Finance committee  That to me is a political question more than an economic question. I think the economics are pretty straightforward. It's in everybody's interest to make sure that we right-size housing and have proper densification and all that kind of stuff. If there are financial constraints and considerations that are delaying that or making it more difficult in municipalities or provinces, I think those could be addressed, but I think at the heart of it is simply political challenges with how municipalities, and provinces to some extent, want to deal with the fact that populations are rising, thereby forcing some pretty difficult choices on the part of local politicians.

Finance committee  Absolutely.

Finance committee  My apologies if I led anybody to confusion. On the housing thing, I think this is a uniquely made-in-Canada issue. The point about it being broader than a Canadian issue was related to inflation and some inflationary dynamics. On housing, I suppose you could argue that the decline in long-term interest rates around the world, which occurred in the pandemic, contributed to the housing situation here, but fundamentally, not building enough homes is our problem.

Finance committee  Yes.

Finance committee  About 1.8 million.

Finance committee  Again, counterfactuals are always a little tricky, but it's almost certainly the case that the economic harm would have been significantly larger. Households' financial positions would have been impacted by a significant loss of income, which clearly was more than made up for by the government.

Finance committee  Is that question for me?

Finance committee  Reasonably limited control.... That being said, when governments are in a position to shut down various parts of the economy, clearly that affects the pricing dynamics in that space. However, I'd like to think that much of the inflationary impulse that we are dealing with now in Canada is ultimately the reflection of policy by the Canadian government and other governments around the world to try to get us out of this.

Finance committee  Could I just clarify that, Mr. MacDonald? Are you talking about the investments done in the context of the pandemic or things before the pandemic?

Finance committee  In principle, OSFI regulations require that when homeowners qualify for mortgages, they're qualifying at a rate of interest that is dramatically higher than what they're paying now. If, in fact, we're right and rates go up by about 200 basis points between now and, say, sometime next year or the end of this year, that is well within the qualifying rate that is used by banks and other financial organizations to figure out if households are going to be able to afford to continue paying or servicing their debt at a higher rate.

Finance committee  I'm not sure I get the question.

Finance committee  Yes.

Finance committee  Thanks, Mr. Blaikie, for the question. There are a couple of points on that. We do think interest rates need to go up, but they need to go up principally to try to bring inflation back into the realm of the Bank of Canada's targets. That's the principal driver now. Of course, by raising interest rates, you are going to cool the housing market in principle.

Finance committee  Good question. If there were an easy answer, we would have resolved the issue, or at least had some potential solutions in recent years. I think that the root of the issue is largely political. As you said, the government determines how many people enter the country. However, ultimately, the cities, and particularly the city councils, have a great deal of power over where these people will be placed and what support they'll receive in the cities.

Finance committee  Generally speaking, yes. The bottom line is that we think—and again, our assessment has changed over the year—that the majority of the strength we're seeing in inflation now—apart from weather-related effects that affected some crops and that are, of course, temporary by nature—whether in Canada, the U.S. or elsewhere, is simply the result of the fact that there is a tremendously strong appetite for goods globally right now, and firms haven't been able to produce enough of those to meet demand, so prices have been creeping up.