Social Policy in Ontario

Dastardly debt clock gets Liberally resurrected

Posted on June 11, 2016 in Governance Policy Context

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VancouverSun.com – Opinion/Columnists
June 9, 2016.   STEPHEN HUME

The debt clock has been exhumed from its crypt once again and is back in service preaching austerity for the Canadian Taxpayers Federation.

The debt clock displays the dizzying speed with which a feckless Liberal government acquires crushing burdens of debt as over-taxed Canadians stagger toward some unspecified financial doom.

This glitzy gimmick first mesmerized rubes about 22 years ago. Now it’s back for another national “The End is Nigh!” tour starting with B.C.

A piece of unsolicited advice: Canada wasn’t hurled into debtor’s prison back when we first visited this sideshow tent; it’s not about to be sent there during this repeat performance, either.

The debt clock is an ingenious bit of agit-prop theatre, but it’s about as useful in assessing the effectiveness of government budgets as bicycles are in assisting salmon migrations.

When a new Conservative government — which interestingly enough came to count CTF austerity enthusiasts among its cabinet ministers and spin doctors … oops! … press secretaries to the prime minister — took charge of national debt management back in 2006, the debt clock was still buried.

The Conservatives inherited a surplus of $13.8 billion from the departing Liberals. They promptly turned it into a $5.8-billion deficit. In fact, they burned their way through almost $20 billion over the next two years. One may speculate as to why enthusiasm for debt-clock sideshows evaporated.

During the federal Conservatives’ run they posted deficits every year until 2015, when they were emphatically asked to leave by the electorate. Yet they were fired not because of their spending habits but because perceptions of cronyism, hypocrisy and mismanagement of the Senate scandal left voters with the conclusion, as Social Credit Premier W.A.C. Bennett once said of the NDP, that “they couldn’t run a peanut stand.”

On their watch — one shared by potential leadership contender Jason Kenney, a former CTF austerity missionary — the federal Conservatives added more than $150 billion to the national debt.

In 2011, with the Conservatives holding a safe majority for the first time since Brian Mulroney, the debt clock was brought back again for a national tour.

Yet Canada didn’t face an imminent collapse of its economy because of debt acquired by the Conservatives. Nor has that circumstance changed with the election of the Liberals. In fact, from the data tables assembled by Statistics Canada, it’s clear that even with recurring deficits, the net debt of the federal government was in steady decline while the debt clock gathered cobwebs.

That’s because national wealth grew faster than debt was acquired.

In 1995, the national debt as a percentage of gross domestic product stood at 70 per cent. By the end of 2015 that ratio had declined to 30 per cent. That’s a decline in net indebtedness of about 57 per cent and the modest deficit announced by the Liberals — an increase in the ratio of debt to GDP of about 1.5 per cent — will barely nudge that trend line.

If most of us could pay down our net household indebtedness by 57 per cent while getting a new roof and furnace, we’d celebrate with a glass of bubbly, not pester folk with “your doom approaches” and “this will all end in tears” sermons.

Statistics Canada charts show that since 2009, the total market value of Canadian households’ assets increased by more than 400 per cent from about $2 trillion to $10.2 trillion. By comparison, Canadian household debt in 2015 totalled $1.85 trillion according to Statistics Canada. Put another way, for every $5.51 Canadians own in assets, they owe $1.85 — not exactly a ratio to cause people to begin lighting their hair on fire.

Of course, the CTF is right in general terms — we should all keep a vigilant eye on government spending to make sure it’s spent effectively on important things like public transit or reducing child poverty, for example. Credit is a critical market instrument, as every business knows. Obsessing about government debt is entertaining, but paranoia is a poor substitute for advocating prudence.

Context is everything.

When the CTF appears with its debt clock, ask why there’s no accompanying wealth clock, too? Perhaps it’s because calculating roughly from Bank of Canada and other GDP growth forecasts from now to 2018 we’d see an equally mesmerizing display as the wealth column increased by about $100,000 a minute.

shume@islandnet.com

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Tags: budget, economy, featured, ideology, jurisdiction, tax

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