Jack M. Mintz: Canada's debt load is even worse than you think fpcomment
Canadian governments are lot more indebted than we think. And I don’t just mean the vast add-ons now taking place and for coming years. No, what I mean is that the official public debt figures mask the true debt position of our governments. This can send the wrong signal to taxpayers that we are OK when we are not.
First, national accounting does not include government employee pension plan liabilities — the money we will all owe to retired civil servants that isn’t covered by a corresponding asset. Add at least another 15 per cent of GDP for this item to the 2019 debt load. Government pension liabilities will easily surpass that in 2020 as asset returns tank and discounted liabilities rise sharply because of low interest rates.
And we’re not finished yet. Governments also have major unfunded liabilities such as Old Age Security, Guaranteed Income Supplements, age-related tax credits, seniors’ drug plans, long-term care facilities and health care benefits. The IMF estimates that on its own unfunded health-care spending for the next 30 years adds up to another 42 per cent of GDP.Financial liabilities require governments to pay interest every year.
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