In her 2021 budget, federal Finance 颅Minister Chrystia Freeland made much of the alleged fact that, despite a binge of COVID-19 spending and resulting massive deficits, sa国际传媒 is well-placed compared with other western countries.
Specifically, she claimed that we have the lowest net debt ratio among the G7 颅members.
A brief explanation is needed here. A聽country鈥檚 gross debt is the total amount owing by all levels of government 鈥� in our case federal, provincial and municipal.
Net debt is arrived at by subtracting from that larger amount whatever marketable assets these governments possess.
A simple example: Suppose you have a $10,000 car loan. But let鈥檚 also say you have a second car worth $5,000 which is all paid off. In this case your gross debt is $10K, but your net debt is $5K, because you could, if needed, sell the second car to pay down part of the loan.
So is Freeland telling the truth? 颅Definitively no.
Here鈥檚 what she鈥檚 done. sa国际传媒鈥檚 gross debt is 120 per cent of GDP. That puts us fifth worst among 25 developed countries, and fourth worst among the G7 countries.
Not a happy scene, and certainly no grounds for embarking on an epic spending spree.
But what about our net debt? Here, according to Freeland, we owe just 33 per cent of GDP, which would indeed place us lowest among the G-7s if it were true.
It鈥檚 not. She accomplishes this piece of statistical legerdemain by including in our 鈥渁ssets鈥� the holdings of the Canadian 颅Pension Plan, and the Quebec Pension Plan. These are worth half a trillion, and would indeed reduce our net debt by the amount Freeland claims, if in fact they could be considered assets.
But they cannot. By law, all of the CPP and QPP holdings are placed beyond 颅government reach, and are held 颅exclusively for the benefit of retirees. Ottawa 颅cannot claim these funds as assets in order to reduce its gross debt. This is flat-out 颅persiflage.
If we use gross debt as a percentage of GDP, sa国际传媒 is worsted by only four countries out of 25 鈥� the U.S. (and then only just), 颅Portugal, Italy and Japan.
This is not the kind of company you want to keep.
The countries we should expect to be in line with, such as Germany, France or 颅Britain, far outperform us. Germany鈥檚 gross debt as a share of GDP is half sa国际传媒鈥檚.
Does any of this matter?
Yes, for two reasons. First, we鈥檙e not talking here about the usual sort of hype or selective choice of facts we routinely hear from politicians. This isn鈥檛 mere 颅exaggeration.
At best, Freeland is trying to fool us, and at worst she鈥檚 just plain lying. But she isn鈥檛 some featherhead backbencher. This is the country鈥檚 chief financial officer.
Again, there is purpose in this deception. Freeland speaks for a government that has committed itself to nearly unprecedented levels of spending and borrowing.
You have to go back to the Second World War to find anything comparable.
But this amount of borrowing is being justified by a false premise, namely that our debt levels remain healthy.
And that is the real concern. It鈥檚 not merely a question of whether Freeland is trying to fool us. The larger issue is whether she and her colleagues are trying to fool themselves.
For down that road lies a very nasty 颅ending.
