Liberals write off $6.3 billion in loans, including $2.6 billion to automaker
There have long been concerns the government would never collect the cash it gave to Chrysler out of concern its collapse would have devastating economic effects on Canada
OTTAWA – The federal government is writing off more than $6.3 billion in loans to businesses and students as the Trudeau government marks a new annual high in money it never expects to get back.
The Liberals have already written off some $3 billion in loans in each of the past two years, but they jumped past that mark in the fiscal year 2017-2018 with help from one loan.
The $2.6 billion write off came through Export Development Canada as part of a loan the previous Conservative government made in 2009 to keep automaker Chrysler afloat.
There have long been concerns the government would never collect the cash it gave to the automaker out of fear its collapse would have devastating economic effects on Canada.
The company used the cash – a US$1.125 billion loan – to restructure.
The decision to swallow the loan happened in March after the Liberals “exhausted every possible avenue” to recover it, a spokesman for International Trade Minister Jim Carr said Monday.
Separate from the writeoffs, the government is also forgiving other debts and loans to the tune of about $1.1 billion, including nearly $344 million that officials don’t expect to recover from student loan recipients.
Combined, the annual public accounts documents show the Liberals decided that the government wouldn’t collect $7.4 billion in loans and debts owed the federal treasury in the 12 months ending in March – a record since they took office in late 2015.
The detailed accounting documents tabled annually provide a window into how much the government spent in the last year, what it spent money on, and just how much wasn’t spent.
Lapsed spending this year, for example, totalled $10.7 billion but the numbers in the public accounts are not always big.
A review of the documents shows that the government paid out $58,803 in damages and other legal claims because of the problem-plagued Phoenix pay system that has left civil servants underpaid, overpaid or not paid at all.
Canada’s auditor general estimated in a report released with the spending documents that the government owes underpaid employees some $369 million and overpaid others about $246 million. The total is $615 million worth of pay errors as of March 31, 2018.
The Phoenix fiasco was the “one significant blemish” on the government’s books for the last fiscal year, Michael Ferguson said in his report.
The report also said the number of employees affected by Phoenix pay problems has continued to grow.
“The government still has not shown signs that it has reduced the impact of pay errors coming from its transformation of pay administration, which includes the Phoenix pay system,” Ferguson wrote.
Federal books finished in the red last fiscal year as the government posted a second consecutive $19 billion deficit as overall spending across ministries, departments, agencies and Crown corporations hit $332.6 billion.
The deficit for 2017-18 was slightly smaller than what the Liberals predicted in February’s budget.
There are concerns the Liberals’ deficit-spending plan at a time of economic expansion could lead far deeper down the deficit hole in the event of a recession.
That has fuelled criticism, particularly from the Opposition Conservatives, about the lack of a road map to return to a balanced budget.