b'PRESIDENTS MESSAGEWHAT TO EXPECT IN 2024T he conversation around what toDeficit budgets and higher interest rates expect our world to look like inhave increased that debt service cost, 2024 begins with reflecting onwhich heading into 2024 is astronomical. how we ended 2023. Lets startMoreover, the BoC increased interest rates with the economy. Governments whoseto fight record-high inflation in recent expenditures exceed revenues increaseyears, but that hasnt worked. their debt. Thats Economics 101. In Canada, governmental expenditures haveThe bottom line as we begin a new year exceeded revenues by a considerableis: expect the high cost of debt in Canada margin for decades, and our debt burdento cause government expenditures to be is enormous at every level of government.diverted away from essential services like Just to be clear, Canada is one of thehealth care, education, social services and worlds most decentralized federations,infrastructure. More to the point, higher and unlike our American friends to thedebt service costs lead to higher taxes and south, our federal government debtdiminished essential services spending at only accounts for about half of the totalevery level of government.Canadian public debt. For the record, economists believe interest As a ratio of GDP, our public debt in therates will come down in 2024. Sadly, that early days of the pandemic reached 130changes nothing. Governments need to per cent, which is absurd. In 2021 throughburrow out from under a mountain of debt. 2023, we saw our debt-to-GDP ratiosMunicipalities cant amass debt in Canada, come down, but suffice to say, Canadabut restricted federal and provincial does not count fiscal responsibility amongspending has the same effect on local its greatest strengths. Predictably, thegovernments, and consumers can expect next question is who owns that enormousto pay more for less for the foreseeable debt, and the short answer is that we do.future. This isnt rocket science. Its just Canadian institutional investors own mostEconomics 101.of Canadas debt, which includes Canadian banks, insurance companies and pensionSo now to the question of how this funds. Hell, even the Bank of Canada (BoC)economic landscape impacts construction. owns some of that debt.We dont have the final figures but in round numbers, the construction industry Does Canada have a debt problem?in Canada shrunk by approximately 1.7 Does the province of Ontario have aper cent in 2023. No surprise. The current debt problem? Yes and yes. And how isforecast is that our world will shrink by that debt paid? Governments pay debtanother 3.1 per cent in 2024 and that interest through general revenue, whichour weakened economy will contribute ultimately comes from Canadian taxpayers.to declining building permits, higher 8Quarter 42023 BUILDERSDIGEST'