Canada’s federal debt is more than $633 billion. By the time you’re finished reading this, Canada’s fast-growing debt will probably be thousands more.
Generation Screwed, a project started by the Canadians Taxpayers Federation to inform young Canadians about how debt impacts them, brought a giant “debt clock” to 13 campuses across Ontario and Quebec earlier this month.
The group brought the clock to Carleton on Sept. 12, and was even “thrown off” Laval Campus for “unsanctioned activism,” according to the Toronto Sun
Aaron Gunn, executive director of Generation Screwed, said the tour aimed to bring an awareness of debt to Canadian students.
“Students need to worry about it because it’s a long term issue,” Gunn said. “Nothing’s going to happen this year or next year, but eventually we’re going to be paying interest when we should be paying for something like education.”
Gunn said debt awareness is especially important because the Liberal government’s plans to run “modest deficits” in order to stimulate economic growth and create jobs. The $29-billion deficit predicted by finance minister Bill Morneau is three times larger than what Prime Minister Justin Trudeau’s election campaign promised.
Gunn said that in terms of spreading awareness across campuses, Generation Screwed accomplished its mission during the campus tour.
“The number one response we get is ‘Wow, I didn’t know the number was that big,’” he said.
However, Carleton economics professor Christopher Worswick said government debt isn’t a problem—so long as it can reasonably be paid back. He said that comparing debt to an economic measure like a country’s gross domestic product (GDP) provides a clearer picture of the country’s financial situation.
“If a country’s debt is 35 per cent of the GDP, then they could theoretically work for one third of the year and pay the debt,” Worswick said.
Canada’s net debt compared to GDP was around 45 per cent in April 2016, according to BMO Nesbitt Burns.
Worswick said the government needs to borrow money to invest, similar to a couple getting a mortgage on a new house.
“It’s not a good thing to run a deficit for the sake of it, but anything where there’s a long-term benefit, like building a hospital, I think it’s reasonable to borrow,” he said. “Does it make sense to wait until you’ve built up enough assets to buy? Not really.”
Gunn said that government spending is necessary, but he’s concerned with the current debt level.
“It’s important to cut out waste and make sure we’re spending that money wisely,” he said. “New spending shouldn’t be considered until the budget is balanced.”
Worswick said it’s a good idea to get students thinking about debt, both personal and within the government.
“It’s always a good idea for everyone to have a better idea of the fiscal situation we’re in, but we have to look at the benefits too,” he said.
