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Results: 31 - 45 of 380
Philip Hemmings
View Philip Hemmings Profile
Philip Hemmings
2021-04-15 18:22
Yes. At some point, once recovery is really solidly under way, then all of the attention should go back to prioritizing some reduction in public debt.
The extent to which active measures may be needed to bring that down will depend on the speed of recovery. If you have a sufficiently strong economic recovery and tax revenues come back rapidly, it might be that your deficits reach levels at which you're going to get reductions in the debt burden without having to make stringent cuts to public spending and so on.
This is all really going to become more transparent in the next year or so, I'd say.
View Pat Kelly Profile
CPC (AB)
Thank you.
I'll keep Mr. Cross going and ask him a question.
Given your testimony just now, what do you make of Bill C-14's unprecedented expansion and raising of Canada's debt ceiling? There's no budget, so we don't know why the debt ceiling would need to be raised. The debt ceiling is part of a second act, and we don't even know why it would necessarily be connected to this bill, which implements the fall economic statement.
Mr. Cross, what do you make of adding hundreds of billions of dollars to Canada's debt ceiling?
Philip Cross
View Philip Cross Profile
Philip Cross
2021-03-18 10:21
As mentioned, a lot depends on the course of inflation and especially interest rates. At near-zero interest rates, almost any amount of debt is affordable and sustainable. The minute interest rates start rising very quickly, this country could find itself in a difficult position.
This was exactly the conundrum the economy faced in the 1994-95 debt crisis. At that point, interest payments especially became unsustainable. The Bank of Canada made it clear that it was not going to bail out the federal government. As the federal government made difficult fiscal choices, the Bank of Canada then maintained lower interest rates to ease that path to restore fiscal equilibrium. A lot depends on the course of interest rates, and a lot of people seem to be counting on interest rates staying low.
A lot of what I said today was based on Chairman Powell's comments for the Federal Reserve board yesterday. He clearly indicated that the central banks will put up with almost any amount of inflation this year. However, going forward, once people start to expect inflation, all bets are off and interest rates could rise quite quickly.
We've already seen interest rates rise this year. The 10-year bond rate in the U.S. has jumped up from less than 1% at the start of the year to 1.7% already. I sit here and watch every day and there's an increase of almost 0.1% a day. This is the story in financial markets these days: How long and how sustainable will the upward movement in interest rates be? That's going to determine everything.
View Julie Dzerowicz Profile
Lib. (ON)
The other thing you're alluding to and you're reminding me about also, Mr. Macdonald, is the fact that if the federal government didn't take on the debt, we have heard from others that there would be worse repercussions for the economy and, as you just mentioned, there would be far higher debt levels whether on corporations or on the provinces.
We have often heard our Minister of Finance say that the government is taking on the debt so that Canadians don't need to. Do you think that's a fair statement?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-03-18 10:29
I think it is a fair statement. The debt could have occurred someplace else. Certainly even in the corporate sector, despite the businesses being the primary beneficiaries of the federal government's COVID-19 efforts, the debt-to-GDP ratio for the corporate sector has risen 15 percentage points in two quarters. It's going to be very difficult for the corporate sector, which already had very high debt, to dig itself out of this, and it would have been much worse had they not received things like the wage subsidy or support for rent.
Despite the help for households, household debt has continued to go up, and despite help for the provinces, provincial debt has gone up over the last three quarters.
Debt has to be understood across the entire economy. It should be looked at not in isolation, at only the federal level or the household level, but also with regard to how it moves and can move between sectors.
View Tamara Jansen Profile
CPC (BC)
Thank you.
Mr. Cross, the finance minister has told Canadians ad infinitum that we can easily afford the debt we have because interest rates are so low and are guaranteed to stay low.
Would you say that her confidence is based on fact or fantasy?
Philip Cross
View Philip Cross Profile
Philip Cross
2021-03-18 10:47
When it comes to interest rates, there are no guarantees. I said I think central banks have made it clear they will not be raising interest rates under any circumstance this year, but as you get into next year and the following year, that's where already we're seeing inflationary expectations and upward pressure on longer-term interest rates building in the U.S. We're going to have to match that; otherwise all the money will just leave this country and go to the U.S.
Counting on interest rates staying lower forever is, I think, already.... That's been the story of financial markets so far this year—that interest rates may rise faster than central banks had thought or promised.
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 Tamara Jansen Profile
CPC (BC)
Thank you.
Mr. Wudrick, the Business Council of Canada said, “The pandemic ignited an explosion in public spending and debt.” The federal debt-to-GDP ratio before COVID was 30%. Now it's 50%. Since we were told by the finance minister that the stimulus package was “preloaded”, which I'm assuming is meant to explain why they spent the most out of all the G7 partners, and now, looking at what appears to be a plan in Bill C-14 to get permission to spend another somewhere in the range of $700 billion, with a $100-billion slush fund and a $600-billion debt ceiling increase, should Canadians be worried that the Liberal government is out of control?
Aaron Wudrick
View Aaron Wudrick Profile
Aaron Wudrick
2021-03-17 17:23
I think Canadians definitely should demand and expect to have a budget. When a government wants to spend money, it's very simple: You come forward, explain what your plan is, and make your case for it. They're not doing that. They are using the pandemic as an excuse to not present a budget.
I was forgiving of that last year. I think most people were. But if you look around the world, all of our G7 peers have managed to present budgets. Every province in Canada except Nova Scotia has been able to. In fact, Ontario will present three budgets. Since their 2019 budget, which was after the federal budget, they'll have presented three budgets before the federal government has presented one.
Just in terms of accountability and transparency, I think it is irresponsible. They're out of excuses. They need to present a budget as soon as possible.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-03-11 15:49
Let me turn to part 7 of Bill C-14. That part effectively increases Canada's debt ceiling from $1.17 trillion to $1.83 trillion.
Am I correct, Minister? Just answer with a yes or no.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2021-03-11 15:50
No, I just asked whether you are increasing the debt ceiling from $1.17 trillion to $1.83 trillion. It's yes or no.
View Chrystia Freeland Profile
Lib. (ON)
Let me just say a quick point on the jobs numbers, because I think those are something that all of us are deeply concerned about. I sure am. Let me say that today 636,000 Canadians who had a job before COVID struck don't have a job.
I think the most urgent priority of our government and this entire House needs to be to provide the economic support to get them back to work.
Results: 31 - 45 of 380 | Page: 3 of 26

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