I want to thank you, and in light of the fact that we need to get out of here by 2 o'clock, I've kept my remarks to 58 minutes.
Some hon. members: Oh, oh!
Hon. Bill Morneau: Thank you, Mr. Chair. It's a pleasure for me to address this committee.
Yesterday in the House of Commons I introduced the fall economic statement for 2016. It builds on the initial steps taken in Budget 2016 to create long-term economic growth by strengthening and growing the middle class. After all, when we take steps to grow the middle class, it benefits everyone. Consumer demand becomes stronger and businesses can invest with confidence, creating more jobs.
With more and better-paying jobs comes more opportunity. There's more left over each month for Canadians to save for the kids' education, plan for a dignified retirement, and feel more secure about their futures. Best of all, it makes the whole economy stronger, more resilient, and far more able to transform into the economy of the future.
I'm happy to report that we've made some pretty incredible progress so far.
Over the last year alone, we have implemented a tax cut for the middle class, which we have helped to finance by raising taxes on the wealthiest 1%.
We have brought in a simplified, tax-free and more generous Canada Child Benefit. Nine out of ten Canadian families now receive more benefits for their children than they did a year ago, which helps raise hundreds of thousands of Canadian children out of poverty.
We have kept our promise to help Canadians enjoy a secure retirement by strengthening the Canada Pension Plan. We have started to make historic investments in public transportation, green infrastructure and social infrastructure. These investments are helping to create well-paid jobs today while strengthening Canada's future economy.
In addition, we have made it easier for our young people to access university or college by increasing Canadian scholarships and by helping new graduates to transition into the job market. This gives them more breathing room before they have to start repaying their Canadian student loans.
Now it's time to take the next steps in our plan to strengthen the middle class and grow the economy. Since the last budget, private sector forecasters have on average revised down their outlook for real gross domestic product growth in Canada. For 2016 as a whole, private sector economists now expect real GDP growth of 1.2%, lower than the 1.4% forecast in Budget 2016. This is set against a backdrop of slow growth around the world due to factors such as slower-than-expected growth in the United States and the uncertainty surrounding the U.K.'s Brexit vote.
Now more than ever, we need investments that bring sustained and shared growth. Though we intend to use our fiscal capacity to meet that objective, we will do so responsibly so that we can maintain our low-debt advantage.
Our fall economic statement reflects our understanding that we must make the right investments today to deliver a brighter and more prosperous future for Canadians. That's just what confident and ambitious countries do.
Yesterday I announced that we're building on our first phase of infrastructure funding by proposing an additional $81 billion, bringing total federal investments in Canada's communities to more than $180 billion over 11 years. This is unprecedented in Canada's history.
We'll also establish a new Canada infrastructure bank to provide innovative financing for these future projects. The Canada infrastructure bank will be responsible for investing at least $35 billion in large infrastructure projects, projects that might otherwise not get done. The projects funded from this bank will create thousands of jobs and attract as much as $4 to $5 in private capital for every tax dollar invested.
To prosper in the future, we also need to hone Canada's competitive edge. For a hundred years, Canada's been a trading nation, but the world we know has become more competitive, so we have to work a little harder to make sure we remain a global player that can meet the demands of tomorrow.
Therefore, it's time for us to make clear to the world that Canada is here to play. In fact, we're here to lead. We're going to allocate $218 million over five years for a new invest-in-Canada hub and hire more trade commissioners abroad to make Canada top of mind for foreign investors. This hub will be up and running by the end of 2017. It will operate globally and in co-operation with federal, provincial, and municipal partners, and while we're out there promoting Canada, we'll also take steps to make sure our legislative framework accommodates investment, making it clear to both Canadians and to potential investors just how we can work together to create jobs and opportunities for everyone.
Finally, we'll keep investing in people, helping firms grow so they can create more good Canadian jobs. Our global talent strategy will do just that. We'll help innovative Canadian firms to scale up and grow by attracting global knowledge workers with specialized in-demand skills.
We'll remove barriers so that top global talent can fill temporary positions here in Canada, helping them grow and giving our workers access to international expertise. I know members of this committee will appreciate that our fall economic statement also contains measures to provide greater accountability for government spending, to put an end to secrecy at the Board of Internal Economy, and to ensure the independence of Statistics Canada and the parliamentary budget officer.
I also want to reiterate what I said in the House yesterday and thank members of the committee for the work you're doing on pre-budget consultations and for your service to Canadians. I look forward to continuing our work with all of you towards a strong middle class and a better tomorrow.
In conclusion, I would say that one year ago, Canadians asked for real change.
Over the next year, I will continue to promote our economic vision and perfect our plan to help Canadians in a way that represents their perspectives and hopes for the future. I am looking forward to reporting our results to all Canadians when we table Budget 2017 and present the next steps of our plan to help the middle class move forward.
Minister, Deputy Minister, I would like to thank you for being here today. I would also like to welcome you once again to the Standing Committee on Finance.
During our pre-budget consultations over the last few weeks, we heard from the Governor of the Bank of Canada, the CEO of the Canada Pension Plan Investment Board, and the Parliamentary Budget Officer, as well as yourself. It is clear that the OECD economies are sluggish and that it is difficult to stimulate growth.
Mr. Minister, under the circumstances, I am glad that you have decided to take such bold measures. You have opted to invest in infrastructure, both with our provincial and municipal partners and with this new tool to fund infrastructure projects, the Canadian Infrastructure Bank. I would like to commend you on this open-minded choice. The current situation is not a conventional one and such measures are necessary.
Could you tell us more about this decision to focus on infrastructure as a way to spur growth. Why do you choose infrastructure out of all the potential options? At this point in time, in Canada, why is this the best way to increase the rate of growth?
Thank you for the question.
I would like to start by saying that you are right. Our economic situation is indeed more difficult because of the global situation and the weak growth of the American economy. That's why we need to make significant investments for Canada and Canadians.
Yesterday, we presented our long-term program. However, in our 2016 budget, we have already taken our first step toward helping Canadian families. That step was very important. Given their concerns, middle-class Canadians need to understand how growth will be positive for their families. That is why we decided to lower taxes on the middle class and create the Canada Child Benefit. In that way, people will be able to imagine a better future for their families than has been possible over the last ten years.
With regard to our long-term plan, we now know that it is very important to invest in our future. Canada has a good record thanks to initiatives that were taken during the 1990s and the very early 2000s. Our situation allows us to invest precisely because our debt to GDP ratio is lower than the other G7 countries. That is where our country is now. We know that investing in infrastructure is the best way to increase the economic impacts. These types of investments will create immediate growth and also make the economy more productive in the future.
That is why we have chosen, both now and in the future, to invest significantly in infrastructure. Moreover, we have decided to broaden the scope of our efforts by setting up a national infrastructure bank. The bank will allow pension funds and institutional investors to work with us to improve Canada's outlook for the future.
Minister and deputy minister, welcome.
I'll start in English. I asked you a question yesterday in the House about where in the Liberal program the commitment was to actually either privatize public assets, privatize the flow of revenue streams of those public assets, or reinvest in infrastructure through tolls and user fees.
Before you answer, I'd like to review what Paul Wells actually wrote today in the Toronto Star:
||The money, if it comes, will help pay for very large infrastructure projects from which investors will expect to generate enough returns to justify their investments.... What sort of returns? Whatever the ingenuity of developers can concoct. Hydro rates and water meter rates, if that's what's getting built. Real estate development along routes rendered more attractive because the roads and rails will be getting a boost. And, yes, road tolls, like on Hwy. 407....
I'd like to understand where in the Liberal platform was the commitment to privatize the assets or the revenue streams or to impose user fees or tolls, because that's what's called a return on investment. Why was it not mentioned during the campaign?
Canadians voted for small deficits to invest in public infrastructure, and right now they're getting larger deficits to pay for the privatization of what they have paid for all these years.
You see, it's a question of language right now.
Let's have a reasonable discussion on the privatization of public assets. We are opposed. In general, the Conservatives are in favour. As for the Liberals, we did not know their position and it was not made clear, especially during the election campaign.
If the Liberals had been honest during the campaign and had said, “We can only reinvest in public infrastructure through tolls, through user fees, and through privatization of those assets”, then people might have chosen something different, but that's not what they heard. They heard that there will be deficits so that the government can invest and renew the infrastructure.
Minister, once again I'm asking you, where was there any mention of privatization, user fees, and tolls?
One more thing I notice is that since then we haven't really heard those words. We hear about “asset recycling”, or “asset revitalization”, or the new expression now, which is “a flywheel of institutional capital participation”. Every economist, everybody who is in the know, understands that those are buzzwords for privatization, for user fees, and for tolls, starting with Andrew Coyne and going with Mr. Steven Gordon, who was saying the same thing.
Once again, where was this commitment to privatize, to stream assets, or to impose tolls and fees?
Welcome this afternoon, Minister.
Our platform last year called for a number of investments in infrastructure. I like to look at it as a plan to invest in Canada and Canadians, to lay a foundation for sustained and more inclusive economic growth.
Frankly, it's a plan to create jobs and to make sure that there's a brighter future for my daughters, Eliana and Natalia, who are in kindergarten right now.
Minister, I would like to ask two questions.
The first is on the innovation hub. Our ability to compete in the world market is based on our ability to attract the best and the brightest, and I think the innovation hub goes a long way. It's a big first step. I would also like you to comment on our changes in terms of allowing foreigners, non-Canadians, to come work in our country on an easier basis.
I will do my second question in a package. Recently the Governor of the Bank of Canada, past governors, and past recent fed chairs all commented on the need to invest in infrastructure. Our plan, in my humble opinion, is a plan for the near term and, most importantly, a plan for the long term, something that was frankly lacking in the previous government.
Recently Mr. Poloz commented on our fiscal capacity, saying that we have a large degree of fiscal capacity to invest to create an infrastructure that allows for a higher sustained growth trajectory.
Those are my two questions, and I would like to hear your words.
I'll start by talking about the first part of your question in terms of the measures we're moving forward on.
We see that we have a very successful country, one with a very strong foundation, with an educated workforce, with a diversity that works in this country. We recognize that we are an attractive investment destination for companies from around the world.
We've seen success so far this year. We saw Thomson Reuters move their headquarters here. We saw General Motors, General Electric, and Microsoft make investments here this year.
We know we can do better. We know that the ability to go out and attract investment to Canada is critically important for creating Canadian jobs. We know that putting in place a systematic effort to ensure coordination at the federal, provincial, and municipal levels to ensure the biggest impact is critically important.
That's why we've decided to invest in an agency that will have an impact in this regard. We think it can have an important impact on jobs and on our economy here.
One of the other things that helps in that confidence for those firms as they think about coming here is the global skills strategy we have laid out. When we have gone out to talk to Canadian firms in the innovative sector and to international firms that are thinking about coming here, they have said that having the key talent is critically important for them. For them to have the one worker who brings a certain skill set that might help them to make more investments in Canada and create that many more jobs here can be critically important.
We've decided that we're going to help to make sure they can do that quickly with a guarantee that we can get workers here within 14 days. With regard to temporary stay workers who can make a difference in their efforts, they will be able to bring them in quickly for short stays. These are things that will make a real difference for businesses. These are critically important, and will help our economy to grow and create jobs.
The remarks of so many intervenors around the world on infrastructure are consistent with our plans. We know that especially in Canada, with the fiscal situation we have, we have the capacity to make those investments. That's why we've embarked on infrastructure spending. That's why Canadians decided that the plan around investment was much better than the other offer, which was around austerity. We know we have the capacity to make investments that can make a real difference. I think all of us will be pleased when we see a more productive economy down the road than what we have today.
Thank you, Mr. Chair, and thank you, Minister, for being here.
I have a couple of questions in particular, so I want to get right to them.
With all due respect, some of my colleagues have suggested during pre-budget consultations that such things as social and green infrastructure don't grow the economy as much as building roads or bridges does. I personally disagree with this. In some instances, social infrastructure such as secure housing can actually have twofold benefits. There's not only the construction of the housing, but we know that secure housing can actually add to secure employment in a lot of instances.
We have also been hearing a lot about an aging workforce, but we also know we haven't a good enough representation of women, as well as indigenous communities, in the workforce. As examples of investments in social infrastructure, I mention housing, or child care spaces, or frankly, clean water in indigenous communities.
Can you perhaps elaborate and speak further to the connection between social infrastructure investments not only being the moral thing, but also growing the economy?
In identifying our infrastructure plans, we have been very clear to recognize the need for different kinds of infrastructure in order for us to be successful. We talked yesterday about our need to make significant investments in transit systems, in transportation, because we recognize that's very important for trade. It's important for people to get to and from work. We made some significant investments in trade corridors because we know that, in particular for businesses, it's critically important to get that infrastructure so they can be effective.
Those are the things that people might quickly jump to when they think about infrastructure, but your point is a valid one. I think back to when I was chairman at St. Michael's Hospital, and the doctors there would always tell me that when we think about health care, we need to think about housing first. It's fundamental to our economy that we have the capacity to provide housing for people so that they can be effective participants in our workforce, so that they can actually share in the benefits that we're trying to create through our growth efforts.
Social infrastructure, building housing, can be a very important foundation from which we can be successful as an economy. That's one of the key reasons we've put a significant amount of infrastructure money into that area. We believe that creating housing can actually be a generator of immediate economic growth in terms of jobs, as well as long-term economic stability.
Concerning the green infrastructure, I think all of us know that life would not be quite as good if we didn't have waste water systems that worked, so as we have impacts from climate change, which are really happening across our country, we need to think about how we respond to those. Having the infrastructure that can enable us to be successful there is critically important. We will continue to think about all forms of infrastructure as critically important to us as we build an economy that will work for today and for generations to come.
It's a good question. I think the best way to answer it is to point out that our infrastructure plan is a significant plan. It's a plan that includes a significant amount of funding in the buckets that I talked about in the last response. It also includes the Canada infrastructure bank where $15 billion of the funding will be, and where $20 billion of repayable capital will be as well.
There will be some projects that will absolutely be perfect for the infrastructure bank. There will be many projects, infrastructure approaches, that will not be appropriate for that bank because they won't be big enough to have the potential to be attractive to pension funds.
Over the last few days I've spoken to a huge number of mayors across the country, in Edmonton, Calgary, Montreal, Quebec, Toronto, Ottawa. They've all been very enthused not only because they can see those transformational projects but also because they realize that if they can get at those transformational projects in a way that allows them to access other sources of funding, it will leave them more funding to do what they might need to do, whether it's to repair the snowplow fleet or other things that of course municipalities will have to do.
We see this as an additive to our impact on the economy. It'll have a huge impact on municipalities because it will give them more capacity to do more things that they need to do for citizens.
The invest in Canada hub is really intended to ensure that we let the world know that we want their investment if it's investment that will help us to create jobs in our country, if it's investment that will advance our goal of growing our economy. We know that as we do that, we need to deal with the challenges that investors face as well as present the opportunities that they have when they make investments in Canada.
We think that we can do better at presenting those opportunities, and that's what we're going to go about doing. You will have seen in The Economist this week, if you took a look at it, an article that's talking about the Canadian advantage and why investment in Canada makes sense because we have such a strong, educated workforce and the capacity to build off our great diversity.
We can see the advantages, and some of the challenges are also clear. We're going to deal with those. One of the things we did in our approach is we said that we're going to raise the amount of the threshold for investigation into whether a company can invest here from its current level up to a billion dollars. We're doing that in advance of what was previously understood. This provides a facility for people to make investments in Canada.
As I mentioned earlier, we've heard about the real need to be able to move talent here. If a business wants to start up in another country and wants to create 100 jobs in that country, it might need someone from their head office to go there in order to bring their culture and their technology and their know-how into that new place, so we're enabling them to do that in a way that will enable their investments and allow them to create jobs here.
These are really important decisions that can pave the way for expertise transfer into Canada, for better jobs for Canadians, and for a more vibrant economy in the long run.
Sure. I've been working with my advisory council on growth to think about how we ensure Canadians have the skills required to deal with the jobs of the future. We don't even know at this stage what many of them are going to be, so we need to create a constantly changing approach to skills. That is something we are looking at.
We also need to ensure that Canadians have access to information they require in order to choose the right courses to study and get into the right place for future opportunity. We are looking at those two areas as critically important in terms of some of the next things we are going to be talking to Canadians about.
With respect to immigration, we see our ability to bring people into our country as part of our long-term strength. It does create long-term growth. It also creates, as you mentioned, the short-term reality that we need to do very well for those people we invite to our country. That's something we are working on.
What you heard from my advisory council is an ambitious idea of growing the number of immigrants to this country. That ambition is important, and it's an ambition our government shares. We also know that we need to get right what we are doing now. The announcement on November 1 of 300,000 immigrants is really us saying that we want to do a fantastic job for the people we bring here so that we can position ourselves for continued growth down the road.
Thank you very much, Mr. Morneau, for being here with us today.
What I admire about our government is that it is trying to eliminate the child poverty that currently exists.
I'm so proud that we are the government that's really trying to rid our country of child poverty, because poverty does not stimulate the economy, nor does it stimulate the human condition. I am very proud of the measures that you've taken on that side. Sometimes when you have a deficit, there are very good reasons for it. It's a very good thing that we're doing.
I would like to go back to the infrastructure bank. I'm not completely convinced about this infrastructure bank, and I'm going to hold you to account, even though I'm in your governing party. I'd like to have a bit more understanding of the timelines and some of the types of projects you are looking at, because a lot of the projects might be very small. When do you actually see the infrastructure bank being fully functional in the Canadian economy?
There are two subjects in that question.
I'd like to start with the issue of child poverty, because I heard some comments. The action we took in Budget 2016 to introduce the Canada child tax benefit gives 3.2 million families the Canada child tax benefit. In 2017 we will have 40% fewer children living in poverty in this country than we had in 2014. I don't know how anybody living in a country as wealthy as ours can say that's not something that we should absolutely aspire to, the idea that we are going to make a difference in child poverty. I mean, I don't know how a House of Commons with people from all different parties can't say, “This is absolutely a goal that we should aspire to.” I couldn't be more proud of those efforts. If we can look back a decade or two from now say that we've been able to do that, we will all be very proud of the time we spent in the House of Commons. I'm sure of that, because it will make a real and measurable difference in the long term.
The Canada infrastructure bank is something that's going to make a difference over the long term. It's something that we know will amplify our efforts. We want to get going on it quickly, so in response to your question around timelines, we will move forward with legislation for it in our 2017 budget. Our aspiration is that it will be operational in 2017. We'll be developing a pipeline of projects. I can't tell you right now that I know what the projects are, but I can give you examples.
The project in Montreal that the Caisse de dépôt and the transit system are working on with the Quebec government is a good example of the kind of project that has inspired our vision, the kinds of projects that public sector pension funds, in the case of the Caisse de dépôt , look at and see that they can improve the lives of retirees over the long term by having infrastructure investments. We can do that to improve the lives of the people who live in Montreal by getting them to and from work more rapidly by getting at this project. There will be big transformational projects in this country that we won't get to or won't get to quickly unless we find a way to crowd more funds into the sector. That's what we aspire to do.
I want to just make sure that you, Monsieur Caron, and others realize that we remain committed to significant infrastructure investments that will not be through the infrastructure bank, because there will be many projects for which it will not be the appropriate vehicle. However, there will be others that will be appropriate and that will have a bigger, quicker impact on Canadians and a much bigger impact on our economy because we move forward in a way that is groundbreaking in the world. That's our objective.
Mr. Ouellette, you can ask a very quick question if you have one.
All right, we'll leave it at that.
When the Canada Pension Plan Investment Board was here, Minister, they did say that they didn't invest a lot in infrastructure in Canada and that their floor was about $500 million in terms of the diversified accounts that they have around the world on infrastructure. They looked at it and it had to be about $500 million before they would get into it. You might want to look at the transcript of their appearance here if you haven't yet.
With that, Minister, I think you knew before you came that there are certainly differences in approach to economic policy around this committee, but I think I can say on everyone's behalf that we really appreciate the fact that you made your fall economic update in the House of Commons, where I think it should be made, and we appreciate your appearance here today within 24 hours of having made that fall economic update in the House of Commons. I expect this was maybe a trial run for question period.