Lack of financial consistency, transparency is bad government

Lack of financial consistency, transparency is bad government

January 29, 2015

Politicians’ lack of financial consistency and transparency harms our country.

Last week the federal government surprised us by lowering interest rates. The reason is that lower oil prices meaning decreased economic activity, will slow the Canadian economy.

They hope to accelerate business activity by reducing interest rates. In our opinion this short-term reaction is a mistake that will hurt Canadians and eventually the entire Canadian economy.

Canadians’ largest financial risk is the historic high levels of personal debt. That is what the federal government and the Bank of Canada have been saying for about five years.

The way to discourage personal debt is to raise interest rates. Last week’s rate decrease will encourage people to increase their personal debt. This is exactly what we have been warned against for so many years.

Low interest rates have encouraged us to overspend on everything from housing to personal consumption. If the government was serious about their warning they would increase, not lower rates.

That is the theory, but now all of a sudden the government is in a pickle because the bottom fell out of the oil market. Their strong warnings and encouragement of personal austerity have fallen by the wayside. More people will find lower interest rates hard to resist.

Our message to the federal government is please do not change your economic story mid-sentence. This will eventually hurt Canadians and it is not what is in the best interest for the citizens you serve.

While we are on the subject of poor government leadership, we can look at Toronto. Last week the City of Toronto released their annual budget. Mayor John Tory delivered what he called a balanced budget. Really?

It was more like an off-balanced budget. The budget is balanced, but only because they want a significant line of credit from the province to actually balance the budget.

So they did not balance the budget, but said they did. They implied there was no short-fall because they got a loan to cover that short-fall. Oh my, arithmetic has surely changed since I left grade school.

These are fairly strong comments so it is fair that I share my personal opinion about politicians. I think politicians are some of the most dedicated contributors to society that we have.

Their pay is lower than what many would earn outside of politics. They are not in politics for personal gain. We are fortunate that so many good people dedicate their lives to serving others.

It is easy to say that politicians are the cause of all our problems. We choose from many different qualified candidates and collectively decide who gets the job. Politics is hard. Balancing the books is hard. Staying on course is hard.

My request is simple for all levels of government. Please be absolutely fair and honest with how you report and attempt to sell your ideas.

Even if that honesty and transparency is bad politics. Canadians have the intelligence to deal unpleasant economic truths.

It is that consistency and transparency that will end up giving us better governance.  

Watson Investments
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