This year Canada is doing a lot better when it comes to controlling its deficit compared to 2011. In fact, the latest news from the Finance Department shows the Federal deficit at only half the level right now as it was at the same time last year.
It’s great news for the Harper government that has promised to balance the budget by 2015 and hopefully have the first year of surplus since 2008. But what does this all mean to everyday Canadians who have seen their job security ripped away, their company lay off hundreds of employees and their consumer debt balloon to record levels?
In short, it signals better economic times are on the horizon.
By The Numbers
It’s first important to understand how much debt Canada is in and where we were economically before the financial crisis. Right now, Canadians are facing a $616.9-billion federal debt load. In 2008, the net Federal debt was $490 billion. It’s also important to note our nation’s debt was steadily declining until 2008; since then Canada has added $125 billion to its debt levels.
Deficit vs. Debt
The difference between the deficit and the debt is especially important because when politicians talk about reducing the deficit, all that really means is that our debt isn’t growing as fast; It does not mean we’re getting out of debt. The deficit is the difference between how much the federal government spends and how much it collects in one year. The national or public debt is the total amount Canada owes. Every time Ottawa borrows money, that debt grows larger.
What Finance Minister Jim Flaherty is really telling us is we are not getting into more debt. Ottawa is able to service the public debt and pay for all public services by borrowing less. This has come at the expense of a number of lost federal jobs and cut public services this year.
The Provincial Role
Canada’s provincial debt is $434.9 billion, making our total public debt more than $1 trillion. This is a major concern for economists who see this is as a possible threat to the economy. Economic growth has been an issue across Canada, the first half other year the growth rate was 1.8 per cent below the expectations of the budgets assumptions.
How This Affects The Regular Guys
To the ordinary Canadian the budget deficit not being as high as it was last year may mean very little in the long term – but we have lots to gain. The latest numbers show Ottawa is able to handle and even lower our deficit despite the slow economic growth. This is encouraging because it shows Canada can get back to a time of budget surplus. In the long run this means better job prospects for unemployed Canadians better public programs and more money for provinces hardest hit by the latest recession.