The promise of a government paying down its debt and providing tax relief. I know I’ve heard this one.
Yes… it was the late 80’s. This annoying Calgary mayor had just swept to power in Alberta. The province was in debt and running a deficit every year. How are they doing now? Well, now they have no debt, the province is swimming in money, and they don’t even need to raise minimum wage because nobody can attract workers without paying at least $10 an hour.
Oh… did I mention they don’t have a PST either?
This is a story I could bear being told nationally, 15 years from now. How about you? Can you stomach Conservative rule for 15 years, with the knowledge that all of Canada will end up like Alberta?
I know I can.
November 24, 2006 at 10:27 am
I hate to burst your bubble but regarding Flaherty\’s proposed wiping out of Canada\’s NET debt by 2021 (I think that was the year he mentioned).
DON\’T BE DECEIVED BY THIS ONE!!!
Flaherty is talking about wiping out Canadaï¿??ï¿?s NET debt at a rate of $3 billion per year. $3 billion for 15 years totals $45 billion. The NET debt is the difference between what the govt. owes and what the govt owns.
The TOTAL debt is approximately $500 billion. This will hardly be touched by $3 billion per year.
To try to put this in REAL terms, suppose you own a house worth $150,000 (your equity); you owe $160,000 on that house (the total NATIONAL debt). Therefore, the NET debt is $10,000. Flaherty is talking about paying off the NET debt (the $10,000), not the NATIONAL debt.
The difference is that Canada would still owe hundreds of billions. He is DECEIVING Canadians into THINKING that that will be the end of the debt.
This is certainly not debt reduction, Alberta style.
November 24, 2006 at 10:40 am
You are right. Net Debt is a very fuzzy term. It sounds a lot better than it is.
However, honestly, I still think such a solid commitment deserves lauding. I mean, if the national debt does down by 3 billion a year, at prevailing interest rates (say 6%) that 180 million a year more in Canadian coffers and 180 million less that need to be collected in taxes. Compounding does even better.
Realistically, if Alberta-Style debt reduction were to take place federally, considering Alberta took I believe 14 years to pull it off, it would take government dedicating 30 billion dollars in every budget. At its highest in the last 12 years, the surplus didn’t get higher than 12 billion. It would take MAJOR funding cuts across the board to pull that off.
I’d still be in favour of it, looking long-term, but most Canadians (or at least the lobby groups) would foment revolution if Harper dared to do it.
November 24, 2006 at 10:55 am
If I recall correctly, originally, that was Alberta’s commitment as well; clear off the ‘Net Debt’. What happened is that the dynamic was changed and once the Net Debt was paid off, the government was backed in its commitment to clear off the balance. It took an additional 3 – 4 years. The same dynamic will happen federally. The amount available for debt repayment in year 10 should be far greater than that available now.
With some reasonable control on the growth of spending (see Manning/Harris proposal for total government take of 33% of the economy vs close to 40% right now) this is both possible and plausible.
November 24, 2006 at 11:22 am
he explained that very clearly and i saw it at least 3 times . he’s not trying to fool anybody