MP Shields wary of ‘deadly’ debt
Local Journalism Initiative Reporter
“You can only go so far into debt before there’s a tipping point,” said Martin Shields, MP for Bow River. That was his response a week after the federal government released its fall economic statement. The economic statement itself drew a range of reactions – from mild praise to harsh criticism, depending on who was doing the reacting.
MP Shields spoke with a touch of exasperation when asked about his take on the economic update, but his response seemed to also reflect a genuine concern for the financial predicaments people in his riding are finding themselves in.
First off, he addressed the burden of debt.
“In this fall economic statement, they had promised they were going to not spend as much money, but they doubled the amount of money that we’re going to go into debt,” he said. “The interest on the debt that we’re paying now is more than the money that’s transferred to the provinces for healthcare. The interest is getting to be deadly. In a sense, it’s limiting what you can spend money on when you’re spending that much on just the interest alone.”
Shields thinks that the fall economic statement “really did not get where they said they were going to go.” He said that although the federal government said they were going to limit their spending, instead they increased the amount of debt they were going to incur. “So right off the top, it’s problematic for me. It’s not providing any more of what people need.”
“The numbers are astounding, how many people are going to the food banks. It’s just brutal. So when a government spends more money, the interest rates go up. The Bank of Canada said deficit spending increases inflation rate. So, mortgage rates are going up.” Anecdotally, he said he met a couple who both have good jobs but their mortgage is going up by $2500 and they’re now looking for second jobs.
“The other side of that is the housing that they talked about in their economic update,” he said, audibly groaning. “In rural Alberta, we are in such a tight (spot).” He noted that Taber has an area that it developed for affordable housing, but what they found is that people are having a tough time qualifying for the mortgages. “As I talked to the mayor the other day, they’ve got 15 new businesses looking to open. Where are they going to live? Who’s going to afford the mortgages?”
“This fall economic update doesn’t resolve what people are facing,” he said, citing the cost of living, the inflation rate of mortgages, and families being priced out of staying in their homes. “Where they’re spending their money I don’t think is resolving those issues.”
The 2023 fall economic statement is an eyeful – page upon page of charts, tables, and explanations, and it’s there on the Government of Canada’s website for all to see. The projections on economic and fiscal developments contain an alternative economic scenarios analysis that forecasts two outcomes.
It reads, “In the upside scenario, the budgetary balance would improve by an average of approximately $5.2 billion per year, and the federal debt-to-GDP ratio would fall to 41.6 per cent in 2024-25 from 42.0 per cent in 2023-24, and be 1.0 percentage point lower than the 2023 Fall Economic Statement outlook in 2028-29.”
“In the downside scenario, the budgetary balance would deteriorate by an average of approximately $8.5 billion per year and add 1.7 percentage points to the federal debtto-GDP ratio by 2028-29. That said, even under the downside scenario, the deficit would remain below 1 per cent of GDP by the end of the forecast horizon, and the federal debt-to-GDP ratio would still be lower in 2028-29 than it is today.”