This motion builds upon the existing ‘Bank of Canada’ Green Party policy
resolution1 in calling for an end to at-interest government borrowing.
Interest-free Government Borrowing
Whereas government debt is reaching such critical proportions that
many countries are currently facing financial collapse because of the
interest on the debts they owe to banks;
Whereas Section 91 of Canada's Constitution (classes 1A, 4, 14, 15,
18, 19 & 20)2 on the Legislative Authority of the Parliament of Canada
stipulates that Parliament has full control of the public debt and
interest, as well as the right to issue money;
Whereas the interest on money borrowed by the government through
the issue of treasury bills and bonds purchased by banks and foreign
governments now accounts for about 90%3 of the total market debt of
$596.8 billion4 (31 March 2011) owed by the people of Canada, and
repaying that interest is advantageous to banks but deleterious to the
welfare of the country;
Whereas the Bank of Canada issues interest-free currency into
circulation for the benefit of the nation, though this is currently only
about 5% of the country’s money supply5, under the authority of the
Bank of Canada Act6 it is authorized to make interest-free loans to
the Government of Canada to make up budget deficits and is
currently doing so, by holding approximately $60 billion in
Government of Canada bonds and treasury bills7;
Whereas the Bank of Canada currently lends the Government of
Canada money interest-free through the purchase of government
bonds and treasury bills;
Therefore, be it resolved that under the powers granted to it under the
Constitution, for all future deficits the Government of Canada borrow
money interest free, through the purchase of Government of Canada
bonds, but to prevent unrestrained borrowing it be limited by only
being permitted when the government is maintaining an operational
surplus.
Reference
“Once a nation parts with the control of its currency and credit, it matters not
who makes that nation's laws. Usury, once in control, will wreck any nation. Until
the control of the issue of currency and credit is restored to government and
recognized as its most conspicuous and sacred responsibility, all talk of the
sovereignty of Parliament and of democracy is idle and futile.”
― William Lyon Mackenzie King
1
Subcategory: Economy and Finance, Code: G10-p24,
http://greenparty.ca/node/14950
2
The Constitution of Canada - A Consolidation of the Constitution Acts, 1867 to 1982
http://laws.justice.gc.ca/eng/Const/FullText.html
VI. DISTRIBUTION OF LEGISLATIVE POWERS
Powers of the Parliament
Legislative Authority of Parliament of Canada
91. It shall be lawful for the Queen, by and with the Advice and Consent of the
Senate and House of Commons, to make Laws for the Peace, Order, and good
Government of Canada, in relation to all Matters not coming within the Classes of
Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for
greater Certainty, but not so as to restrict the Generality of the foregoing Terms of
this Section, it is hereby declared that (notwithstanding anything in this Act) the
exclusive Legislative Authority of the Parliament of Canada extends to all Matters
coming within the Classes of Subjects next hereinafter enumerated; that is to say, —
1.
Repealed.(44)
1A.
The Public Debt and Property.(45)
2.
The Regulation of Trade and Commerce.
2A.
Unemployment insurance.(46)
3.
The raising of Money by any Mode or System of Taxation.
4
The borrowing of Money on the Public Credit.
5.
Postal Service.
6.
The Census and Statistics.
7.
Militia, Military and Naval Service, and Defence.
8.
The fixing of and providing for the Salaries and Allowances of Civil and
other Officers of the Government of Canada.
9.
Beacons, Buoys, Lighthouses, and Sable Island.
10.
Navigation and Shipping.
11.
Quarantine and the Establishment and Maintenance of Marine
Hospitals.
12.
Sea Coast and Inland Fisheries.
13.
Ferries between a Province and any British or Foreign Country or
between Two Provinces.
14.
Currency and Coinage.
15
Banking, Incorporation of Banks, and the Issue of Paper Money.
16.
Savings Banks.
17.
Weights and Measures.
18.
Bills of Exchange and Promissory Notes.
19.
Interest.
20.
Legal Tender.
21.
Bankruptcy and Insolvency.
22.
Patents of Invention and Discovery.
23.
Copyrights.
24.
Indians, and Lands reserved for the Indians.
25.
Naturalization and Aliens.
26.
Marriage and Divorce.
27.
The Criminal Law, except the Constitution of Courts of Criminal
Jurisdiction, but including the Procedure in Criminal Matters.
28.
The Establishment, Maintenance, and Management of Penitentiaries.
29
Such Classes of Subjects as are expressly excepted in the Enumeration of
the Classes of Subjects by this Act assigned exclusively to the Legislatures of
the Provinces.
And any Matter coming within any of the Classes of Subjects enumerated in this
Section shall not be deemed to come within the Class of Matters of a local or private
Nature comprised in the Enumeration of the Classes of Subjects by this Act assigned
exclusively to the Legislatures of the Provinces.(47)
In Chapter 5 “Understanding Deficits and Debt” of the 1993 Report of the Auditor
General of Canada
3
http://www.oagbvg.gc.ca/internet/English/parl_oag_199312_05_e_5944.html
the Auditor General noted:
From Confederation up to 1991-92, the federal government
accumulated a net debt of $423 billion. Of this, $37 billion represents
the accumulated shortfall in meeting the cost of government
programs since Confederation. The remainder, $386 billion,
represents the amount the government has borrowed to service the
debt created by previous annual shortfalls.
4
Department of Finance website - accessed 23 January 2012
http://www.fin.gc.ca/dtman/2010-2011/dmr-rgd1101-eng.asp#toc309907434
As of 31 March 2011, Canada’s total market debt stood at $596.8 billion,
and though the current figures for the share of interest in the total public debt are
unavailable, there is little reason to believe it has improved since the Auditor General’s
report of 1993.
5
The Bank of Canada does not have an accurate figure for this, saying that it is ‘…only a
small portion of all the money circulating in the economy at any one time’.
http://www.bankofcanada.ca/about/backgrounders/canadas-money-supply/
6
Bank of Canada Act. Section 18, Articles i and j
http://laws.justice.gc.ca/eng/acts/B-2/page-6.html
BUSINESS AND POWERS OF THE BANK
18. The Bank may
(i) make loans or advances for periods not exceeding six months to
the Government of Canada or the government of a province on taking
security in readily marketable securities issued or guaranteed by
Canada or any province;
(j) make loans to the Government of Canada or the government of any
province, but such loans outstanding at any one time shall not, in the
case of the Government of Canada, exceed one-third of the estimated
revenue of the Government of Canada for its fiscal year, and shall not,
in the case of a provincial government, exceed one-fourth of that
government’s estimated revenue for its fiscal year, and such loans
shall be repaid before the end of the first quarter after the end of the
fiscal year of the government that has contracted the loan;
7
As of 28 March 2012, the Bank of Canada held $17,546 million in Government of
Canada treasury bills, and $47,572 million in Government of Canada bonds.
http://www.bankofcanada.ca/wp-content/uploads/2012/05/wfs040512.pdf