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The 2016 Budget plan states that “The more that families owe, the harder it is for them to save and plan for their future,” suggesting it is important for Canadian families to avoid a debt spiral. But the same plan also endorses the concept of an expanded Canada Pension Plan (CPP), which indicates the federal government believes there is a need to force Canadians to save more. As borrowed money must be paid back, one might question the government’s logic that increasing the debt burden on Canadians indirectly by borrowing on their behalf leaves people better off than if they take on debt directly.

The federal government brushes off this issue by describing its spending as “investments,” that will grow the economy, thereby holding down debt-to-GDP ratios. But the traditional difference between consumption and investment spending is that the latter is intended to generate returns in the future. But it’s plainly doubtful that many of the “investments” announced in the budget really qualify as things that promise to generate returns. Take, for example, the $1.9 billion over five years for culture, of which close to $700 million dollars will be allocated to the CBC. It is difficult to see how the economic impact of bigger CBC budgets could exceed that of Canadians spending the same amount by spending that money in the economy themselves, say by upgrading their cable TV packages. By applying the term “investments” with abandon, as all politicians seem to do now, the term has lost its meaning. And their assertions that economic growth will be sufficient to alleviate any future burden on households from deficits are losing credibility.