Interest payments soar as Canadian governments rack up debt
Posted Jan 5, 2016 7:23 am.
This article is more than 5 years old.
An old adage says: you’ve got to spend money to make money.
If that’s the case, Canadian governments are headed in the right direction. But if that isn’t true, we could all be in big trouble.
A report from the Fraser Institute shows federal, provincial and local governments spent a total of $60.8-billion of taxpayer money on debt interest alone from 2014-2015; almost as much as governments spent on Kindergarten to Grade 12 education.
While Alberta is still doing better than everyone else, that is starting to change.
According to the report, Alberta’s federal and provincial debt interest payments in 2015-16 will be $778-million, which is only 1.8 per cent of the province’s total revenue, but Ben Eisen, Associate Director of Provincial Prosperity Studies with the Fraser Institute, points out up until recently Alberta has been a net asset province.
“Financial assets have actually exceeded its debt in the past, and that was by $35-billion in 2007-08,” he said. “That’s been eroded in recent years substantially. This year it’s down to $3-billion and next year the province is going to become a net debtor again.”
He’s also quick to add this has been happening for some time, and we can’t blame the drop in oil prices or any one government.
In most cases, overspending is the problem and Eisen explains the Liberal government’s plan to invest heavily in infrastructure spending won’t curb the trend any time soon.
Canada’s combined debt is projected to reach $1.3-trillion in 2015-16, the equivalent of every person in the country owing almost $36,000.
