:08:56.200Oh, so that was going to be my question, are we aging our population at that 5% significant, but it felt like, wow, we really hit an age bump suddenly.
00:09:07.160So part of it was age, part of it was, you know, those baby boomers entering the category, but we gave ourselves a raise, a significant indexing that went across those five years that contributed to that increase, right?
00:09:20.460So, you know what, I get it, it's a big population, and quite frankly, it's going to, at some point in the next few years, make up 25% of our population, and it's a big voting block, I get it.
00:09:32.240Yeah, so I understand why it was done, but again, you know, these are all the things that came through.
00:09:37.760Then there's the other one that was, just blew my mind, right, which was contributions or transfers to other levels of government, which is pretty much healthcare.
00:09:47.140When you look, when I tore it apart, it was $100 billion, right, so transfers to people makes up about $120 billion, transfers to other levels of government makes up $100 billion, right?
00:10:00.920So now you got $220 billion out of $521 billion, right?
00:10:06.700And those are primarily healthcare, so when you look, when you rip apart that category, you see pretty much all just healthcare expenditures.
00:10:16.400And that's another show, I know, but, you know, that has all kinds of challenges that we continually see and we continually are going through in Canada.
00:10:24.680So, then we get to, which is my favorite one, which is direct program expenses, right?
00:10:33.660So, and there's $140 billion in that, which is government.
00:10:38.040It's just crown corporations, government.
00:10:40.180That's us assigning money to contracts.
00:10:43.400Yeah, and we grew that $42 billion since 2019 through COVID, never went back to any normalized amount.
00:10:52.800And then there's all these, what I call slush fund programs, which is a myriad of distributions to other crown agencies.
00:11:00.860You know, there's some First Nations payments.
00:11:55.900You know, it became a little bit of a free-for-all, quite frankly.
00:11:58.720You know, what happened was people would say, okay, I'll vote for your budget if I get, you know, the $38 billion or $10 billion dental care for, you know, low-income individuals in society.
00:12:11.740So, you know, they formed agreements and they kind of circumvented the whole system, right?
00:12:29.800But, you know what, when you start brokering your future away, then you have to ask yourself, what am I doing, right?
00:12:36.460You know, am I trying to figure out individual programs over other individual programs?
00:12:42.200And, you know, that's kind of the death knell for democracy, right?
00:12:45.220When you can increase your program benefits because your spending is increasing on a certain category, that is the elimination of the democratic process.
00:12:55.800And that's the scary part in this when you go through it because not only are we growing to such a large deficit amount or a debt amount, you know, we're also creating factions within government that can keep doing it.
00:13:07.240And there is no way to stop it unless there is a failure, which we're going to talk about in a minute.
00:13:12.600It's very interesting that the process just feeds itself.
00:13:17.480You know, it's a self-fulfilling prophecy of continuing debt.
00:13:20.820Yeah, but we weren't always, you know, Mike, and this is kind of when I dug into it, it was really interesting because, you know, I took a look at some of the prime ministers in the past, right?
00:13:47.020And then handed it off to Paul Martin, who actually did the same, right?
00:13:51.300And then we were lucky enough, you know, to have Stephen Harper and up until the mortgage meltdown in 2008 when the economy got all rocky and bumpy from those, remember those subprime debt?
00:14:05.860Yeah, so when the world went upside down, you know, he, it's interesting, he was basically done when he increased his deficit, right?
00:14:17.380So he hit a bumpy period, and, you know, in the words of Arnold Schwarzenegger, I think, in California, you know, no politician should be able to outlast large deficits.
00:14:28.280And, you know, he, and even in his book talked about it, that he knew he was done in California when 2008 came, because he took, you know, they blamed him, and he went down for it.
00:14:41.260So, you know, you saw the same thing in the Harper area, and then we get in now, and, you know, we get going in the Trudeau era, and all of a sudden, you know, we got debts rising, it becomes normal.
00:14:54.300And the crazy thing is, it becomes normal to talk about the billions, right?
00:14:59.520You just explained to me, we had two different governments, two different parties follow the same trajectory for a period of time, and then suddenly the real estate market and the banks caused a problem that we have never returned from.
00:15:17.480So, we get through 2008, we get the Trudeau group, you know, the government to come in, and off we go again.
00:15:26.140So, you know, we're 33, 24, so the debt amounts on an annual basis don't go below $10 billion.
00:15:32.640So, we all of a sudden go from a period where we're talking kind of in the low billions to the low millions or high millions to a period where anything over $10 billion is unachievable from a deficit perspective, and it normalizes.
00:15:49.640We, for some reason, we all say, okay, that's fine, and that's pre-COVID.
00:15:53.880So, that's pre-COVID that somehow we got okay with running these massive deficit amounts because, quite frankly, we never ran, and it was, I went back and checked, and this was an interesting research exercise for me.
00:16:09.500Had we ever run any balanced budget legislation?
00:16:13.220So, had anyone ever come and said, you know, like debt ceilings in the U.S.?
00:16:21.520On the, some provinces, right, you know, Ralph Klein, remember the Ralph Klein days when he kind of, he came and did it?
00:16:30.600There are some provinces have looked at it, done it.
00:16:34.500Municipalities, for the most part, are just a hot mess, quite frankly, that the federal government and the provincial governments help out.
00:16:40.940And the provinces just keep downloading more and more to the municipal level.
00:16:45.200The hotter the mess they are, the more money they give them.
00:16:48.380But, anyways, that, that just become the norm.
00:16:51.880And so, you know, balanced budget legislation just never seemed to be part of our lexicon, and we never wanted it to be.
00:16:59.080Which, again, as you go through this, it kind of taints our history because we keep cratering into this massive, massive hole.
00:17:08.120You know, and I think as we go along, we've got to look at the federal government, we've got to say, okay, like, where are we getting this money?
00:17:20.200Do you know, do you know where we get this money for the deficits, Mike?
00:17:50.380We're just, we're just talking federal dollars.
00:17:52.180You know, that's a show we're going to do.
00:17:54.240We're going to do some shows coming up where we're going to, you know, take a look at the West Coast, the East Coast, Central Canada, and we're going to break down kind of what their budgets look like.
00:18:03.360But, yeah, this is just the federal government.
00:18:28.640You know, our founding fathers really created the federal government, you know, not to be the catch-all, to be the largest entity in government.
00:18:39.180The federal government was to control programs that every province would use, right, health care, unemployment.
00:18:54.940So, the sad part about it is it started off as a good idea, right?
00:18:58.880And the downloading or the provinces were given a lot of powers and rights so they could run their own economies, right?
00:19:07.660They could basically, and they do for the most part.
00:19:10.660Oh, they did for the most part up until post-COVID where that kind of became very messy.
00:19:16.500Again, we're going to talk about it in other shows, but, you know, that was the intent of our founding fathers and, you know, we just went in the wrong direction.
00:19:25.440We became a bloated entity on the federal side.
00:19:30.060We got okay with deficits and here we are.
00:19:33.620And the provinces, the provincial deficits seem to be ever-growing.
00:19:39.020The federal government's forever bailing out programs on that front as well.
00:19:46.140Yeah, hot mess is a really good description.
00:19:48.260The federal government's grown out of control in the sense that your democracy erodes when they borrow more, they take more of your income, and they grow to be a department of the government, essentially.
00:20:14.460Well, you figure if your GDP is $3 trillion, right, so your GDP is just under $3 trillion, your expenses are $500 billion for the government, right?
00:20:24.380You are the biggest spender entity in the country, right?
00:20:28.460So at that point, you have the most employees, you have the most infrastructure, which was really not the intent, right?
00:20:36.020It was, again, the intent of it was to create economies of scale by running programs across multiple provinces.
00:20:44.740In your research, have you caught any sense of kind of what population or what area of our population receives versus who the biggest contributors are to the coffers here in Canada?
00:21:05.640I get that it's asked all the time, and it's really hard to figure out the numbers.
00:21:08.940But, you know, by looking at seniors, which we talked about, which make up 25%, and we actually spend $76 billion on elder benefits a year.
00:21:20.840And then you take the government expenditures, as we talked about, which makes really, you know, you add health care in there.
00:21:27.600You're talking another $335, so health care and then the benefits and then the slush programs.
00:21:33.160You know, you're definitely over 50% of the people take more from the system than they give to the system for the total population of Canada.
00:21:43.420It's what the exact number is, I have no idea.
00:22:39.120We pay $47 billion, and that's basically up from $23 billion in 2019.
00:22:46.700So we doubled our interest payments in those years, and that's got to be a wake-up call, you know, because if you're a regular business, well, think about yourself, right?
00:22:57.060You know, you're going along, you're running your business, taking your loan, you know, you start taking more loans, you start taking more loans.
00:23:10.460You're finding new ways to grow, but you're not growing fast enough because your interest is growing, and in this case, it would be unsustainable.
00:23:17.280If you were running a business, you wouldn't make it, and now, quite frankly, with the announcement to keep at that pace, so if we're comfortable keeping at the $60 billion a year pace, you know, it definitely isn't sustainable,
00:23:30.320and in the next four years, you know, we're going to see even more if we decide to do military spending.
00:23:39.200Yeah, we've committed 5% of GDP to that.
00:24:43.940So if we go up to the 50-year average, we'd go up to 5% or 6% or even 7% on interest rates.
00:24:51.260That means our interest rate would grow from $50 to $80 billion a year in interest payments every $1 trillion.
00:24:59.240So we could get to the point, quite frankly, if we get to $3 trillion with the defense spending, we'd get to $250 billion in interest every year.
00:25:11.080So which would definitely be unsustainable.
00:25:48.560Because, quite frankly, there was a lot of things happened.
00:25:51.360You know, even today, the story we started the show about, you know, that's an offspring of COVID thinking, right?
00:25:58.580You know, we gave an entrepreneurship fund to a group of people that didn't use it in the method we wanted it used and followed the process.
00:26:09.320And there was many other ones along the way, you know, the Arrive Scam.
00:26:39.560Well, and I honestly, Scott, all kidding aside, I think there's a whole show on probably the crime and the other part of this that we need to look at, quite frankly.
00:26:50.060And we need to figure out what we do with all these things when they happen, right?
00:26:54.360Because we can't, what we're finding as we come through the economics of this, we can't just turn a blind eye to it anymore.
00:27:00.400We can't just say it's okay because it's not okay, right?
00:27:59.920So the challenge is, what happens is, is we borrow more to try to offset all these vicious deficits that we're actually putting up on the board and the debt increasing.
00:28:11.320We actually spiral into a similar situation as Greece.
00:32:31.480It's a high-tax region, so you're seeing more and more, you know, people who are still healthy enough to move are moving.
00:32:38.500If they move with their assets, we don't send a very good financial indicator by even our CPP investing only 12% of the pension in the country and 47% in the U.S.
00:33:19.420And I think we sent an indicator to a bunch of people who controlled the wealth in the country that, you know, they had to look other places and find safe havens.
00:33:56.420Unemployment right now is at a high, about 7%.
00:34:00.180And we have, you know, what we've done is we've parked a bunch of our younger citizens.
00:34:06.180At home, you know, our 20-year-olds are sitting at home feeling devalued.
00:34:10.480You know, we have a significant drug issue on the health side.
00:34:13.640But, and quite frankly, that's not making us productive.
00:34:18.800And that's the key to the economics of this.
00:34:20.820Like, we need to increase our productivity.
00:34:23.700We need the investment in Canada to start.
00:34:26.640And, you know, there's a few ways to do it.
00:34:28.940Yeah, tell me, okay, so you and I talked earlier and you said, you know, there are some solutions probably that we're not looking at right now.
00:35:44.260With the fact that we've doubled our interest and our productivity is low, and quite frankly, we're not seeing a lot of growth on the other front from our revenue perspective, we need, as a country, to print some money.
00:36:00.740But the money we print has to go into productive projects.
00:37:35.700Whereas large corporations don't, right?
00:37:37.560So, we need our public funds, so the money we print, to go at different levels, right?
00:37:44.280Some of it has to go to the small entrepreneurs, but it has to go and it has to be working.
00:37:49.040So, we have to be very diligent in making sure we just don't throw a bunch of money out there and the money gets spent on, you know, someone's slush fund for their retirement in Antigua.
00:39:08.860I say this on, how many shows have I said this on?
00:39:10.960You're probably sick of this, but I go back.
00:39:12.820Right now, in the world, thinking that anyone else in Germany, Poland, Italy, you know, China, Taiwan, is going to dig us out of this hole, that's very naive.
00:39:28.120You know, the U.S. is taking care of themselves.
00:39:30.700When you listen to the debt crisis in the U.S. right now, the debt crisis in China, anywhere else, they have very similar circumstance to us.
00:39:43.140We might say, oh, because we're smaller, it's a smaller number.
00:39:46.240But per capita, we're all kind of in the same, you know, not so great situation.
00:39:51.540So, you know, the key is we got to focus on our domestic growth.
00:39:55.480Okay, so it begs the question, why aren't the legislators screaming and yelling to fix this all day long?
00:40:05.360It seems to be the core, over $1 trillion, easily headed to three and beyond over the next decade without even trying, and yet legislation, the legislature is doing nothing about it.
00:40:20.880I mean, they complain about it in bits and pieces, but as a framework of how we spend and how our deficit is mounting, why aren't we hearing?
00:40:30.760Well, you know, honestly, Mike, politicians do not lose for spending too much in elections, right?
00:40:38.300So, you know, this is where you got to get a little bit excited, and I think people got to get really excited for their own well-being because, quite frankly, it's the future of their kids.
00:40:48.300Now, it's not just the future of their kids, right?
00:40:51.380So, and I keep saying this to, you know, siblings of mine right now, right?
00:40:58.520I'm having this conversation with them, and, you know, they have great government pensions.
00:41:02.220They're in retirement, you know, and we were having it the other day.
00:41:06.580I said, well, you know, and their comment to me is, well, this isn't going to impact me, right?
00:41:11.520So, it's not going to have any impact on me, and I said, well, it might.
00:41:22.000I think that as citizens of Canada, we think very much today, a little bit from yesterday, and not at all about tomorrow when it comes to these things because we spend so much time trying to be popular with our vote among our friends and family instead of really focusing on what it is financially that's going wrong with this country.
00:41:44.140Well, you know, we just talked about, you know, we mentioned Greece, and I'm not trying to pick on Greece because I love Greece, beautiful country, and I love the people, but you know what?
00:41:53.120We talked about pensions, right, earlier on, and so, you know, out of all this, you know, as we rack up more debt and debt climbs, interest climbs, we have an instability in society.
00:42:07.660So, it creates an instability, and people go, well, what's that instability, Paul?
00:42:11.780Well, ultimately, pensions benefits would be not paid.
00:42:16.620So, if it got really bad and they said, okay, I can't, the bond market came back and said, listen, we're not going to, you're not credit worthy, we're not going to take your bonds anymore, then we'd be, start to print money.
00:42:28.760But people forget, like, the bondholders aren't just going to say, hey, okay, that's fine, right?
00:45:06.900But, you know, you would use that information to go through and look at all the contracts, adjust your costs, review your contracts, eliminate what you don't need from a domestic policy, make your cuts, and then try to get back towards something that was reasonable.
00:45:23.440That would be the rational thing to do, and that's where we're missing that discipline in the system where we get back to doing that, right?