Himalaya Canada Toronto Maple Leaf Farm, Liberte
Canada has the potential to become a failed state. The Federal debt is about to hit $1,000,000,000,000 and is growing at a rate of over $1 billion per day. By the end of the year, the Government itself projects this will hit $1,200,000,000,000. That’s ‘trillion’ for those who are having difficulty with all the zeros. With a total population of 37,896,808, that amounts to over $30,000 per woman, man and child by the end of the year. The working population in November 2020 was only 18.6 million. So, the year-end federal debt per working person will be $64,000. How many Canadians have $64,000 in savings? All this does not take into consideration the Provincial, Municipal and personal debt resting on Canadians’ shoulders. Accounting for all levels of debt per working person would raise this burden to over $100,000 per working person.
Fitch Ratings Services downgraded Canada’s AAA credit rating in June 2020, dropping the rating to AA+ based on what it called a “deterioration of Canada’s public finances”. Fitch is now announcing another warning about the credit of Canadian debt. Based on the Government’s projections of $1.2 trillion debt at the end of the year, Fitch says this will amount to a 120% of economic output, significantly higher than the median for a AA rating. Fitch is signaling a further rating reduction on Canadian debt in future if the Government does not ensure that Government-to-GDP is on a declining path.
What is a safe level of debt? It is a difficult question that depends on many factors. Historically the 100% level has been the level at which a country’s interest payments begin to comprise too large a portion of its budget. The interest on the debt crowds-out a country’s ability to spend on other areas like Health, Social Security, Education, and of course there is always the risk of defaulting on an interest payment. Interest rates are at an historic low, but it would be irresponsible to assume that this will endure forever.
Argentina, as an example, has debt to GDP approaching 100% and has just defaulted on $500 million in debt. This is the second time the country has defaulted on a debt payment since 2000, and the ninth time in its history.
Amid the Covid-19 pandemic and unprecedented spending on relief to citizens, the Canadian Government has continued to increase foreign aid payments and Carbon taxes, thereby squeezing Canadian taxpayers from both sides, and showing absolutely no fiscal discipline. Following many increases in aid over the past several years the Trudeau Government is once again announcing an increase of $485 million directed to a United Nations program meant to help low, and middle, income countries access Covid-19 tools and vaccines. Overall Canada has pledged $1B to this program.
Who are these countries? Included in the list of low, and middle, income countries are the likes of CCP-controlled China and Iran – the greatest supporters of terrorism and sworn enemies of the West.
The Canadian Government’s mantra since the beginning of the pandemic has been “we are all in this together”. It is not true. Who in the public sector has had to tighten their belt to participate in the pain that the rest of the citizens have had to experience? What effort has been made by the Government to have the public sector and politicians share in this pain? Their salaries, bonuses, benefits and pensions have been maintained unchanged, and have even seen growth during this unprecedented time of hardship for most other Canadians.
What effort has been made by the Government to find areas where budgets could be trimmed instead of bloated? It is a reasonable question whether we should be expanding our foreign aid budget at a time when Canadians are suffering, and at a time when the Government is insisting on adding another Carbon Tax on top of the one already in place.
I see no evidence of the Public sector acting like “we are all in this together”. I think it is galling to many Canadians and begs the question whether this is all part of the Government’s oft-stated excitement for the “Great Reset” touted by the World Economic Forum and Klaus Schwab. Must the Canadian economy and standard of living be sacrificed for the good of the rest of the World in an orgy of global Socialism where the billionaire elites of Davos are the only ones who will float above it all? If so they should have the courage to say so. Of course, courage and fiscal stewardship is not something that politicians are renowned for.
- Canadian Taxpayers Federation, Debtclock.ca
- National Post, August 27, 2020, “Fitch Ratings issues new warning over Federal spending, government debt”.
- Spencer Fernando, “Trudeau Government announces $485 million more in taxpayer dollars will be given away in new foreign aid program”, December 14, 2020
- WorldDate.info, Average income around the World