Liberal Finance Minister Chrystia Freeland says the “prudent” federal borrowing limit is $1.8 trillion, the largest increase in Canadian history..Speaking before the finance committee, held virtually due to COVID-19 restrictions, Conservative MP (Carleton) and finance critic Pierre Poilievre questioned Freeland regarding proposed borrowing limits in the new budget – a key fiscal anchor absent since the last Liberal budget presented in March 2019..Freeland delivered what was obviously the key speaking point – “prudent” – five times during her answers..Poilievre: “What is the minister proposing to raise the limit to?”.Freeland: “Mr. Speaker (sic), we have outlined very carefully – and I believe very prudently – our plans on the borrowing limit. We believe that the prudent level is 1.8 trillion.”.Poilievre: “And that would bring us how close in debt-to-GDP numbers to the level we reached in the 90’s, when Canada almost defaulted on its debt. Just looking for the number.”.Freeland: “Actually Mr….uh, Mr. Chair, it’s an inexact question, because we are not proposing to borrow that amount of money, we are simply proposing to raise the limit… because that’s the prudent thing to do.”.Poilievre: “Well, if you’re not proposing to borrow that amount, you don’t need to the authority to do so.”.Freeland: “Uh…uh… Mr. Chair, uh… actually, that’s not the case at all. A prudent government always se (sic)… creates buffers, and creates fiscal space, but there is, as the member knows, a very clear difference between borrowing authority and the amount the government has actually borrowed.”.Poilievre: “Well this is the biggest increase in borrowing authority ever sought by any government in Canadian history. It’s a monstrous increase to $1.8 trillion. Why should parliament give the government that authority if the government claims it doesn’t even need it?”.Freeland reiterated the Liberals weren’t actually borrowing the money, simply seeking authority to borrow it..Prime Minister Justin Trudeau already created one of the largest budget deficits in the world through his COVID-19 support programs, and now plans to continue spending..When Freeland delivered the Liberal “fiscal update” – instead of a budget – on November 30, the national debt was forecast to reach an unprecedented high of $1.2 trillion. Now, just over a month later, that number has increased to $1.8 trillion – a 50 per cent hike. .The International Monetary Fund (IMF) indicates Canada’s GDP in 2020 was $1.71 trillion..An increase in national debt to the proposed ceiling of $1.8 trillion would raise Canada’s debt-to-GDP ratio to 105.26 per cent..In 2014 the debt-to-GDP ratio was 85.7 per cent..A study by the World Bank found that countries with debt-to-GDP ratios above 77 per cent for prolonged periods suffer significant reductions in economic growth..Canada’s debt-to-GDP ratio is now forecast to stay above 100 per cent through 2025..Ken Grafton is the Western Standards Ottawa Bureau Chief. He can be reached at kgrafton@westernstandardonline.com
Liberal Finance Minister Chrystia Freeland says the “prudent” federal borrowing limit is $1.8 trillion, the largest increase in Canadian history..Speaking before the finance committee, held virtually due to COVID-19 restrictions, Conservative MP (Carleton) and finance critic Pierre Poilievre questioned Freeland regarding proposed borrowing limits in the new budget – a key fiscal anchor absent since the last Liberal budget presented in March 2019..Freeland delivered what was obviously the key speaking point – “prudent” – five times during her answers..Poilievre: “What is the minister proposing to raise the limit to?”.Freeland: “Mr. Speaker (sic), we have outlined very carefully – and I believe very prudently – our plans on the borrowing limit. We believe that the prudent level is 1.8 trillion.”.Poilievre: “And that would bring us how close in debt-to-GDP numbers to the level we reached in the 90’s, when Canada almost defaulted on its debt. Just looking for the number.”.Freeland: “Actually Mr….uh, Mr. Chair, it’s an inexact question, because we are not proposing to borrow that amount of money, we are simply proposing to raise the limit… because that’s the prudent thing to do.”.Poilievre: “Well, if you’re not proposing to borrow that amount, you don’t need to the authority to do so.”.Freeland: “Uh…uh… Mr. Chair, uh… actually, that’s not the case at all. A prudent government always se (sic)… creates buffers, and creates fiscal space, but there is, as the member knows, a very clear difference between borrowing authority and the amount the government has actually borrowed.”.Poilievre: “Well this is the biggest increase in borrowing authority ever sought by any government in Canadian history. It’s a monstrous increase to $1.8 trillion. Why should parliament give the government that authority if the government claims it doesn’t even need it?”.Freeland reiterated the Liberals weren’t actually borrowing the money, simply seeking authority to borrow it..Prime Minister Justin Trudeau already created one of the largest budget deficits in the world through his COVID-19 support programs, and now plans to continue spending..When Freeland delivered the Liberal “fiscal update” – instead of a budget – on November 30, the national debt was forecast to reach an unprecedented high of $1.2 trillion. Now, just over a month later, that number has increased to $1.8 trillion – a 50 per cent hike. .The International Monetary Fund (IMF) indicates Canada’s GDP in 2020 was $1.71 trillion..An increase in national debt to the proposed ceiling of $1.8 trillion would raise Canada’s debt-to-GDP ratio to 105.26 per cent..In 2014 the debt-to-GDP ratio was 85.7 per cent..A study by the World Bank found that countries with debt-to-GDP ratios above 77 per cent for prolonged periods suffer significant reductions in economic growth..Canada’s debt-to-GDP ratio is now forecast to stay above 100 per cent through 2025..Ken Grafton is the Western Standards Ottawa Bureau Chief. He can be reached at kgrafton@westernstandardonline.com
