The Canadian Taxpayers Association is sounding the alarm about the rising level of government debt, a situation that will cost every New Brunswick taxpayer the equivalent of $1,400 this year to pay interest on the debt.
In its latest report released on Wednesday, the Canadian Taxpayers’ Federation (CFC) called on provincial and federal governments to make achieving zero deficits a priority.
“Our governments cannot afford to borrow indefinitely, and if we wait too long, there will be very few options left to balance budgets and this will be difficult,” says Renaud Broussard, acting Atlantic Director of the FCC.
The organization, which “struggles for lower taxation, less waste and greater government accountability,” notes that New Brunswick’s debt should reach $14.1 billion in 2022 while its share of federal debt will reach $1.2 trillion.
According to the Federal Communications Commission, New Brunswick’s share of federal and provincial debt each is $52,200, an increase of $4,300 from last year. It will cost each taxpayer $1,400 to pay the interest on provincial and federal debt.
normal under the circumstances
For Pierre-Marcel Desjardins, economist and professor at the Graduate School of Publishing at the University of Moncton, the high level of government debt is justified by the economic context caused by the pandemic.
“It is true that you cannot borrow indefinitely,” he said. But it was right for governments to borrow and take on debts to help the Canadian economy and people through the crisis. So sounding the alarm at this time is completely inappropriate.”
The special economic situation caused by the COVID-19 pandemic is not mentioned in the FFC report.
Pierre-Marcel Desjardins says the government must continue to “use public funds wisely by making strategic investments for profit” if it is to ensure a return to normalcy.
The economist recalls: “As for the pandemic, we learned from the crisis of the 1930s when the government withdrew completely, causing an economic crisis that lasted for ten years. There, governments learned and played the role they had to play.”
While it is true, on an individual basis, that we may want to get rid of our debt, it is not the case for companies and governments, adds Mr. Desjardins.
Businesses and governments cannot hope to be debt-free. Companies borrow regularly, for example to build new factories and this commodity can be used for 30 years, it is an investment in the company. It makes sense for governments to take the same approach. When they borrow to build roads, schools or hospitals, this infrastructure will be used for many years, and this is a benefit to the community,” he explains.