Reflections on John O'Fee's Council Comment on Government Debt...

 

Councillor John O'Fee's latest column in the Kamloops Daily News deals with government debt. It's a pretty solid piece, in my opinion, explaining the benefits and costs of the practice.

A couple of things struck me.

This first is a bit of tangential point. John partly justifies government debt by saying "Like any enterprise, improvement requires investment." I personally would hate to think this is true. Sometime, improvement might mean cutting when budgets are getting too high or when programs are no longer working. John makes a similar point, seems to me, in the last sentence of his column in saying "It’s certainly not a problem we can afford to ignore."

Second, and this is more of a question, I'm wondering why John used TNRD (our regional district) aggregate figures rather than City of Kamloops figures. It would probably made the column a lot stronger if people had a better picture of what is happening locally.

Comments

[John O'Fee]

Hi Arjun, I used the figure for the regional district because all of our borrowings are done through the Municipal Finance Authority ("MFA") and all have to be approved through the regional district. The MFA publishes its borrowing data by regional district (including the per capita debt)but not by municipality. Using a population of 85,000 and a total capital debt of around 108 million in 2010 we would owe about $1270 per person locally. Given that I rounded most of the other numbers up, the overall number is about the same.

My other point was that some debt that is incurred for infrastructure development helps the economy generally and investing in those sorts of improvements can be prudent...even if it results in some debt.

[Arjun Singh]

Thanks for the comment John. Our local debt is quite a bit higher than the regional district average.

[John O'Fee]

This is to be expected because the major infrastructure pieces tend to be in the larger centres of a region. Wastewater and water treatment plants are two examples along with major recreational facilities like pools and arenas.