Re: ‘Feds need to take on some more responsibility’ (Editorial, PQB News, Sept. 17)
Your editorial hit the nail on the head in exposing the imbalance between taxes received by senior governments, and the mass of governance now unloaded onto the provinces.
It didn’t used to be that way, and the change can be dated to the early 1970s, when all government borrowing was abruptly privatized with neither publicity nor Parliamentary approval.
In a financial crisis caused by exploding oil prices, the then Liberal government was persuaded by intense pressure from the banking system – a consistently large donor to major parties – to abandon the 40-year-old program of interest-free borrowing from its own wholly-owned bank.
Thus they accepted without question the private banks own Basel One edict which proclaimed that “governments borrowing interest-free from their own bank created financial uncertainty and should be abandoned”.
This sustained policy change created budgetary mayhem which endures full-bore today, as budgets run serial deficits from interest-on-the-interest, and unpayable debts endlessly grow.
Federal governments have been forced to underfund programs, reduce transfer payments while passing whatever load they can onto the provinces, and dodge around the inevitable inflation caused by borrowing money needed to cover the enormous but nationally unproductive interest burden.
Twenty-six years ago, the auditor general issued his “Report to Parliament on Interest and the Debt” (still available online) which shows that a stunning 92% of the national debt then was due to cumulative, unpayable borrowed interest.
Federal debt alone has nearly doubled since then, incurring another $800 billion of nationally unproductive interest payments, and this must continue as long as governments fail to borrow their needs from their own bank at nil interest as a primary national service, with the benefits returning to the nation.
It’s rather like borrowing our Armed Forces at interest from someone else; just fundamentally wrong.