Report lambastes debt reduction target

Accuses Canada of squandering economic opportunity
April 26, 2004

OTTAWA - Canada is hoarding unprecedented economic wealth while human insecurity - at home and abroad - deepens, says a new international report.

Squandering Canada's Surplus, a report to Social Watch, an international citizens' watchdog group, is critical of Canada's recent decision to reduce the country's debt-to-GDP ratio to 25 per cent in 10 quick years.

"Aggressive debt reduction as a political priority is a dubious way to spend Canada's unprecedented fiscal surplus," says the report's author, economist Armine Yalnizyan.

"There is no economic reason to choose 25 per cent as a target. There also is no magic to achieving it. Under relatively normal conditions Canada is poised to reach that target sooner or later anyway."

The report shows how Canada has a unique opportunity to invest its unprecedented string of budget surpluses to reduce poverty and human insecurity at home and abroad.

"No other G7 nation has had seven years of back to back budgetary surpluses at the federal level. No other developed nation has got surpluses as far as the eye can see," says Yalnizyan.

"We owe it to our country, and to developing nations, to invest that money in the very things that enhance human security and prepare for the future - such as health care, housing, infrastructure, a reliable social safety net, and adequate foreign aid. Thirty billion or more over the next ten years could buy a lot of improvement in people's lives."

The report illustrates how Canada could easily meet Prime Minister Paul Martin's goal of reducing the debt-to-GDP ratio to 25 per cent and still invest in programs that foster human security nationally and internationally.

"Without paying an extra cent down, Canada could meet the debt reduction target one year later than Martin's arbitrary 10-year goal," Yalnizyan says.

Squandering Canada's Surplus is being released as part of the global Social Watch report at the April 22-23 IMF-World Bank meetings in Washington, along with reports from civil society organizations from 60 other countries. Social Watch reports annually on governments' progress in meeting their United Nations commitments to reduce poverty and improve gender equality within their own borders

The CCPA houses the Canadian Social Watch initiative in collaboration with the North South Institute.