MISLEADING ANALYSIS: It's the Fraser Institute That Needs a Six-Step Makeover

By Sanger, Toby | CCPA Monitor, February 2007 | Go to article overview

MISLEADING ANALYSIS: It's the Fraser Institute That Needs a Six-Step Makeover


Sanger, Toby, CCPA Monitor


The Fraser Institute released its report on Canadian government debt last November. It was designed to stir up public alarm about rising levels of government debt and push for deep cuts in health care and social spending.

The report, which claims that each Canadian taxpayer owes $171,032 in federal, provincial, and municipal liabilities, is a typical Fraser Institute cocktail of alarmist "facts," sobersounding language, misleading analysis, opaque calculations, quarter-truths, significant omissions, and wildly exaggerated policy lessons.

While the report acknowledges that the real direct debt of Canadian governments has actually declined, it raises alarm about what the Institute says are the growing unfunded liabilities of Medicare, Old Age Security, and the Canada Pension Plan. It also suggests that Canadian governments have a high debt compared with other developed countries.

The answer, according to the Fraser Institute, is a six-step plan that includes restructuring government by immediately scaling down old age security programs, eliminating the Canada Health Transfer (along with our national Medicare system), and eliminating the Canada Social Transfer, affordable housing, child care, and many other social programs.

Here are the facts:

* Governments in Canada have the lowest debt burden of all the G-8 countries, measured as a ratio of direct debt-to-GDP.

* Total public debt of all governments in Canada has dropped from $851 billion in 1997 to $798 billion in 2004 in actual dollars. During this same period, it declined from 98% of our GDP to 63.7%, and from $28,543 per person to $25,044 per person.

* According to Statistics Canada, our government debt is at its lowest ratio in more than 20 years; corporate debt has also declined, but household debt is more than 108% of annual income. Overall national net worth is almost $143,000 per person.

The Fraser Institute has massively inflated these healthy fiscal numbers with very dubious calculations of over $1.6 trillion of debt in "program obligations" for the Canada Pension Plan, Old Age Security, and Medicare.

While the debt burdens of governments and corporations in Canada have dropped very significantly, the real debt crisis is for ordinary Canadians, thanks to the reduced public spending and low-wage policies that the Fraser Institute advocates.

For example, the Fraser Institute includes $516 billion in unfunded liabilities for the Canada Pension Plan. Although it is not stated in the report, this was calculated on the assumption that no one makes one cent more in payroll contributions to the CPP past December 31,2004, but the plan still has to pay out benefits to everyone who has contributed so far. …

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MISLEADING ANALYSIS: It's the Fraser Institute That Needs a Six-Step Makeover
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