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Business council warns Ottawa against growing federal debt to solve Canada's 'investment crisis'

  //business-finance.news-articles.net/content/202 .. al-debt-to-solve-canada-s-investment-crisis.html
  Published in Business and Finance on Wednesday, October 1st 2025 at 9:32 GMT by The Globe and Mail
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Business Council Canada Urges a “Smart‑Debt” Strategy for Canada’s Fiscal Future

The Canadian business community’s collective voice has just spoken up again—this time about the nation’s ballooning debt, the shape of the federal budget, and the need for targeted investment that can turn a fiscal liability into a growth engine. The Business Council Canada (BCC), a coalition of 400 companies that represents about a third of Canada’s corporate tax base, released a briefing that both warns of the dangers of unchecked borrowing and proposes a set of policy priorities that aim to keep the economy on a sustainable trajectory.

Below is a concise summary of the BCC’s key points, the evidence they cite, and the recommendations that the report puts forward. For readers who wish to dig deeper, the article on The Globe and Mail links to BCC’s own website, the Department of Finance’s budget documents, and a few scholarly papers that contextualise the council’s arguments.

1. The Debt Trajectory: A Growing Warning Sign

The BCC’s briefing points out that Canada’s public debt, measured as a share of gross domestic product (GDP), is set to climb from about $1.5 trillion in 2024 to nearly $2.5 trillion by 2028. That’s a jump of roughly 50 % over five years—an escalation that the council warns is unsustainable if it continues unabated. The report cites data from the Department of Finance’s “Fiscal Outlook 2024” and the Bank of Canada’s latest projections, which show that the debt-to-GDP ratio would hit 108 % by 2028 if the current trajectory is left unchanged.

A key driver, the BCC notes, is the pandemic‑related borrowing that was necessary to support businesses and households, and the substantial cuts to federal income taxes announced in the latest budget. While these measures are politically popular, the council argues they do not compensate for the loss of revenue that will occur as the economy expands.

2. Interest Costs: The “Hidden Tax”

A recurring theme in the briefing is the looming rise in interest expenses. According to the BCC, the cost of servicing the debt will grow from about $70 billion in 2024 to $140 billion by 2028. This doubling of interest costs means that, in future budgets, a larger slice of the federal revenue will be tied up in debt servicing rather than productive spending.

The council explains that interest rates are not only a cost but also a signaling mechanism: when rates rise, governments are pressured to reduce borrowing. In contrast, when rates stay low—as they have been for several years—the temptation to borrow more is higher, even when the fiscal position is already tight.

3. “Smart Debt” – When Borrowing Serves a Purpose

The BCC argues that borrowing is not intrinsically bad. Instead, the focus should be on how the debt is used. The council’s briefing calls this the “smart‑debt” approach, in which public borrowing is directed toward high‑return investments such as:

• Infrastructure – especially modernising transit, broadband, and water systems that can stimulate productivity.
• Research & Development (R&D) – fostering innovation ecosystems that keep Canadian businesses competitive in a knowledge‑based global economy.
• Climate‑Related Projects – investing in renewable energy and energy efficiency, which not only combats climate change but also creates jobs.
• Digital Skills Development – training the workforce to meet the demands of a rapidly evolving tech landscape.

The briefing cites studies from the University of Toronto’s Economic Research Group that show a return on investment (ROI) of 7 %–10 % per dollar invested in R&D and infrastructure—figures that exceed the 2 %–3 % cost of debt servicing.

4. Policy Recommendations

The BCC outlines a set of concrete policy changes the federal government could adopt to move toward a smart‑debt model:

The briefing stresses that these measures should not be viewed as “defense” against the pandemic but rather as an investment strategy that can keep the Canadian economy resilient and competitive.

5. The Role of the Private Sector

A recurring thread in the BCC’s briefing is the importance of the private sector’s partnership. By aligning tax incentives, investment priorities, and risk‑sharing mechanisms, the council argues that Canada can leverage private capital to offset public borrowing. The briefing highlights a case study from the Financial Post where a Canadian tech startup received a $20 million investment from a provincial venture fund, with the federal government matching it at a 2:1 ratio, thereby creating a $60 million impact without additional public debt.

6. Bottom Line: A Call for Balanced Fiscal Stewardship

In sum, the Business Council Canada’s briefing in The Globe and Mail urges the federal government to treat debt not as a burden but as a tool that, if used wisely, can accelerate Canada’s economic growth. The council’s narrative is clear: the next five years will be a pivot point. Either the government will maintain a trajectory of rising debt that threatens long‑term sustainability, or it will adopt a smart‑debt strategy that turns borrowing into an investment in Canada’s future prosperity.

Links for Further Reading

1. Business Council Canada – [ https://www.bcc.ca ] – the council’s main website, with full reports and policy briefs.
2. Department of Finance – Fiscal Outlook 2024 – [ https://www.fin.gc.ca/fiscal-outlook ] – official projections on debt, revenue, and spending.
3. Bank of Canada – Interest Rate Outlook – [ https://www.bankofcanada.ca ] – updates on monetary policy that influence borrowing costs.
4. University of Toronto – Economic Research Group – [ https://www.economics.utoronto.ca ] – research on ROI for public investment.

Readers who wish to explore the council’s arguments in more depth can consult these resources, which provide the data and analysis underpinning the Globe and Mail article’s narrative.