Finance committee  We operate nationally. The weight of Alberta is roughly 12% nationally. The weight of Ontario is I guess about 43% or 44% nationally. So obviously, if indeed in Ontario or Quebec we had inflation going through the roof, it would necessitate much stronger action. A good example would be 1988-89, when in fact there was actually a huge problem in central Canada and we had to take very vigorous action, you'll recall, back then.

Finance committee  I'm going to let Paul deal with that, but let me make two observations. One, corporate consolidation is going on worldwide. It's going on here. It's going on elsewhere. And there are some very real reasons for that. Second, the flows actually do go in both directions. Paul is going to talk about that in a second.

Finance committee  Let me take them very quickly in reverse order. As I said, there is substantial day-to-day and week-to-week volatility in the dollar. You are right, we are above the range that we did our projections on, and we'll just have to see as we come to the next time what sort of trading range we have.

Finance committee  I'll try to go very fast. First of all, when I come back in October we can talk about the social program side. On hedge funds, what I said earlier is absolutely true. These private pools of capital--whether they be hedge funds, whether they be pools of taking corporations private--and this tremendous, apparently inexhaustible supply of liquidity to fund these guys are the real issue, and I'd be really happy at some point in the future to come back and spend some time on that.

Finance committee  I wish I could answer that question as of 2007. I worked on this back in 1996-97. All I can say is that at that time our problem was that other countries in fact allowed all of these games to be played. So our firms would have been at a serious disadvantage if we had closed the thing up tight.

Finance committee  It's a very difficult, highly annoying, highly frustrating issue, because the appearance here of all sorts of bad things and the actuality of some bad things going on bring the system as a whole into disrepute. That is the very important reason to try to deal with it. All I'll say is that in the two times I tried to go at it, it was extraordinarily difficult to actually find legislative means to accomplish the goal.

Finance committee  That's absolutely correct, and therein is the difficulty. This is just a very difficult area, and it's been difficult ever since I've been engaged in this. It was difficult when we rewrote the tax law in 1972. When we rewrote it in 1972, the act was about that thick; it's about that thick now, and a lot of it has been to try to deal with these very thorny issues.

Finance committee  Our target is to keep total CPI inflation, including these volatile--

Finance committee  Yes, that's our target. We recognize that those elements are volatile, so we're likely to bounce around our target a little bit. The band of one to three gives you the normal range you might expect that total CPI to bounce around. It's not that we're happy if we're at three or we're happy if we're at one.

Finance committee  In all tax legislation, as you know, transition is absolutely critical regardless of what you're going to do, but at the same time, the credibility of the whole tax system does come into question. This is the very difficult issue we struggled with in the 1980s and again in the 1990s.

Finance committee  One has to be careful. The issue is that of a Canadian firm wanting to do an expansion abroad, that expansion is being financed by debt, and whether that debt ought to be deductible against the normal business operations here in Canada. In principle, what one would say is that if it's part of their normal business operations, if it's not feeding through a tax haven to get some special deal, it shouldn't be very different from doing an expansion here, because indeed what you're trying to do is build a global enterprise that's of great benefit to all Canadians.

Finance committee  We did a study, and we continue to study this issue. Our best estimate was that constituted or gave us an index that was the best forward-looking indicator of where consumer prices were likely to move, because our policies act only in a forward manner. We actually calculate three or four others, which we publish on our website as well.

Finance committee  We need to work closely with the Chinese authorities. We have a good relationship with the People's Bank of China. It isn't easy for them either. We are used to leaving it up to the market to make the necessary adjustments. Since it's a matter of maintaining control, they're afraid of making adjustments to relative prices, even though it would benefit them a lot.

Finance committee  In any event, we have...

Finance committee  Yes, but let's be quite clear. Whether it's China, Europe, the United States, or Canada, it's in the interests of everybody to have the resolution of these imbalances take place in a smooth manner. It's in the interests of everybody domestically. It's in the interests of no one to do something foolish.