Majority Mindset on Debt

beer budgetIn our previous post where it was revealed in a recent Ipsos Reid poll that nearly half the respondents were within $200.00 of not being able to pay their bills, leading us to wonder if this was the result of an income problem or spending problem, the Fraser Institute recently released a study on the spending habits of the Ontario government.

As a collection agency with offices in Edmonton, Calgary and the GTA we are watching with keen interest the unfolding of events with respect to these phenomenon and their impact (or lack thereof) on Canadian credit markets.

According to the study by the Fraser Institute Spending is the Source of Ontario’s Deficit and Debt Problem it was found that government spending and not a weak economy and slumping tax revenues that was responsible for Ontario’s chronic budget deficits and mounting debt.

Between 2003-04 and 2015-16 for example, provincial program spending increased by 71.6% to $120.9 billion from $70.4 billion. That’s faster growth than the economy as well as inflation and population growth combined.

Furthermore the study shows that program spending, restrained to the same rate as economic growth since 2003-04, would have resulted in a $10.7 billion surplus this fiscal year rather than a $7.5 billion deficit. Had program spending simply kept pace with inflation and population growth, the surplus would be even larger. The report also points out that Ontario has run 10 budget deficits in the past 13 years and the province’s net debt (projected to reach $298 billion in 2015-16) has more than doubled since 2003/04.

While the Ontario government has plenty of company and are not alone in this trend, this study by the Fraser Institute just happened to be the one to come out close to the same time as the Ipsos Reid poll of Canadian consumers, in order to help illustrate our point of today’s majority mindset on debt.

Governments, while piling on the debt, and in order to justify runaway spending, will always place the blame on the failure of higher levels of government cutting support, or the previous government of the day gutting programs and services thereby creating a cycle of much needed catch up or, individuals and businesses not paying their fair share, but the bottom line is “it’s not our fault, its someone else’s.”

Therein lies the problem; not taking responsibility for a problem results in having no control over ever hoping to solve the problem. And so the problem continues to grow….

Individuals, while piling on the debt, and in order to justify runaway spending will always seem to place the blame on something else; the economy, government, their landlord, their employer, the grocer, big oil, or something incredibly esoteric like “income inequality” (although the writer still has not figured out how someone else’s income effects my debt level) while in the same breath failing to consider inequality in effort, desire, motivation or risk aversion.

Therein lies the problem; not taking responsibility for a problem results in having no control over ever hoping to solve the problem. And so the problem continues to grow….

I know, we are all entitled to having champagne tastes on a beer budget, but should it really be a shock when the waiter brings us the check?