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Dan-in-Ottawa

Fiscal sticker shock

The country wanted a fiscal update, but the Liberal government delivered a fiscal snapshot.

There was a growing demand for a fiscal update of the federal government finances following the spending response to the COVID-19 virus, as well as the revenue impact from having large sectors of our economy shut down.

But the Liberal government provided what it termed a fiscal snapshot, as opposed to a proper, full fiscal update.

The numbers are staggering.

The deficit for this fiscal year is expected to hit $343 billion. To put that figure into perspective, during the world financial crises in 2009, the federal deficit was $56 billion.

Our total debt in Canada is now expected to hit $1.06 trillion in 2021, significantly up from $685 billion in the previous fiscal year.

Keep in mind, this is the spending to date.

There are still many groups, individuals and organizations, who have received promises from the prime minister for additional financial supports that have yet to be delivered.

Also, of concern is that our debt to GDP has shot up to 49%, from what was projected to be around 30%.

Canada’s credit rating has also been downgraded by one major credit rating agency.

The credit rating downgrade is of concern because credit rating downgrades can increase the interest for servicing the debt. 

Historically low interest rates are helping to keep debt servicing levels lower, and, for now, more manageable. 

The challenge is when interest rates rise, the debt servicing costs increase significantly.

I suspect anyone with a variable rate mortgage knows this well.

The more notable challenge is that this current level of borrowing and spending is unsustainable.

Many financial experts have already cautioned that Canada no longer has the required fiscal capacity if there is a serious second wave of the COVID-19 virus.

As the current program spending is unsustainable, the Trudeau Liberal government will need to come up with a successful plan to transition Canada back into a situation where there is growth in GDP and employment.

At the same time there will also need to have a debt management plan that has a relationship to government revenues as well as expenditures. 

To date the Liberal government has not released any plan of this kind.

There is no finger pointing in this week’s report.

We are all Canadians in this situation together and we will be dealing with these circumstances in our future.

My question this week:

  • How concerned are you at the lack of a transition plan to move Canada forward, and is now the best time for one?

I can be reached at [email protected] or call toll free 1-800-665-8711.

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About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the Shadow Minister for Environment and Climate Change.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

Dan  is consistently recognized as one of Canada’s top 10 most active Members of Parliament on Twitter (@danalbas) and also continues to write a weekly column published in many local newspapers and on this website.

MP Dan welcomes comments, questions and concerns from citizens and is often available to speak to groups and organizations on matters of federal concern. 

He can be reached at [email protected] or call toll free at 1-800-665-8711.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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