mike watkins dot ca : February 27 2009 Archives

February 27 2009

December 2008: Canada deeper in debt

Speaking of secrecy, our government officials and the elected mouthpieces who notionally run these departments often hide or keep secret important truths simply by talking about something else.

If one reads the latest news release from the Department of Finance one might conclude that Canada and Jimmy Flaherty are doing a good job.

Yet the secret truth, available with just a little digging, is that Canada dipped deeper in debt in December 2008, to the tune of an additional 3.8 billion on top of somewhere between 15 and 50 billion dollars of new debt incurred so far this fiscal year.

http://64.21.147.48/tv-20090227-125543.gif

The chart illustrates a total new debt line (dark blue) and a dotted "best case" line. There are two primary factors which drive the difference between the two lines:

  1. Year over year there was an announced change in how certain crown corporations obtain their borrowing; where previously said crown corporations (Canada Mortgage and Housing Corporation (CMHC), the Business Development Bank of Canada and Farm Credit Canada) obtained their own borrowing, this fiscal year the federal government proper arranged this financing to lever the stronger borrowing power of the national government and thus save some interest charges.
  2. After the election - you might recall it was the election where Harper and Flaherty tried hard to pretend that all was well, that Canada would never go into deficit - Flaherty did an about face and called the situation facing the world and Canada a "crisis" and decided to help out the Canadian banks to the tune of buying $25 billion in CMHC-insured mortgages off the banks so they could clean up their balance sheets. Its something of a shell game.

Points 1 and 2 are related. CMHC is one of the crown corporations the government is obtaining financing for. Ultimately we taxpayers are all on the hook for what happens to these mortgages, because if as in the U.S. there is a surplus of defaulted mortgages over the insurance funds protecting them, guess who will be paying for the mess? You and me.

Even if we give Flaherty the benefit of doubt, writ large, and take off 10B + 25B = $35 billion dollars from the gross new accumulated federal debt, we are still left with over $15 billion dollars in new debt incurred by Stephen Harper's government.

Flaherty can play word games and claim that the government is still capable of operating without a deficit but the reality is that we are in fact 3.8B deeper in the hole in December, or $15.2B of new debt on a cumulative basis so far this fiscal year.

Ottawa "Cult of secrecy"

Via Paul Wells at Macleans, an intriguing blog post by Sun News reporter Elizabeth Thompson in Mystery Meetings:

There are public meetings on Parliament Hill. There are in camera meetings. However, Parliament's Citizenship and Immigration committee have come up with a new one - "informal meetings."

No, that doesn't mean that MPs show up in jeans and running shoes. It means that they don't tell anyone that they are going to meet, let alone that they were going to spend four hours this week grilling top immigration department officials on some of the biggest hot button issues facing that ministry.

We should note these are all party meetings, which means these off-the-record sessions are being tacitly endorsed by the right, centre, and left of Canadian politics.

Why?

This tidbit serves to underscore the larger problem of inappropriate government secrecy identified this week as the federal Information Commissioner Robert Marleau tabled to Parliament (Chronicle-Herald) a hard-hitting report (PDF | HTML) which gives failing grades to many major federal departments for their handling of information and access to information requests.

Canadians expect and deserve far greater efficiency and accountability from their government. Robert Marleau, federal Information Commissioner

I've never seen a candidate stand up and say "If elected I shall do my utmost to hide the truth from you" yet that is exactly what we are increasingly getting from some of our elected representatives and the ministries they are entrusted to lead.