What voters need to know about deficits and the debt

At the birth of Canada,thegovernment already owed moneyand 20 cents out of every federal dollar was spent servicing thatdebt, saysLivio Di Matteo, economics professorat Lakehead University.

Indeed, since Confederation, the federal government has run a deficit about 80 per cent of the time, according toDi Matteo, who haswritten extensively about deficits for the Fraser Institute think-tank.

However, as the CBC's Aaron Wherry reports, the political drive to balance a budget seems to have waned sincePrime Minister Jean Chrtienand Finance Minister Paul Martinwrangled down Canada's deficit in the 1990s.

Still, the topic doescome up during election campaigns, including the current one.CBCNews explains some of the terms and issues surrounding deficits, debt and where the parties stand on balancing the books.

What's the difference between deficit and debt?

Simply put, whengovernment revenues (the taxes it takes in) areless than its expenditures (themoney it dishes out to pay for government services), thegovernment records a deficit.

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The accumulation ofall the deficits, plus the interest since Confederation,is the debt. Di Matteo says there are a fewways to look at the debt. There's the gross debt, or the total debt, and that's everything the federal government owes. There is also the "federal debt,"which is the differencebetween the government's total liabilities and total financial and non-financial assets.

Those non-financial assets,however, include things like the Parliament Buildings, Di Matteo says,which are unlikely to be sold off any time soon. Sothe net debt takeseverything the federal government owes and subtractsthe government's financial assets.

What's the current debt/deficit?

Accordingto the Department of Finance, the government posted a budgetary deficit of $14 billionfor the fiscal year that ended on March31, 2019. (Compare that, for example, with the U.S., which just recorded a deficit topping a trillion dollars.)

The federal debt (the difference between total liabilities and total assets) stood at $685.5billion and Canada's netdebt is $768 billion. Meanwhile, U.S. debt is more than $22 trillion.

The Liberals seem to focus on thefederal debt-to-GDP ratio. What is that measure?

The debt-to-GDP ratio is thethe federal debtcompared to the gross domestic product of the country. In other words, taking the debt and dividing it by the GDP.

"There is no official number of what it should be. But generally, the higher itis the larger the debt burden," Di Matteo said.

Currently, Canada''s debt-to-GDP ratio stands at30.9. According to Liberal projections, it will shrink to30.2 per cent of GDP in 2023-2024.

For a comparison, before Chrtien and Martin embarked on a series of cuts,the federal debt-to-GDPratio was 66.8. It was at its highest in 1946 at 108.9 per centand at its lowest in 1913 at 11.3 per cent.

The reason the Liberals like to focus on this measurement is that Canada's debt-to-GDP ratio is the lowest among the G7 countries. For example, the figure for Japan is 237.5 per cent of GDP, 106.7 per cent for the United States and 99.2 per cent for France.

But the figure used by the Canadian government doesn't include the debt from all levels of government, like the provinces and municipalities. When those figures are included, the ratio, according to the International Monetary Fund,jumps to 88 per cent.

What about our debt per person?

That may be an easier way for people to understand our debt. The Canadian Taxpayers Federation calculated that every Canadian's share of the debt is a little over $18,000. (Compare that to the U.S., which, according to the U.S. Debt Clock, estimates debt per citizen at just under $69,000 US)

How is each party approaching the deficit?

The Liberals promised in the 2015 election campaign that they would run temporary deficits, but by 2019, Canadians could expect a balanced budget.

That neverhappenedand isn't expected to happen in the near future.According to the campaign platform they released, their government, if re-elected, wouldincrease the deficit to $27.4 billion next year. It then projects deficits of more than $20 billion over the next three years. The party has not offered a firm timeline as to when itwould balance the books.

Conservative Leader Andrew Scheer has said his government would take five years to balance the budget, but his party has not yet released its campaign platform, or any figures on the deficits they expect to run.

NDP LeaderJagmeet Singhhasn't been clear on how his government would tackle the federal deficit. The party's platform isn't fully costed and doesn't includedeficit estimates

Back in September, at a campaign event in Ottawa, Singh wouldsay only that his approach would be different from the one Justin Trudeau's Liberals have chosen and that his priority is helping Canadians now.

His party platform does say his government would"manage debt and deficits responsibly, borrowing when required to defend the services that Canadians and their families rely on, and moving to balance when prudent."

Green Leader Elizabeth May has committed to returning Canada to budgetary balance in five years. For the 2021-2022 fiscal year, a Green government would run up a$22.7-billion deficit, cut that down to around $19 billion the next year and come up with a $400-million surplus by2023-24.

People's Party of Canada Leader Maxime Bernierhas vowed that his government would present a balanced budget within two years of taking office.