Canada needs to reduce government and household debt
By Lethbridge Herald on June 15, 2024.
Editor:
Government and household debt is out of control. Most of the provinces and federal government use borrowing to balance their budgets. The federal government has an annual deficit of $40 billion and a total net debt of $1.4 trillion. Interest payments are a major consequence of debt accumulation.
Federal interest payments are expected to reach $46.5 billion, or 10.2% of total revenues, in 2023/2024. The combined federal and provincial net debt will reach $2.18 trillion in 2023/24 (debt-to-GDP ratio 76.2 per cent).
Among the G7 countries, Canada has the highest level of household debt to disposable income(180 per cent), versus 100 per cent in the U.S. Using ever increasing levels of debt to fund government and household spending is reckless and unsustainable.
The IMF projects 2024 per capita GDP growth of 1.4 per cent for Canada and 2.1 per cent for the U.S. In Canada this is associated with low productivity growth, a downward trend since 2008-2009.
Some causes include shorter work weeks, long vacations, early retirement( 55-60 years), mass immigration, unreasonable union agreements and increasing government bureaucracy. Failure to improve Canada’s productivity slowdown will perpetuate stagnant wage growth, erode competitiveness and impede long- term prosperity.
Unless the above problems are urgently addressed, Canadians will have to accept a reduced standard of living and mediocre public services.
M.P. Greeff
Lethbridge
10-9
