Media reports suggest Finance Minister Bill Morneau is seriously considering an end to the Canada Savings Bond program in his next federal budget.
The program, introduced after the Second World War to help Ottawa raise money from individual Canadians, is about to launch its 70th year of sales, but senior government sources say it could be the last.
Sales of the federal government bonds have been in a freefall since the late 1980s, when the program was a lucrative savings tool for consumers looking to cash in on then sky-high interest rates.
The bonds have been seen as one of the safest investment vehicles, because they are fully backed by the federal government and could be cashed in at any time. Interest earned was also compounded, and at times returns could be lofty.
But now banks and other financial institutions offer readily available products like GICs, self-directed trading accounts, mutual funds and exchange-traded funds (ETFs), which often offer better rates of return.
Fewer people are buying CSBs each year — because of paltry payouts in an era of sub-1% bank rates — and the government is questioning the $60-million price tag it costs to run the program each year.
The auditor general has in the past raised questions about the program's profitability. Administered by the Bank of Canada, it is costly to run because thousands of Canadians still hold bonds (even if they are buying fewer each year) and their main point of contact is the central bank itself.
The national advertising campaign, which coincides with the two-month sales period each year, also costs in the millions.
