Another Year Older And Ten Billion In Debt
Back in the day, the simple word debt could make someone a pariah. It could strip him or her of their self respect. Debt could leave you dependent on charity soup kitchens and consignment shops.
I can remember my parents, children of the Depression, grow dark and silent when they learned one of my uncles was being buried by debt. Debt was why Britain was told it couldn't have the Suez Canal in 1956. The Americans owned UK debt, and they didn't like the Brits mucking up the Middle East any longer.
For good reason no one wanted to put your fate into the hands of others. When you hit zero on the bottom line there was no basement where you could go till hard times moved on and your fortunes got a boost. Nothing was nothing. Even as financial institutions found creative ways to extend credit by credit cards, the thought of that monthly payment kept many awake till late at night.
Now there are radio commercials telling you that you don’t have to pay back what you owe or offering blandishments to hand over your house to get the VISA bill paid. Debt is now a party game.
Whatever taint the word might have still have had has been obliterated this past month with the news of the public indebtedness of Canada and several of its provinces. Rising like the Saturn rocket from the billions into the trillions, the amount Canadian governments owe is now just a fiery ember in the sky, headed for the black hole. The numbers are unfathomable, the underlying value of everything is unknowable.
If anyone is afraid of these huge numbers, there’s been no indication from the Liberal and NDP politicians that they are fazed by debts that many economists suggest will take generations to erase— if everything goes right. Their Conservative rivals naturally rail against the excess, butlarge parts of these debts were run up when Conservatives ran these governments themselves.
In Wednesday’s federal budget the Trudeau Liberals uncoupled themselves from their casually disingenuous election promise to tame the deficit almost immediately upon taking office. Last year’s budget had the deficit at $84-billion over five years. Now? It’s estimated at $101 billion, (about $20 billion per year more than the last Harper budget) but no one takes the number seriously if oil doesn’t pick up in value.
The whole process is couched in FancySpeak, the word salad developed by clever people to disguise that they haven’t a clue. Such as this headline in the Globe & Mail: Federal budget vows $100-million for strategy on gender-based violence. $100 million for a strategy? How about just saying Stop It and bank the $100 mill? But that’s not clever enough.
This Fun With Figures was preceded by the provincial budget brought forth by Alberta’s NDP government— the one elected because the Tory dynasty had, in the opinion of many Albertans, ransacked the legislature. The NDP’s first tenure as the province’s ruling party has coincided with the spectacular implosion of Alberta’s energy industry. This cratering makes the National Energy Plan disaster look like a Sunday school picnic.
Being good social democrats, the NDP insist that a downturn in the province’s economy and the withdrawal of billions from the economy is no excuse to make things worse on the citizens. So the NDs instead shackled the provincial debt with a carbon tax and keep their public sector friends working. I’ll let you listen to what Kevin O’Leary thinks of premier Rachel Notley’s financial prowess. (http://www.inews880.com/2017/03/10/kevin-oe28099leary-calls-rachel-notley-e28098toxic-cocktail-of-mediocrity-and-incompetencee28099/).
A province that once was so awash in oil riches that premier Ralph Klein was cutting royalty cheques to all citizens, is in line for a $71.1 billion debt by 2019-20, with a debt-to-GDP ratio of 19.5 per cent. Debt servicing costs would be an estimated $2.3 billion.That’s if everything goes right— like a $59 barrel of oil. When last seen oil was headed to $40 a barrel this summer as the world is awash in the black gold.
Blind to these realities, Notley will keep pumping money into the lifeless soul of the economy till it perks up. Or the right wing in Alberta unites in time for the next election. Bet on the latter, not the former.
But Notley’s a piker next to Ontario’s Kathleen Wynne. Wynne’s relationship to money is like that of the car-rental customer to a car wash. Hey, it’s someone else’s problem, and there are a whole bunch more clean models on the lot. Having wrecked her province’s energy industry by tripling bills to customers, she’s now spreading the love to the rest of the Ontario economy.
The province’s Financial Accountability Office has predicted the province’s net debt will balloon by another $50 billion to $350 billion over the next four years. Ontario is spending more on debt interest payments than on post-secondary education. While her advisers say that a debt-to-GDP ratio under 40 is no sweat, she has clawed back some of the money on consumer’s energy bills. By booting the debt down the road.
But that’s what’s happened to debt’s ability to scare people. Now it’s a concept wrapped in a policy paper inside a program about innovation. Anything but calling it what our ancestors knew it to be. A pair of manacles that put you into the power of other people. Good luck when the euphemisms run out.
Bruce Dowbiggin @dowbboy.is the host of the podcast The Full Count with Bruce Dowbiggin on anticanetwork.com. He’s also a regular contributor three-times-a-week to Sirius XM Canada Talks Ch. 167. A two-time winner of the Gemini Award as Canada's top television sports broadcaster, he is also the best-selling author of seven books. His website is Not The Public Broadcaster (http://www.notthepublicbroadcaster.com)