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  • Cam Anderson

Part One: Financing sustainable Canadian government programs

Updated: Apr 6

Problem:

Canadians are resourceful and can envision solutions to solve a good portion of Canadian societal issues. However, they lack available government budgets to properly fund many proposed programs to address the issues.


Example candidate issues for significantly increased spending include: health care, housing, food, education, reducing inequality, aging populations, access to justice, arts funding and infrastructure, job displacements from new technologies, and addressing environmental damage.


Tax levels however are high enough, many would say too high. Raising more money for new programs by increasing taxes would be difficult. Alternatively, cuts from one government program to fund another program would face staunch resistance.


Faced with this budget squeeze, how can spending increase to meet these challenges?


Why it matters:

Canada's potential is limited if we do not.

Look for example at our youth, our future generations. Canada is one of the wealthiest nations. Yet, for some of our youngest Canadians, this does not ring true. Many children go hungry. Some children face limited educational or career opportunities a consequence of poverty or discrimination. Family problems with addictions, bankruptcies, familial dysfunction, crime, and homelessness compound the issue.


Canadians know which programs could significantly reduce these issues. Imagine the potential impact if these programs were continuously conducted in a meaningful way. Most surely Canada would be a happier, healthier, more productive society. At the individual level providing opportunity may unleash new high achievers, potential Alexander Graham Bells, Dr. Bantings, Margaret Attwoods, Glenn Goulds, or Wayne Gretzkys.


Solution:


Fund programs fully. Spend only a small portion of money you already have so funding is sustainable.


Perhaps because we want immediate results, spending a little right away from money we don't have on a program that offers a solution to an issue seems like a good move. But often the program is not broad enough in its application or is not sustained enough mostly as funding required would be too high. Asking for more money, the program gets a bad reception. And now appearing therefore ineffective, the program is cut back or eliminated. Now we are in debt on the program and have not solved the problem adequately.


It is not the program design that causes failure, it is the amount of care, attention and unwavering support to do what is needed, that is the problem. But getting deeper in debt is also a problem. We need a better way to finance our programs, and there is a better way.


Rather than tax to spend year after year, governments should first grow a supporting financial foundation before spending. Governments should act like individuals and families preparing for retirement. Individuals must first save and invest to then spend in retirement sustainably. Why shouldn't governments do the same thing?


Governments could first save up the funds needed to for a program, and only then with funding in place, start the program with a suitable substantial and ongoing budget.


Funding Canadian programs to solve various issues would no doubt collectively require enormous sums. If, for example, the on-going sustainable budget target was to fund $40 Billion in annual spending, then about twenty-five times that amount (i.e., $1 Trillion) would be needed as the supporting fund.


To raise $1 Trillion, Canada could invest $1 Million (a negligible 0.002% of our annual federal budget) and then wait about 300 years to amass the $1 Trillion. Or it could borrow a full $1 trillion and meet the goal by investment gains in approximately 15 years. The best choice lies somewhere in between 15 and 300 years.


To reach a sizable fund in a shorter time frame, Canada must make use of available credit. Borrowing is not a bad thing in and of itself. Yes, debt is not advisable to meet current expenses, as we are doing with our annual deficit spending. Once spent on programs, nothing of value from the borrowing is left to fund future spending. So we borrow more to finance more current expenses. Bad move!


However, borrowing is helpful when incurred for valuable purposes or commodities. Portfolios of stocks increase in worth, they always have value. Borrowing for a short limited time to create a fund that continuously grows is a good use of debt.


It is, therefore, my contention Canada could significantly improve our society by raising funds using substantial temporary debt. No new taxes and no existing program cuts. The budget squeeze can be avoided. Canada can prosper.


Next blog, I will discuss what results and risks Canadians would face if this temporary debt approach is used.

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