Drowning in debt

It should be obvious by now that big numbers don’t scare Canadians.

We’ve been warned so often, and for so long, about the dangers of the national debt we’re accumulating, that we’ve developed something of an immunity. When it comes to debt, Canadians are like the frightening new antibiotic- resistant superbugs that can’t be killed even with the most powerful drugs. A billion dollars? A hundred billion dollars? A trillion dollars? We shrug it off and just keep borrowing. Hasn’t killed us yet, right?

If big numbers can’t penetrate the national psyche, however, perhaps smaller ones might. As in education budgets, social service budgets, childcare budgets and security budgets that are smaller than they could be, because so much of the money collected in taxes is lost to interest payments on past borrowings.

That’s the key warning of a Fraser Institute report on Canadian debt. It has all the usual scary numbers: Combined federal and provincial debt will top $ 1.3 trillion this year; Ontario will soon owe $ 300 billion, passing Quebec as the most in- hock province; another $ 450 billion has been tacked onto the national credit card since the 2008 recession.

Bah. Canadians are used to those numbers, and used to ignoring them. Who can possibly grasp numbers that come with 12 zeros attached to the end? Most of us can hardly fathom the salaries of a first- line centre in the National Hockey League.

But the import of those numbers may be easier to absorb when put in another context. For instance, the report notes that the interest spent last year on previous borrowings — $ 61 billion — is almost equal to the entire cost of public education in Canada last year.

It’s $ 10 billion more than the total pension benefits paid out through the Canada Pension Plan and Quebec Pension Plan. Imagine: if not for the profligate borrowing of Canada’s governments, benefits to pensioners could be doubled without increasing a single tax, cutting a single program or adding a single cent to the budget.

At almost $ 1 billion a month, Ontario s pends more on debt interest than it did on its entire welfare s ystem. Quebec’s i nterest payments swallowed double the a mount it spends on post- secondary education. All those Montreal street protests a year ago, by university students upset at a minor tuition hike, could have been avoided if the government wasn’t pouring money into servicing debt.

B. C.’s interest costs are double its childcare budget, Newfoundland spends more on interest than it does on elementary and secondary schools.

And remember — none of that money is going to reduce the principal. It’s just paying interest on past borrowings. The principal isn’t being reduced at all — it’s growing steadily. Ontario still spends almost $8 billion a year more than it brings in and has a mammoth infrastructure plan to finance. Prime Minister Justin Trudeau was elected on a promise to add $ 10 billion to the federal debt load every year for three years, but even his own finance minister doesn’t appear convinced he can stick to that figure. It’s more likely to be double the promised amount, unless some serious new tax, or sharp cut in spending, is put into place.

Trudeau portrays it as a necessity. As does Ontario Premier Kathleen Wynne, who is fond of saying the province can’t afford not to pursue her many projects, the same argument offered over the past decade, through good times and bad times, thick and thin. Is there ever a time Ontarians can afford not to borrow? Alberta’s NDP government maintains borrowing is such a necessity, it’s willing to use debt to cover operating expenses. Their views reflect the notion that Canadians consider their benefits a birthright, and budgets have to be crafted accordingly.

Borrowing is cheap at the moment, they say. We can afford it … barely … for a little while longer. God forbid interest rates should rise. Because birthrights have a way of disappearing when the lenders come around to collect.

THE INTEREST SPENT LAST YEAR ON PREVIOUS BORROWINGS IS ALMOST EQUAL TO THE ENTIRE COST OF PUBLIC EDUCATION IN CANADA.