Deficit hysteria in Québec:Facts versus Fictions, Net debt to GDP based on accumulated deficits 33%


Let’s compare Québec’s debt with the debt of the other governments in Canada,
by using the two main debt concepts. The headline number which is largely meaningless because it ignores the value of government financial and non financial assets and the net debt number based on first subtracting from the debt the value of financial assets and then subtracting from that first net debt number the value of non financial assets held by the government. The figure that is arrived at “debt representing accumulated deficits less accumulated surpluses expressed as a percentage of the GDP is the most meaningful statistic on government indebtedness particularly when we take into account to whom the debt is owed , how it is financed and the rate of interest it is financed at. Once we do this much if not all of the hysteria generated by the government’s barrage of propaganda about indebtedness should dissipate. Note Quebec’s debt to GDP calculated accurately in this way is 33 %, a significant figure but very far from a catastrophe.Its sister province Ontario has a ratio of 24.8 %. These deficits are largely the result of the the elevated unemployment and economic slowdown that Quebec has suffered from since the financial panic of 2008-09.Trying to eliminate them in a year or two as the Quebec government appears to be doing through austerity is simply bad policy.Note that B.C. at -0.6 %,Saskatchewan at -3.1% and Alberta at -17.6 % are all running surpluses due to the resources boom and their lower unemployment rates.

Gross debt and debt representing accumulated deficits as at March 31, 2013 (as a percentage of GDP)

Gross Debt 53.6% 49.0 44.0 38.7 36.8 32.9 31.8 29.8 25.9 15.1 6.0%

Debt representing 33.0% 33.1 24.8 22.1 10.2 8.9 13.1 18.2 -0.6 -3.1 -17.3%
accumulated deficits.

(1) A negative entry means that the government has an accumulated surplus.
Sources : Governments’ public accounts, Statistics Canada and Ministère des Finances du Québec.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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