Canada’s national debt today is $619-billion. That means each one of us owes $17,100 to Ottawa’s creditors. This amount is in addition to provincial government debt, municipal debt, and in the case of many people, substantial private debt.
Over the next four years, the Canadian government is going to spend a lot more money, so much in fact that by the next federal election in 2019, the national debt will be $99-billion larger. Canada’s per-capita debt will jump by $2,000 in four short years.
Who will pay for this spending spree? Of course, collectively we all owe that money, and no one can opt out of government debt if he doesn’t like it. But there is also an important intergenerational perspective to consider here. Borrowing money to fund today’s entitlement programs kicks the can of repayment down the line. The people financing government services in the coming decades will have to pick up that can. In other words, tomorrow’s taxpayers will pay twice.
By the time today’s IOUs are due, there will be more retirees and fewer taxpayers, thereby placing a greater burden on young workers to keep the country solvent. Notwithstanding spending allocations for post-secondary education and promises to hire more young people to government jobs, the young are not, therefore, the primary beneficiaries of this budget.
If politicians wanted to leave young citizens in a better position to prosper, they would be better off ensuring that government lived within its means toda, rather than running up the national credit card.
Just put yourself in the position of a university or college student who will graduate in 2020. Due to the higher debt load, substantial public funds – by then $32.8-billion in one year – will go to paying the interest on debt, and therefore less money will be available for social programs and infrastructure projects. To pay for all of its previous over-spending, and to finance higher health care costs for an ageing population, the government will have to cut programs or raise taxes, or both.
Since large public debts can drive up interest rates, it could become more difficult to get a mortgage, buy a car, take out a loan, or invest in a business. And for many people those higher interest rates will mean more years of paying back student loans and other debts incurred during early adulthood.
Worse still, the government’s deficit spending does not adequately invest in infrastructure – a centrepiece of the Liberal campaign for “modest deficits” in last autumn’s election. Over the next two years, the federal government will fall well short of the promised $10-billion for roads, bridges, airports, and other key structures that will allow for better productivity and hence economic growth. This also means fewer assets that could be sold to help pay down the debt in the future.
In short, this spending program isn’t about investing in young people. And unlike today’s elected officials, the leaders of the coming generation will one day have to make the hard choices that come with fiscal responsibility. After having to balance the budget in the 1990s, you would think our leaders in Ottawa would have learned their lesson. It wasn’t easy to do 20 years ago, and it won’t be easy to do after 2020.
Jackson Doughart is a policy analyst.