federal government

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With the holiday season now behind us, the oncoming flood of credit statements to Canadian households is a powerful reminder that there are no free lunches. Borrowing to pay for current consumption brings interest payments, and ultimately, the need to pay off principal balances. Most Canadians are intimately familiar with this reality when it comes to their household finances. But this same reality also applies to governments. As taxpayers, Canadian families are also responsible for interest on government debt. And these payments are significant.


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Allegations of expense scandals in the Senate have shocked many Canadians and rightfully so. Although unsettling, such antics are not an isolated case; they are part of a larger institutional problem with government.


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After federal Finance Minister Jim Flaherty unveiled his latest financial plan Tuesday, much of the media hype centred on the government's larger than expected surplus in 2015-16. Early chatter seemed to accept the government will deliver as promised and some declared its "conservative assumptions" might allow for the deficit to be eliminated even earlier.


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When Christy Clark recently asserted British Columbia didn’t need the federal government and also said “we don't need Alberta,” the B.C. premier demonstrated why Canada’s founding fathers were concerned about provincial politicians: when they think in isolation, such premiers harm the interests of all Canadians.

The context of Clark’s election-time remark was how BC could become an energy superpower if more natural gas was developed and delivered through pipelines, as opposed to “allowing” oil pipelines to crisscross British Columbia more than they already do.


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Over the course of the past several months, outgoing Bank of Canada Governor Mark Carney and Federal Finance Minister Jim Flaherty have repeatedly warned that Canadians are spending beyond their means and taking on too much debt.

“A concern of the Bank of Canada...has been the pace of growth of household debt” Carney recently noted. Minister Flaherty added, While interest rates are currently low by historical standards, eventually they will rise. Canadians should…. understand this when taking on significant debt…


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The key litmus test for the Harper government’s 2013 budget was always going to be how realistic it was with respect to achieving a balanced budget by 2015-16. The governing Tories have staked both their economic and political credibility on being able to balance the budget. The current plan, which mirrors previous budgets, relies on controlling the growth in spending and hoping revenues increase sufficiently to balance the budget.


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When Finance Minister Jim Flaherty announced last week that the Conservative government will miss its target for balancing the budget, he confirmed something that should be obvious to all students of recent Canadian economic history: Crossed-finger revenue forecasts and unrealistic spending growth projections are no basis for sound economic policy.