Tag Archives: big government

Our big government and its big debt

The Throne Speech yesterday stated the Canadian Federal Government will be getting serious about curbing its out-of-control spending habits. (That’s good. It’s about time!)

 

It is a fact that, today, we have the largest federal bureaucracy that we have ever had. And to maintain the bulging size of government and its programs, the government overspends at an alarming rate – the worst that it has ever spent. The federal government’s annual deficit spending is digging us deeper down into a hole that many of us will not live long enough to climb out of. Here are the numbers:  Canada’s federal debt is growing at a rate of $863 per second – $52,000 per minute – $3.1 million per hour.

 

Between 1997 and 2008 the federal government under the guidance of PM Jean Chretien and Finance Minister Paul Martin was running surplus budgets and paying down our debt. However, I find it unfathomable (as a fiscal conservative) that the Conservative Government of Stephen Harper has raised Canada’s federal debt from $457 billion in 2008 to over $600 billion. Since 2008, the Conservative government has borrowed $161 billion, bringing the federal government’s debt burden to $618 billion.

 

Recently released figures from the federal government reveal that the total debt outstanding in Canada at the end of June 2013 was $5.408 trillion. The numbers for last fiscal year tell us that, from July 1, 2012 to the end of June 2013, the total debt outstanding in Canada increased by $306 Billion. For that 365 day period the total debt outstanding in Canada increased at a rate of $838 Million per day.

 

Need we worry when we hear these facts? These bald numbers mean little to the average “I’m-living-paycheque-to-paycheque” Canadian. However, we should realize this: that the mounting figures signal a sorry fiscal state. The average Canadian couldn’t rack his credit cards this high! Yet, Canadians are now strapped with huge hangover costs of a Big Government that has spent for years (and decades previous) like a drunken sailor.

 

So, there is reason to be hopeful with what Stephen Harper shared with us in the Throne Speech. Just perhaps our chief economist PM and his much-celebrated Finance Minister have come to realize their spending spree must end.

More in the By George Journal on the ugly truths of Big Government  

10 quotes on government spending

  • “Government does not tax to get the money it needs; government always finds a need for the money it gets.” – Ronald Reagan
  • “The real goal should be reduced government spending, rather than balanced budgets achieved by ever-rising tax rates to cover ever-rising spending.” – Thomas Sowell
  • “Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.” – Ron Paul
  • “Government does not have a revenue problem; government has a spending problem… it is time that we begin to fine tune our focus and decide what the priority of government ought to be.” – Marsha Blackburn
  • “Increased government spending can provide a temporary stimulus to demand and output, but in the longer run higher levels of government spending crowd out private investment or required higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.” – Martin Feldstein
  • “Borrowing and spending is not the way to prosperity.” – Paul Ryan
  • “Economy does not lie in sparing money, but in spending it wisely.” – Thomas Huxley
  • “Lower taxes, less government spending on domestic programs and fewer regulations mean a better economy for everybody.” – Larry Elder
  • “Government is taking 40 percent of the GDP. And that’s at the state, local and federal level… Look, at some point, you cease being a free economy, and you become a government economy.” – Mitt Romney
  • “Deficits are a problem… the problem is not the size of the deficit, it’s the size of government’s claim on our economy.” – Ronald Reagan

 

Is it not time to demand accountability?

       Let’s review our nagging, on-going dialogue about big government and the call for accountability with our governments’ spending practices. Here’s an equation that Canadians should know well enough, especially after having just completed their income tax filing this week.  

 

Big Government* = Ever-Increasing Taxes

(* – synonymous with out-of-control-spending, mismanaged budgets and bulging bureaucracies)

 

       Many will claim this is nothing but a cynical and simplistic view of our Canadian governments. Perhaps so. It is certainly cynical for it smacks of irritation for what is transpiring here in Canada – and elsewhere in debt-ladened United States and Europe.

       It is a sad reality that today, because of our Big Government, Canadian families are spending more money on taxes than on food, clothing, and shelter combined.  The Fraser Institute reported earlier this week that in 2012, 42.7 per cent of an average family’s income went towards taxes (including all types of taxes imposed by federal, provincial, and local governments). Canadians spent less than that – 36.9 per cent – on food, clothing, and shelter combined. Read this for yourself: SAD.

       Today we brace ourselves for Ontario’s budget announcements. Really, what more can the McGuinty/Wynne Government throw at Ontarians? This sorry Government has a record that screams mismanagement: ORNGE scandal, eHealth Ontario boondoogle, a $585 million price tag to cancel a gas plant during the past election. Then there are the costs of the Liberal’s Green Energy Act that will smack Ontarians with energy hikes of 40–50% in the next few years. Under the Liberal era, Ontarians’ debt load has almost doubled to $250-billion – and in a few years, we will be suffering worst fates than Greece’s current financial mess. With this quagmire, what can we expect as far as Ontario taxes are concerned? The only relief we might be spared today is due to the fact an election is in the wind. So, the Liberals will settle for kicking the can a little further down the road…

       Our By George question to ponder: Why are Canadians so apathetic when it comes to demanding fiscal responsibility of their politicians and their governments?

       Our point is simply that there needs to be greater accountability. As Big Government gets bigger – accountability is becoming critical.  There would be few complaints in paying “our fair share” of taxes if Canadians were witness to responsible government spending and a fiscal accountability within both political and bureaucratic circles. What is agitating for many, though, is the knowledge that there are gross wastes in government spending and we only know a small fraction of the whole story.

       Today our national debt has climbed over $600 billion. Every day Canadians are paying more to service that debt. We live with growing, multiple levels of bureaucracies, over-governed and over-regulated. Our government has never been bigger – and it keeps getting bigger.  Is it not time to discuss government accountability and a fiscally responsible approach to digging out?  Is it not time to start questioning where our taxes are going and demanding answers from both our politicians and bureaucrats?

The Costs of our Big Governments

It has become annoying that our political leaders today take no notice of just how big and intrusive Government has become for Canadians. It is equally irritating that they do not recognize (and, in many instances, try to rationalize) just how much government costs its citizens.

 

Government has become too big, too costly. FACT: our Federal Government oversees the largest and most expensive federal bureaucracy Canada has ever known. What is most troubling is that the government has grown under a Conservative watch – and these “able fiscal managers” have done little to trim the rank and file, done little to curb government spending.

 

Another FACT: This past weekend, Ontarians were presented a new Liberal Premier whose answer to our Province’s ailments is to increase government activity. Kathleen Wynne is about to give us more of the same of Dalton McGuinty’s fiscal policies – the same policies that ballooned Ontario’s debt, sunk its credit rating and labeled the Province: “Have-Not”. Wynne is all about tax and spend; her agenda is greater dollars to health care and transportation projects, new universally delivered programs for both drugs and child care – and a balanced budget? Very Liberal-esque.

 

FACT: Increased government comes at a cost. Given our federal and provincial governments spend more than they tax, the governments are deferring the payments for today’s services and programs to future taxpayers: our children and grandchildren.  Simple question:  When will Canadians wake up to this fact?

 

As a splash of cold water to the face, By George Journal offers a few observations from Ronald Reagan’s January 1981 inauguration speech. Here’s a refreshing view on the role of government that should be heeded by our political leaders today. Reagan’s bons mots:

  • “…great as our tax burden is, it has not kept pace with public spending. For decades, we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present…. to continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.”
  • “You and I, as individuals, can, by borrowing beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?”
  • “We are a nation that has a government—not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted to it by the people. It is time to check and reverse the growth of government which shows no signs of having grown beyond the consent of the governed.”
  • “It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government.”

 

Here’s a final observation about the exorbitant costs of government today – and the fact that nobody has their eyes on the till when it comes to spending taxpayers’ dollars. This is but one tangible example of the unfathomable costs of government taken from our headlines this week (there are so many similar examples of government expense that go unreported and unnoticed). Think about what you could do with a million dollars.  $1,000,000.   Now, take a look at the latest from Ottawa:  It cost taxpayers exactly $1,061,448 to ship armour-plated limousines to India last year for Prime Minister Stephen Harper’s official visit, documents from the Department of National Defence have revealed. – National Post

 

More on Big Government

WARNING: What follows is another axe-grinding session regarding one of our greatest irritants: big government and our politicians’ inabilities to control spending and cut into the ever-growing, bloated bureaucracy. 

The last few weeks have brought into focus, once again, how our Canadian elected officials have learned little from the fiscal mismanagement of many of the countries in Europe, not to mention the economic mess south of our borders. Both the federal and Ontario budgets were inadequate responses to the serious financial challenges Canada faces. The federal Conservatives delivered a milquetoast approach to government spending and public sector cuts, rather than the definitively conservative response that was required. And, ignoring the siren calls of restraint, the Dalton McGuinty’s Liberals simply continued to dig Ontarians into a deeper, larger debt hole.

Here are some points of fact about the recent budgets that signal those storm clouds on our Canadian horizon have darkened and become ever-more ominous.

Federally:

  • The $5-billion cut from departmental budgets is, in reality, less than 2.0 per cent of program spending – not 12% reduction (in real spending per capita by fiscal 2017.) Finance Canada’s bean counters stayed up many nights to bake up this 12% figure – adjusting for inflation and population growth to 2012 and counting all previously announced savings.
  • The announced 12% (2%!) cut is applied to the all-time, single year spending record set by the Conservatives in 2010, when spending rose more than $37-billion in a single year. (One must hope the government can find cuts from these uncontrollable increases.)
  • Program spending under the successive Harper Governments has risen from $175 billion to $243 billion – a 40% increase in 6 years. Each year, the government has run a deficit and, today, the national debt is now more than $580 billion.
  • Andrew Coyne of the National Post points out:  “All that the Tories are proposing to do is to roll back some of the increased spending that they themselves introduced. The public service from which the Tories pledge to trim 19,000 employees is the same one to which they added more than 30,000.”
  • Barbara Yaffe of the Vancouver Sun writes of the bloat in Ottawa:  “Call it the civil service cycle. Ottawa has been growing and shrinking its workforce as though playing an accordion. And taxpayers should be furious.”
  • Yaffe’s research: The firing and hiring Ottawa-style is costing Canadians BIG TIME. Canadians today are paying cumulative severances since 1995 to a group equivalent in size to the population of Kamloops, BC – about 70,000. In the private sector, a laid-off worker might get two weeks severance pay for each year with the company. Ottawa is expected to offer almost six months’ pay after just one year of service, plus cash to go back to school.
  • Here are the numbers: Under Chretien, bureaucracy cuts from mid-1990’s to 2000 were 40,000 total. Then, in 2000, the Ottawa payroll went back up 19,000 in one year. In the decade following 2000, the core public service (excluding the RCMP and military) grew by 34 per cent. When military and RCMP personnel are included, growth in the overall public service was 25 per cent.  That compares to Canada’s population growth since 2000 of 13 per cent.

 

In Ontario:

  • With a deficit of nearly $16 billion this year, Finance Minister Dwight Duncan stuck with a Liberal fiscal plan to run deficits for another five years (until 2017/18). These deficits will increase Ontario’s debt to more than $315 billion from $238 billion today — this after the debt has already increased by over 70% since the McGuinty Government took office in 2003.
  • In this Liberal fiscal plan, remarkably, there is no planned cut overall government spending. To balance the budget by 2017/18, the McGuinty Government banks on revenue growth forecasts averaging 3.7% annually. On the spending side, Duncan proposes to hold program spending growth to an average rate of 0.7% (both projections totally unrealistic!).  Consider last year’s Ontario budget promised to hold program spending growth to 0.4% for 2011/12, yet spending has increased 2.5%. This same government increased program spending at nearly double the rate (6.3%) of economic growth from 2003/04 to 2011/12.
  • In some of the government’s big ticket areas, spending will increase significantly over the next three years: health care of 6.3%, in K-12 education of 5.2%, and in social services of 8.0%. (With these increases, holding overall spending to an average of 0.7% is out of the question.)
  • As a result of the budget, credit agencies have move quickly to criticize the Province’s fiscal plan. Moody’s downgraded the Province’s credit rating and Standard & Poor issued new warnings. These credit downgrades will affect Ontario’s cost of borrowing – which means more money to service our growing costs of government and our debt.
  • If there were a Ministry of Debt in the Province of Ontario, it would be the third largest ministry with a budget today of $10.6 billion – our interest payments on our debt. 
  • Christina Blizzard of Sun media sums up the criticism of McGuinty’s Liberal budget: “His party came out with an irresponsible, unsupportable budget that didn’t tackle the major causes of his overspending – full-day kindergarten, subsidies on hydro bills, tuition cuts, etc.  Economist Don Drummond provided McGuinty and Finance Minister Dwight Duncan with a road map to get us out of their mess. They threw the map out the window – and we’re heading over a cliff.”

MPs Should Note This Example From The Past

This week MPs return to Ottawa to debate the federal budget. One of the central arguments on Parliament Hill in the days and weeks to come will revolve around Canadian pension reform. We are told, by way of setting an example that MPs are looking at their own gold plated pensions and perks of the job.

For those MPs pre-occupied with reviewing their own pensions, the story of American Harry Truman’s approach to his Office and retirement is a stellar example from the past. It is to be expected that MPs will not follow this former U.S. President’s actions; yet, it is hoped they may emulate Truman’s principles of fairness and his rejection of assumed privilege (or as we have come to know it north of the border – “Dingwall’s entitlement”).

Here’s a tribute / a lament to a past era and a long-since-gone breed of politician:

     Harry Truman was a different kind of President. He probably made as many, or more important decisions regarding our nation’s history as any of the other 42 Presidents preceding him. However, a measure of his greatness may rest on what he did after he left the White House.

     The only asset he had when he died was the house he lived in, which was in Independence Missouri. His wife had inherited the house from her mother and father and other than their years in the White House, they lived their entire lives there.

     When he retired from office in 1952 his income was a U.S. Army pension reported to have been $13,507.72 a year. Congress, noting that he was paying for his stamps and personally licking them, granted him an ‘allowance’ and, later, a retroactive pension of $25,000 per year.

     After President Eisenhower was inaugurated, Harry and Bess drove home to Missouri by themselves. There was no Secret Service following them.

     When offered corporate positions at large salaries, he declined, stating, “You don’t want me. You want the office of the President, and that doesn’t belong to me. It belongs to the American people and it’s not for sale.”

     Even later, on May 6, 1971, when Congress was preparing to award him the Medal of Honor on his 87th birthday, he refused to accept it, writing, “I don’t consider that I have done anything which should be the reason for any award, Congressional or otherwise.”

     As president he paid for all of his own travel expenses and food.

     Good old Harry Truman was correct when he observed, “My choices in life were either to be a piano player in a whore house or a politician. And to tell the truth, there’s hardly any difference!”

Our politicians’ rhetoric of restraint – let’s hope they mean it

This week ‘Big Government’ was back in the news with various Canadian political leaders suggesting it’s time for restraint.  (ed. – They now are considering what to do with the barn door long after the horse has galloped out of sight.)  

Sun News has responded to these new cautionary messages from the PM and some Premiers like Dalton McGuinty with heightened skepticism and a dose of deserved ridicule.

But, before we get to the news, let’s refresh our memories on how deep our hole is.  Our national debt clock is clicking over at an incredible pace:  http://www.debtclock.ca

Brian Lilly of Sun TV takes the Federal Government to task in his Lilley’s Pad blog:  Cut gov’t spending now and cut deep – First cut must be deep  He comments:

     The Harper government spends too much money and has spent too much since it came to power. This needs to stop….  With a federal debt of more than $577 billion, getting control of government spending is imperative. If the cutting is going to be serious, it will mean cutting full government agencies, boards and corporations.

Christina Blizzard pulls no punches in her dislike of McGuinty’s newfound restraint messaging. In her Toronto Sun column,  Hang your head in shame, McGuinty she writes:

     Having the Liberal government preach restraint and the need to find new ways of doing things is a bit like the guy who kills his parents then wants sympathy because he’s an orphan.

     When it comes to fiscal mismanagement, Premier Dalton McGuinty’s wounds are all self-inflicted.  He and Finance Minister Dwight Duncan have recklessly dug this province into a massive black hole of irresponsible over-spending.

***   ***   *** 

Q – So, why should Canadians be concerned about how big our governments have become? 

A – Because we are paying dearly for it now – and will be for years to come.

Consider federal government pensions for our bulging civil service.  The federal public-sector pension plan has about 561,000 members (317,000 active workers, 180,000 retired employees and almost 60,000 survivors).  Federal civil servants currently contribute 35% of pension service costs, with the government (as the employer) contributing 65%.  A recent report released by the C.D. Howe Institute said federal public-sector pension plans are $227-billion in deficit and, if left untended, Canadian taxpayers will be on the hook to bail out rich civil-servant plans.

Again, it’s all surreal as Canadians begin this discussion while countries like Greece implode under the weight of their civil service.

The Canadian public sector is unsustainable – a train wreck ready to happen – as we’ve pointed out in past posts:

(For a complete listing of our posts on the thread of Big Government, you can read dozens of articles – tagged ‘big_government.’)

Developing through 2012…

Welcome to Canuckistan

You’ve heard our lament before: Big Government just keeps getting bigger.

In Canada, this reality has transferred our once-enterprising country into a state centered economy, where a growing number of Canadians are on the public-dole and/or receiving government cheques of one kind or another.  What’s troubling is there are no siren cries that our growing public sector and the costs of big government come at a price.

The Ontario economy is bulging with no signs of restraint. The federal government (under a Conservative Government!?) is the largest it has ever been – costing Canadians more than it has ever had to pay. We’ve become working zombies with no enterprise, content to redistribute our wealth from one public-sector workers’ paycheque to another. Doesn’t this sound similar to one of those satellite States in the former U.S.S.R.? Why yes! Welcome to Canuckistan!

Here are some facts from recent news articles to put Canuckistan into perspective:

  • Federal spending jumped 22 per cent in the first five years the Harper Conservatives were in power. Federal expenditures in 2010-11 totalled $270.5 billion, compared with $222.2 billion in 2006-07. Unbelieveable!
  • In its June budget, the Conservatives projected an increase in the federal debt to $610-billion by 2015-16 from $533-billion in 2010-11, an increase of $57-billion in five years. Now, just months later, the debt is expected to reach $641-billion by 2015-16. 
  • Total provincial debt is already expected to reach $487-billion this year. Add this to the federal debt that’s currently at $586-billion and Canadians are leaving over a trillion dollars ($111,000 per Canadian family) in debt for the next generation to pay. With the federal government and nearly all provinces expecting deficits into the foreseeable future, the total level of debt will increase significantly.
  • All provinces (save Saskatchewan) expect to run deficits over the next several years. Provinces such as British Columbia and Manitoba currently have the smallest deficits among the provinces (0.4% and 0.6% of GDP). At the other end of the spectrum is Ontario, with a $16.3-billion deficit (2.6 % of provincial GDP), a number so large it makes up more than 64% of the total deficits recorded by all the provinces in 2011-12, even though the province represents only 38% of total Canadian GDP.
  • Ontario Government’s debt is $16 million this year; McGuinty’s government has raised the provincial debt by more than $100-billion since 2003 without once curbing spending. Total debt is heading toward $300-billion. Unsustainable!
  • Measured on a comparable basis using OECD numbers, Ontario’s net debt-to-GDP ratio — debt as a percentage of annual economic production — will hit 40% within a few years to place Ontario on par with Spain.
  • One-in-five Canadians (20.2%) now work for one level of government or another, for a Crown corporation or for a publicly funded institution such as a school or hospital. In real numbers, there are more than 3.6 million public sector employees out of a total of about 18 million working Canadians.
  • About 86% of families and 79% of persons not living in families received some form of government transfer in 2009. The total amount transferred to all Canadians increased 10% in 2009.
  • People in the bottom two quintiles of income in Canada (the people in the bottom 20% and the next-lowest 20%) — so 40% of the population — receive nearly 60% of their income from government of one form or another.

Want to read more on this? We suggest Lorne Gunter’s column, We’re all addicted to big government in the National Posthttp://fullcomment.nationalpost.com/2011/11/28/lorne-gunter-were-all-addicted-to-big-government/

It’s the math, stupid

We received this e-mail yesterday – leaving us muttering aloud if this is actually the case…  

Can you imagine running the country with these numbers?

United States Tax revenue: $2,170,000,000,000

Fed budget: $3,820,000,000,000

New debt: $ 1,650,000,000,000

National debt: $14,271,000,000,000

Recent budget cut: $ 38,500,000,000

Now, remove 8 zeros and pretend it’s a household budget.

Annual family income: $21,700

Money the family spent: $38,200

New debt on the credit card: $16,500

Outstanding balance on credit card: $142,710

Total budget cuts: $385

Sorta brings the issue “home” doesn’t it?

(ed. – Thanks to Pat George for this eye-opener, especially given the daily international headlines.)  

Ontario: The Unbridled Big Government

Expect in the months to come to witness our big Ontario Government become BIGGER.  We only need look at a few developments this week to see that we will be getting the government we deserve, having just given Dalton McGuinty the free reins to tax and spend.  

So, now, here’s what we can expect through the next four years. Our public sector will continue to grow; public sector spending will increase. Our Ontario debt will increase.

Our Ballooning Ontario Debt  

Canada’s liberal-leaning national magazine Maclean’s conveniently waited until after the Ontario election to reveal their damning expose of the Liberals’ fiscal policy:

Why Ontario is poised to become Canada’s Greece

Under McGuinty’s watch, Ontario’s debt has almost doubled to $230 billion

http://www2.macleans.ca/2011/10/17/why-ontario-is-poised-to-become-canada%E2%80%99s-greece/

Here’s an excerpt from this piece:

     Traditionally known as the engine that drives Canada, Ontario is in danger of becoming the Greece of Confederation—if Greece happened to account for more than a third of Europe’s economy.  Under McGuinty’s watch, Ontario’s debt has almost doubled to $230 billion, due to massive stimulus spending as well as unrestrained growth in health care and education. And it will continue to rise despite announced plans for greater austerity. By the time a balanced budget is contemplated in 2017, the province will have added an additional $67 billion in new debt. On a per capita basis, the current provincial deficit is almost twice as large as that of its next nearest wastrel, New Brunswick….

Our Ontario Energy Prices to Rise

We will also come to realize the hurt from high energy costs as a result of the Liberals’ energy policies. Brace yourself – from Monday’s paper:

     … average consumer using 800 kwh a month would pay $2.11 more for the electricity alone. On the overall electricity bill, which includes other charges including transmission, the increase is 1.8%, the OEB said.  But energy analyst Tom Adams pointed out via Twitter, if just the cost of electricity is looked at, the increase is 4.3%….

     The reason for the cost jump is more expensive power coming online in the next year, including refurbished nuclear units at the Bruce Generating Station and increased wind generation.  Under the government’s Green Energy Act, wind and solar generation, along with other forms of renewable power, are subsidized.  The Ontario Power Authority will pay up to 13 cents a kwh for wind power, far more than the cost of power from hydroelectric plants or coal-burning plants.  (SOURCE:  http://www.torontosun.com/2011/10/17/ontario-hydro-rates-going-up )

So, we might as well just throw our wallets into the pile… there’s going to be four more years of Big Government in McGuinty’s Ontario.

Ontario Liberals’ run-away train wreck

The Ontario Liberals have proven themselves neither managers of the Province’s economic engine nor of our public purse. Their big government ways have placed Ontarians and future taxpayers and businessmen in a difficult position.

The accumulated effect of the Liberal’s big government ways over the past eight years have cost us dearly. Already, their economic policies have seen the Province gone from “have” to “have-not” status.  Liberals’ focus on nanny-state priorities have left Ontarians initiative to drift. The once humming economic engine of Canada has become a sputtering, choked-off remnant of itself.

Each second of Liberal economic management costs us $685. It’s criminal that the Liberals have amassed a provincial debt that now totals over $224 billion. This works out to over $18,000 per person. It is a fact that in their two terms in office, the Liberals have accumulated more debt than all previous governments combined!

How have the Liberals accumulated this debt in less than eight years?  It is Dalton McGuinty’s systematic, underhanded approach to the management of public sector – an approach that can only be summed up in the phrase “labour peace at any cost.”  Toronto Sun political reporter Christina Blizzard recently accounted for the Liberal’s record in a column entitled: Ontario has a debt crisis.

     They’ve increased spending on government programs by more than 70% and doubled the province’s accumulated debt.

     Public sector salaries are out of control. With those salaries comes the ticking time bomb of cushy, defined benefit pensions.

     Despite a stern finger-wagging from Finance Minister Dwight Duncan and a pledge to freeze civil servant salaries in the 2010 budget, only a handful of government workers actually had their pay frozen. Ontario provincial police, got an 8.5% pay hike — a deal that has municipalities across the province up in arms, as they know it sets a precedent for their forces. The government negotiated a secret deal with OPSEU that gave them 1.75% in 2009, 2% in 2010, 2% this year — and 3% next year. The big teacher unions weren’t included in the pay hike. Their contracts, conveniently, aren’t up until next year. Same with the province’s doctors.

     You only have to look at the annual so-called “Sunshine List,” of people making more than $100,000 on the public dime to see how salaries have soared. When the Liberals took office eight years ago, 20,249 people were on that list. The latest list of 2010 salaries show that number has more than tripled — with 71,478 people on the list.

Read Blizzard’s full column here:  http://www.torontosun.com/2011/09/17/ontario-has-a-debt-crisis

Dalton McGuinty is steering a run-away-train wreck of his own making. Here is hoping that next week Ontarians chose to jump the track on this disastrous course.

Yes, I have an axe to grind!

I believe our government – all levels of government –

has got too big, is growing too fast,

and with no thought as to the costs to Canadians.

So, as a frustrated taxpayer, who is a libertarian-at-heart, I have posted a half dozen snippets of what is wrong with our Big Government (not that I have specific answers to the conundrum other than to CUT).  For the more than 30 posts on “Big Government” in the By George Journal, surf through this menu:

https://www.bygeorgejournal.ca/?tag=big-government

 

Trudeau-era government spending – Today!

 

Canadian Taxpayers Federation’s magazine, The Taxpayer, came in the mail today and I read it with some trepidation. I never know whether to laugh or cry when reading their feature stories. In this issue, CTF Federal Director Kevin Gaudet’s article on federal government spending confirmed my worst fears about “the run-away-train-wreck” we call Ottawa.

 

Here are the Federal Government’s spending facts:

  • Canada’s federal debt increased by $152 million per day in 2009-10 and continues to increase by $124 million per day in 2010-11.
  • The $105.2 billion in debt paid down between 1997-98 and 2007-08 (by Chretien and Martin) will have been added back in 2011 (by Harper and Flaherty).
  • Program spending has increased by 40% during the four fiscal years between 2006-07 and 2009-10 (Harper’s Conservatives). This is an increase of $70 billion.
  • The last 40% four-year program spending increase was between 1972-73 and 1975-76 (Trudeau’s Liberals).

Can you believe this horrible re-run of “Back to the Future” – when you have a Conservative “fiscally prudent” Government spending like Trudeau’s deficit-financing administration of the mid-seventies?

 

The out of control spending in Ottawa has to stop. We can only hope for some signs of sanity and sobriety in the up-coming federal budget. Yet, with this government’s track record on spending and public sector growth, is there any hope?

 

A story of Haves (Public Sector Worker) and Have-Nots (Public)

    

The Canadian Taxpayers Federation reports the federal public sector pension plan has created a situation where Joe Canuck would need to save $14,180 per year in his nest egg – every year for 35 years – to match that of a senior federal government bureaucrat pension.

 

Here’s the math using the example of an employee who starts working for the federal government at age 25, with an average salary for pension calculations of $100,000. Note that retired employees are paid a guarantee pension of 70% of the average of their highest five consecutive years of paid service – a pension that is fully indexed to cost of living adjustments. (Also note that earning $100,000 puts more than 42,000 federal bureaucrats in the top 2% of income earners in Canada.)

 

So, here’s that ugly math:

  • Our federal government employee will retire at 60 with a pension starting at $70,000 per year, indexed for life. At age 81 (average life expectancy) he would be paid $135,099 that year and, over the period of retirement, he would be paid almost $2.4 million.
  • Joe Canuck retiring on savings would require $1,014,200 in the bank at retirement, and a 5% annual return to receive $70,000 per year – with no indexed growth. To gain this retirement nest egg, Joe Canuck would have had to save $11,194 per year, every year for 35 years.
  • To have enough to match the indexed figures of our federal public employee, Joe Canuck would have had to save a little more than $1.2 million through his working years. This nest egg would require one to save $14,180 per year, every year for 35 years – and hope to earn 5% every year in compounded interest (and not suffer any market correction!).

When you combine this pension information with the increasing wage gap between higher-paid public sector workers and similarly employed private sector workers (see Canadian Bureaucracy is “Out of Control” @ https://www.bygeorgejournal.ca/?p=1675 ), the picture becomes very clear that we are supporting a privileged class of bureaucrats!

    

Having just come through our RRSP season, I ask you, Joe Canuck, were you able to sock away $14,180 this year? How much to you plan on putting into savings over the next decade? Perhaps $142,000? If not, don’t sweat it; you’re keeping good company with the many Have-Nots outside of Ottawa.

 

Our big, fat bureaucracy (Libin tells it like it is)

     

There was a wonderful opinion piece by Kevin Libin in this Saturday’s National Post about the bulging Canadian bureaucracy and what it means for our country.

 

     The Wall Street Journal’s Dan Henninger recently put out an intriguing theory to explain why Egypt was such an economic basket case — with unemployment and food inflation fuelling in large part the political instability there — while Turkey, another profoundly Islamic country, has seen its economy flourish. Look at the size of the public sector, he says: in Egypt, the percentage of people working for the government is 35%; in Turkey, it’s 13%. There is, he points out, “a striking correlation between economic success in emerging economies and relatively low populations of public employees, notably in Asia.” The strong performers of Korea, India, Malaysia, Taiwan, Thailand and China have small public sectors relative to their population, while moribund economies breed university grads for the state bureaucracies that provide some measure of job security, buying regimes some stability. “Past some tipping point of a population employed by the state, an economy starts to choke,” Henninger writes. With more than 20% of Canadians now working in our public sector, and rising, it’s worth asking where, exactly, our own tipping point is.

     This week, Statistics Canada released new numbers of public sector growth that showed that beginning in mid-2005, right before the Conservatives were elected, the growth in public sector jobs outpaced the growth of Canada’s population, after four years of lagging below the general population growth rate. And starting in 2008, that rate really began to soar, and it hasn’t stopped since. One of the biggest culprits in the last two years has undoubtedly been the Conservatives’ stimulus plan, notes Jack Mintz, the economist and chair of the University of Calgary’s School of Public Policy.

 

Those Stats Can numbers can be found here:

http://www.statcan.gc.ca/daily-quotidien/110222/dq110222b-eng.htm

 

Read Kevin Libin’s column in full here:

http://www.nationalpost.com/opinion/columnists/bureaucracy/4351326/story.html

 

 

Canadian Bureaucracy is “Out Of Control”

  

Ben Eisen of the Frontier Centre of Public Policy reported on public administration wage growth over the past decade – comparing remuneration for bureaucrats with that received by private sector employees doing comparable jobs.

 

The numbers came from Statistics Canada data and they showed:

  • Across the economy, wages grew by 30 per cent. Wages for Ottawa bureaucrats increased twice as fast.
  • The wage gap between typical private sector workers and federal bureaucrats increased 250 per cent, from just under $10,000 in 1998 to $25,000 in 2009.
  • If you look at the question in terms of potential money saved had the wages of bureaucrats increased at the same rate as the productive economy, in 2009, taxpayers would have saved $1.6 billion.

The Calgary Herald reported on this comparative report:

   Over the past decade, the average number of days bureaucrats take off each year has increased by 40 per cent. Compared to private sector workers, bureaucrats fall ill nearly twice as often. “Uncertified” sick leave, that is, absence without a doctor’s note, has increased 74 per cent. A Carleton University professor explained this was because of stress, demoralization and hard work. Laziness was not mentioned.

   One explanation, advanced by the head of the bureaucrats’ union, John Gordon, was that “the workload increases every day.” Perhaps the economic value of the skills and experience of these people are worth it.

   Eisen suggested another explanation. Public sector unions are able to extract what economists euphemistically call “rents” (and the rest of us call extortion) because the public sector strikes are a big problem for governments. So they buy labour peace with taxpayers’ money.

 

Read more of the Herald’s article here (editor’s warning: some of the contents are graphic and could cause vomiting):

http://www.calgaryherald.com/news/Cooper+Byzantine+bureaucracy+leads+down+road+ruin/4330154/story.html

 

 

The ugly #’s behind our Big (Ontario) Government

   

Columnist Christina Blizzard calls a Big Government as she sees it. Here’s what she writes about Ontario’s McGuinty Government:

 

     The bald figures are these:

     1.Your electricity bill will climb 46% over the next five years.

     2.The government will give you a 10% rebate on the total bill — including the tax.

     3. In 2002-03, the year before the Liberals took power, total revenues to the province were $74.6 billion.

     4. That figure for the 2010/11 fiscal year is $107.6 billion. That additional $33 billion, one way or another, has come out of your pocket and mine.

     5. Total expenses in 2002/03 were $74.5 billion.

     6. Total expenses in 2010/11 are projected to be $125.6 billion — a $51.1-billion increase.

     The more the Liberals take money out of our pockets, the more they spend — and the more we go in debt.  This is irresponsible, verging on the reckless — and it has to stop.

 

To understand exactly what a Big Government approach will do to an economy, read “Spanky Math spanks Ontario: Thursday’s economic update features a head-spinning amount of bad news plugged in the numbers” – Christina Blizzard in the Toronto Sun:

http://www.torontosun.com/comment/columnists/christina_blizzard/2010/11/18/16210876.html

 

Big Government and the ballot

  

In the wake of decisive, anti-establishment mayoralty victories in Toronto and Calgary, there has been a great deal of commentary about the average Canadian’s disenchantment with the political status quo. With the common cry of “greater respect for the taxpayer” winning the day, it seems our collective conscious is saying “we’re mad as hell and we’re not going to take it anymore.”

 

Well, at least, I’d like to believe that the voter anger and backlash is directly tied to the fight to bring-to-heel our Big Government. Consider that today our federal debt is approaching $550 Billion, which means that every man, woman and child in Canada owes more than $16,000.  Look at the way our debt clock clicks over:

http://www.debtclock.ca/

 

It’s truly disconcerting that the federal two-year budget deficit will exceed $100 billion and that it will take five years to balance Ottawa’s books. As was recently reported by our federal Finance Minister, the federal budget deficit for the 2009-10 fiscal year hit a record $55.6 billion, up from $53.8 billion forecast in the March budget. The deficit for the current 2010-11 fiscal year is forecast at $45.4 billion, which combined with last year equals a two-year deficit of more than $100 billion. [Source:  http://www.thestar.com/article/874011–budget-deficit-55-6-billion-flaherty ]

 

To help draw these parallel thoughts together, I recommend reading a thoughtful Ottawa Citizen editorial from this past weekend by John Robson, entitled : Shaking up the elites.  Robson states:

     As J. Budziszewski noted about patterns behind the apparent random madness of public affairs, people “are more logical than they know; they are only logical slowly.” They are slowly but inexorably realizing that the methods and ideas of the past half century have definitively failed. If the political elites don’t adjust, unbelievable things will continue to happen because only fringe candidates will speak important truths: We cannot make the state bigger, more expensive or more intrusive; it has exhausted its managerial capacity at the size it now is and runaway public spending is threatening not only the economy but the very social programs making the spending run away.
[Read the editorial here: http://www.ottawacitizen.com/columnists/Shaking+elites/3743987/story.html#ixzz1424O7vlP ]

 

Given we now live with the largest federal government EVER and the largest, most expensive public service EVER, is it any wonder we’ve begun to hear the exasperated cry of “Enough is enough.”  Have you stopped to figure out the payroll for the federal, provincial, and municipal public servants – everyone from your elected representative and all those staff who serve them through to the rising numbers of generously paid teachers, police, firefighters, etc.??  From political staffers overheating their blackberries in the rush to save their bosses’ behinds, to economic development officers planning new rounds of navel-gazing consultations on how public money might re-charge our economy, the obvious question is:

 

Is there a stop-button on this abuse of public money?

 

Perhaps not.

 

But there is always the ballot.

 

 

Sirens’ cries on the cost of Big Government

   

Today’s Globe and Mail column from Jeffrey Simpson is yet another siren cry about big government and the frightening costs that will need to be paid.

 

Read The fiscal drag in Ontario is bad – why won’t our politicians say so? found at

http://www.theglobeandmail.com/news/opinions/the-fiscal-drag-in-ontario-is-bad-why-wont-our-politicians-say-so/article1717028/

 

In the wake of the Ontario Government’s recent announcements of how it intends on balancing the books, Simpson ponders:

     An unsettling postrecession disconnect has settled over Ontario politics. It’s the same kind of disconnect that can be seen elsewhere in Canada.

     The disconnect lies between the doleful fiscal situation of Canada’s largest province and the apparent unwillingness of Premier Dalton McGuinty, or any of the province’s politicians for that matter, to talk seriously about that situation….

     Never, ever believe fiscal predictions seven fiscal years from now. They are jokes at best, deceptions at worst. When Mr. McGuinty’s government predicts a balanced budget in 2017-2018, it is literally fooling itself and the voters.

 

Simpson concluded his column by stating an obvious:

     It’s easy to blame politicians for not dealing straight up with issues as painful as a government that spends too much and taxes too little, since the antidotes to these deep fiscal problems are: higher taxes and/or lowered spending.

     Apparently, it’s we the voters who don’t want to hear that kind of straight talk. So politicians don’t give it to us. They fear us.

     As governments emerge from the deficit pits into which they all fell during the recession, their fear of our unwillingness to hear straight talk will lead to more of the disconnects…

 

This problem is also being wrestled politically at the federal level, as Tasha Kheiriddin so adroitly points out in her article It’s the economy, stupid (again) found here:

http://fullcomment.nationalpost.com/2010/10/21/tasha-kheiriddin-its-the-economy-stupid-again/

 

Kheiriddin writes:

     Faced with a larger-than-expected deficit this fall, ending stimulus next year will not be enough to get the economy on track.   Will Mr. Harper’s 2011 budget call on Canadians to “pitch in” and help with recovery by supporting spending cuts?  Instead of cutting spending for legitimate reasons (ie, our government was too big to begin with), cuts would then be made under the auspices of “economic recovery”.  Trimming back the state is a good idea, but would be done for the wrong reasons – because the government overspent in the first place.

     Electorally, this does not bode well for the Conservatives.  Having made the economy their flagship issue, their fortunes will be tied to the country’s economic performance.  While the Liberals aren’t offering anything dramatically different, apart from axing planned corporate tax cuts, it is the government, not the opposition, which will have to wear whatever economic situation presents itself at election time.  Between worrisome noises down south and warnings from the Bank of Canada up here, the Tories have reason to be nervous.

 

It comes down to when Canadians will have the stomach to talk about this mess caused by Big Government and not allow our politicians to conveniently side-step the issue.