Time is running out to improve Canada’s debt issues
September 18, 2023
Focusing entirely on the dangers of mounting household debt is a disservice to our country, writes Peter Watson.
Over a few short years, housing mortgage rates have doubled, or more. This has caused a significant hardship for many homeowners. Many people might not be able to keep up with mortgage payments and are at risk of losing their homes.
But let’s also keep in mind that the federal and provincial governments are carrying steep debts, too.
They continue to spend, and to compound that problem is significantly higher interest rates, which means that debt refinancing, as well as new debt, comes with higher interest payments.
I want to extend an example from the business world. A case in point is how senior management often has a financial incentive. Run the company well and be fiscally responsible, and it just might mean bigger bonuses.
Perhaps this formula could be adopted by senior civil servants and elected officials?
For example, balance the budget and start paying down debt or your future government indexed pension will be reduced or eliminated.
Whether you are a household or a government, debt does not magically evaporate.
Does the ballooning of government debt suggest financial mismanagement or poor planning? Some may agree, or some may disagree.
Pushing that debt forward to future generations could be troublesome on many levels.
We need politicians that have the communication skills to outline our debt problems and outline solutions. This is the key to our survival on all fronts for families and governments alike.
“The Canadian debt clock” is ticking. There must be a financial incentive that encourages politicians and civil servants to manage the finances without bankrupting future generations.
Our future relies on strong leadership implementing sound fiscally responsible strategies.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com