Dan Albas

Dan Albas

COLUMN: Fiscal sticker shock

Deficit and debt increasing while Canada’s credit rating has been downgraded

There has been growing demand for a fiscal update of the federal government finances following the spending response to the COVID-19 virus, as well as the revenue impact from having large sectors of our economy shut down.

This week the Liberal government provided what it termed as a “fiscal snapshot” as opposed to a proper full fiscal update.

The numbers, in a word, are staggering.

The deficit for this fiscal year is expected to hit $343 billion. To put that figure into perspective, during the world financial crises in 2009, the federal deficit at that time was $56 billion.

Our total debt in Canada is now expected to hit $1.06 trillion in 2021, significantly up from $685 billion in the previous fiscal year.

Keep in mind, this is the spending to date.

READ ALSO: COLUMN: Transitioning our economy back to work

READ ALSO: COLUMN: A celebration of Canada

There are still many groups, individuals and organizations, who have received promises from the Prime Minister for additional financial supports that have yet to be delivered.

Also, of concern is that our debt to gross domestic product ratio has shot up to 49 per cent, from what was projected to be around 30 per cent.

Canada’s credit rating has also been downgraded by one major credit rating agency.

The credit rating downgrade is of concern because credit rating downgrades can increase the interest that is paid servicing the debt.

Historically low interest rates are helping to keep debt servicing levels lower, and for now more manageable.

The challenge is when interest rates rise, the debt servicing costs increase significantly.

I suspect anyone with a variable rate mortgage knows this well.

The more notable challenge is that this current level of borrowing and spending is unsustainable.

Many financial experts have already cautioned that Canada no longer has the required fiscal capacity in the event there is a serious second wave of the COVID-19 virus.

As the current program spending is unsustainable, the Trudeau Liberal government will need to come up with a successful plan to transition Canada back into a situation where there is growth in GDP and employment.

At the same time there will also need to have a debt management plan that has a relationship to government revenues as well as expenditures.

To date the Liberal government has not released any plan of this kind.

There is no finger pointing in this week’s report.

We are all Canadians in this situation together and we will be dealing with these circumstances in our future.

My question this week: How concerned are you at the lack of a transition plan to move Canada forward, and is now the best time for one?

Dan Albas is the Member of Parliament for the riding of Central Okanagan Similkameen Nicola. This riding includes the communities of Kelowna, West Kelowna, Peachland, Summerland, Keremeos, Princeton, Merritt and Logan Lake.

To report a typo, email:
news@summerlandreview.com
.



news@summerlandreview.com

Like us on Facebook and follow us on Twitter.

ColumnistFederal Politics

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Calls for potential overdoses in B.C. spiked in 2020, especially in the Okanagan - Shuswap. Pictured above is a BCEHS re-enactment of paramedics attending an overdose. (BCHES photo)
UBCO program increases drug checking availability in Kelowna, Penticton, Vernon

January 2021 data shows of 95 opioid samples tested across Interior Health, 93 contained fentanyl

Person experiencing homelessness. (Black Press Media file photo)
Program preventing youth homelessness launches in Kelowna

Upstream Project’s goal is to help young people become more resilient

Youth from Vernon, Kelowna, Penticton and the Kootenays were able to dig into two evenings of online learning and connection through United Way Southern Interior B.C.’s <CODE>anagan program. (Submitted)<code> </code>
CODEanagan gives youth a chance to learn about technology

The youth, aged 12 to 21, built their own WordPress sites and developed blogging ideas

A rainbow shining on Kelowna General Hospital on May 12, 2020 International Nurses Day. (Steve Wensley - Prime Light Media)
New COVID cases trending down in Interior Health

24 new cases reported Thursday, Feb. 25, death at Kelowna General Hospital

The Combined Forces Special Enforcement Unit of British Columbia’s (CFSEU-BC) Uniform Gang Enforcement Team (UGET) has arrested a man who was on the run for nearly a decade. (File photo)
9-year search for international drug trafficking suspect ends with arrest at YVR

Khamla Wong, charged in 2012, taken into custody Feb. 24 by BC-CFSEU

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature. (B.C. government)
B.C. reports 10 additional deaths, 395 new COVID-19 cases

The majority of new coronavirus infections were in the Fraser Health region

A new survey has found that virtual visits are British Columbian’s preferred way to see the doctor amid the COVID-19 pandemic. (Unsplash)
Majority of British Columbians now prefer routine virtual doctor’s visits: study

More than 82% feel virtual health options reduce wait times, 64% think they lead to better health

Larch Place is the first building to be built in the BC Housing, Canadian Mental Health Association housing project at the corner of Third Street SW and Fifth Avenue SW. This view is from the Shuswap Street side where it sits behind the Graystone East building. (File photo)
Opening of doors at new housing development in Salmon Arm welcomed

BC Housing announces opening of 32 rental units, with 35 more expected in summer 2021

Cory Mills, Eric Blackmore and A.J. Jensen, all 20, drown in the Sooke River in February 2020. (Contributed photos)
Coroner confirms ‘puddle jumping’ in 2020 drowning deaths of 3 B.C. men

Cory Mills, Eric Blackmore and A.J. Jensen pulled into raging river driving through nearby flooding

Castlegar doctor Megan Taylor contracted COVID-19 in November. This photo was taken before the pandemic. Photo: Submitted
Kootenay doctor shares experience contracting COVID-19

Castlegar doctor shares her COVID experience

Vancouver International Women in Film Festival kicks off March 5.
Women in Film Festival features two B.C. filmmakers

The 16th annual festival kicks off March 5, 2021

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The booklet roots present day activism in the history of racist policies, arguing the history must be acknowledged in order to change. (CCPA)
New resource dives into 150 years of racist policy in B.C.

Racist history must be acknowledged in order to change, authors say

Agatha Mary Clarissa Miller, before she knew she would change literature. Photo Wikipedia
And Then There Were None

What book knocked your booties off when you were young?

Most Read