Just the other day I was watching television in my bed prior to drifting off for the evening. As I recall I was watching the news, and I got to thinking about how nice it would be to get rid of my 21″ CRT boob tube and replace it with a brand new 32″ Plasma, LED, or LCD HD television. You know the ones, fully loaded with all the bells and whistles.
Now I will admit that there is really nothing wrong with the TV I have, but lets face it the new ones are just a lot nicer. As I lay in my bed musing about this I thought that if I were to buy a new TV I might as well get one of those PVR satellite receivers, that way I could record programs and watch them at night. After all, in for a penny in for a pound. In fact since I am upgrading…. why not a couple of sets of wireless headphones for the wife and I, that way one could watch TV into the wee hours while the other slept. Ooops, almost forgot a DVD player, a Bluray, probably 3D with some wireless features (don’t want to miss out on NetFlix).
Just as I was planning my run to BestBuy the next day, reality set in (it’s a bitch at times). I needed all of this equipment like a “starving dog needs a second arsehole”, more to the point where was the money coming from? After all it’s not like I had a couple of grand set aside for tech upgrades, or that my employer would just cut me a cheque out of the goodness of their heart (and their understanding of my hi-tech needs). The bottom line was that the money would have to be reallocated from something else ( food, education, retirement, mortgage, emergency funds, saving, etc.) or borrowed, thus incurring some debt.
So, now that I have laid out my hi-tech bedroom fantasy (almost sounds risque doesn’t it?) you are probably asking yourself what this has to do with Government debt.
Well its no big secret that governments at every level (civic, provincial, and federal) are and have been overspending for years, taking on ever increasing debt loads with no end in sight or any formal plan for repayment. So what is the answer?
Simple, like my television, every bit of new proposed spending must be given sober second thought. In fact to go a step further, every bit of current government spending must be reviewed under a microscope. With government debt (and for that matter personal debt) in many cases approaching record high levels the days of spending on every want or desire, or catering to special interest groups must end.
How bad is it, seriously?
Canada’s combined federal and provincial net debt will pass $1.1 trillion at 11 p.m. ET on October 3, according to a recent calculation. The Canadian Federation for Independent Business (CFIB) estimates that total debt has now surpassed $31,850 per person (however if it is any consolation the American taxpayer is saddled with a Federal debt of over $44,000 per person!). The CFIB also noted that provincial and federal net debt in Canada has increased by $100 billion, about 10 per cent in just the last a year and a half alone.
To put this all in perspective, as of 2009 the average annual income for a single Canadian was $31,500, or in simpler terms about $350 less than their share of the current combined Federal and Provincial debt!
Unfortunately it may be even worse (or thankfully a bit better) depending on what province you reside in,
with the per capita debt being highest in Ontario and Quebec, where it has reached $35,550 and $38,725 respectively, and lowest in Alberta and the Yukon, where it sits at $14,700 and $14,900.
Now I realize that the average Canadian citizen likes living in a country where so many of their needs and wants are provided for by various levels of government, but unfortunately on occasion reality must creep into utopia. All of these wonderful social and entitlement programs can only be sustained for as long as there is money to do so, by default as the debt increases and more revenue must go to service it, there is less left to spend on the “niceties” that many Canadians have come to expect as part of their heritage. As well, a large public debt also has a negative effect on the value of a currency, if you need proof just look to our neighbours to the south. Recently the Canadian dollar has been virtually at par with the American greenback, unfortunately we can take little credit for that. Our dollars hasn’t gained as much value as the American dollar has lost, in other words its not that our buck is that much stronger, the equality of the currency is a reflection of just how weak their buck is.
Now to be fair, the CFIB has acknowledged that net debt is not as high as it has been in the past. However I suspect that is due to the fear of hitting the so-called debt wall in the mid-1990s which prompted drastic spending cuts particularly at the federal level. The funny thing is that at the time we had a Liberal government in power (traditionally not a party associated with sound fiscal management) and somehow they rallied to this call for action. Now we have a Conservative government who are spending like sailors on shore leave.
The bottom line regardless of who is in power is that government spending has once more become reckless. Maybe what Canada needs now is another solid dose of financial fear to help us get our books balanced at all government levels. One of these days I will address the issue of personal debt in Canada, but blogging on one fiscal crisis is all I can manage on a lazy Sunday.