Our governments have a debt problem. The federal deficit for this fiscal year is approaching $400 billion and the total debt is about $1 trillion. BC is in better shape with a current year deficit of $13.6 billion and a total debt of $88.626 Billion.
A conference Board of Canada report stated that governments are “spending like never before” producing “massive and permanent” debt levels. This is not sustainable.
Our governments believe that a combination of low interest rates and high levels of economic growth will allow them to accommodate this level of debt. It might just be possible if that was all the debt they were going to add but the Federal deficit for the next fiscal year will be about $121.6 billion dollars and continuing in the red for the foreseeable future. BC will also be running deficits for years.
Our governments have not been transparent as to how they intend to pay for this increased debt, and currently are borrowing just to cover the interest. The Trudeau administration has not produced a budget in 2 years and Canadians don’t know what this government‘s detailed taxation and spending plans are.
With the pandemic not yet over, maintaining support payments to those in need will have to continue. It seems certain that a combination of increased taxes and a reduction in spending will be necessary, and soon. This will reduce economic growth, which in turn will reduce the government’s ability to sustain this level of debt.
What is the plan Mr. Trudeau?