Harbinger for the Future of Canada

Here's a good read for those Liberals who don't see a problem with how our economy is being managed. NF has been on the Government teat for many years... and it's finally caught up with them. They are heading for bankruptcy just trying to pay off their debt.

If you can't understand how that can happen..take a look at the Liberals last budget... and look at what has happened in NF..

Good read:

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Greene said the current governance culture — one that views budgets as "notional" and deficits as something that don't matter — has to end. She said the overall debt sits at more than $47 billion in a province of just over 500,000 residents.

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"Our predicament is the result of years of overspending; [government] spending about 25 per cent more than it takes in every year," she said, noting that expenditures soared by 80 per cent over a 15-year period "regardless of changes downward in our revenues."

Since the province has one of the largest public sectors in the country on a per capita basis, Greene recommended it re-examine its relationship with unions.

"The compensation and benefits paid to many public sector employees are higher than those received by people doing the same jobs in the private sector workforce," she said.

The team considered options such as salary freezes, four-day work weeks and privatization of some services to save money, but she said those decisions should be negotiated by government and the unions and if progress is not made, the province should legislate changes.

"Given that public sector salaries and benefits are 41 per cent of expenditures, it does seem there's an opportunity for good and productive discussion to be had," she said.

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https://www.cbc.ca/news/canada/newfo...very-1.6016005

They're calling fiscal belt tightening "The Big Reset".... HaHa.

https://www.youtube.com/watch?v=o_9Gdg53QMw

Things are going to get interesting

I hate to think of all those in Public Office counting on pensions...like many states, they ( Police, Fire, Teachers) are left with pennies on the dollar when the state (province) declare bankruptcy.

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The Parliamentary Budget Officer’s latest fiscal sustainability report made clear that current fiscal policy is not sustainable for many provinces, thanks to rising health care costs and aging populations.

Newfoundland and Labrador may be in the worst shape but it is not alone. Federal government sources concede it is the expired canary in a coalmine where other provinces are already showing signs of gasping for air.

The PBO sustainability report forecast that only Quebec, Ontario and Nova Scotia have stable fiscal outlooks.

A report by the Conference Board of Canada for the premiers predicted that, while the federal fiscal situation will improve in the next 10 years, the provinces and territories will see their deficits double from a combined $46 billion this year to $103 billion in 2030-31.

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The national debt is on course to reach $1.5 trillion within five years from $615 billion when the Trudeau government took office.,
Freeland pointed out in committee that the debt to GDP ratio will peak this year and then dip marginally. But the budget is explicit that the debt-to-GDP ratio won’t get back to pre-pandemic levels until 2055 – and that’s if you buy into the government’s optimistic assumptions.

The lesson from Newfoundland and Labrador is that you can’t live beyond your means indefinitely. Governments should make provision for unexpected events that lead to higher interest rates and brutal spending cuts. Drummond has a simple answer: “Somebody has to raise taxes.”

Absent decisive action, the federal government could go the same way as the most indebted provinces.

The only difference in Ottawa’s case is that if the federal government does fall off the debt wall, there will be no benevolent senior level of government around to put it back together again.

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https://nationalpost.com/opinion/joh...ents-in-canada

No worries there Mike for those impacted -they will just raise taxes.

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Originally Posted by gbk

No worries there Mike for those impacted -they will just raise taxes.

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The problem there isn't a viable tax base on the island...all old folks on pensions (mostly CCP and OAS) ...they aren't EVER going to pay of $46 billion debt.

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Originally Posted by MikePal

The problem there isn't a viable tax base on the island...all old folks on pensions (mostly CCP and OAS) ...they aren't EVER going to pay of $46 billion debt.

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What about a longer amortization period, say to the end of the next century. That should give them an ample opportunity to stretch their dollars. We are good at extending indebtedness in this country. Just ask some of the indigenous people how prompt we are at settling land claims. LOL

You don't stop hunting because you grow old. You grow old because you stop hunting.
- Gun Nut

Good point on FN’s.. GN. Guess it’s only good when it’s working for you, not against your interests.

41% of the budget.

I don’t know if that’s horrible. Ontario is over 50% and has the leanest PS (headcount).

Difference being, despite being a basket case, Ontario still has revenue (GDP)..oh wait a sec it’s 2020/2021

Government debt has a few different forms. Primarily Bonds and T-Bills. They have maturity dates. And while the debt can and will be rolled. The issuer will have to offer better rates or steeper discounts on T-Bills.

/looks at inflation and credit ratings....

So, while issuing far more long term debt (25,year) is possible. The interest would need to be......through the roof? Why would anyone want to buy NFLD bonds if the interest offered is no better than say Ontarios? And, given the risk they might not be able to pay the interest in 5 or 10 or 25 years....and given, over the same time inflation....or what really matters is the yield curve at the time of issuance. So, the interest would to be...punitive, unaffordable. No different than our own mortgages really. Is the interest for a 1 loan higher/lower than a 5year? And why can’t we get 25 year mortgages? Because the risk?


Freeland.
Seems like everyone forgets that debt is just a number. Ditto income. Both are essentially meaningless until measured against something. Which when it comes to debt is each other.
Debt to gdp. No doubt, her 2055....read that AGAIN. Is based on rosy economic growth. And like most on left, no doubt she believes sunny days last forever, as well. So 35 years of hot economic growth without a contraction or another 2008, 2020.


For years people here freaked out about Ontarios debt. The debt no matter what it is, means Jack if revenue.....is high enough.

Income/revenue likewise is relative. To????

Well in NFLds case if most of the province makes $30,000 on CPP/OAS...and or EI. Their toast.

And yes, it does seem as though the left and PS still haven’t learned basic economics, budgeting or how to run even a small “company”.

should they have to declare bankruptcy, yep employees are last in line. Creditors get their money first. As it should be. Too bad, so sad, thoughts and prayers

In Canada,interest payments on the debt simply gets added to the deficit. Eventually,the deficit becomes rolled into the debt and on and on it goes. Sooner or later,that giant ponzi scheme will come crashing down. As we sit right now,this country is functionally bankrupt and has been for a long,long time. If we ran our household finances like the government runs the national finances,the banks would have foreclosed on us long ago until we were all living out of a empty dryer box under a 401 overpass,somewhere. How anyone thinks this is sustainable boggles the mind.

A few minutes to come back to this.

So, like Ontario did, the province had to call in an outside expert, to tell them they shouldn’t be running lemonade stands. And how to fix it. No idea if she is right wing, or extremely left like Drummond.

Both recommended salary freezes, and raising taxes, and cuts. Both identify the need to stand up to Unions.

In NFLDs case, there is an argument to be made for cuts that result in layoffs ( highest per capita headcount). In Ontario it’s opposite leanest and expensive.

People will argue that X role is worth Y money. For this or that reason. Paraphrase I think I’m worth $$$, or I think so and so is worth $$$.

I wonder if “teachers”, or “cops” or “RNs” make the some money as they do in Ontario. Assuming no. Why not? Because revenue and the tax base?

Layoffs.
No one likes layoffs. One it puts people out of work. Two, it means fewer services. Whether RNs, or PSWs or pencil pushers at service Ontario.

Salaries
Everyone, has bills to pay. But yep...but are all equal?
If the mean duo income in NFLD is $80,000 (it is). Should Public servants that gross around the same take hair cuts?

Benefits
Add 20% to 25% to the cost.
None more so than pensions. Especially because they are DBPs. Which typically calculate the benefit
Based on the 5 highest years.
And too often, because Unions usually have stupid salary grids where people get raises just for showing up to work and logging hours....over and above raises when contracts are renogiated. Too often at inflation ( often above). But which also does not address natural business cycles. And things like 2008. When gdp goes in the tank and takes years to recover.....

For the life of me, I can’t think of one good reason why someone that grosses a lot more than the mean, double the typical tax paying peon. Can’t afford to take care of themselves.

And can only guess, such a straightforward, logical, justified measure would meet the stiffest of all resistance. The holy grail. And unions and their members would go nuclear.

Far easier to nip the low hanging fruit and their own “have nots” as we’ve seen in Ontario

”Canada”
when JT took over debt to gdp was good (thanks Harper). I know many here didn’t like his initial spending. Fact of the matter is, the D/G ratio was good and could handle.

some

but it wasn’t some, and sunny days don’t last forever...

2055 or 35 years.
I do believe I’ve said our grandchildren and theirs. Yep, about 35 years before they have a say and can vote.