For next week’s federal budget, the Canadian Institute of Chartered Accountants (CICA) is urging Ottawa to pay down the debt, keep close tabs on spending and ensure Canadians’ fiscal well-being is as much a priority as their physical health.
“Canadians have said that they want to see the federal government spend more on health care and defence, and we understand and share these concerns,” said Pierre Brunet, chair of the CICA Board of Directors. “However, we are also aware that our $536 billion national debt continues to consume more than one-fifth of federal government revenue, money which if freed up could be used for health care, defence and other worthy programs. Our message is that, should the government determine certain programs merit increased funding, it should as far as possible re-allocate money from existing programs to those higher priority areas, while assigning as much as possible of the surplus to pay down the debt.”
As of 2002, interest payments on the debt still consumed 21.8% of all federal government revenue. “On a personal level, this is like an average Canadian earning $50,000 per year who must contemplate an $11,000 interest bill at the start of the year,” said Brunet. “How much flexibility would this give you for other needs and priorities?”
On a per capita basis, each Canadian household’s share of the federal debt is $46,000. The federal government’s debt-to-GDP ratio stands at 49.1% — the CICA has set a debt-to-GDP target for the government of 40%.
“Debt reduction in recent years has freed up $3 billion a year in interest payments for other uses,” said Brunet. “The government has made clear and commendable progress in improving its financial condition, but we also have to caution that future improvement could be negatively affected if interest rates increased significantly.”
The CICA is also urging the government to stay on course implementing the five-year tax cut plan.