Editorial A threat to sovereignty

The greatest threat to Canadian sovereignty today is not free trade but a growing public debt that is running out of control. In recent years, the economy has been humming along nicely. But beneath the surface there has been a growing debt that, once the economy slows down, will have tremendous impact. The resulting pressures will force us to compromise on the very things that set Canada apart from other nations.

That’s why the free trade agreement is good for Canada. It will promote prosperity, and it is only through prosperity that we can maintain our enviable way of life.

It’s the greatest shortcoming of our political system that political leaders feel they must pander to the desires and fears of the voting public in order to gain power. As a result, they cannot provide real leadership and expect to gain office. Witness the ill-fated but constructive “short-term pain for long-term gain” platform of the Tories in 1982.

The result is that opportunities such as those presented in the free trade agreement are attacked as a threat to the status quo. But if it’s the status quo we try to protect, we’re in trouble. Our public debt currently stands at about $300 billion and is growing by close to $30 billion a year. Interest payments on this debt alone accounts for close to 25% of federal spending. That’s money that is being drained away from any productive use.

Debt can be a useful instrument, but it must be kept manageable. When the country has to borrow in order to pay interest, it’s clear that things are not being managed properly. Any CEO can tell you — indeed, any householder can tell you — that when you have to borrow money to pay interest, you’re in trouble.

The deficit has been cut in the past four years, but not by a significant amount considering the economic boom times Canada has enjoyed during that period. And a reduced deficit only indicates we’re living less dramatically beyond our means — we’re still spending more than we earn. If interest rates go up or government revenues fall as the result of a slower economy, the amount we pay to service that debt can only go higher.

Given the cyclical nature of the economy, companies like Inco and Noranda have done exceedingly well to struggle through the tough times and get their house in order during the good times. If only our governments could do as well, we’d be in much better shape.