CANADA'S IMAGINARY UNICORN BALANCE SHEET
|Pierre Poilievre MP Carlton Bill Morneau MP Toronto Centre|
Bill Morneau has told Parliament on 20 occassions that the Canadian government balance sheet was strong. On May 13 he was asked about the three main components of the balance sheet, assets, liabilities and equity. The finance minister was unable to supply an answer to any of the questions. You can view the video of this exchange on Canadian Sentinel.
In truth, the government doesn’t actually publish anything called a “balance sheet”, contrary to the Finance Minister’s constant use of the term. The government does publish a “Consolidated Statement of Financial Position” (which is now more than a year out of date) and a “Condensed statement of assets and liabilities”, but nothing called a “balance sheet”.
Pulling from reports by Finance Canada and the Parliamentary Budget Officer, one can be extrapolated.
The “net equity” is often called the “federal debt”, which is a deceptive term. Normal people would say that the debt is the total liabilities of $1.49 trillion. What government calls its debt is actually the net worth… which is negative $962 billion. You read that correctly: if the Government of Canada sold all its assets and put all the proceeds into paying debts, it would be left with a negative net worth of $962 billion—almost a trillion dollars.
Lop off some zeroes to make the numbers more digestible. Imagine your only asset was a $531,000 house and it had a $1,493,000 mortgage—a mortgage three times the value of the house. Your net worth would be minus $962,000. You would give the keys to the bank and walk away from your house bankrupt.
So, why is government not yet bankrupt? Because its balance sheet has an invisible asset whose value is literally priceless: taxing power. The asset is the net present value of all future taxes government can collect. It is the only reason governments can defy financial gravity and avoid collapsing under crushing debt.
The above comes from an article by: Pierre Poilievre and published by EnergyNow.ca.
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