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Results: 1 - 15 of 142
View Nathan Cullen Profile
NDP (BC)
Mr. Wudrick, how much have the Conservatives added to the national debt since taking power?
View Nathan Cullen Profile
NDP (BC)
Income splitting is essentially a retroactive policy costing about $2 billion.
Is it a good move to borrow $2 billion in order to bring in a program that helps 15% of Canadian families?
Aaron Wudrick
View Aaron Wudrick Profile
Aaron Wudrick
2015-05-28 10:43
I think generally our position is that borrowing to spend is a bad idea.
View Joyce Bateman Profile
CPC (MB)
Now, you're talking about the G-20, and I just want to focus on that. You will be familiar with this, of course; I mean, it was in our throne speech in 2013, and our Prime Minister has said that he is targeting a 25% debt-to-GDP ratio by 2021. We're working on bringing that down.
How important do you think it is for G-20 countries to manage their debt?
Stephen S. Poloz
View Stephen S. Poloz Profile
Stephen S. Poloz
2015-04-28 9:19
That's a very difficult question, because the debt depends so much on what's going on in each individual country. As I said before, the whole global economy is pushing against these headwinds, which are the aftermath of the financial crisis.
The growth we see is not natural growth; it's happening because policy is stimulating that growth. We have not reached the stage where it's all escape velocity and everything is happening. The U.S. economy is the first, and may be there. The U.K. economy may be there. We may be approaching it. These are the sorts of things.... But other countries are still working hard at it.
Turning that into a pure fiscal question, I'm sorry, is just not my—
View Bryan Hayes Profile
CPC (ON)
I do.
Just quickly, on page 1.8 there's a reference to the interest ratio. This ratio has been in a steady decline, reaching 10.4% in 2013-14. I just want to get a sense of what contributes to that decline and what that means to Canadians. When I look at 10.4%, I'm saying, okay, so what? What if it were 20%? What if it were 5%?
What is the significance of the 10.4% to Canadians?
Bill Matthews
View Bill Matthews Profile
Bill Matthews
2014-11-06 16:03
Maybe I'll start and then let my colleague from Finance finish.
That's been a steady decline. When you think about the public debt charges, if I recall correctly, going back to 1996-97 our expenses on public debt were eating up about 30% of our expenses. That leaves 70%, just grosso modo, for government programs.
When you can drive down the interest number as a percentage, it basically allows a higher percentage of your spending to be on program spending rather than paying down the debt. In terms of the percentage you're dealing with on interest—here's where my colleague Mr. Leswick can clarify and add additional stuff—there are two things. One is the size of your debt. The second thing at play is the size of your economy.
Debt over the last couple of years has been going up because of the recession; we had the economic action plan, etc. But that came on the heels of a number of years when the government was running a surplus, so there were reductions in debt. Interest rates are lower. That certainly helps. Since the 1996-97 year, the economy has certainly grown as well.
Nick, you may want to clarify or add to that. You're good? Okay.
View Mark Adler Profile
CPC (ON)
View Mark Adler Profile
2014-11-04 11:39
Thank you, Governor and Senior Deputy Governor, for being here today.
I want to quote Ms. Wilkins. You made a speech, Mr. Poloz, that you've referred to a number of times during your presentation today, and you said, “The legacy of a financial crisis is a heavy burden for any country, and paying down debt impedes normal economic growth for a long time.”
Given that quote, how significant a decision was it by our government when we assumed power in 2006 to pay down $30 billion in debt? Could you answer that? Also, how significant is it that, of the G-7 countries, we are going to have the first balanced budget in 2015?
Stephen S. Poloz
View Stephen S. Poloz Profile
Stephen S. Poloz
2014-11-04 11:40
As I said earlier, I think throughout that piece the good news was that we had the flexibility to be able to respond to a very adverse development. It's one of the ingredients that helped Canada to have a better great recession than other countries, and then what really made it clear to markets that everything was on track was the credible fiscal plan that came with it.
I would leave my comments at that, but those ingredients were helpful to markets and of course to the economy at a time when exports fell very dramatically. That's the most important growth ingredient of our economy ongoing. Low interest rates combined with some fiscal action made the difference.
Gregory Thomas
View Gregory Thomas Profile
Gregory Thomas
2014-09-29 15:30
Thank you, Mr. Chair, and committee members.
On behalf of the Canadian Taxpayers Federation, Canada's largest, oldest, and noisiest taxpayer advocacy group, I thank you for the invitation to appear today.
We recently surveyed our supporters and had nearly 6,000 responses to the survey, which was asking what the priorities should be for the Government of Canada in the years ahead. Interestingly, 53% of this sample of nearly 6,000 Canadians said that paying down Canada's debt was their top priority for what to do with the surplus, while 44% favoured tax cuts and 2% wanted to see more federal spending.
So we strongly urge the committee to urge the government to include a debt repayment schedule in the 2015 budget. Nobody's expecting the debt to be repaid overnight, but over the course of 11 surplus budgets leading up to the financial meltdown in 2008, over $100 billion of federal debt was repaid by governments of all stripes, the lion's share of that by a Liberal administration. We hope the Liberal caucus and the official opposition will take note of the desire amongst Canadians for lower debt.
Our supporters also indicated a preference for fewer tax brackets, lower rates, and fewer boutique tax credits. When it came down to a straight-on request for input as to how best to deliver tax relief to families, the most popular option was increasing the child care deduction and allowing stay-at-home parents to benefit from the child care deduction. We believe that if special relief is going to be afforded to Canadian families, then a child care deduction of $10,000 per child that is available to stay-at-home parents, whereby a parent in the workforce could pay a stay-at-home parent, is an affordable, flexible, and effective way of getting that tax relief to Canadian families.
We continue to call for the government to reduce employment insurance premiums and to ultimately implement an employment insurance savings account, whereby Canadians who never use the employment insurance fund and who work all their lives could roll their own employment insurance premiums into their retirement savings at retirement. This year, a working couple earning the average industrial wage—two spouses earning approximately $50,000—is going to see $4,300 docked from those paycheques on behalf of the employer and the employee and sent to Ottawa. We think that's far too much money benefiting far too few Canadians. We strongly urge the committee to urge the government to begin comprehensive reform of employment insurance.
We have a whole bunch more in our brief, but if I keep talking my friends won't have a chance, so I'll once again thank you for the invitation.
Philip Cross
View Philip Cross Profile
Philip Cross
2014-09-29 15:39
Thank you, Mr. Chair.
I'd like to summarize. The MLI has done a couple of research reports in the area of federal deficits. One result that I think most members would be familiar with is the impact of aging on future deficits. Another impact I'll be discussing is the implications of provincial deficits, an impact that is rarely discussed. I'll start with the aging.
The rapid aging of the population is going to put pressure on federal finances through at least four mechanisms. One is that there will be fewer workers paying income tax. Second, there will be increased demands on the unfunded portion of our pension plans, notably the OAS and GIS. Third, there will be increased demand from the growing number of federal employees for the unfunded portion of federal government employees' pensions. Finally, there will be increased demands to fund the health care system.
One estimate we've published is that from now to 2030 the aging of the population by itself will add 52.5% of GDP to federal government debt outstanding. That's more than all federal government debt today.
The other thing I'd like to discuss is that while you look at federal finances—and they've come down from a peak deficit of over $40 billion at the worst of the recession to a negligible deficit over the last four quarters—what's rarely discussed is how there has been almost no improvement in provincial deficits over that time. In fact, provincial government debt today is higher than it was at the worst of the recession, totalling something on the order of over $40 billion at the moment.
The largest deficits are being run by Ontario and Quebec, the provinces that also have the highest provincial debts. Quebec's debt outstanding is 48.1% of GDP. Ontario is next at 37.4%. Ontario's is growing much more rapidly.
On the other hand, with regard to Quebec's deficit, they've had more ability to bring down their deficit, but it's worrisome that they haven't been able to eliminate it completely. In 2013, then finance minister Marceau gave an “engagement ferme”, in his words, that the deficit would be eliminated. Instead, the deficit came in at $1.7 billion and, by the Quebec government's own estimates these days, it is heading up to $3 billion.
Why am I talking about provincial deficits? In the fall of 2012, we published a study showing that financial markets regard the federal government as giving an implicit guarantee to bail out the provinces that get into debt. This happened regularly during the Depression, but we don't have to go back that far.
One of the interesting chapters in Chantal Hébert's recent book, The Morning After, was about then Saskatchewan premier Roy Romanow saying that when he took over the province they were “flat broke” and adding, “I don't think I'm overstating it.” He then recounted how he got a call from Brian Mulroney, then the prime minister:
...he phoned me about the gravity of the Saskatchewan and Newfoundland situations. The essence of the conversation was that we had to take dramatic action and if we did not, the federal government would have to act and the Bank of Canada governor would have to intervene.
That I think very explicitly says that the federal government is perceived correctly by financial markets as backstopping provincial debts. So to the degree that provincial government deficits continue to be a problem, this is something that can't be ignored when assessing the future outlook for federal finances.
Thank you.
View Mark Adler Profile
CPC (ON)
View Mark Adler Profile
2014-09-29 16:50
Thank you very much, Chair.
Thanks to all of you for being here today. I really do appreciate your input.
Mr. Cross, you brought up the whole issue of the albatross of provincial debt and our ability for ongoing fiscal sustainability in our country. Mr. Speer wrote a paper recently comparing Ontario to California and showing the abysmal situation that Ontario is in. Here at the federal level we're going to be discussing how to use the fiscal dividend. For the most part, the provinces, perhaps barring Saskatchewan, don't have that luxury, but we here at the federal level do.
Mr. Speer, I'm wondering if you could just initially comment on, one, the best uses for the fiscal dividend, and two, that light that's coming down the tunnel, that locomotive that's coming towards us in terms of the provincial debts that we are facing as a nation and the burden that's going to place on fiscal sustainability going forward. Could you comment on those two initially?
Sean Speer
View Sean Speer Profile
Sean Speer
2014-09-29 16:51
Thank you.
Very briefly, Mr. Chair, what the highest priority ought to be is obviously going to govern the committee's work throughout the hearings.
I spoke today about capital gains tax relief, because I really do think that in terms of a bang for your buck, this could be a low-cost, high-impact measure. It's really something that the committee ought to look at, if the goal is to set the foundation for economic growth going forward.
With respect to the issue of provincial deficits and debt, it's obviously something that we've written and talked a lot about at the institute, including in the work by Mr. Cross. I would just say that we've seen some positive steps in recent weeks and months in the Province of Quebec, which has the highest debt-to-GDP ratio. We seem to have a government that's saying the right things about getting it under control and a populace, a citizenry, that has elected a government that's been honest about what steps need to be taken. The truth is that I think the more worrying jurisdiction at present in the Province of Ontario, because we are not seeing a government or citizenry that seems prepared to take the steps necessary to turn the province around.
Brian Kingston
View Brian Kingston Profile
Brian Kingston
2014-09-29 17:06
Mr. Chairman, committee members, thank you for the invitation to take part in your pre-budget consultations on the topic of balancing the federal budget to ensure fiscal sustainability and economic growth.
The Canadian Council of Chief Executives represents 150 chief executives and leading entrepreneurs in all sectors and regions of the economy. Our members lead companies that collectively administer $4.5 trillion in assets, employ more than 1.5 million Canadians, and are responsible for the majority of Canada's private sector exports, investments, and training.
Canada's economy has proven resilient since the recession and continues to expand at rates higher than in most other OECD countries. Reducing the federal debt while implementing pro-growth policies would ensure that Canada continues to grow and remains an attractive destination for business investment and job creation. The CCCE fully supports the government's commitment to balanced budgets and debt elimination. Achieving balance and reducing Canada's debt-to-GDP ratio has four significant benefits.
First, balanced budgets and low debt levels are good for Canada's long-term economic growth. Estimates across advanced economies show that debt levels above 90% of GDP are correlated with lower economic growth. Fortunately, Canada has not reached this point, but that is not a reason to be complacent. The combined federal-provincial net debt reached 62.1% of GDP in 2013 and 2014—an increase from 49% in 2008 and 2009. According to the Fraser Institute's 2014 report on government debt, the story is significantly worse if you look at total liabilities, including debt guarantees, contingent liabilities, and unfunded program obligations. Using this metric, all provinces, except Saskatchewan, have total liabilities as a percentage of GDP in excess of 150%. In short, Canada's long-term prosperity depends on achieving and maintaining a sustainable debt level, and the federal government must lead the way.
Second, balanced budgets allow the government to respond to long-term challenges such population aging. The old age dependency ratio, which measures the number of elderly people as a share of those of working age, will rise dramatically due to a decline in total fertility rate and increases in life expectancies observed over the last 80 years. According to the Parliamentary Budget Officer's fiscal sustainability report, this will lead to slower growth in the labour force and total hours worked. Combined with lower labour productivity growth, projected average real GDP growth will be 1.7% over the period from 2013 to 2087, down significantly from average growth of 2.6% over the past 30 years. Balanced budgets and a low debt-to-GDP ratio give the government the flexibility to face this demographic reality.
Third, balanced budgets and a low debt-to-GDP ratio give the government the ability to respond to future downturns. While Canada's economy has performed comparatively well, the recovery from the global financial crisis has been underwhelming and continues to fall short of expectations. The recovery has had repeated false starts and still faces considerable headwinds. Much of this can be attributed to poor global growth that has averaged 3% over the past 2 years. That's well below the average prior to the crisis, and it's unlikely that 2014 will be much better. Until global headwinds abate and U.S. economic recovery fully takes hold, Canada will be vulnerable to new economic shocks and must be prepared to respond. Balanced budgets and a low debt-to-GDP ratio help to insulate Canada against such shocks.
Fourth, balancing the budget allows the government to make targeted investments to improve economic competitiveness. According to the PBO, the federal government has the fiscal room to increase spending, decrease revenues, or some combination of both.
The following pro-growth policies would ensure that Canada remains an attractive destination for business investment and job creation. First, implement a single, comprehensive portal that brings together data on labour market conditions and job vacancies across the country. Second, introduce a direct R and D support program for major new private sector innovation projects. Third, make targeted investments in infrastructure to promote increased trade and economic growth. Fourth, conduct a comprehensive review of the tax system with the goal of simplifying the tax code, encouraging the growth of small and medium-sized companies and improving exporters' competitiveness.
In conclusion, the CCCE supports the government's efforts to return to balance. Once balance is achieved, we recommend targeted investments to improve Canada's economic competitiveness and long-term prosperity.
I'd be happy to answer any questions you may have. Thank you.
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