Public Accounts Committee on May 7th, 2024

[Carolyn Rogers]

I'm going to ask my colleague to answer that because, as I said, it's a little complicated, given that our year-ends are different. It's not easy to find the same number in our financial statements as the same in their financial statements, but Coralia can give you that breakdown.

[Coralia Bulhoes]

We prepare our annual financial statements, which are from January to December, but then we also provide the data for the fiscal year of the public accounts, which is from April to March. We provide that to the Department of Finance and the Receiver General for Canada after the numbers are audited by our two auditors, so when it is rolled up into the public accounts, it's integrated into the overall public account numbers and you will see our results in the public accounts.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Can you explain what led to the losses from 2020-23? What is the total amount of the losses, including the indemnities paid by the Government of Canada?

[Coralia Bulhoes]

Just to clarify, the losses have been incurred in the public accounts starting in 2022-23. The current public accounts loss is $3.1 billion. In the previous years, we had surpluses, including a surplus of $2.4 billion for the previous year.

Overall—and it's important to note that the forecast we have is based on the market view of the interest path and also assumptions on the evolution of our balance sheet—based on the latest forecast, we're forecasting that the total loss will be about $9 billion.

It will be over a period of an extra two years—this first year of losses and an extra two years—after which we expect to be back in a net income position. That net income will allow us to offset the accumulated losses, and we're forecasting that by 2029, we'll be back in a positive net position.

[The Chair, Conservative, John Williamson]

Thank you. That is the time, I'm afraid, Mrs. Shanahan. We went well over.

We now go to Mr. Lemire for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

I pay a lot of attention to the consultation processes organizations use and the symbolism or meaning attached to things.

Ms. Rogers, how did you consult indigenous populations? Specifically, I'd like to know whether you incorporated consultations into the process for the redesigned $20 note featuring His Majesty King Charles. The British monarchy is often seen by some communities as harmful or offensive. As a Quebecker, I will also say that Quebec has repeatedly said how detached it is from the monarchy.

Do you have a choice as to whether Charles the monarch appears on the note, or would you say that yesterday was an especially happy day for the Bank of Canada?

[Carolyn Rogers]

I would make two remarks in response to your question.

First, directly to your question about the choice of having King Charles appear on the $20 bill, I think it's a long-standing tradition to have the monarch on our $20 bill.

To your other question, we do broad consultation on the various images that appear on our currency, including with the indigenous community. You will have seen us incorporate a number of images on various bills over the last few years. We will continue to consult with the indigenous community going forward.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I realize it's a long-standing tradition to feature the monarch's image, but wasn't this an opportunity to modernize the Bank of Canada's image, even Canada's image?

[Carolyn Rogers]

We'll continue to modernize our bills. We'll continue to consult the public on the images we use on our currency, absolutely.

As I said, we do that now, and we do specifically consult with the indigenous community. We have incorporated their feedback on a number of our bills recently.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

How do you consult with indigenous communities? I'm curious.

[Carolyn Rogers]

We have a number of advisory committees, but we do have an advisory committee of indigenous members and elders. We have gone out to communities. We've invited them into our premises. There's a variety of different ways.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

That's interesting.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Desjarlais, you'll have the floor for two and a half minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I'm inclined to question who the indigenous communities are. It's oftentimes a large failure of the government to properly consult. I'll quickly ask the question to the Bank of Canada.

Who are the people or the nations? Can you name one of them?

[Carolyn Rogers]

I'm sorry; I came here prepared for public accounts, but I would be very happy to get that information back to the committee. I would be very pleased to provide some additional detail.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Sure.

I'll provide a recommendation, as well, to state that the Truth and Reconciliation Commission affects all of us, including the Bank of Canada and including you, Ms. Rogers. It's a commitment that all public officials, anyone who serves the public, must undertake a process to better understand how we can better serve our country to understand that legacy and how it may impact people.

I'll leave that as a note, and I'll look forward to the supply of documents.

In regard to the public debate on the deficit in Canada, it's been one that's been a long time coming. I was pleased to hear about the renewal date of 2026 for the target inflation rate. New Democrats, for a very long period of our history, stemming back even to the 1980s.... Our Conservative colleague mentioned the 1982 budget.

There are often two ways that are debated publicly to control public debt. One is to raise taxes and the other is to cut spending. We rarely hear of a third way, which is to reduce real interest rates.

Does the Bank of Canada have any comments on that? I guess it wouldn't be the Bank of Canada but more the Department of Finance.

Do you have any comments about the contemplation of policies related to reducing real interest rates or policies to affect that?

[Nicolas Moreau]

You referred to real interest rates. This is a combination of the nominal interest rate and the inflation.

The Government of Canada doesn't have any policy in order to fix or impact the real interest rate. This is more for the Bank of Canada, by setting up the inflation target and the nominal interest rate.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

In terms of those agreements that set the Bank of Canada's target, who supplies information to those agreements? Is it the Department of Finance and the Prime Minister's Office? Who should we seek as being accountable to in relation to those agreements?

[Carolyn Rogers]

There's a broad public consultation as part of the inflation targeting renewal. Each time we renew the agreement, we do it a little bit differently, but it always includes consultation.

Certainly we seek out academic input. There's a lot of research, both from our own researchers at the bank and from the broader research community, that feeds into this. There are civil society groups, businesses, government organizations at the provincial and the federal level. It's a very broad, very robust engagement process to get input.

[The Chair, Conservative, John Williamson]

Thank you. That is your time.

As chair, I'm often given the right to a few questions. I have a couple, so I'm going to take the time. I'm just looking for some quick responses.

First of all, Mrs. Shanahan, thank you for raising this, because the Bank of Canada was brought in here today to talk about the losses that it's incurring now.

Where previously you'd always been a net contributor, you have turned into a net debtor now. In responding to a previous question, you referenced the time you expect to go from deficit into surplus. Can we get that, and then even beyond that, if you see a time to arrive at a net-net to come out ahead, we would appreciate knowing that.

Is that something we can get?

[Carolyn Rogers]

Yes, for sure.

[The Chair, Conservative, John Williamson]

Deputy Governor Rogers, it's your position—the bank's position—that the Government of Canada's deficit spending is not inflationary. Is that correct?

[Carolyn Rogers]

What we said at testimony last week is that from our initial look at the most recent federal budget, we don't expect it to contribute materially to inflation, but that the budget came out between forecasts, and as part of the next forecast, we will incorporate the budget.

[The Chair, Conservative, John Williamson]

Did the governor himself reference that provincial deficit spending could be harmful to the inflationary outlook and could cause inflation? I read something about that.

Could you clarify that, please?

[Carolyn Rogers]

I think what the governor said is something he's said many times before, which is that when we do our forecast and when we look at inflation, we take all forms of government spending in. We don't distinguish between one government and another. We take it all in and we measure its impact on inflation.

Regardless of the source of the spending, if the spending is outpacing revenue—