If there is one thing that is damaging Canada and its ability to do what is required in a time where increased protectionism, isolation and a return to “America First” is the clarion call across the United States, – it’s Canada’s gross debt to GDP level.
Canada has, under the Trudeau administration, allowed the debt ratio to increase, and dangerously to unprecedented levels. Today Canada’s gross debt to GDP ratio stands at 107 percent (April, 2024), higher than Germany or the United Kingdom. Canada needs to act, as Canada now demonstrates that we are in a state of ‘recession’ per capita.
Canadians like to compare net debt, but this clouds the issue for Canadians, and of course is a popular figure for the Liberal Federal Government to use as a measure, because it looks much better than it is. . In simple terms, Canada, is marginally better off than the U.S., with a massive gross debt of $35.46 Trillion. But Canada’s much smaller economy is certainly more vulnerable.
The national debt has increased, and increased dramatically, ever since the Liberals took power in Canada. In 2015-16, federal debt was $619.3 billion. Today that is expected to rise with new programming, funded through debt, to $1.4 trillion. A projected deficit of $40 billion that was forecast for 2024, has now ballooned to almost $62 billion dollars.
Canada has to either increase taxes appreciably or reduce spending, at a time when Canada needs to spend twice what it spent on defence in 2023. Continuing down this road is unsustainable, as is electing another Liberal government, unless it changes its policies and commits to those changes.
One option is for Canada to take control of its fossil fuel production sector. But doing so and reintroducing new legislation akin to the NEP, would be a radical shift for Canada, during a time of global financial and geopolitical instability. However, avoidance is not an option.
It’s time for a gut check. Canadians will have to accept cuts in services, and substantive ones, if Canada is to get its financial house in order. Gross debt to GDP is considered healthy at 40%, not 107%. And the world is becoming increasingly dangerous and hostile as America, under trump, decide to move to an isolationist position.
What the bottom line clearly indicates is that Canadian sovereignty is at risk of being tested, especially in the Arctic. And Canada’s commitment to spending 2% of GDP, is more than suspect as Canada will not even approach 2% by 2030.
Deep financial cuts in programs including social programs is required, while maintaining planned increases in Canada’s military procurement and military annual spending.
Without this, and with another government of either political persuasion unwilling to do what is necessary, and Canada’s future may be put more into question than at any time since WWII, — not to mention the safety and stability of Europe and the world as a whole.
Canada needs NATO, and NATO needs a strong Canadian military. Anything less is unacceptable.
On that merry note, Happy New Year Canada.
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