Evidence of meeting #43 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
A video is available from Parliament.
6:15 p.m.
NDP
Murray Rankin NDP Victoria, BC
Okay.
I'll just say thank you for the reference in your materials to the need to address the Canada Pension Plan crisis. It's very good.
6:15 p.m.
Conservative
6:15 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair.
Thanks to all of you for coming here at this late hour, enduring us, giving us some great advice and your wisdom.
I get a little confused, and I want somebody to help me with this. We've talked about the necessity for reducing debt, and I agree with that. I agree with that premise. But by the same token, we talk about spending more for infrastructure. This is where it gets a little confusing. I think about the United States, which has spent an enormous amount of money. But they've borrowed that money, and yet they still include that in their GDP figures. Subsequently, we try to...or at some point there are those who emulate that and think we should follow that example.
So who is right? Do we as a government take the moneys that we take from taxes, and do we spend what we have, or do we—
6:15 p.m.
Conservative
The Chair Conservative James Rajotte
I'm sorry, Mr. Van Kesteren.
Colleagues, we do have bells for 15 minutes. Can I assume the consent of the committee to finish the next two rounds?
6:15 p.m.
NDP
6:15 p.m.
An hon. member
Okay.
6:15 p.m.
Conservative
The Chair Conservative James Rajotte
We'll finish with Mr. Van Kesteren and Mr. Adler. The chair may have one at the end.
6:15 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thanks, Mr. Cullen.
Do we spend more money and do we go further into debt, or do we apply the techniques or the position we have as a government, which is that we will spend money that we have? Somebody help me out with this.
I think I'll leave it open to anybody who wants to tackle it.
6:15 p.m.
National President, Canadian Union of Public Employees
I think the G-20 finance ministers, who wrestled with that very question, talked about the balancing act between the growth of one's economy and the debt as a percentage of that overall grown economy. They strongly counselled the world, to the extent they can influence the world, that debt reduction has to be weighed against sluggish economic growth.
6:15 p.m.
Conservative
6:15 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
The federal government has a budget of about $270 billion a year. Your interest payments are locked in. You have certain commitments to Canadians and the provinces. But that gives you, frankly, lots of operating room to set different priorities. Our view is that infrastructure deserves to be near the top of the list of priorities.
6:15 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
But that's not my question. My question is do we go into deficit further? We're ecstatic about the fact that we're one of the very first countries, I think the first G-7 country, to come out of this whole recession—we'll call it a recession—in a plus position. Do we go into a minus position to do these things, or do we do it with the money that we have?
I'm asking because we're setting our budget in motion, and we need to have your input as to what we should be doing.
6:15 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
In a purely arithmetic sense you can actually run deficits forever as long as the share of GDP is smaller than your growth rate, but I wouldn't counsel that. I actually think balanced budgets are important, because budgetary balance is an important anchor to put down. So within a balanced budget framework our advice would be that infrastructure spending deserves higher priority.
6:15 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Should we include in our GDP deficit spending or money we borrowed, like the United States does?
6:15 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
I don't understand your question in terms of public accounts.
6:15 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Should we calculate growth by the moneys we have taken and we've borrowed? Should we consider that an increase in GDP?
6:15 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
Government spending at any time is a form of stimulus. It adds to the economy, but I think the really important thing is get the right principles in place. I agree with many members of this committee that balanced budgets matter and that you start there. Then it's a question of reallocating within your spending envelope towards things that really do support the growth capacity of the economy.
6:15 p.m.
Senior Associate, Canadian Council of Chief Executives
I would agree with what Mr. Hodgson said, and I would say that the government's commitment to reducing the debt level to 25% of GDP by 2021 is a sensible goal. We would support that target.
6:15 p.m.
Conservative
6:15 p.m.
President, Frontier Centre for Public Policy
There has been a lot of research on the optimum size of government. A lot of studies say 30% of the economy is government. We're at 42% or 41%. I think there's lots of room to make governments smaller and pass the money along to private citizens.
6:20 p.m.
Conservative
6:20 p.m.
Conservative
Mark Adler Conservative York Centre, ON
Thank you, Mr. Chair.
I would like to begin with Mr. Hodgson.
If a family making $80,000 a year has $120,000 a year in expenses, ultimately what's going to happen is that this family is going to lose everything. Correct?
