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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

"We are looking seriously at the spread and determining what our next steps should be," says Alberta’s chief medical officer of health, Dr. Deena Hinshaw, as the daily number of COVID-19 cases continues to climb.
427 new COVID cases is highest in Alberta ever

Central zone has 126 active cases of COVID-19

100 Women Who Care make a donation to Sylvan Lake Food Bank and Bethany Care Centre. Photo By Megan Roth/Sylvan Lake News
100 Women Who Care donate to four Sylvan Lake groups

The Food Bank, Bethany Sylvan Lake, Community Partners and the Library all received a donation

RCMP. (Black Press File Photo)
Calgary man dies in two-vehicle collision near Sylvan Lake

A semi truck collided with a SUV just east of Hwy. 781 on Hwy 11.

Shaelynn Decock and her dog Taco, who has been missing since Aug. 26. Photo Submitted
Sylvan Lake woman looking for closure for her stolen dog

Shaelynn Decock says it has been two months since she last saw her dog Taco

Alberta chief medical officer of health Dr. Deena Hinshaw updates media on the Covid-19 situation in Edmonton on Friday March 20, 2020. nbsp;Alberta is reporting it's highest daily number of COVID-19 cases, with 364 new infections. THE CANADIAN PRESS/Jason Franson
Alberta confirmed 323 COVID-19 cases Tuesday

Central zone active cases at 145

B.C. Liberal leader Andrew Wilkinson, B.C. NDP leader John Horgan and B.C. Greens leader Sonia Furstenau. (Black Press Media)
VIDEO: One day until B.C. voters go to the polls in snap election defined by pandemic

NDP Leader John Horgan’s decision to call an election comes more than a year ahead of schedule and during a pandemic

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

U.S. border officers at the Peace Arch crossing arrested two men on California warrants this week. (File photo)
Ottawa predicts system delays, backlogs unless court extends life of refugee pact

Canada and the United States recognize each other as safe places to seek protection

Conservative member of Parliament Michelle Rempel Garner, left to right, Conservative Leader Erin O’Toole and Conservative Deputy Leader Candice Bergen arrive to hold a press conference in Ottawa on Thursday, Oct. 22, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No-confidence showdown over sweeping Tory motion on government handling of pandemic

The Conservative motion is to be put to a vote Monday and has the support of both the Bloc Québécois and NDP

From l-r., first lady Melania Trump, President Donald Trump, moderator Kristen Welker of NBC News, Democratic presidential candidate former Vice President Joe Biden and his wife Jill Biden on stage at the conclusion of the second and final presidential debate Thursday, Oct. 22, 2020, at Belmont University in Nashville, Tenn. (AP Photo/Patrick Semansky)
Trump, Biden fight over the raging virus, climate and race

Republican president declared the virus, which killed more than 1,000 Americans on Thursday alone, will “go away.”

JJ Collett Natural Area Foundation held its AGM on Oct. 19 at the Ponoka Legion. (Emily Jaycox/Ponoka News)
De-listing Alberta parks creates ‘risk’ for coal mining: CPAWS

Canadian Parks and Wilderness Society speaks at JJ Collett AGM

COVID-19. (Image courtesy CDC)
Temporary COVID-19 testing sites coming to Wetaskiwin and Ponoka

The Wetaskiwin location will open Oct. 23, 2020 and the Ponoka location will open Oct. 29.

ACC President and CEO Ken Kobly spoke to Ponoka Chamber of Commerce members over Zoom on Oct. 20. (Image: screenshot)
Alberta chambers are ‘411’ to members, government: ACC president

Changes to government supports, second wave and snap election

Smartphone showing various applications to social media services and Google. (Pixabay photo)
National media calling for level playing field with Google, Facebook

In Canada, Google and Facebook control 80 per cent of all online advertising revenues

Most Read