Neither a Borrower Nor a Lender Be

Canada's year-end financial statement looks pretty good.  And it will be getting even better.  Partly because there is good news that the U.S. economy is finally beginning to grow, pulling itself out of its prolonged recessionary slump.  And partly because the current Conservative-led Canadian government has been playing at relatively mild austerity.  Fundamentally tackling its own expenditures, charging government departments to find savings and implement them.

And putting federal civil servants on notice that there will be fewer jobs, though the jobs that are required will still be there, and hiring is continuing, but at a slower pace, even while some employment categories are being revamped and released.  The good news is not that there are fewer public servants, but that the country's debt is declining, and the Finance Minister is getting a better handle on the deficit.

Federal revenues finally are exceeding expenses for federal government programs.  And we have realized an operating surplus of $4.8-billion for the past fiscal year.  Much of which will go to service our debt, for the time being.  The year's past deficit came in at $26.2-billion, an awesome sum to represent a budget imbalance.  But it represents half of what it stood at only two years earlier. 

Although the Governor of the Bank of Canada has issued a pre-release warning that interests rates will shortly be on the way up; a modest increment, we can suppose, it's currently at a 45-year-low.  Which has been good for taxpayers.  Good and not-so-good in a sense; helping people make ends meet, but also encouraging people to take on more debt than they logically should, as a result of low interest rates.

We're also paying fewer taxes than we did a few years ago.  Billions less in total, in fact, than what we were paying in 2006.  Government has initiated a few changes in our social benefits and that has concerned many people.  On the other hand, we're healthier, living longer than we ever have, as Canadians.  We're in good physical shape, so it makes sense that retirement expectations be altered.

OAS benefits kick in two years later, at 67 incrementally, fully implemented by 2023.  MP gold-plated pensions have been altered to reflect the kind of world we really inhabit.  Even the Prime Minister saw fit to reduce his pension - enormously, as a matter of fact, placing his own pension reduction in the same situation as that being imposed on others - and even more so.

Putting our national fiscal health in the perspective of reality; our net debt is less than half of what appears to be the G7 average.  Canada spends slightly less and taxes slightly over the G7 average.
And the debt?  It will take a lot of grinding to get it reduced to a manageable level, even though Canada's debt is considered to be reasonable compared to that of the United States.

Canada's debt stands at $800-billion.  And it isn't a good feeling to know that the singular country that is buying up our notes is China; that we are in fact indebted to a country whose immense population doesn't live nearly as well as Canadians do, but the middle class is forging ahead in China, and the country still  has enough disposable income to invest in economies such as ours.

We're doing all right, but they're doing even better.