When it comes to fiscal management, the federal government’s message to Canadians is inconsistent with their actions.
Statistics Canada released third quarter results showing Canadians’ debt-to-household-income is at a record high, and according to a report from the Organization for Economic Co-Operation and Development (OECD), when it comes to debt, Canadians top the global list.
The governor of the Bank of Canada has often said that household debt is one of our country’s largest problems. Since the world financial crisis back in 2008 and 2009, the federal government and the Bank of Canada have cautioned Canadians that low interest rates were enticing Canadians to overspend.
The government over the last decade, Conservatives or Liberals, have provided good advice on how to manage debt.
Ottawa preaches fiscal prudence however their own spending habits are anything but. During the last three years the federal government has increased spending by 20 per cent.
Canada needs to become more financially responsible before our mounting debt becomes too enormous and overwhelms our economy.
You would think if each and every one of us was able to earn an income, spend within our means, and reduce personal debt, then financially all would be good. In theory, yes. But how good can it be if our federal government gets to the point where it can’t pay its bills?
Last week’s column discussed the new stress test being imposed on mortgage borrowers, designed to cool down an overheated real estate market. To the government’s credit, this is the seventh time adjustments have been made to help consumers avoid overspending on housing.
Having too much debt, whether for a government or a household, can become financial quicksand. Regardless of how hard you try to get out of your predicament, at some point it does not end well.
We can give the government full marks for how they have recommended individuals manage their finances. Unfortunately, they get a failing grade when it comes to managing the country’s finances.
Spending is easy. What we need is the federal government to have the courage and foresight to better manage Canada’s finances.