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Results: 91 - 105 of 459
View James Cumming Profile
CPC (AB)
Thank you, Chair.
I'll direct my questions predominantly to Mr. Cross.
It's good to see you at committee again, Mr. Cross.
You talked quite a bit about quantitative easing and the Bank of Canada's massive bond buy. Should we be concerned that the majority of Canada's debt is really at a floating rate right now? What's the impact of that? Even if we were to fix it today, would we see an uptick in debt-servicing costs?
Philip Cross
View Philip Cross Profile
Philip Cross
2021-03-18 10:49
It's not all floating. As I mentioned, the PBO study found that an increase in interest rates in one year would have an impact of $4.5 billion, but over five years, it would be $12.8 billion, and that's because it takes time for that longer-term debt to roll over. It wouldn't be immediate, but even $4.5 billion is significant. Once rates start rising, they're not going to stop at the 1% scenario that was in the PBO's report. Once rates start rising, there's a potential there for them to rise quite significantly.
View James Cumming Profile
CPC (AB)
Prior to COVID, we had pretty anemic growth in Canada. Did you see anything in Bill C-14 or the fall statement that would give you some comfort that there's an actual targeted program on growing our way out of the crisis we're in today?
Philip Cross
View Philip Cross Profile
Philip Cross
2021-03-18 10:50
No. Everything—and perhaps correctly—in fiscal monetary policy is being aimed at short-term stimulus to the economy. It's understandable. We're still in a major crisis. Until that's resolved, I'm afraid short-term considerations are going to dominate.
However, it is a concern that there's almost no focus on the underlying determinants of long-term growth in this country, in particular investment in innovation. There's virtually no talk about it. All the focus, all the discussion in policy, is on labour, child care and guaranteed annual incomes. Everything is about labour. You don't hear anything about investment. Especially, you don't hear anything about the number one determinant of long-term growth in this country, which is productivity and innovation.
View James Cumming Profile
CPC (AB)
For investment to come back into Canada, because we saw an exodus of investment from Canada, the investors need some kind of certainty. Would you agree that, in this ask of significant dollars from the taxpayers of Canada, there should be at least some indication as to where that money would go to increase productivity and to encourage that kind of investment?
Philip Cross
View Philip Cross Profile
Philip Cross
2021-03-18 10:51
I wrote a paper last summer for the Macdonald-Laurier Institute, which I'm representing today, that talked about innovation. We've had programs to stimulate productivity and innovation in this country for decades. We have government programs all over the place. They just haven't worked. We have to get away from this mentality that if we fiddle with the inputs of innovation, or the presumed inputs of innovation, like research and development and education and so on, that we'll fix innovation. That's not working. We have to get back to how we encourage an entrepreneurial mindset in this country.
We've heard a lot of talk today about how somehow being wealthy is almost a crime in this country. It's something we should penalize. If somebody becomes rich, we immediately should increase taxes on them. Why don't we celebrate these people? Why don't we ask them: What is it that you did right that the rest of us can learn from?
That's much more the mentality you see in the U.S., and guess what. Guess who's the number one most innovative country in the world by far. It's our neighbours to the south, but we denigrate them. I just don't get it.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-03-18 10:53
Thank you, Mr. Chair.
Thank you to all our witnesses for presenting this morning before the committee. It's a great conversation.
Ms. Grynol, I listened to your testimony with great concern, especially the numbers you quoted with regard to hotels and possibly 70% of them going bankrupt unless the federal government extends, specifically, the wage and rent subsidies to the end of the year.
With that in mind, can you share your thoughts on the proposed application of the GST and HST to short-term accommodations through digital platforms such as Airbnb? How do you think this will level the playing field for hotels, which feel they have been disproportionately disadvantaged by these platforms?
Susie Grynol
View Susie Grynol Profile
Susie Grynol
2021-03-18 10:54
We've had an uneven playing field for some time now, at multiple levels of government, frankly. Here you have an industry that's emerged where they're basically selling the same product, but they're just doing it online. Who is competing with us are the operators who are buying up whole buildings and kicking people out of their homes, who are taking long-term housing supply off the market and who are using it to rent on a short-term basis. They can do that right across the street from a hotel, in a condo building where Airbnb owns all the units, or half of them, but they don't have to pay tax, the same health and safety standards don't apply and none of the rules governments have put in place to govern the accommodation space have applied to them up until this point.
We are delighted to see—and we've been working on this issue for a long time now—that effective July 1 there will be a levelling of the playing field for GST and HST application. This means Airbnb and other short-term rental platforms will have to charge and remit GST at the point of purchase. That will help to level the playing field.
I will also say that we are also seeing people booking cottages all over this country through Airbnb right now. You have no idea what their cleaning protocols are. They're not subject to the same standards as hotels are. Hotels, which have been playing by the rules all of this time and which are building hotels and contributing to communities, are sitting empty. I'll just leave that as an open comment.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-03-18 10:55
Thank you.
This next question is for anyone on the panel who wishes to comment.
There's been a lot of commentary from our opposition colleagues that we have spent too much on these programs, and that the supports we have implemented caused us to go into debt. We heard it again today in certain testimonies.
There are few options for financing monumental programs like the ones created to help Canadian weather this pandemic: either increase Canada's annual debt, raise taxes on Canadian families and businesses, or cut funding to crucial programs.
In your opinion, how should the federal government have financed this extra spending during this time?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-03-18 10:56
In the short run those are exactly the three choices that governments face. They can raise taxes, they can cut programs or they can run deficits, or some mix of the three.
The decline in federal government revenues at $60 billion is so substantial that there would really be no way for you to cut government programs to anywhere near balance the budget. To do so would be devastating. You'd have to totally eliminate EI, totally eliminate, say, the Department of National Defence, and totally eliminate the Canada child benefit program. That would have been sufficient to balance the books in 2020.
Clearly, deficit financing is the right decision at this point. The federal government interest rate on 5- to 10-year bonds is at, or near, historic lows. We haven't paid this little in interest rates on bonds going back to the 1950s. Under 2% is extremely low in terms of what we're paying to finance this debt. It's very different, actually, than the situation we faced in the 1990s, when interest rates were much higher.
Certainly there's a risk that interest rates could rise and could increase costs to the federal government, but interest rates don't just affect the federal government. Interest rate rises affect the household and corporate sectors in addition to the provincial sector, all of which pay higher interest rates and all of which are much more highly leveraged.
The federal government is sitting at 50% of GDP right now in terms of mixed debt. The corporate sector is 130% of GDP and the household sector is at 110% of GDP. Those sectors would be hit much harder. We'd be driven rapidly back into a recession if we were to see a big increase in interest rates, before the federal government suffered in any real degree.
Susie Grynol
View Susie Grynol Profile
Susie Grynol
2021-03-18 10:58
I would just say that without the investment in these programs, we wouldn't have a hotel industry today. I would just say thank you to the government for that.
However, I would say that moving forward, these programs have to be tailored. They have to be tailored to the people who really need them. If that doesn't happen, we will have spent all this money for naught.
View Wayne Easter Profile
Lib. (PE)
Susie, let me just throw in one question there, and that's on the wage subsidy. We have announced it to June 5, I believe.
If there was to be a change, when does that announcement have to be made? I'm talking to my tourist operators, and they're telling me, “We have to know now. It's too late to tell us in June.”
What are your thoughts on that?
Susie Grynol
View Susie Grynol Profile
Susie Grynol
2021-03-18 10:59
It has to be in the budget. The budget has to say to the travel and tourism industry, we've got your back; we are giving you predictability that you are going to be able to pay your bills through CERS, that CEWS is going to be there and you can hang on to your employees. It cannot be June; it has to be now, because the decisions on whether to close or stay open are happening today.
View Elizabeth May Profile
GP (BC)
I have a very quick question for David Macdonald.
Appearing before this committee some time ago now, then Governor of the Bank of Canada, Stephen Poloz, was asked about whether these policies could become inflationary. With crystal clarity, as I'm sure many of you remember, he said, “That's a problem I'd love to have.” He was much more worried about deflation.
David Macdonald, would you comment?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-03-18 11:00
We're concerned about Canada's federal debt-to-GDP ratio at 50%, but the Japanese debt-to-GDP ratio is at 260%, and they're desperate for more inflation. They've been encountering deflation since real estate crashed there in the 1990s, and so that is exactly a problem that we should hope to have.
Certainly, higher inflation would give the Bank of Canada more flexibility. Frankly, they're scraping along with zero lower bound. There's no way to increase economic growth anymore by lowering interest rates; they're already at zero. Higher inflation would give the Bank of Canada more flexibility to have slightly higher interest rates and potentially provide a bigger kick to the economy in the next recession, which will inevitably happen.
Results: 91 - 105 of 459 | Page: 7 of 31

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