Canada’s Debt To Jump To $630 Billion In 5 Years : TD Bank

Canada's debt to jump to $630B in 5 years: TD Bank

CBC News
Last Updated: Tuesday, June 2, 2009 | 9:18 PM ET
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Canada's total debt will jump more than 30 per cent by 2013-14 under current economic conditions, the Toronto-Dominion Bank said Tuesday in a new forecast.

The bank said Ottawa's auto bailout package, as well as a lagging economy, will add $167 billion in new public borrowing over the next five years.

That means government debt, estimated at $462.9 billion at the end of fiscal 2008-09, will rise by 36 per cent during the period to almost $630 billion, according to Don Drummond, TD's chief economist, and Derek Burleton, the bank's director of economic analysis.

On the current path

Worse still, from a fiscal perspective, the TD analysis assumed that Ottawa did not allow much growth in the spending on existing programs, such as health and defence.

Many experts have argued that national governments, whether in Ottawa or Washington, have a difficult time ignoring voter entreaties to spend more, especially during times of economic stress.

Ottawa's fiscal balance ($)
2009-10 -51.0B
2010-11 -45.3B
2011-12 -28.3B
2012-13 -23.1B
2013-14 -19.4B
Source: TD Economics

The federal deficit will peak at $51 billion in 2009-10 and then drop marginally to $45 billion in the next fiscal year. By 2013-14, the final year of TD's outlook, Ottawa's shortfall will be at $19.4 billion.

Cash-in and cash-out

According to the TD's analysis, government spending will increase by more than $40 billion, or 20.3 per cent, comparing the 2007-08 level of $199.5 billion to the bank's projection of $240.1 billion in 2009-'10.

A large chunk of Canada's expenditure rise is due to the government's plan to forward cash to the country's ailing auto sector.

In addition, TD expects the government's revenue to drop almost 10 per cent, hitting $218.6 billion in 2009-10 versus $242.4 billion in 2007-08.

Thus, the bank forecasts that Ottawa's revenue will pass the $242 billion threshold in another two years, hitting $245.3 billion in 2011-12.

Falling company profits in the current recession have sliced the amount of income taxes paid by corporations.

Also, lower consumer spending has cramped GST receipts, while declining take-home pay has cut the federal government's income from personal income taxes.

All told, while revenue as a percentage of the country's GDP reached 16.3 per cent in 2006-07, Canada's intake will only hit 15.1 of GDP by 2013-14.

In the final year of TD's forecast, Ottawa is assumed to have revenue of $275.7 billion.


Story comments (389)

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Paul Forget wrote:Posted 2009/06/05
at 12:00 PM ETBlatant fearmongering. We're in a recession, of course federal debt is going to balloon. A first year economics student could tell you that much. How about a bit of perspective – currently, Canada's national debt is lower than almost all of the other G8 countries. Canada may be suffering, but given the world-wide financial situation, we're sitting pretty.
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edlobster123 wrote:Posted 2009/06/05
at 4:45 AM EThow accurate.
hmmmmm not really.
it is all garbage and more garbage.
where were their predictions in september of 2008 when we were told our economy was sound.
we are 50% u.s. companies and i knew it was a lie.
now the government wants to print money to offset the rising canadian dollar.
why because the interest rate is 1/4 %?
you would think the high dollar would be good for the oil industry.
it is contradicted by tourism,trade of goods,and i guess we better get the dollar down to 50 cents again to compete with the u.s steel industry and the auto industry.
this is a complex scam.
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Lost in Life wrote:Posted 2009/06/04
at 2:38 PM ETmore garabage posted on CBC to cause fear in citizens of this recession.
when will this ever end? I'm so sick of hearing this crap.
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That's all she wrote:Posted 2009/06/04
at 6:31 AM ETalreadygone wrote: 'some stuff'

If what you say is true there is no cause for worry because A. we couldn't do anything to prevent it and B. once it does happen it's for the better, as it would force the people to overthrow the current corrupt game winners and our economic system will evolve into something better which I envision to be a sort of capitalism light, where the lure and reward of power and wealth are replaced with something more harmonious to keep those who best propel the economy happy to be doing so.

How's that for a run on sentence?
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alreadygone wrote:Posted 2009/06/03
at 11:17 PM ETBufrord G. If I've misunderstood you I appoogize. However I must dis agree with you… the debt will not take care of itself. It will never be allowed to be eliminated… our country has been under financial seige for some time now, longer than what you may even remember. The fact is that no mater how hard we work, how much we apply against the principal the world financiers slow down the economy the world economy as a whole this time(on purpose) to force the governments into deficit spending and increasing the debt again.

This is “Not” a conspiracy it is true. To the world financiers its not about creating weath. They already have more than they could ever use… there is nothing tangable that they cannot posess, everything they desire they can acquire… except one thing keeps aluding them… POWER. Power to control you and me. Power to control the entire world and all its people though commerce. This is what the are steadily working toward, and were the busy bees helping them get closer to it. They will get it. It's only a mater ot timing.

We cannot exit this system it is a closed loop. A net is already set and they are beginning to reel it in. And when its in so help all of us.