$13.2 billion surplus

[August1991]

The federal government racked up a $13.2-billion surplus for last fiscal year and the Stephen Harper administration will apply all of it towards the national debt, The Globe and Mail has learned.

This is one of the largest,single debt repayments in Canadian history. It will help bring Canada's debt down to $481.5-billion.

Canada's federal debt has shrunk by $81.4-billion over the past decade, down from a peak of $562.9-billion in 1996-1997. The national debt as a percentage of the country's economic output is now at its lowest level in 24 years.

G & M

I would have cut taxes but I'm happy that the Tories are not spending the money.

In polls, Canadians say that they don't like the GST and they don't like government debt. Canadians are wrong on both counts but who am I to argue? I don't care if the Tories foolishly cut the GST and foolishly pay down the debt if these policies mean the Tories are popular.

Canada's public debt is not important. It is far more important to rein in government spending and the Tories seem to be doing that.

[M.Dancer]

Sounds like they have Paul Martin as their finance minister......

[August1991]

Sounds like they have Paul Martin as their finance minister......

The surplus is due to the remarkable growth in North America over the past 14 years or so whci in turn is due to the computer revolution and the independent policies of the Fed since 1979.

I'll give Paul Martin credit for limiting government spending in Chretien's first mandate. PM PM wanted to blow the surplus on an NDP shopping list.

By cutting taxes, Harper would have made a future surplus (and a future shopping list) less likely.

[geoffrey]

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

I, or any other taxpayer, never gave the government the mandate to collect excess monies and then spend them at whim. That's our money, let's have it back. Government's collect money to spend on critical programs in the national interest, not for the sake of collecting money.

[Wilber]

By cutting taxes, Harper would have made a future surplus (and a future shopping list) less likely.

On the other hand, reducing debt will make a future surplus more likely.

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

Not if it is used to pay off debt. Once that is done, I would agree with you.

[geoffrey]

By cutting taxes, Harper would have made a future surplus (and a future shopping list) less likely.

On the other hand, reducing debt will make a future surplus more likely.

Surpluses are as negative to the economy as deficits.

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

Not if it is used to pay off debt. Once that is done, I would agree with you.

Why, is the government saving for retirement? Tell us how much the government is going to spend on debt reduction, it's merely another expenditure in the big scheme of things. Spend that amount, and the excess taxation needs to be returned to the taxpayers. I think there should be a place on your tax form, donate your cheque to paying down the debt if you wish, I personally don't care.

[M.Dancer]

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

I, or any other taxpayer, never gave the government the mandate to collect excess monies and then spend them at whim. That's our money, let's have it back. Government's collect money to spend on critical programs in the national interest, not for the sake of collecting money.

You seem to be preuming that all revenues collected came from personal income tax.....perhaps it ain't your money and it came from some multinational corporation, will you suggest that Monsanto get a tax break proportional to what the blood sucking firm paid?

if so, kiss any hopes of a tax rebate goodbye

[August1991]

By cutting taxes, Harper would have made a future surplus (and a future shopping list) less likely.

On the other hand, reducing debt will make a future surplus more likely.

I was thinking that there will likely be another surplus next year but if Bob Rae is PM, he'll be tempted to spend it. Now, if Harper had cut taxes (rather than than pay down the debt), there'd be no surplus next year and Rae would have had more troubling with his shopping list.

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

Not if it is used to pay off debt. Once that is done, I would agree with you.

Wilber, it may be a good idea for some people to be debt free. But don't take that idea and apply it to the government.

If you care, I have made the argument here.

[geoffrey]

By cutting taxes, Harper would have made a future surplus (and a future shopping list) less likely.

On the other hand, reducing debt will make a future surplus more likely.

I was thinking that there will likely be another surplus next year but if Bob Rae is PM, he'll be tempted to spend it. Now, if Harper had cut taxes (rather than than pay down the debt), there'd be no surplus next year and Rae would have had more troubling with his shopping list.

Very good point, look long term and cut taxes to prevent the likely future spend happy PM (Ignatieff and Rae) from spending more money. Rae couldn't possibly expect to go to the public and raise taxes?

$13 billion is $13 billion too much collected. Give it back in rebate cheques proportion to personal incomes taxes paid in.

Not if it is used to pay off debt. Once that is done, I would agree with you.

Wilber, it may be a good idea for some people to be debt free. But don't take that idea and apply it to the government.

If you care, I have made the argument here.

August is right. Paying off the debt isn't neccessarily bad in my opinion, but it shouldn't be priority one. It pays more to give that money wasted to private individuals to invest into the economy directly.

[Wilber]

August is right. Paying off the debt isn't neccessarily bad in my opinion, but it shouldn't be priority one. It pays more to give that money wasted to private individuals to invest into the economy directly.

It is as much a moral issue as anything with me. Not paying off debt is handing future generations liability for money you have spent. Not trying to address that in your lifetime is immoral in my opinion.

[geoffrey]

August is right. Paying off the debt isn't neccessarily bad in my opinion, but it shouldn't be priority one. It pays more to give that money wasted to private individuals to invest into the economy directly.

It is as much a moral issue as anything with me. Not paying off debt is handing future generations liability for money you have spent. Not trying to address that in your lifetime is immoral in my opinion.

I'm a youngin, I'll be paying for that debt for a long time yet. I still have no problem with it.

It seems it's more a guilt from older generations about their excess spending than a guilt about the debt. Spending is the enemy, not the debt.

[Charles Anthony]

Wilber, it may be a good idea for some people to be debt free. But don't take that idea and apply it to the government.

If you care, I have made the argument here.

The argument is lacking in regards to the effect of government borrowing on:

- the ability to continuously borrow again in the future

- the value of the domestic currency

The argument makes does not address limits to borrowing. Are we to believe that all fiat-currency issuing governments can borrow without limits????

It is as much a moral issue as anything with me. Not paying off debt is handing future generations liability for money you have spent. Not trying to address that in your lifetime is immoral in my opinion.

I agree.

[Wilber]

I'm a youngin, I'll be paying for that debt for a long time yet. I still have no problem with it.

It seems it's more a guilt from older generations about their excess spending than a guilt about the debt. Spending is the enemy, not the debt.

Debt comes from spending money you don't have. Isn't that the definition of excess spending?

[watching&waiting]

This 13 billion when applied to the debt not only shrinks the debt by that amount but it also save the amount of interest that would have incurred. If we still keep paying down the debt like this we can and will be able to be debt free in a couple decades. While Canada is doing will now, we do not know what is around the coener. Remember the liberals said there was no way that harper could pay for his election promises and not raise taxes? Well they were wrong once again now weren't they. Even after all the military spending and the GST cuts we have seen another huge surplus. He may well cut some taxes in his next budget, and with his government doing as well as this during a minority situation, I would say that people will soon look and see that they are willing to give him a majority situation in the next election. Who ever the libs pick as a leader will even more so now need a united paln and as we all can see that the libs are fragmented and no one in the race is capable of uniting them all. As for NDP they will yip and yap about things, once again showing they are the idiots of the parties.

[Argus]

Why, is the government saving for retirement? Tell us how much the government is going to spend on debt reduction, it's merely another expenditure in the big scheme of things. Spend that amount, and the excess taxation needs to be returned to the taxpayers. I think there should be a place on your tax form, donate your cheque to paying down the debt if you wish, I personally don't care.

What would the interest be on that $13.2b in a year? The prime rate is at 6% isn't it? Doesn't that mean by paying off this amount the government will save about $780,000,000 it would otherwise have had to pay in interest? And over the next five years that would be $3.5 billion - which we now won't have to pay.

Don't you think saving that money is a good thing?

[August1991]

What would the interest be on that $13.2b in a year? The prime rate is at 6% isn't it? Doesn't that mean by paying off this amount the government will save about $780,000,000 it would otherwise have had to pay in interest? And over the next five years that would be $3.5 billion - which we now won't have to pay.

Yield on 10 year Canadian government bonds is around 4%.

That means the Canadian government is taxing Canadians (many of whom have a mortgage above 6%) to pay back debt at 4%.

The government would be better to cut taxes and let people pay down their mortgages.

[Topaz]

Well, don't hold your breath! The Cons will be spending big money on the military and the war on terror, so give them time and the surplus will go and we'll be in the red again!! IF, they don't go into red, then services will be cut or taxes will go up.

[Argus]

What would the interest be on that $13.2b in a year? The prime rate is at 6% isn't it? Doesn't that mean by paying off this amount the government will save about $780,000,000 it would otherwise have had to pay in interest? And over the next five years that would be $3.5 billion - which we now won't have to pay.

Yield on 10 year Canadian government bonds is around 4%.

That means the Canadian government is taxing Canadians (many of whom have a mortgage above 6%) to pay back debt at 4%.

The government would be better to cut taxes and let people pay down their mortgages.

That's an interesting way of looking at things. I don't believe it's a popular one but...

I think we, as a people, need to pay down the debt. There will always be people with mortgages, so if we use that as an excuse we will never pay off the debt. And who knows, maybe we'll have another period of stagflation where the economy tanks and interest rates jump to 20%. The cost of servicing that debt load then could well bankrupt us.

Where is the wisdom in paying billions per year in interest for perpetuity? Whatever the interest rate is on the debt the feds borrowed we will pay many hundreds of millions less every year because of this decision.

I will look after my own mortgage, thanks.

[gc1765]

I think we, as a people, need to pay down the debt. There will always be people with mortgages, so if we use that as an excuse we will never pay off the debt. And who knows, maybe we'll have another period of stagflation where the economy tanks and interest rates jump to 20%. The cost of servicing that debt load then could well bankrupt us.

Where is the wisdom in paying billions per year in interest for perpetuity? Whatever the interest rate is on the debt the feds borrowed we will pay many hundreds of millions less every year because of this decision.

I will look after my own mortgage, thanks.

I never thought I'd say this, but I agree with you 100%.

[bradco]

Isn't this the same party that accused the Liberals of poor fiscal management for having massive surpluses? Why do politicians of all stripes make it so easy to point out their hypocrisy?

Either way Im all for paying down the debt.

"Yield on 10 year Canadian government bonds is around 4%.

That means the Canadian government is taxing Canadians (many of whom have a mortgage above 6%) to pay back debt at 4%."

My knowledge of government debt isnt that great but wouldnt it be more prudent to pay off debt first where the interest is not going to domestic actors...paying interest to Canadians who have government bonds doesnt seem like it would be as bad as international debt.

Maybe a tax cut to allow people to pay off their higher rate mortgages is better....but how many people would do that instead of using a tax cut on consumption?

[Ricki Bobbi]

Maybe a tax cut to allow people to pay off their higher rate mortgages is better....but how many people would do that instead of using a tax cut on consumption?

The Conservatives are in a no win situation with respect to tax cuts.

They cut the consumption tax and people say it was meaningless and won't make a differnece in people's lives.

If they cut taxes to allow people too pay off their mortgages it would be criticized as a tax cut for the *rich*.

They'll stick with their plan and let the lefties whine.

No issues with paying down the debt. There would be no issues with zero net government debt. Like I've said many times Paul Martin was a great finance minister and equally as bad as PM.

Hmmmm, I wonder if he would come out of retirement to be Harper's finance minister?

[Riverwind]

I would have cut taxes but I'm happy that the Tories are not spending the money.

The BOC issued a public warning a few weeks ago to all Canadian gov'ts. The BOC said that the BOC needs to tighten montetary policy right now and that gov'ts should avoid injecting new stimulus into the economy right now with tax cuts or spending increases. I suspect this is the primary reason behind the decision to pay down debt.

[August1991]

I would have cut taxes but I'm happy that the Tories are not spending the money.

The BOC issued a public warning a few weeks ago to all Canadian gov'ts. The BOC said that the BOC needs to tighten montetary policy right now and that gov'ts should avoid injecting new stimulus into the economy right now with tax cuts or spending increases. I suspect this is the primary reason behind the decision to pay down debt.

Keynes has been dead for over 60 years.

What will happen when all those bonds get reimbursed?

Anyway, the US Fed just kept interest rates steady and there are rumours it may cut them. Inventories are up, oil and house prices down. So even the ghost of Keynes would agree with a tax cut - although it would be more effective if it were permanent.

Edited September 26, 2006 by August1991

[Bakunin]

This is a good news, the less money they spend, the better...

[Wilber]

The government would be better to cut taxes and let people pay down their mortgages.

Government debt is my mortgage, yours to.