Saturday, September 30, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
No Result
View All Result
Macdonald-Laurier Institute

Neufeld cites MLI study in letter to the Post

July 17, 2014
in Domestic Policy Program, Economic policy, In the Media, Latest News, MLI
Reading Time: 2 mins read
A A

Writing in the Financial Post’s letters section, former assistant deputy minister of finance Edward Neufeld cited an MLI paper on provincial solvency as an “excellent” review of how provinces are taking on excessive debt loads.

The paper, titled “Provincial Solvency and Federal Obligations”, examines the long-term debt obligations of all 10 provinces.

Author Marc Joffe finds that the probability of a default will increase to more than 50 per cent for a majority of provinces over a 30-year period. Alberta and Ontario, with probabilities of more than two-thirds, are most likely to default over that time frame.

Provincial borrowing was also the subject of an MLI video, featuring the institute’s Managing Director Brian Lee Crowley, entitled “Debtbusters: Who’re broke provinces going to call?“

Edward Neufeld, July 15, 2014

The notion that the Canadian government will likely come to the rescue if Ontario threatens to default may be a Pollyanna view of the situation. (Bond Angst Rising, July 5). Worse still, this line of thought may be pervading the bond market right now and so may explain why the interest rates on Ontario bonds have not risen more than they have in the light of the province’s fiscal outlook. And as Marc Joffe has indicated in an excellent review headed Provincial Solvency and Federal Obligations (Macdonald-Laurier Institute), it may also explain why some provinces have permitted excessive debt loads to build up B as did some countries in the European Monetary Union.

It is prudent for investors to recall 1935-1936. While the western provinces had received some loans from the federal government in the early thirties, the Alberta situation deteriorated to the point of risking a major default. After some discussion with federal authorities no assistance emerged, default occurred and bond holders suffered. Also the province was essentially shut out of the bond market until 1945.

Why no assistance? The federal government, understandably, wished to have some controlling influence over Alberta finances in return for major financial assistance and Alberta refused to have its powers compromised in this way. So the issue was not just the one of providing financial support but also that of accepting a significant shift in the federal-provincial distribution of financial powers. It is therefore prudent for investors to assume that, if a province gets to the point where it risks defaulting on its financial obligations, adequate federal assistance will not automatically be there. Furthermore, if it comes it may do so after protracted discussion of terms and conditions and constitutional implications, and so an extended period of uncertainty. During this period of confusion and uncertainty the state of the provincial bond market might not be pretty to behold. Do all provincial bond prices currently reflect this kind of uncertainty? I doubt it.

Edward Neufeld, formerly Professor of Economics, ADM of Finance Ottawa, EVP and Chief Economist Royal Bank.

 

Share this:
Previous Post

MLI director, author named to government’s economic advisory council

Next Post

Civil service sick leave report misses the point: Crowley in Postmedia papers

Related Posts

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times
Columns

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times

September 28, 2023
MLI in Parliament: Richard Shimooka on defence procurement
Video

MLI in Parliament: Richard Shimooka on defence procurement

September 28, 2023
Conservative populism can break elitism and fix institutions: Jamil Jivani in the National Post
Columns

The dark reality of foreign transnational repression in Canada: Marcus Kolga in iPolitics

September 28, 2023
Next Post
Brian Lee Crowley

Civil service sick leave report misses the point: Crowley in Postmedia papers

Newsletter Signup

Follow us on

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario, K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

  • Inside Policy Magazine
  • Annual Reports
  • Jobs
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.