Do as I say, not as I do
August 18, 2024
Please help me understand the logic of our federal government and how it makes financial decisions, writes Peter Watson.
We will start by looking at the current economic environment.
Canadians are under financial pressure. Many cannot afford to purchase a house and current homeowners are having trouble with the high interest rate on their mortgage.
Many households with a reasonable mortgage interest rate will face reality this fall when a large number will have to renew their current mortgage and their regular payments will increase.
Half the population is living with a cash surplus of only $200 or less, meaning the slightest financial hardship will be difficult or impossible to endure.
Technological advancements including the evolution of artificial intelligence means that some people have lost or will lose their job. The work environment has us doing more while employing fewer people.
The federal government and the Bank of Canada have encouraged business to invest in new technology to be more efficient. Other timely messages include being more fiscally responsible and trying to get household debt under control.
In summary, for many Canadians times are tough.
Contrast that to how the governments operate as if money grows on trees and accumulating debt is acceptable. For some unknown reason financial prudence does not apply to our federal government.
The federal Treasury Board recently published information on the federal government’s payroll. Since the Trudeau Liberal government came to power almost a decade ago. the federal government’s payroll has increased twice as much as our population growth.
The advice given by our federal government for Canadians to make better use of technology to enhance efficiency and to better manage household debt is sound financial advice.
The logic of good financial advice directed at Canadians does not apply to the federal government in the way it makes financial decisions.
Unfortunately, this is a case of “do as I say, not as I do.”
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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