Debt by a Million Novelty Cheques

First off required reading: Public Accounts of Canada 2010

These documents outline every dollar spent by the Federal Government.  The ones I focus on here are:

If you break down each Federal Government Department you can categorize the tax dollars spent in three ways:

  • Department
  • Other
  • Transfer Payments

Department

This is the unionized bloated bureaucracy that is government.  The pencil pushers, expense accounts, etc. that make government.  A certain level of this is ultimately required in any government but as usual as the scope of government creeps this expands uncontrolled.

Other

The various departments have agencies (CBC, HRC etc.) that are under its jurisdiction.

Transfer Payments

These are the giant novelty cheque items that the Federal government uses to buy your votes.  If you read the document you find all sorts of subsidies, bailouts and other personal & corporate welfare schemes.  This list of all the transfer payments is depressing.  It just goes on and on for 282 pages.

I have posted on this before and I call it ‘Debt by a Million Giant Novelty Cheques‘.

I personally think 95% of these expenditures should not even be made at all.  But if you did indeed want these to be in the scope of government it should be local (i.e. municipal or provincial) not federal.  These items are wealth re-distribution plain and simple.

The Federal Government should handle the bug picture items that impact all Canadians such as:

  • national defense
  • civil & criminal justice system (i.e. police, courts and jails)
  • interprovincal jurisdiction issues
  • international relations

So lets look at what the Federal Government spends its money:

Now lets look at the big picture:

Transfer payments are pretty equal to personal AND corporate income tax combined.  If we off loaded all of these bailout, subsidies and welfare schemes on to the Provinces where they belong we could eliminate all income taxes (personal and corporate).  I know  am lumping these all together and there are some items that are ‘justified’ transfer payments but those are the minority.

There would now room for the Provinces to increase provincial income taxes to pay for the bailout, subsidies and welfare schemes that they choose to fund.  If British Columbia wants to bailout the forestry sector then British Columbia taxpayers would pay for it.  If Saskatchewan wants to bailout farmers then Saskatchewan taxpayers would pay for it.  If Quebec wants $7 / day daycare then Quebec taxpayers would pay for it etc.

The reality would be that the Provinces would never fund these crazy schemes and the over all tax burden would drop significantly.  The bigger impact would be the exponential growth of the economy which would benefit everyone including low income Canadians.

This is the problem with Federal politics.  There are really no practical limits on what the Federal Government can do and thus you see what amounts to bribery.  Vote for me and I will bring you a giant novelty cheque.  To make matters worse we go into debt to keep paying for this.  Its time to start talking about changing the system for the better.

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13 Responses to Debt by a Million Novelty Cheques

  1. Herman Dost says:

    Your info on finances is very interesting!
    I am trying to compile a list of budgets, deficits and the accumulated national debt for each year since WW2. I have the Prime Ministers and Finance Ministers already.
    Do you know where this information can be obtained?

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  3. Ron Hughes says:

    Well done in tackling this subject, government spending is something we should all be more aware of. I will disagree with your idea of off-loading to provinces things like forestry and farm supports. When the occasion arises that crop insurance etc are inadequate for the farm sector a national standard is really the only way to go. For example: Sask has around 44% of Canada’s farm acreage but 2% of the population. To say that the stewards of nearly half of a nation’s arable land for food production shouldn’t be considered a vital national interest worthy of federal support is at least a short-sighted if not a downright risky strategy. Your assessment that Quebec should pay for its own “gold standard” daycare model is however quite valid.
    At any rate, thanks for your efforts to enlighten, I have bookmarked and will return for further study.

    • Dan says:

      Why are farmers worthy of the perpetual bailout though? If every year a group of farmers goes bankrupt because of a bad crop etc. That land is still the and will be purchased by someone else who will take a run at it the next year.

      Failure is a necessary requirement for capitalism. It is vital feedback to the system to show everyone how not to do things. If we keep bailing out these industries all it does is reward failure.

      [WORDPRESS HASHCASH] The poster sent us ’0 which is not a hashcash value.

      • Ev Gilmar says:

        Spoke like a true urbanite that does not understand that farming is much more than grinding up the soil, throwing in some seeds and coming back in the fall to harvest. It takes years of experience to farm successfully on any one piece of land. The farmers fail, not because they are bad farmers, but because there are many forces beyond their control that cause crop failures – too little rain, too much rain, late frost, early frost, plus the commodity dealers that govern prices. Farmers must be sustained on their land in the national interest or you city folk will have only imported food on your plate and be at the mercy of the commodity boys as to price.

        • Ron Hughes says:

          Exactly Ev, Forces of nature aside, the constraints placed on farmers through political decisions is a strong argument for support of the sector on a national basis. Two examples of these forces: 1. In the 1980s and 90s the U.S. aggressively sold wheat internationally with the export enhancement program (EEP) which they said was to counter the even higher export subsidies of the European Union, the resulting two for one sale of US wheat predictably cut returns in half to Western Canadian wheat farmers.
          2. Diversification away from wheat and into say; Dairy or Poultry operations were prevented by Canadian supply management policy which barred entry to the western farmers as the majority of quotas were and still are assigned to Ontario and Quebec farmers.
          If the federal system is going to tie your hands behind your back it shouldn’t also ask you go it alone in a knife fight. My overall point Dan is that some federal spending beyond your short list above is appropriate if the country is truly considering a national strategic interest.

          • Ken says:

            Increased or sustained federal spending on agriculture will only serve to promote the growth of unintended consequences that plague not only that sector of the Canadian economy, but all others as well.

            The answer is no government involvement, or as minimal an intervention level as is possible. Government is the barrier to wealth creation, not the source.

        • Ken says:

          This is a ridiculous argument.

          Sure, it is hard work to grow food, Dan hasn’t disputed that notion. And the people with the experience that you mention are needed to farm will always be there – it’s a matter of creating the conditions necessary to make farming profitable. You start by eliminating government intervention in the market place.

          Farmers face inordinate costs for nearly every part of their operation, and the reasons can be directly attributable to government involvement in regulating agriculture, fostering a culture of entitlement amongst Big Agro companies, not to mention meddling in the economy that leads to onerous taxation, and high prices for equipment, or supplemental labor. Most of these issues are resolved when we get government out of the business of food.

          In a free market economy if a farmer is unable even still to turn a profit, someone just as knowledgeable or experienced will be there to fill the void and turn a profit on that arable land.

          • Dan says:

            You explained that better then I did the first time. That was my whole point.

            [WORDPRESS HASHCASH] The poster sent us ’0 which is not a hashcash value.

  4. L says:

    This should be the real election issue! I do not want Ottawa to do anything for me except what you listed and immigration/refugee reform.

    What is the point of sending an old age pension and clawing it back?

  5. Shawn Coyle says:

    There’s also the government’s habit of providing funding for R&D, and then demanding payment from the company for work that other departments do to certify the work done. Accounting for all that work by the gov’t department takes time and costs money, to no good purpose, except to keep clerks and accountants paid.

  6. Manny says:

    Wonderful work, thank you! It clearly illustrate how far our govts have sfederal trayed away from their core responsibilities and are abusing their power to tax us.

    I am tempted to blame Trudeau for initiating this trend. Am I right?

  7. Derek says:

    The irony of your of your statement Manny is that while I also believe Trudeau is largely to blame for the escalation in costs, we bought it hook, line and sinker.

    Another irony I found while reading the comments of Dan and Ron is that it was Trudeau who, at is first western press conference as Prime Minister, in Winnipeg, asked: Why should I sell wheat for Western Canadian Farmers?

    So to some extent, Dan, Trudeau did agree with you that agriculture should not get his support. I believe this had more to do with the number of votes that the ag sector could bring to the table than any libertarian viewpoint he may have had. Rather, he seemed content to introduce the NEP and just about bankrupt the west singlehandedly. Tommy Douglas’s quote that is along the lines of: Canada is a cow, the West feeds it, the East milk it, and, well you can guess what it’s doing to the Maritimes! This comes to mine(other than that I’m no Douglas fan per se’). Ron’s fear would be not limited to agriculture, nor intended to prop up failing businesses. Correct me if I am wrong Ron, but I believe the intent of your comment is your concern following a natural disaster. Like all the damage of the ice storm in Quebec, flooding in Winnipeg or, as mentioned, a prairie wide crop failure. With SK having nearly half of all worked acres but 2% of people, I can understand.

    Bottom line Ron, while I whole heartedly agree with your concern for economy sizes and presumed risks, I feel that if the governments role was severely curtailed, a lot of the problems would simply disappear. As you mentioned, eliminated would be various policy’s, like supply management, would no longer be further contributing to the problem.

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