The Peace Tower is seen on Parliament Hill in Ottawa on November 5, 2013. The federal government is writing off more than $6.3 billion in loans to businesses and students it never expects to collect. (Sean Kilpatrick/The Canadian Press)

Liberals write off $6.3 billion in loans as part of money never to be collected

That includes student loans and a $2.6 billion write off that came through Export Development Canada

The federal government says it won’t collect $6.3 billion in loans, a figure fuelled by the write off of a nearly decade-old automaker bailout that the Liberals say had no hopes of being recouped.

The Liberals have written off some $3 billion in loans in each of the past two years, but they jumped past that mark in fiscal year 2017-2018.

Key to the jump was a $2.6 billion writeoff that was part of a financing package the previous Conservative government made in 2009 to keep automaker Chrysler afloat and save an estimated 52,000 Canadian jobs during the recession.

In 2011, former finance minister Jim Flaherty said taxpayers would likely never recoup the full value of the bailout when Chrysler repaid $1.7 billion provided to the restructured company, now known as Fiat Chrysler.

There was still a US$1.125 billion loan, excluding interest, sitting on the books to the “Old Chrysler” when the Liberals took office in late 2015.

The company had paid back about $238 million from its original loan, but the Liberals decided to write off the remaining principal and interest in March after officials exhausted every avenue for recovery.

International Trade Minister Jim Carr blamed the terms of the loan set out by the previous government to explain his government’s decision.

“At the time they handed out the loan, they knew it would be 100 per cent written off,” Carr said Monday.

“The ‘Old Chrysler’ did not have an opportunity to pay it back … there are no surprises here.”

READ MORE: Prime Minister pledges to ensure ‘thriving’ dairy industry post USMCA

Separate from the writeoffs, the government is also forgiving other debts to the tune of about $1.1 billion, including nearly $344 million that officials don’t expect to recover from student loan recipients.

Combined, the annual public accounts documents show the Liberals decided in the 12 months ending in March that the government wouldn’t collect $7.4 billion owed the federal treasury — a record since they took office in late 2015.

The detailed accounting documents provide an annual window into how much the government spent in the last year, what it spent money on, and just how much wasn’t spent.

Lapsed spending this year, for example, totalled $10.7 billion, but the numbers in the public accounts are not always big.

A review of the documents shows the government paid $58,803 in damages and other legal claims because of the problem-plagued Phoenix pay system that has left civil servants underpaid, overpaid or not paid at all.

Canada’s auditor general estimated in a report that the government owes underpaid employees some $369 million and overpaid others about $246 million. The total is $615 million worth of pay errors as of March 31, 2018.

The Phoenix fiasco was the “one significant blemish” on the government’s books for the last fiscal year, Michael Ferguson said in his audit opinion about the public accounts.

He said the number of employees affected by Phoenix pay problems has continued to grow.

“The government still has not shown signs that it has reduced the impact of pay errors coming from its transformation of pay administration, which includes the Phoenix pay system,” Ferguson wrote.

Federal books finished in the red last fiscal year as the government posted a second consecutive $19 billion deficit as overall spending across ministries, departments, agencies and Crown corporations hit $332.6 billion.

The deficit for 2017-18 was slightly smaller than what the Liberals predicted in February’s budget.

There are concerns the Liberals’ deficit-spending plan at a time of economic expansion could lead far deeper down the deficit hole in the event of a recession, fuelling criticism from the Opposition Conservatives about the lack of a road map to return to a balanced budget.

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

WATCH: Animal rights activist defends Monday’s Ribfest protest

Amy Soranno was one of seven activtists that chained themselves to a bank to protest Ribfest

Sponsors needed to help Kelowna families this season

Okanagan Boys and Girls Club “Adopt-A-Family” program kicks off for another year

Kelowna RCMP need 56 more officers by 2025: report

The additional officers would cost the city nearly $10 million

Central Okanagan Sports Hall of Fame welcomes 6 new inductees

Okanagan athletes and sports pioneers were added to the HOF Thursday

Pedestrian hit on corner of Burtch Road and Sutherland Avenue in Kelowna

Man has since been released with minor injuries

Get your head out of clouds, North Okanagan

Fall fog sticks around all day in northern portion of valley

65-million-year-old triceratops makes its debut in Victoria

Dino Lab Inc. is excavating the fossilized remains of a 65-million-year-old dinosaur

B.C. widow suing health authority after ‘untreatable’ superbug killed her husband

New Public Agency Health report puts Canadian death toll at 5,400 in 2018

Changes to B.C. building code address secondary suites, energy efficiency

Housing Minister Selina Robinson says the changes will help create more affordable housing

Security guard at Kamloops music festival gets three years for sexually assaulting concertgoer

Shawn Christopher Gray walked the woman home after she became seperated from her friends, court heard

Keremeos Fire Department acquires new truck

Regional District of Okanagan Similkameen approves fire truck purchases for Keremeos, Willowbrook

Wharton Street in Summerland open for traffic once again

Road closure had been in place for past five months for upgrade work

Penticton RCMP do not intend to review sexual assault stats

Eleven out of 29 sexual assault cases in Penticton were deemed unfounded in 2018

Most Read