Many of us have the somewhat unnerving feeling that the financial crisis in Greece (that is also affecting Portugal and other European countries) could end up being our story a decade or two from now, unless we get our deficit and debt under control.
Despite the fact Canada has one of the stronger economies in the developed world, and despite the fact our banking system remained relatively stable through the worst of the turmoil that brought down some major financial institutions, we are vulnerable.
Financial experts tell us that Greece has been living beyond its means for years, borrowing money to pay its huge public service while continuing to have an almost 80 per cent tax default rate. Now banks are demanding austerity measures to ensure the country has enough money in its coffers to pay back the loans.
No one seems to be talking much about the missing tax money, although a member of the Greek government resigned recently after the news got out her husband owed about a million dollars. The announced pay cuts for the country’s many public servants has triggered strong objections (i.e. rioting) because many of the affected people make relatively little money, and cuts to their wages would hurt them and their families.
As we hear about the need for austerity measures, we feel a twinge of discomfort. We know our country and province spent their way out of the recession with borrowed money. Borrowed money has to be paid back with interest – short-term gain for long-term pain.
Sometimes borrowing makes sense, whether it is on a personal basis or on a much larger scale. Taking out a loan to buy a house is usually considered a wise investment, as long as the payments are affordable. Borrowing to buy a house as an investment, knowing the payments are unaffordable, is one of the things that triggered the financial crisis and almost brought the world’s economy to its knees.
Maintaining a solid business infrastructure is important for Ontario and Canada – this is where the jobs are that will fuel the country’s economy for our children. But we cannot saddle them with unnecessary debt.
According to the Canadian Taxpayers Federation, Canada’s debt is about $525 billion and climbing. It had ballooned to $563 billion in 1997, but had been reduced to $458 billion. Then the recession hit. Our national debt now seems poised to surpass that bloated 1997 figure. Ontario’s debt is also growing by leaps and bounds. Most of us see the HST as an attempt to generate additional revenue – by making business more productive thereby generating jobs meaning more people paying taxes, as an out-and-out cash grab, or both, depending on what side of the political fence we sit on.
It is no coincidence that Ontario’s Conservatives kept quiet about the HST until recently. With the new tax only a month away from launch, it seems too little, too late. They are going through the motions. This tax is the work of the provincial Liberals operating in concert with the federal Conservatives.
History will have to be the judge of whether the tax will work to the benefit of Ontarians, or not, and whether spending our way out of the recession was the right decision. However, we are the ones who choose who represents us in Ottawa, Queen’s Park, and Minto. We have to keep asking ourselves, and the various candidates, if a proposed expense will benefit future generations, or burden them. The events in Greece should serve as a grim reminder of what can happen when a country lives beyond its means.