in Featured World News Canada’s debt is “much worse” than the government lets on: study
By Isaac Lamoureux, True North Wire
A new study by the Fraser Institute finds that Canada’s debt is much worse than the Liberal government admits to.
The study found that the statistics the government uses to claim it has the lowest net debt-to-GDP ratio in the G7 are flawed because they count assets that cannot be used to pay off the debt in Canada.
“The study finds that Canada’s relative debt position, instead of being the best of the G7, falls significantly when total debt is measured instead of measuring debt after adjusting for financial assets,” a news release from the Fraser Institute said. “Net debt, which is the measure used by the federal government, offsets a part of the country’s total debt by including financial assets.”
When using net debt as a share of the economy, which refers to indebtedness after financial assets have been subtracted from the total debt, Canada ranks fifth lowest among 32 industrialized countries and the lowest among the G7.
Using total debt as a share of the economy, Canada falls to 26th place out of 32 countries and third lowest in the G7, outperformed by the UK and Germany.
Comparing the two measures, Canada falls 21 places, marking the largest change to its debt rating out of the 32 industrialized countries.
“Gross debt is a fair and accurate measurement to compare Canada’s relative debt ranking to peer countries because it’s an apples-to-apples comparison,” Jake Fuss, the director of Fiscal Studies at the Fraser Institute and co-author of the report, told True North. “Using other measures such as net debt offers an apples-to-oranges comparison because of how public pension assets are treated in Canada from an accounting standpoint.”
He said that the net assets from the public retirement plans, along with other liabilities, are controlled for in gross or total debt-to-GDP ratios, making them a better indicator of Canada’s deficits when compared to the international community’s debt.