Finance Committee on May 2nd, 2013

[Murray Rankin, NDP, Victoria, BC]

Is there somebody from FINTRAC who might be able to assist?

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Rankin.

[Murray Rankin, NDP, Victoria, BC]

Thank you. Good morning.

I think I understand that FINTRAC is requesting in the estimates a net funding decrease; however, it's requesting a funding increase of half a million for an economic increase for personnel expenditures. If that's correct, what operations are going to be affected by the net decrease in the amount of funding requested?

[Hélène Filion, Chief Financial Officer, Financial Transactions and Reports Analysis Centre of Canada, Department of Finance]

The economic impact is small on personnel, small on trips and professional contracts.

[Murray Rankin, NDP, Victoria, BC]

Okay.

There was a report out last month from the Standing Senate Committee on Banking, Trade and Commerce about combatting money laundering, essentially. In that report, the committee recommends the elimination of the $10,000 threshold for international electronic fund transfers.

If that recommendation were implemented, would FINTRAC require more resources—human resources or money—to address the increased number of reports that would be submitted to FINTRAC?

[Hélène Filion]

First of all, the government is welcoming that report. We are currently assessing all the recommendations, so I don't know if Finance can answer that question. Until there is an answer on the recommendation, I cannot talk about it.

[Diane Lafleur]

The government is currently assessing the totality of the recommendations. There are a number of interesting recommendations that came out of that report. Part of that assessment is also assessing any potential cost implications of the recommendations, so that will factor in to the decision-making.

[The Chair, Conservative, James Rajotte]

You have 30 seconds.

[Murray Rankin, NDP, Victoria, BC]

That's fine, thank you.

[The Chair, Conservative, James Rajotte]

Okay. Thank you, Mr. Rankin.

Go ahead, Mr. Jean, please, for your round.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for coming today.

I just want to set the record straight, Mr. Chair. As far as I recall, we actually had Minister Flaherty here on November 7 on BIA two, and Minister Menzieson March 5. I thought I heard my colleague mention that we haven't had Minister Flaherty here in over a year, I think he said. I just wanted to make sure we set the record straight on that, because obviously, we have had two appearances by ministers of finance here over the last six or seven months.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

First of all, if the marketing man could come back, that would be very helpful.

Meanwhile, I'd like to talk a little bit about inflation targeting.

I know it's more of a discussion for the Bank of Canada, but I noticed in your introductory remarks that you talked a little bit about inflation targeting. I know in 1991, for instance, when inflation was at 5%, there was a 2% target introduced. It was met in 1998, and since that time it's been consistent as a target.

First of all, on the issue of price-level targeting versus inflation targeting and the real effects of inflation on economic growth, why do we have a 2% target instead of a 0% target? I guess that's my main question. What effect will inflation targeting have on economic growth generally on a macro basis?

[Galen Countryman]

Again, that's a bit beyond my area. I think that's a question more for the Bank of Canada.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I thought you were going to say that.

Do you use any of the Keynesian methods, such as the new Keynesian Phillips curve or any of that methodology to deal with your financial projections, or is that more of a Bank of Canada issue? You deal with the numbers and report them in the main estimates, and then the supplementary estimates, etc. Do you use any of this modelling, the new Keynesian Phillips curve, and things like that, in your analysis of what's happening?

[Galen Countryman]

Again, that would be more of a Bank of Canada question.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Would that be no, you don't use it?

[Galen Countryman]

I'm from the fiscal side, so on the economic side they use.... I know they have models but I don't know exactly what they use.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Catta, I know we've had an opportunity to hear from you many times before and your understanding of marketing is quite impressive. What is top-of-mind awareness in marketing? Do you know?

[Jean-Michel Catta]

I'll respond again from the finance perspective. When we're talking about economic issues, or what's on people's minds more generally, it would be public policy issues, concerns about the economy. We've seen this particularly over the past two or three years: concerns about the economy, concerns about their jobs, concerns about their financial well-being, particularly given the current economic circumstances.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

But in marketing, top-of-mind awareness is a marketing idea that suggests the first brand that comes to your mind is top-of-mind awareness. In essence, when you think of soft drinks, most people think of Coca Cola; when you think of Mexican restaurants, Taco Bell usually comes to mind. It depends on the marketing, and that's what top-of-mind awareness is.

In this particular case, I'm asking this question, but isn't it true that people don't even recognize from time to time that they see advertising? In fact, the marketing experts and research proves that many times people don't see marketing, but in their mind it's there because they hear the jingle, or they inadvertently see things as they pass by on highways, such as billboards, without even recognizing it consciously, but subconsciously it's there. That's why many mega-billions of dollars are spent every year in North America on top-of-mind awareness, consistently using that same jingle, that same ad. In fact, I would suggest that's why Coca Cola for the most part only advertises as Coca Cola. They don't advertise the other sweetened drinks they have because they're trying to distribute that and trying to make sure people think of Coca Cola products always. Is that fair to say?

[Jean-Michel Catta]

I would agree with your assessment, and if I link it to the economic action plan advertising, it's the reason the advertising, particularly in terms of the messaging and the nature of it, has been fairly consistent over the past two or three years, to your very point about being consistent on what this plan is about. So again, from the messaging standpoint, it is effective.

[The Chair, Conservative, James Rajotte]

Last question.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

In fact, it's all about confidence in the economy, confidence in the market, confidence in Canada. As we see the stock market, it's basically 100% driven by consumer confidence, so it's fair to say that the marketing is working. We've heard from you that the marketing is working and, in fact, the top-of-mind awareness campaign is very successful because it's making Canadians believe positively in the economy. Wouldn't that be fair to say?

[Jean-Michel Catta]

Absolutely.