Provincial debt grows by over $1 million a week
Doug Gallant
The Guardian
Last updated at 12:36 AM on 08/10/08
Every second of every day Prince Edward Island’s debt rises by $2.
If you think that’s alarming do the math for a week. Figures provided by the Canadian Federation of Independent Business (CFIB) indicate the provincial government’s weekly debt totals $1,158,773.
Erin McGrath-Gaudet, CFIB’s policy analyst for P.E.I., says the provincial debt is a ticking time bomb.
“It’s growing every second of every day and with every tick it’s taking away opportunities for the future,’’ McGrath-Gaudet told a press conference Tuesday in Charlottetown.
The CFIB called the press conference to unveil the P.E.I. Debt Clock, a digital counter on the federation’s website, www.cfib.ca/P.E.I. that illustrates just how quickly the provincial debt is growing.
In unveiling the debt clock, the federation’s 1,100 P.E.I. members once again called on the provincial government to balance its books.
McGrath-Gaudet said P.E.I. is the only province which still runs a deficit. With the exception of Newfoundland and Labrador, every other province in Canada requires a balanced budget by law.
Newfoundland and Labrador, however, is not in the same financial position P.E.I. is, McGrath-Gaudet said.
She told reporters there’s a good reason every other province has rejected deficit spending.”
“It simply isn’t sustainable. The (debt) clock serves as a reminder of this.’’
McGrath-Gaudet pointed out the shortfall in government finances is not from a lack of revenue.
Government revenues have consistently been growing much faster than inflation. The problem is that government spending outpaces any growth, she notes.
Government expenditures, the federation says, grew by 12.5 per cent in 2007-08 and 8.8 per cent in 2008-09.
If government expenditures continue to grow even at the lower rate of 8.8 per cent annually and revenues continue to increase at the five-year average rate of 5.7 per cent, federation officials say the deficit will grow to $330 million in five years.
They say for a province the size of P.E.I. that’s a significant debt load.
The debt load currently equates to $10,000 for every man, woman and child in P.E.I.
If the current trend continues government will never be in a position to balance its books, McGrath-Gaudet warned.
The CFIB is calling on government to balance its books now and put in place balanced budget legislation to ensure the province puts an end to deficit spending.
It’s the federation’s hope the debt clock will serve as a reminder to all Islanders that deficits are not just a budget-day issue.
“Our debt grows by more than $1 million every week. It’s time we stopped the clock.”
McGrath-Gaudet said the solution to all of this is both relatively simple and painless — limit future spending increases to inflation.
Ed: The growing provincial debt is the destination for the Chinese investment deposits. Premier Robert Ghiz believes he can use the funds to keep the deficit low and ensure his re-election. CFIB is a business group with a neo-conservative bias that has been successful in lobbying government to reduce or eliminate social programs.
