Finance committee  Do you want to continue with that?

Finance committee  That's why immigration policy is crucial. I think immigration quotas will be raised over the next ten years. That will be an economic reality in order to balance this impact.

Finance committee  I think if you look at the housing market in Canada, it has basically been booming for ten years. A lot of pent-up demand has been utilized. Then over the past year or six months we have seen Canadians trying to beat the HST and have basically accelerated their purchasing borrowing activity from the future and the future has arrived.

Finance committee  That's a very good question. I think the point I made earlier, that we became very sensitive to higher interest rates, is exactly what we are talking about. I do believe that house prices will fall, and that's a good thing, because I think we need this kind of adjustment. I don't think we are in a crash type of situation like in the U.S., because for that you need extremely high interest rates and you need a sub-prime type of situation, and we don't have these preconditions for a crash.

Finance committee  At this point, for the next 12 months, I don't think we can afford it. I think, given--

Finance committee  I don't think we can afford it. I think that given the fact that there is so much uncertainty, I would not change the system so quickly. I would allow monetary policy to do the work. I would allow interest rates to remain low, and, if needed, would actually cut interest rates as the first wave of improving the economy.

Finance committee  Let me say yes, we were able to recover all the jobs, but if you look at the distribution of those jobs you can see that roughly one-third of all the jobs created during the recovery came from two sectors: construction and the public sector. You don't have to be an economist to predict that those sectors will not create too many jobs over the next twelve months.

Finance committee  Let me talk about the housing story. I'll let other people comment on the manufacturing. The housing market is slowing significantly. House prices are falling everywhere, especially in the west, but also in central and eastern Canada. I think this will continue. The market is already adjusting and taking care of the business.

Finance committee  I agree. As I mentioned, it's not only the dollar but other challenges that will make the life of SMEs in Canada very difficult over the next two to three years. We've already lost ground. During this recovery, most of the job gains were actually in large corporations, not small businesses.

Finance committee  Yes, I was talking about the sensitivity of consumers to higher interest rates, if that's what you're referring to. The debt-to-income ratio is 146%, which is a record high.

Finance committee  It is the debt-to-income ratio.

Finance committee  Yes. If you look at the first half of the year, we have $8 billion of extra money just because of the fact that the economy was surprising us on the upside. But you know what? Easy come, easy go. This money will not be available in the next six months, because the economy will surprise us on the downside.

Finance committee  It's not going to be easy. I think it's doable, but it's not going to be easy. First of all, I think the worst will be the next eight to twelve months. Beyond that, we are going to recover. We are going to basically see a situation in which the economy will gather momentum. At the same time, it will not be rising by 6% or 7% on a nominal basis, and therefore we have to be prudent.

Finance committee  Well, I think that the realistic assumption....

Finance committee  Yes, I think that for the next 12 months a realistic number is around 2% to 2.5%, with nominal GDP at about 3.5% to 4%. Anything beyond that will be too risky. Beyond that, a nominal GDP of roughly 5% is reasonable.