Government Debt is a Risk for Canadians
May 20, 2024
Government debt is a financial risk that affects us all, writes Peter Watson.
Will the mountain of federal and provincial debt cause Canada to go into a financial tailspin?
Let’s consider the facts. The recent federal budget projected a deficit of $40 billion. This will add to our debt which is already over $1 trillion.
The amount of money we spend on interest for our national debt this year is $54 billion. To put that figure in the proper perspective, that is more than Ottawa transfers to the provinces for healthcare.
Unfortunately, the provinces overspend just like its federal counterpart. According to the Bank of Montréal, provincial debt will grow by $65 billion this year.
Canada has a debt problem. The source of that problem is our elected officials in federal and provincial governments. Unfortunately, politicians get elected with the promise of spending not by being fiscally prudent, controlling costs and attempting to reduce our debt.
Financially speaking, at what point do we sink.
As individuals we can be successful with our own personal financial planning by controlling spending and managing debt. Consider that the foundation of your personal finances.
Our financial comfort could be interrupted if the government is forced to cut back on services provided. For example, would medical transfer payments to the provinces be greatly reduced?
Although I blame elected officials, it is all of us that decide which politician to vote for office. The ultimate responsivity of government actions rests on our shoulders.
The short-term solution is to start a national conversation about fiscal responsibility. Leaders could emerge and encourage others to consider improved government financial management practices.
These leaders could be current or future politicians, influential Canadians or people like you and me.
Our debt clock is ticking.
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
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