True Patriot Love

00:00:00.000 I'm so excited today to dig into part two of the analysis of the 2024 federal annual

00:00:29.720 report part one we looked at revenues and what made the province tick and then part two we're

00:00:36.680 going to actually look at expenses and so you'll remember in part one we actually broke down where

00:00:45.080 all the revenue for the federal government was coming from and if you remember the revenues

00:00:50.360 were primarily coming from our personal income tax followed by corporate income tax and then GST and

00:00:58.200 then we broke down some of the other revenues all told we actually have a great revenue scenario and

00:01:06.440 we've seen a huge increase of about 32 percent since 2019 and the fiscal revenues for 2024 are 459.5

00:01:19.960 billion dollars so can you imagine if you were a company you would have grown since 2019 32 percent

00:01:26.920 you would have had revenues of 459 billion dollars and you would be really happy don't you think well

00:01:35.160 now we're going to dig into the expenses and we're going to see the true story so let's kick it off and

00:01:41.080 and I'm going to actually take off my jacket because this is going to take a little bit of analysis and

00:01:47.720 I want to walk you through so if I start sweating you'll know why okay so the composition of expenses

00:01:54.280 right uh as you can see and I always laugh when I say this the biggest expense of government is

00:02:01.000 actually government so the direct expenses so the other direct program expenses make up the biggest

00:02:09.240 portion of expenses of the government which we're going to break down in a minute followed by transfers

00:02:15.240 to the provinces so it's it's interesting we are looking at the pie chart that shows where all this money

00:02:23.560 goes as a percentage and the biggest expenditure expenditure is actually for federal government

00:02:29.400 and the second biggest expenditure expenditures is for other levels of government so which make up almost

00:02:36.680 half actually it makes up half of all the expenditures of government so imagine all the expenditures we're

00:02:43.240 going to talk about in a minute go towards internal government very interesting so let's kick it off

00:02:50.200 um if we go to the next slide so if we can see now this is really interesting the total expenditures

00:03:00.520 i'm just going to cut to the chase here because i think it's important we go through it and then we

00:03:04.600 sort of think through it the total expenditures of the federal government now we're only talking the

00:03:10.440 federal government remember that is 521 billion dollars right so right away you say okay that's more than the

00:03:19.320 uh 459 billion in revenues well yes it is so you know that's what makes the deficit and the interesting

00:03:27.000 part is since 2019 these expenditures have gone up 175 billion dollars so in 2019 we had 346 billion in

00:03:40.520 the expenses and now today we have 521 billion in expenses so um and we're going to go through now

00:03:49.400 these expenses they categorize them when they do the annual report of the federal government they

00:03:53.800 categorize them into a number of categories right so the first category they talk about is major transfers

00:04:00.280 to people or to persons right so these are uh as you can imagine they go to uh seniors and they go to

00:04:10.360 uh eoi and and other programs which you're going to talk about then they go major transfers to other

00:04:17.560 levels of government well that's an interesting one because that's the ones that go to health care

00:04:24.520 and other programs then we have the smaller ones like our pollution pricing we talked about yesterday

00:04:31.640 and then we have direct programs now the direct programs are what goes to the federal government for

00:04:38.600 the most part which we'll break down in a minute and then of course we have debt servicing so the

00:04:44.360 interest on debt and then we have where our pensions and our benefit programs lie with the government so

00:04:51.960 that's where we're at that's a summary of the uh annual report for 2024 compared to 2019.

00:05:00.760 so let's kick it off let's take a look at major transfers to persons and i'm going to start with

00:05:08.120 the first one this is the first line item in the annual report for expenses and this is for elderly

00:05:14.040 benefits now as you can see elderly benefits increased from 2019 by 22 billion dollars

00:05:26.200 now think about that because that's a very interesting number it was 76 billion it went

00:05:30.440 uh it is 76 billion it in 2019 it was 53 billion increased 22 billion dollars right so how many

00:05:41.160 seniors increased so that was my first question i said okay paul uh are there a lot more seniors i know

00:05:46.680 a lot of baby boomers are are starting to become seniors you know of course um so i said okay that's the

00:05:53.320 reason all the baby boomers have shifted up a quarter of the population and we told that you know boom

00:05:58.280 bust an echo we've been told that over the years we're going to see a lot more seniors a quarter of

00:06:03.560 our population is going to be seniors so it's a big number we know that we know it's coming so i took a 0.99

00:06:09.240 look and in 2019 there were 6.5 million seniors in our population and then in 2024 there's 7.6 million

00:06:21.640 seniors right so that's from stats can it's easy to get anyone can get it so that's an increase of

00:06:27.880 1.1 million as far as the seniors so 1.1 million people either shifted into the seniors category or

00:06:35.320 arrived in canada under our immigration system and got into the seniors category so that's an increase

00:06:42.680 of 18 percent so then head scratcher i'm sitting there and i say to myself okay you know i've seen an

00:06:50.200 increase in 22 billion and i'm wondering to myself why do we only see an increase in population of 18

00:07:00.680 when there's a 42 percent increase in the amount that goes to elderly benefits well then i broke down

00:07:07.400 the per capita payment and lo and behold we gave the seniors a raise so somewhere along the way between

00:07:16.920 2019 in the middle of covid everything happening we started to index the or increase they call it

00:07:23.960 indexing but it's just an increase it's a raise they started to increase the senior payments on average

00:07:31.400 by 21 percent so that equated to a 22 billion dollar increase uh in 2024 so uh you know that does that go

00:07:42.840 away i doubt it quite frankly this is a big voting block uh a lot of people this is important for

00:07:49.160 governments they usually provide this uh group with a good stipend because quite frankly they're the ones

00:07:57.480 who actually go to vote and they tend to vote in the direction they want based on the benefits they get

00:08:03.560 so you know what we've seen the increase and we know why that line item has gone up so if we go to the

00:08:09.400 next one major transfer to persons uh this is the unemployment insurance support measures so yesterday

00:08:20.040 we talked about this right we talked about the fact that companies had increased their amount to

00:08:27.640 ei significantly uh since 2019 so i think yesterday if my numbers are correct in my mind companies

00:08:37.800 contribute 29 billion to this we actually take part of that 29 billion and we pay it directly out to

00:08:46.520 uh to uh the seniors or sorry to the unemployment groups um this hasn't changed significantly

00:08:55.320 uh but you can see quite frankly unemployment has gone up so we took a look at it and we said okay

00:09:02.280 unemployment was 5.6 percent in 2019 which equates roughly to throughout the year total year 1.2 million

00:09:11.960 people on ei at any point in time and then uh it went to 6.7 percent uh which equates to about uh 1.5 million

00:09:22.040 so that has 308 000 additional people going on ei so that roughly the numbers roughly equate to 25

00:09:32.200 increase in the number of people now on ei so you know uh fast forward through covid from 2019 to 2024

00:09:42.120 we're now talking about a 25 percent so 25 more people are on ei than in 2019 therefore we see roughly

00:09:52.120 a 22 percent correlation in the increase of unemployment or employment income insurance benefits

00:10:00.520 and support measures and we end up with a very large total of 23 point billion dollars in this

00:10:08.760 category which roughly uh is the same number as the amount paid by corporations into ei so it's very

00:10:18.120 interesting years ago and a lot of you who are new to government financing uh ei was always a pretty

00:10:25.480 significant profit margin for the government uh companies paid into it fewer people were on ei

00:10:31.880 and it the additional monies that came from this were used for other programs ie health care and other

00:10:38.680 things so just keep that in mind so this one's kind of gone up significantly it's seen a 22 percent

00:10:44.520 increase and i'm still waiting for one to go down by the way so uh carrying on um cho this is my one of

00:10:53.080 my favorite ones so the other major transfer to persons is the children's benefits so for those of

00:11:03.240 you um who get children's benefits you're probably wondering how much does this number equate to as a

00:11:13.000 total across the country of canada so well it equates to 26 billion dollars

00:11:19.960 and that's a that's a really big number so 26 billion dollars we do it used to be in 2019 23

00:11:29.320 billion it went up 2.4 and it went up 10 percent so the interesting thing about this and and you know

00:11:35.800 i i dug into the numbers because you know uh for those of you who like podcasts you constantly hear

00:11:41.640 about the birth rates going down so birth rates are a topic across the world you know we're all elon musk

00:11:49.160 is telling us that uh japan's uh you know going to disappear and uh because birth rates are so low

00:11:56.920 well you know i dug into it and i said okay how many people uh are are you know how many children

00:12:03.480 are in this category uh and what's the difference and why did it go up up or down right and it went up

00:12:09.960 so uh if we go to the next slide you'll see canada has now joined the lowest low fertility countries so

00:12:20.040 we are now in a category with south korea spain italy japan with 1.3 children per women or less

00:12:29.640 right so imagine that you know i know italy uh has talked the same as japan about the culture

00:12:37.000 disappearing because the lack of birth rates and the the death rates being higher than the birth

00:12:42.200 rates and therefore over time the the the true italian culture will disappear because of that

00:12:49.720 so we're now in the same category so then you say to yourself okay well then why did the number go up

00:12:54.840 10 because now the number of children in the category has stayed the same or gone down um so why

00:13:02.040 right well again we gave ourselves a raise we decided to index this number um because we think

00:13:09.400 that that will keep the program going the interesting thing about this is that isn't it time in my mind

00:13:17.960 and this is the question i asked the audience isn't it time to start working to see if this program

00:13:23.880 is achieving the objectives so if the program was put in place to increase birth rates and it's not

00:13:31.640 increasing birth rates i think at some point it behooves us to actually sit back and say okay

00:13:38.600 what do we need to do and if that's an objective of the government and you know if you look at immigration

00:13:43.960 policy uh child programs all those things those are all things that have to be looked at together

00:13:50.600 because they're all the same issue it's increasing your population and how to move your population forward

00:13:58.440 to increase the population so again you know when you look at uh major transfers to persons this is one

00:14:06.840 that is seeing a significant increase uh rolling on to uh the next one and the next one is other major

00:14:17.000 transfers to other levels of government okay so um this is uh you know the one where we give money to

00:14:27.720 health care we give money to fiscal arrangements to other programs so as you can see you know from

00:14:35.720 the chart that's on the screen we had an increase this is a pretty significant increase of 13 billion

00:14:42.520 dollars since uh 2019 to 2024 so it went from 52 billion to 65 billion for transfers to health care and

00:14:52.760 social programs so 25 percent increase right so for those of you saying well man i'm not getting

00:14:58.520 good health care i'm not getting my wait times are too high i can't get a doctor you know the federal

00:15:05.080 government has increased this by 13 billion dollars since 2019 so the question becomes kind of value for money

00:15:15.640 effectiveness efficiency those are all the questions that are on the table now because it's not a

00:15:22.120 it's not a fiscal dollar monetary matter it basically is how the money is being spent is the money being spent

00:15:30.600 correctly right uh fiscal arrangements and other transfers which we're going to talk about in a minute

00:15:36.760 uh this is another one this has gone up 48 so we went from 30 uh from 23 billion to 34 billion uh since

00:15:46.760 2019 so it's been a significant increase right so you look at these two programs and you say to yourself

00:15:53.400 we've gone from 75 billion dollars to 100 billion dollars so 25 billion dollars up so we've seen basically a

00:16:02.680 32 percent increase in spending in this category a 32 percent increase right so our population so then

00:16:11.400 my mind right away my mind goes to okay these are all kind of social programs you know whether it be health

00:16:17.160 or social um you know have we have we uh seen a shift in the population that would warrant such a large

00:16:28.920 shift well the answer is no right we talked about it in part one of our series on the annual report the 2024

00:16:37.960 report we've seen uh our population grow by about uh almost 2 million people since 2019 so 2 million people

00:16:50.120 you know 1.959 went from 37 million to 39 uh million in a few years and from

00:16:58.760 19 to 24 and so we've seen a 5 percent growth in our population but we've seen as you see on the next

00:17:08.920 line we've seen a 19 increase per capita in spending on health care so just think about that right our health

00:17:19.640 and social programs we spend from a federal perspective right now in 2024 we spend 1657

00:17:29.000 in 2019 we spent 1396 so we increase we didn't see a population increase that matched the increase in

00:17:39.960 spending for health care but we did see a significant spending increase right almost three times the

00:17:46.680 spending increase to the pop to the uh population increase it's really interesting because that's you

00:17:53.400 know a lot of times you'll hear people say you know it's because of all the new immigration our

00:17:59.880 health care is so bad well that doesn't correlate so that's a misnomer so the numbers don't play out

00:18:06.120 uh and that was kind of surprising to me because i kind of bought into that you know i'd be at parties

00:18:10.600 and people say you know we brought in a lot of immigrants so you know uh and i'm like hmm i don't know

00:18:16.120 did we bring in that many and would it would it have dwarfed the system that bad right so because we only

00:18:22.040 brought in five percent increase since 2019 to 2024. so and you know i just put this on the slide

00:18:30.200 because uh you know i googled of course you know when i was putting this together and i said what do

00:18:36.680 people are what are people in the world saying about our health care system our health care system

00:18:40.920 well they're saying you know it's a decentralized yes it's publicly funded you know it's equitable and

00:18:47.640 it provides health care to everyone equally so you know we and then it actually talked about the fact

00:18:56.680 that we are one of the highest so being one of the highest spenders in the world on health so but we still

00:19:05.560 face challenges such as wait time shortage of professionals and low hospital beds per capita so

00:19:13.240 it's really interesting you know because it the numbers do not play out and i think as we get into

00:19:19.000 the other podcasts on health care we're going to delve into this more but you know the numbers sure tell

00:19:24.440 a different story than what we are we perceive and what i perceive for sure so going to the next slide

00:19:32.040 um oh this is interesting so this is uh the next category that we saw up on the board and so which

00:19:40.920 is again you know the major transfers to other levels of government these are the other transfer

00:19:46.600 category that we saw went up significantly this includes basically

00:19:52.440 uh legislative growth in canada health transfers social transfers equalization transfers uh housing

00:20:04.760 build funds um and more health agreements so if you look at that hundred million number it's pretty much

00:20:12.760 all centered around around health because i was looking at the number and i'm thinking okay i see what we

00:20:18.360 spend on health care it's gone up and then i see this other number you add the two together and it's a

00:20:22.920 hundred billion dollars from the federal government and it pretty much is all health care and child care

00:20:27.800 transfers um we go to the next one so uh basically so this okay so i talked about it yesterday this makes me

00:20:38.840 laugh um every time i look at this so this you know and i put it government program canceled in an odd way

00:20:45.960 pollution pricing right so we all remember this story in 2024 carbon tax right we got into the election

00:20:53.480 all of a sudden no one uh the prime minister stepped down prime minister trudeau stepped down no one

00:20:59.480 wanted to take credit for carbon uh you know he was worried about it prior to so he started the

00:21:06.440 uh the uh the pollution pricing proceeds uh rebate so we created a pollution pricing program you get a lot

00:21:17.320 of peas and we were raising 10.5 billion and all of a sudden there was a flow of people against it the

00:21:25.720 premiers were up in arms everyone didn't like it so rather than get rid of it we started to rebate it back

00:21:32.040 to people so we created a program that actually generated 10 billion dollars in revenue and then

00:21:38.840 we created a rebate program that rebated 9.8 billion dollars so there's a delta small delta it's a small

00:21:46.280 revenue line still but you know it's a very odd way um and of course politically driven it's something

00:21:53.240 that started should have never started because quite frankly it didn't have support across the country

00:21:58.280 and it ended up dying on its on its own speed so if we go to the next so uh these are the direct

00:22:06.280 program expenses so uh i'm gonna i'm not gonna talk a lot about uh covet the emergency wage subsidy i

00:22:15.000 think they're still you know listen there's no point in any of us having any more i guess we could go

00:22:20.600 back and have more covet uh discussions we could probably analyze it to death we probably find out what

00:22:27.320 happened to all the money and i think we'd be probably disgusted i know we would be disgusted

00:22:31.880 um but you know we're still trying to get some money back so we do get some money back we have 420

00:22:37.400 million and 24. um as you can see there back in 19 there was a fuel proceeds uh amount that was uh spent

00:22:48.200 so we got a rebate for fuel i don't know if anyone remembers that but uh it was like a hundred bucks and

00:22:54.040 i think we all got it and uh maybe once or twice but and and that happened and then it went away so

00:22:59.880 there's you know a couple odd programs in the beginning but then you jump to this is what i talked

00:23:05.640 about earlier i'm going to talk about the operating transfer payments last on this sheet but i'm really

00:23:13.400 going to hit go down to operating uh expenses so the increase in operating expenses which is the second

00:23:21.320 bottom line on this sheet you can see in 2024 was 140 billion up from 98 billion so a four almost a 42

00:23:37.000 billion dollar increase or a 42 percent and this is the government expenses so this is basically what it

00:23:45.880 takes to run the government personnel everything else so since 2019 just get this in your head right

00:23:54.680 we saw a 42 percent increase in government spending on direct government expenses including personnel

00:24:06.040 so it grew to 140 billion from 98 billion you know this is what you're hearing more about more and more

00:24:14.120 but you know that is the detailed expenses of what's being spent then i go above and i go to the other

00:24:20.360 transfer line and this is more of the slush fund um which i'm going to talk about in a minute but that grew

00:24:26.520 uh it grew more it actually grew more if you think about it grew from uh wow 51 billion dollars to 96

00:24:36.920 billion so this one almost doubled this one went up 44 billion dollars 86 percent and this one's like a slush

00:24:43.800 fund so what i'm going to get into a minute this is like the catch-all of catch-alls for government

00:24:48.440 right anything program interest they want to put money into they basically put into this fund so

00:24:56.280 um if you look so if we go to the the next slide uh as we talked about this fund so the other transfer

00:25:06.600 payments fund the every fund i call it our payments to natural resources first nations transportation

00:25:13.720 gender equality defense justice etc this one goes on and on for pages and pages and pages of

00:25:23.640 uh contributions payments payments uh domestically foreign payments uh programs in other countries

00:25:32.840 uh that don't you know they're this one's hard to track it's like i said it's pages and pages of

00:25:38.440 detail of where money is going and contributed and spent by the government um for different programs

00:25:45.320 and but that one grew like i said it almost doubled uh operating expenses as we talked about uh are

00:25:53.560 basically are the disp the expenses of departments agencies consolidated crown corporations and other

00:26:00.440 entities and this is basically uh also included includes the personnel costs and of course because

00:26:10.760 of covet and all the non-repayments of the loans provided during covet has a significant around a 10 billion

00:26:18.680 dollar from what i can figure out uh bad debts uh baked into it so that's why we saw such a and it's just

00:26:26.440 not covet related it's not a one-time payment it's uh the increase in government um okay let's hit the

00:26:36.680 next one so this is one and we're going to spend a lot more time on the next show but this one i'm just

00:26:42.520 going to spend a few minutes on uh talk about and then i'm going to leave it because we're going to do

00:26:48.920 one more uh part of the series and the next part of the series is called uh debt and gdp and we're

00:26:56.280 going to spend about a half hour breaking down uh where the debt is how the debt works for canada

00:27:02.920 how the payments work and then also talk about how it correlates to gdp and uh the gtp performance

00:27:10.040 of canada going forward so um as you can see this is no uh big well a little bit of a big surprise for

00:27:17.960 some people i'm sure but uh our interest on our debt has basically doubled so since 2019

00:27:26.600 to 2024 we saw a 24 billion increase in our interest payments for the country 103 percent increase

00:27:36.520 from 23 billion to 47 billion dollars so again you know this is the charges the interest uh on our

00:27:47.000 our interest bearing debt um and this is offset slightly by cpi adjustments on our uh real return

00:27:57.080 bonds so this does have an income component of it but it it hasn't even kept close to keeping pace

00:28:03.160 with what our debt component so you know coming out of covet we all know we spent a ton of money which

00:28:08.360 we'll talk about it ballooned our our national debt um you know to trillions and now uh this is the price

00:28:18.520 we're paying which is uh overwhelming and and very tough 47 for our the size of our country right now

00:28:26.920 47 billion dollars on interest payment is a huge number i don't think people contemplate how big that is

00:28:32.440 for the size of our country and the size of our gdp so um okay so the next one uh actuarial losses so

00:28:43.160 this is kind of a new and i won't spend a ton of time on it because i know people you know this is a

00:28:48.840 more of an accounting actuarial number but this is an interesting number which i'm gonna also spend a

00:28:54.200 little time in our next podcast when we talk about debt and gdp i'm going to talk a little bit of a

00:29:01.000 pension performance right so um because we do have some large government pensions cpp and others that we

00:29:08.360 do have standing um and this basically is one of the challenges that we do have is that as our pension

00:29:16.520 liability uh became bigger and our obligations became more overwhelming we now face the issue

00:29:23.960 when they don't perform so when they underperform so think about it when the actuaries go in and they

00:29:30.200 very simply they say we have so many people in this pension these people will probably live till 84

00:29:37.800 and your pension performance doesn't match what your obligation to pay them is so you have to now

00:29:45.640 take a write down or take a loss because you're not able to meet your commitment so you got to set up

00:29:50.760 a liability create a loss and this goes up and down right this is a number the new accounting standards

00:29:59.000 i think are came in and they require it to happen so you're going to see more of this and it's probably

00:30:04.840 a good thing to keep track of actually when i was fishing around when and taking a look at this number

00:30:09.320 i ever got very interested in it i came to the next slide and i found out uh which is very interesting

00:30:16.680 interesting the canadian pension plan investment board uh board of people who invest all our money

00:30:22.840 we give them revealed that 12 percent of cpb assets are invested in canada the lowest ever so the largest

00:30:32.120 chunk 714 billion dollars of the fund 47 is currently invested in the united states so you know just

00:30:42.600 to i found very high and you can see by the chart the red the red is us in canada so you can see

00:30:49.160 in 2005 i'm going to take my glasses out for this 74 of this fund was invested in our own country and over

00:30:57.560 time actively someone made the decision around it looks like 2016 to 2015 2016 to basically switch and

00:31:10.760 invest most of our money abroad so i don't know how that makes a ton of sense i'd like to actually at

00:31:16.520 some point uh do a podcast and meet with someone from the cpp and find out why that makes a ton of

00:31:23.960 sense um and then finally you know and wrap up i just wanted to go through the last slide

00:31:31.800 you know because this was a very interesting podcast for me as we dug into the numbers

00:31:36.280 we started off the podcast right and we uh talked about revenue and we said okay aren't we in a good

00:31:45.720 spot we have 459 billion dollars in revenues up 38 percent sorry more than i thought 38 percent

00:31:55.400 from 332 billion dollars up 127 billion dollars so we have revenues that have grown since before

00:32:03.720 covid 38 you know to this almost a half a trillion dollars and we've actually managed to outspend it

00:32:13.800 by actually incurring 521 billion dollars in expenses um for a deficit of 61 billion dollars

00:32:23.960 so we started off you know pre-covid at a deficit number which we thought was really high remember yeah i

00:32:31.320 i don't know for those of you who are a little younger and you know the early 2000s lived through

00:32:36.600 balanced or positive budgets you know seeing a deficit of more than 10 billion dollars was like

00:32:43.080 outrageous uh for at a time and now you're at 61 billion dollars we've seen it increase 47 billion

00:32:52.040 so as we as we delve into the next uh podcast where we start to talk about debt and we start to talk

00:32:59.160 about pensions and we start to talk about gdp we're going to see the implications of the deficits and

00:33:05.960 that's really important for a country again remembering we're a country of 40 million people

00:33:11.080 we're a large land mass but a small country to have deficits that are now exceeding 50 billion dollars

00:33:17.400 and it has extreme consequences so stay stay tuned subscribe uh and we hope to see you soon for the next uh

00:33:38.360 uh

Federal Budget 2024： Where Did the $521 Billion Go？｜ Expenses Breakdown Explained

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True Patriot Love

Federal Budget 2024： Where Did the $521 Billion Go？ ｜ Expenses Breakdown Explained

Episode Stats

Summary

Transcript

Federal Budget 2024： Where Did the $521 Billion Go？｜ Expenses Breakdown Explained