Government has some difficult debt decisions ahead that will have a lot to say about Canada’s future prosperity. They will also have a lot to say about your local politicians, because dealing with debt is not the strong suit of most of MPs, MLAs or councillors.
Cutting services, reducing spending and shelving campaign promises are not welcome on re-election bandwagons.
But rolling up massive public debt seriously handicaps government’s ability to run countries, provinces and municipalities, especially during and following a major health crisis.
Canada’s debt load promises to be disturbingly onerous this year. Federal and provincial deficits could total more than $300 billion in 2020-21, and the country’s overall debt, last seen heading for $800 billion, could be $1 trillion by the end of the fiscal year. While COVID-19 has made a good portion of 2020’s contribution to that debt unavoidable, the Justin Trudeau Liberal government was piling up debt long before the pandemic’s arrival. But that’s all cash flow under the bridge.
What’s needed now are areas where government can apply some prudent cost cutting.
As with any business, wages and benefits are a good place to start.
In Canada, government workers continue to have a considerable advantage over their private-sector counterparts.
A recent Fraser Institute report notes, for example, that wages for government workers are 9.4% higher on average than wages paid in the private sector.
According to the report, Canadian government workers also retire 2.4 years earlier on average than their private-sector counterparts, and 90.8% of those government workers retire with a defined-benefit pension that only 40.7% of private-sector workers get – if they are lucky enough to get a company pension at all.
With Canadians facing a crippling public debt burden and a bleak pandemic economy, there is little justification for government workers to be more richly rewarded than those struggling to survive in the private sector.