At The Mercy of Foreigners!!!

This is one of the battle cries I have heard talking about Canada’s National Debt and how we soon won’t be able to have control over our own destiny, as the Federal Government’s Creditors will start dictating to us about fiscal policy, Bunk! I say to that.

As usual the media gets it a little wrong. While the above rant may have some grain of truth with our soon to be turkey stuffed friends down south, in Canada that is not true at all. In fact Canada is really quite good figuring out who(m) is holding the Federal Government’s Debt.

International Comparison of Non-Resident Holdings of Central Government Debt

A very interesting graphic, which explains where some folks seem to get it wrong. Yes, our friends in the U.S. have a high degree of non-residents holding the Federal Debt (more than 2 times as much as Canada). It’s more interesting to see that Australia has such a high level of foreign investment.

Have a read of the document that is linked to the graphic (i.e. click on the graphic), if you are curious about exactly who, what, where and how the Federal debt works. Interesting stuff.

{ 4 comments }

If I Were the Government

So I saw an interesting graphic on Tumblr comparing the U.S. government spending to a median family income and how it might look, so I have tried my best to dredge up this comparison for Canadians.

This model is already flawed as I am only looking at the model where I (the Big Cajun Man) will take on the guise of the Federal Government and not all governments in general (which would change the debt number much as you will see). The average family income is borrowed from 2011′s median family income from Stats Canada as well.

The numbers I am using are gleaned from a report from Stats Canada, and are at best an estimation.

Income for the BCM Family $76,000.00
Spending Costs
   Life expenditures $74,512.00
   Debt charges $9,608.00
Total Spending $84,120.00
Net Income -$8,120.00
Debt charges as a percentage of income 12.64%
Current Family Debt $180,453.00
Debt after this year $188,573.00
Income Compared to Debt 42.12%

What does this mean? Well if I were the Government I’d be spending over 13% of my income on paying off my debt, however, if you look at my debt, it isn’t really that far out of whack, is it? A family with $180K worth of debt is a little high, and they should think about paying it off soon, but then again it is do-able, over a long period.

Oh and here is a nice graph I made too.

If I Spent the Way the Feds Spent

If I Spent the Way the Feds Spent

If you look at the U.S. Model it is a much higher Debt in comparison and a much more dire looking pay back scenario.

{ 4 comments }

Budget 2012: The RDSP Changes

I’ll stay away from the rest of the budget (don’t want to sound too much like a whiny Civil Servant (who said, Too Late!)), but there are changes to the RDSP program which is important to me and any other parents who have disabled children and those with disabled loved ones.

From this web site, the changes are:


The budget proposes the following changes that will increase the effectiveness of RDSPs:

  • Simplifying the process to open RDSPs for individuals who have reached the age of majority and lack contractual competence;
  • Reducing the repayment of Canada disability savings grants and Canada disability savings bonds in certain cases;
  • Introducing changes to the minimum and maximum withdrawal rules;
  • Allowing a tax-free rollover of registered education savings plan investment income into an RDSP;
  • Temporarily suspending the termination of an RDSP following cessation of eligibility for the disability tax credit if the beneficiary may qualify for the DTC again in the foreseeable future; and
  • Reducing the burden associated with administrative requirements.

The last point is good, because as I have said, setting up an RDSP with TD/Waterhouse really was a complicated issue.

A lot of these changes are designed to get more institutions to offer an RDSP to their customers (it is not available everywhere), but also make it swifter in implementing as well.

The ability to transfer the proceeds of an RESP into an RDSP is a good idea. If you have a child that becomes disabled, or is diagnosed later in life, the ability to take the funds that you had been saving for post-secondary education into a lifetime savings program for the child, just seems to make sense to me.

The temporarily suspending the termination of an RDSP is interesting as well, in case you have a disabled person whose cure” is mis-diagnosed, or they were unable to get their disability “reconfirmed” in a timely fashion, there is not a sudden closure of their RDSP, again, this seems to make sense to me.

The RDSP still seems to be a bit of a mystery to a lot of folks, but if you have a disabled loved one, I would strongly advise you to go find out more about the program. If there is money to be had from the government to help later in life, you should be trying to get that money as soon as you can.

{ 2 comments }

Civil Servants: Another Point of View

I have in the past used information from the Canadian TaxPayers Federation, so I feel it would be remiss of me if I didn’t include their latest YouTube video as part of my I am a Civil Servant, set of writings.

The points made by the TaxPayers Federation are valid and interesting, however, I somehow feel there is an implication that Government Employees are all overpaid, etc., in the delivery of the message (yes, they don’t say it, but I am reading between the lines). The e-mail that pointed  to the clip did include the following paragraph (which does make the point a lot clearer that Civil Servants are all RICH, or will be with their pensions):

After all, you along with every other Canadian, each owe about $6,776 and counting in additional taxes to pay for the rich federal government employee pension plan. That’s of course on top of our federal debt. Federal bureaucrat pension plans are short $227 billion due to the rich, unsustainable payouts negotiated.

Blaming Civil Servants for having a generous pension is interesting, so PSAC should have negotiated a crappier set of benefits?!? (apologies, that is flippant, but still valid) Also, another reason the pension fund is short is  due to the Federal Government raiding the fund in the 90′s, and bad investments as well (which all pension plans are now suffering through).

I believe the TaxPayers Federation will get their wish somewhat when the new Government budget comes down, and the Government will then explain how much money will be spent this year on severance packages for the LARGE cut back in the Civil Service (this will not be scalpel cuts, this will be Chain Saw hacking, similar to the early 90′s, is what my sources are saying).

Wonder what the Federation is going to say about the severance packages given to the Civil Servants? I guess that remains to be seen.

{ 13 comments }

I am a Civil Servant

I keep hearing from various media outlets and bloggers how much money is wasted on the Government and such, and inevitably out of these discussions comes statements about the Civil Service, and I now feel that I have the right to comment on this stuff (having worked in both the Private and now the Public Sector).

Let’s go over a few of the more interesting points that some folks seem to have an opinion about:

  • I am  paid by your taxes, but strangely I also pay taxes as well. One media outlet seemed to be implying that Civil Servants didn’t pay taxes, but I can assure you, I pay taxes just like everyone. No free ride here.
  • Pretty much everybody can easily figure out from information readily available how much I make, which is disconcerting, since when I worked for Nortel, people could guess but they couldn’t be sure they knew how much I made.
  • Someone does drive me into work in the morning (these days), but he or she works for OC Transpo, I don’t get limousine rides to work every day (yes, someone asked me that exact question when they heard I worked in the government).
  • Are we all lazy? Let’s not go there on this one, let’s just say I have seen good and bad in both the Public and Private sector, and leave it at that. Some might argue I am a Lazy Sod, so maybe you shouldn’t ask me?

From what I can tell, a lot of misconceptions folks have about Civil Servants (or Public Servants) seems to come from the perks that Members of Parliament get.

The major issue I keep hearing is that I have a “gold-plated free pension”, which is an interesting fallacy, that again comes from the MP side of things. Yes, I have a very nice pension (that many people do not have, so I do realize that having a pension is a great benefit), that was negotiated with an elected government, but is in no way “free” to me. I pay a great deal of money into the Pension Plan, and will more likely have to pay more soon, to retain this privilege, but I did have this same privilege when I was at Nortel (until it all fell apart).

Yes, the taxpayer pays for part of my pension, but that is because they are the folks bankrolling my employer (i.e. the Federal Government), so again, I am kind of paying into that too.

Unlike Members of Parliament, Civil Servants take 35 years to get a “full” pension. Members of Parliament get a FULL pension after 6 years (oh and I don’t think they put much money in on their side either).

A Civil Servants “full” pension can be calculated as (assuming they work for 35 years in the Civil Service):

70% of an average of your 5 best years salary, which is then discounted by how much CPP you will get paid (once you are CPP eligible)  {simple isn’t it ?}

What’s the point of all of this? Just me venting at some of the more asinine commentaries I have seen on the Media and in the Blogosphere lately. If anyone cares to try to refute or ridicule my opinions, have at it, I am prepared to discuss whatever points you like on the topic of the Civil Service and it’s Pension system.

 

{ 45 comments }

Canadian Personal Finance Blog is Stephen Fry proof thanks to caching by WP Super Cache