The Peace Tower is seen on Parliament Hill in Ottawa on November 5, 2013. The federal government is writing off more than $6.3 billion in loans to businesses and students it never expects to collect. (Sean Kilpatrick/The Canadian Press)

Liberals write off $6.3 billion in loans as part of money never to be collected

That includes student loans and a $2.6 billion write off that came through Export Development Canada

The federal government says it won’t collect $6.3 billion in loans, a figure fuelled by the write off of a nearly decade-old automaker bailout that the Liberals say had no hopes of being recouped.

The Liberals have written off some $3 billion in loans in each of the past two years, but they jumped past that mark in fiscal year 2017-2018.

Key to the jump was a $2.6 billion writeoff that was part of a financing package the previous Conservative government made in 2009 to keep automaker Chrysler afloat and save an estimated 52,000 Canadian jobs during the recession.

In 2011, former finance minister Jim Flaherty said taxpayers would likely never recoup the full value of the bailout when Chrysler repaid $1.7 billion provided to the restructured company, now known as Fiat Chrysler.

There was still a US$1.125 billion loan, excluding interest, sitting on the books to the “Old Chrysler” when the Liberals took office in late 2015.

The company had paid back about $238 million from its original loan, but the Liberals decided to write off the remaining principal and interest in March after officials exhausted every avenue for recovery.

International Trade Minister Jim Carr blamed the terms of the loan set out by the previous government to explain his government’s decision.

“At the time they handed out the loan, they knew it would be 100 per cent written off,” Carr said Monday.

“The ‘Old Chrysler’ did not have an opportunity to pay it back … there are no surprises here.”

READ MORE: Prime Minister pledges to ensure ‘thriving’ dairy industry post USMCA

Separate from the writeoffs, the government is also forgiving other debts 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 in the 12 months ending in March that the government wouldn’t collect $7.4 billion owed the federal treasury — a record since they took office in late 2015.

The detailed accounting documents provide an annual 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 the government paid $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 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 audit opinion about the public accounts.

He 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, fuelling criticism from the Opposition Conservatives about the lack of a road map to return to a balanced budget.

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Central Coast Regional District swears in new Board of Directors

There are three new faces representing our region and two returning directors

VIDEO: Black horse signals ‘sign of peace’ for Tsilhqot’in Nation

Justin Trudeau rides black horse provided by Cooper family

Trudeau exonerates hanged war chiefs of 1864 on B.C. Tsilhqot’in title lands

Prime minister rides horseback with Chief Joe Alphonse, TNG Chairman, to Xeni Gwet’in meeting place

B.C. Legions in need of young members to continue aiding veterans into the future

Lest we forget what thousands of men and women did to fight for Canada’s freedoms – but without new membership, many Legion chapters face dwindling numbers

Rain, snowfall warnings in effect across B.C.

B.C.’s Interior set to get hit with snow while the Lower Mainland is expected to see more rain

People flocking to Vancouver Island city to see hundreds of sea lions

Each year the combination of Steller and California sea lions take over Cowichan Bay

Protesters confront Environment Minister in B.C.

Protesters wanting more for killer whales confront Catherine McKenna

Humans reshaping evolutionary history of species around the globe: paper

University of British Columbia researcher had the paper published in the Proceedings of the Royal Society

Toronto ‘carding’ activist Desmond Cole stopped by police in Vancouver

Cole says his experience reveals what daily life is like for black and Indigenous residents

Commercial trucks banned from left lane of Coquihalla

B.C.’s Ministry of Transportation has introduced a new program that hopes to prevent accidents and closures on the Coquihalla Highway.

B.C. on track to record same number of overdose deaths as last year

128 people died of overdoses in September, bringing the total to more than 1,100 so far in 2018

B.C. firefighters rescue horse stuck in mud

‘It happens more often than you’d think,’ says deputy chief

Canadians more prepared for weather disaster than financial one: poll

RBC recommends people check their bank app as often as the weather app

B.C. dog owner sues after pet killed in beaver trap

A Kamloops man is suing the operator of a trapline north of the city after his dog died

Most Read