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Results: 16 - 30 of 46
View Peter Fragiskatos Profile
Lib. (ON)
Thank you, Chair.
Governor, thank you for being here. You shared with the committee in your remarks that you and the bank are foreseeing very robust economic growth in the year to come.
What are some key sources of potential risk, things that could stand in the way of that, things you worry about?
I know it's hard to predict that, but sources of risk are important.
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2021-04-27 17:03
I couldn't agree more, and as I said previously, there is a lot of uncertainty.
As I highlighted in a previous answer, the biggest uncertainty is the course of the pandemic itself. We're assuming this is a very nasty third wave. We are not through it yet. In our base-case projection, we have restrictions being lifted toward the end of May through June. If that gets extended, if there are new variants, if there are problems with vaccines, those will all have consequences for our economic outlook.
Beyond the pandemic itself, there are a number of uncertainties. I highlighted, in a previous answer, that the U.S. economy is doing well. We expect we will get some positive spillover effects from that. That will boost our exports, but there are risks to our exports. To be frank, we've been disappointed in the past.
Certainly, if the Canadian dollar were to be materially stronger, that could undermine the competitiveness of our exports and create a new headwind for our exports. There are also some risks with respect to protectionism. The U.S. has a buy America program. Hopefully, Canada and the U.S. can sit down and work this out, so that we can have an integrated North American market, but if there were new protectionist measures that limited our access to the U.S. market, for example, that would also dampen our exports.
To date, corporate bankruptcies have actually been quite low. That has a lot to do with the various supports that have been provided, but there's no question that there are many companies just hanging on. It gets back a bit to my earlier risk with respect to the pandemic. The sooner we can get through this and we can gradually reopen the economy in a safe way, those businesses can restart, but if that gets delayed, there are risks that bankruptcies could increase.
There are a number of upsides, as I mentioned. There are a lot of accumulated savings. That creates some upside risks. The U.S. economy is strong, but there are downside risks, and we're certainly weighing both of those. We will be assessing how those evolve going forward. I look forward to coming back to the committee and updating you.
View Peter Fragiskatos Profile
Lib. (ON)
Thank you, Mr. Chair.
Thank you, Mr. Giroux and your officials, for being here.
I want to ask you the same question I asked Governor Macklem a few minutes ago, and that relates to impediments to growth posed by risk.
At the end of March, I saw that you and your office forecast that this year, 2021, 5.6% is what's predicted in terms of economic growth for the country. In 2022, that drops a bit to 3.7%, but it's still robust. Those predictions are roughly in line with where the Bank of Canada forecasts things, as we heard earlier today.
My question to you is this: What sources of potential risk do you see that we all need to be mindful of and that could stand in the way of that strong growth?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2021-04-27 17:26
Like the governor said, I will probably identify the same risks as he did. The biggest risk, by far, is how the pandemic evolves and, flowing from that, how Canadians behave. What I mean by that is how secure they feel to resume what will be the new normal if it is back to where we were pre-pandemic. The recovery will be highly dependent on Canadians' confidence that they can go about their daily lives with travel, going out, etc., without getting sick. A lot depends on how the pandemic evolves.
Another big risk or uncertainty is the level of recovery in the U.S. If the pace of recovery in the U.S. is faster, as many expect, then it will have beneficial impacts on Canada.
Another risk is the risk of faster-than-expected rising interest rates. Faster interest-rate rises could dampen growth by weighing on households and businesses that then have to support a higher burden of debt servicing costs—and governments as well.
I could go on. There are upside risks and downside risks, but these are the main ones that come to mind.
View Peter Fragiskatos Profile
Lib. (ON)
Thank you very much.
I don't usually ask the same question twice. It's simply because we had the governor here today and you, and I think it's important to get on the record where both of you think the risk is, how both of you judge it and the sources of potential risk. The fact that your answers line up almost entirely with each another—you gave virtually the same answer, Mr. Giroux, as Governor Macklem did—says a great deal about these factors. They are the key things to pay attention to for us as a committee, so I appreciate it.
With that, I'll turn it over to my colleague Mr. McLeod.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2021-04-27 17:52
Thank you, Mr. Chair.
Thank you, Mr. Giroux, for being with us this afternoon. It's always a pleasure to see you.
We know that economic growth is the best way to deal with rising debt after a crisis.
Do you think the federal government's policy response throughout the pandemic, as well as the measures announced in the 2021 budget, will be effective in generating the economic growth needed to address the pandemic-related debt?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2021-04-27 17:52
Thank you for the question.
This is a very risky question for me as a non-partisan officer of Parliament. It's difficult for me to answer this question.
My team and I will certainly focus on determining the economic impact of the measures announced in the budget. In particular, we'll be looking at the impact it will have on the economic growth as well as the level of employment.
However, it isn't for me to determine whether or not the measures are appropriate from a public policy perspective. These are eminently political choices. If you ask people of different views, they will have different opinions on how best to generate economic growth. It's a question to which, unfortunately, I can't give a clear and definitive answer.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2021-03-18 11:33
Thank you, Mr. Chair.
Thank you, Mr. Giroux and Ms. Yan, for your testimony this morning at committee.
I think that penalizing the individuals who have become wealthy is very short-sighted. I think the government should be focused on creating initiatives and plans for individuals to become wealthy, for our country to prosper and for there to be economic growth and abundance here.
I'm wondering if you can comment on that. Have you seen anything at all from this government that would indicate they have plans for people to prosper and to become wealthy?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2021-03-18 11:34
That's a broad question. Generally speaking, the best way to increase wealth across a country is to increase the productive capacity of an economy. That could be done in a few ways, but not that many ways.
One way is to increase the number of people who participate in the labour force, by providing incentives to work and join the labour force. Another good way is to provide incentives to increase the capital, the machinery and equipment. Finally, there are measures that increase productivity, and these take a variety of ways, depending on the sector that you are targeting or looking at. These are generally the main ways of increasing the wealth of a nation.
As to whether we have seen that many initiatives from the government, that's an area that's probably highly sensitive politically and policy-wise, so I'll let each and every one of you be the judge of that, because different persons may have different perspectives on that. By that, I mean that some investments that are socially oriented might increase productivity in the economy, while others could be reducing the productive capacity of an economy, and not all investments are created equal.
Ian Lee
View Ian Lee Profile
Ian Lee
2021-03-18 12:11
Thank you, Mr. Easter.
I apologize for the technological hiccup. I do have a very high-speed connection, I assure you. I have Bell Fibe.
I want to thank the finance committee for inviting me to appear.
My disclosure is that, first, I do not belong to or donate to any political party, nor allow lawn signs on my lawn at all. Second, I do not consult to any company. I am paid by Carleton; that's who pays me.
Approximately 50 years ago, a very distinguished liberal professor of economics, Professor Arthur Okun, adviser to President John F. Kennedy, wrote a small monograph that became very influential. I studied it during my Ph.D. studies 30 years later. It was called Equality and Efficiency: The Big Tradeoff.
Professor Okun argued that almost every last public policy decision involves a trade-off between these two fundamental values, which could be understood, he said, as—to use synonyms—rights versus markets or equality versus efficiency. While most understand the idea of equality or equity today, or what some call “social justice”, the idea of efficiency or markets seems to be less and less well understood with the passage of time. “Efficiency” was the catchword that Professor Okun used to signify markets, economic growth, productivity, standard of living, jobs, or what Adam Smith characterized 300 years ago even more succinctly as simply “the wealth of nations”.
Restated using Professor Okun's phrases—and to be fair, I may be contradicting Professor Okun a little bit—equality requires efficiency; equality requires markets; equality requires growth, just as efficiency requires equality or equity if markets are to succeed. To state it even more bluntly, rights need markets if rights are to be achieved, while markets need rights to succeed.
Some may disagree. You can see the fact that I have travelled and taught, for 30 years, over 100 times, in developing countries, and I have noticed that remarkable correlation. The countries with the greatest degree of rights are the wealthiest and most successful countries, the OECD high-income countries of the world.
Unfortunately, it's increasingly fashionable among populists to claim that rights and markets, or equity and efficiency, are opposed to each other, antithetical. I am directly challenging the simplistic slogan “people over markets”. You hear it regularly.
Professor Okun understood that equality or rights are not free. Indeed, from Professor Okun's time in the 1960s to our time today, we have developed a much deeper appreciation of how costly policies and programs are to try to develop and achieve inclusion, equity and social justice. This is why we are at a critical point in Canada. The costs of equity have become so very large, and the deficits even larger, that we must seriously discuss, once again, efficiency or growth if we do not want to unwittingly undermine or sabotage policies to continue to offer programs to support equity or social justice.
If that is seen as a little bit extreme by some people, I just want to remind you of the 1995 largest downsizing in Canadian history. I wrote what was, I think, the definitive article on that in How Ottawa Spends.
I turn now to these issues in Canada, and to my criticisms, in order to make my philosophical comments to this point much more concrete.
One, no budget or plan has been presented to Parliament to provide the analytical and policy justification for increasing the debt ceiling. I would merely note that many years ago, in the seventies and eighties, in my previous incarnation in a decade-long career as a mortgage and commercial lender, I lent millions and millions of dollars. If a business owner met me to discuss their borrowing needs and they didn't have a business plan, I told the owner to go away, create the plan, and then return to talk to me about the plan, which was, is, and always will be the foundation or basis for credit authorization.
Two, there is simply no justification for delaying the presentation of the budget. The Government of Canada has an excellent digital financial infrastructure for financial reporting and accounting. Indeed, if I may say so, some of my finest graduates from our program over the past 30 years—I've been teaching for 32 years—have entered into the Government of Canada as financial analysts and accountants, and have become very successful at modernizing the now excellent financial and accounting systems. As someone who has lived in Ottawa for over 60 years, and with friends and relatives inside the public service of Canada who are familiar with the financial reporting systems, it is simply inaccurate to suggest that the empirical data of daily, weekly and monthly expenditures in the Government of Canada is unavailable to produce a budget.
Three, there is an urgent need for a fiscal anchor, per the IMF, the OECD, David Dodge, Don Drummond et al. There are many others. Contrary to those opposed, a fiscal anchor is not a lockbox that prevents government decisions. It is a tool of evaluation and accountability for all stakeholders. I understand that no one wants a bad report card. I can tell you that I hate student evaluations if they say bad things about me. I love them when they say nice things about me. But the genius of liberal democracy lies in the myriad of checks and balances that go far beyond mere elections. A fiscal anchor is a critical check and balance of fiscal policy.
Four, concerning the post-pandemic recovery, I urge the committee to debate and discuss whether the stimulus that has already been provided over the past 12 months via income support programs—I strongly supported them, as I think every Canadian did—and that drove the savings rate from roughly 2% to just under 30% is stimulus. I'm referring to the $200 billion. It can be argued that the Government of Canada, perhaps unwittingly and perhaps wittingly, engaged in post-pandemic stimulus with the plethora of income support programs.
Restated, there is approximately $200 billion—per the TD Bank and their economic analysis of only this week—in bank accounts in Canada, waiting for mass vaccination and confidence to return to individuals and businesses before they start spending. What I'm suggesting is that I don't think we need to stimulate the stimulus. However, although I don't think further stimulus is needed, I recognize that a good number of people out there do think that.
If we do proceed with stimulus, I urge the committee to recommend to the finance minister that we shift from consumption and income spending to investment. If stimulus is decided upon, it should refocus from general consumption and income support to infrastructure, and I mean real infrastructure, not mislabelled consumption spending on day care centres or hockey arenas, but investments that enhance the productivity of the economy: ports, roads, rail, airports, pipelines and digital infrastructure.
The economy has not underperformed due to lack of resources. Large numbers of Canadians, and I am one of them...I have been sitting in this house since last March, and 99.999% of my life has been in this house, because I am waiting for a vaccine, along with millions—
View Tamara Jansen Profile
CPC (BC)
I think these are for the finance officials here.
The Business Council of Canada said, “The pandemic ignited an explosion in public spending and debt. The federal debt-to-GDP ratio was 30 per cent before COVID-19 but now [is over] 50 per cent.” They're clear that what we need is an economic growth strategy, rather than a stimulus strategy.
Since we were told by the finance minister that the stimulus package was pre-loaded—that's why we spent so much more than the rest of our G7 partners—are we going to be growth-focused going forward?
View Wayne Easter Profile
Lib. (PE)
I will turn to officials, but if it's a policy decision of the government, officials can't answer that. They can answer questions on things that are in Bill C-14, but if it's a policy position of the government, we can't expect officials to answer to that, and I think that's one.
Go to your next question, Ms. Jansen.
View Francesco Sorbara Profile
Lib. (ON)
Thank you, Mr. Longfield.
Welcome, Deputy Minister, to the committee again, and thank you for availing yourself.
I wanted to get to the aspect of digitization. You came back today, and we wanted some clarification on the finance department's estimates on numbers with regard to digitization, in one aspect. In terms of looking at the overall economy, and even looking at the NextGenerationEU fund that's been set up with a heavy focus on digitization of not only the European economy but how that's paramount for all economies, how important is it that we take a whole-of-government approach working with industry, private sector, charitable and non-charitable sectors in terms of how we view digitization?
Michael Sabia
View Michael Sabia Profile
Michael Sabia
2021-03-09 12:51
It's very important. If we've learned one thing in this pandemic, it's that digitization and digital access is not a “nice to have” anymore; it's an absolute fundamental. I'd go further than that. In terms of the future economic growth of the country, not just digital access in the sense of broadband connectivity but digitization of businesses, the adoption of digital technology across small and medium businesses is absolutely fundamental.
It should be a national priority, because that's where the jobs and Canada's economic growth will come from in the years ahead. It's an area in which, if I can speak personally, I'm particularly interested, in terms of finding the new locomotives of growth for our national economy. This one is hugely important.
It starts with expanding broadband connectivity, because that's intuitive and important. It goes beyond that. It's the capacity of small and medium businesses to adopt these technologies, to have access to the people who can help them do that. There's a whole range of issues here that are important to the future economic growth and well-being of Canadians.
This issue applies very much, and I agree with you, across governments. It very much applies to an earlier question that was asked about how government interacts with organizations outside of government itself. This is something that Canadians have to get serious about, more serious than we've been.
I say that because the challenge of growth facing our economy is the biggest economic challenge we'll have once we get our way through this pandemic. This is something that warrants a lot of time and attention. It warrants a serious look in terms of government policy as to how to enhance what we're doing in this area.
View Catherine McKenna Profile
Lib. (ON)
Thank you very much.
I'd like to start by acknowledging that I'm in Ottawa on the traditional unceded territory of the Algonquin Anishinabe peoples. I'm really delighted to be here with my deputy, Kelly Gillis, and her amazing team.
Good afternoon to everyone on the committee. It's great to see you again.
Thank you very much for inviting me to discuss the importance of investing in infrastructure for Canadians and the role that the Canada Infrastructure Bank plays in our infrastructure plan. I want to thank the committee for undertaking this really important study.
First, I'd like to say that our government is committed to making critical infrastructure investments across the country that will help us build back better, create good jobs, grow our economy, create inclusive communities and tackle climate change.
There is no question that the Canada Infrastructure Bank plays an important role in our plan. The bank has already committed to infrastructure projects that contribute to creating jobs and growth, building inclusive and resilient communities, and helping us meet our climate targets.
By attracting private sector and institutional investors to infrastructure projects in the Canadian public interest, the Canada Infrastructure Bank brings a new approach that will impact how infrastructure in Canada is financed.
There is no question that the Canada Infrastructure Bank plays an important role in our plan. The bank has already committed to infrastructure projects that contribute to Canada’s economic growth, building inclusive and resilient communities, and that help meet our climate targets.
By attracting private sector and institutional investors to infrastructure projects in the Canadian public interest, the Canada Infrastructure Bank is taking a new approach that will impact the way infrastructure is funded in Canada.
The pandemic of the last year has challenged Canadians in countless ways. On top of the impact of the illness, death and public health measures to stop the spread of infection, we're now facing the challenge of building our economy back. The work we do and the decisions we make in the coming months and years will define our country's path for decades to come.
This is why the government is undertaking Canada's first national infrastructure assessment. By mapping out where we need to go, where gaps exist, what needs to be prioritized and how we will finance the investments in infrastructure that we need, we will enable provinces, territories, municipalities and indigenous communities to identify projects of key importance and get them built in the best interests of Canadians.
Let me take a couple of minutes to talk about where the Canada Infrastructure Bank is today. It has entered a new phase of development under a strong and capable leadership team. The bank is committed to developing and executing $35 billion in investments to get maximum long-term benefits for Canadians in five priority areas: clean power renewable generation, storage and transmission; broadband in underserved communities; building retrofits; agriculture irrigation projects to help prairie farmers; and zero-emission buses and charging infrastructure.
As the CIB is an arm's-length Crown corporation, the government sets the policy priorities and the CIB's board of directors is responsible for the organization's management and investment decisions. To ensure the organization's priorities remain aligned with the government's, last month I updated the CIB's statement of priorities and accountabilities. It now includes a target for the bank to invest at least a billion dollars in total across its five priority areas in revenue-generating projects that benefit indigenous peoples.
Additionally, last fall, our government joined the Canada Infrastructure Bank in announcing its growth plan, a clear plan for the crucial next three years. The three-year, $10-billion growth plan will be a key driver of our plan to build back better through its five major initiatives: clean power, broadband access, energy-efficient buildings, agricultural irrigation, and zero-emission buses.
The CIB has taken immediate action to implement its growth plan, first with a $407-million investment towards the largest agricultural irrigation project in Alberta. Recently, it announced an engagement with what is anticipated to be the largest battery storage facility in Canada, working with an indigenous community. The bank is also backing the REM, the largest public transit project in Montreal in half a century, and it's looking at how to expand the capacity of the New Westminster rail bridge in B.C. to boost trade and transportation.
The CIB now has priority sectors, an investment plan and a strong leadership team to play significant role in getting more and better projects built for Canadians across the country.
I am confident that the Canada Infrastructure Bank's investments will help to drive Canada's economic recovery and build the infrastructure we need, in all communities, for Canada's long-term success.
Canada's infrastructure plan is investing in thousands of projects across the country, creating jobs and building more inclusive communities.
Thank you.
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