Evidence of meeting #4 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Finn Poschmann  Director of Research, C.D. Howe Institute
Mario Seccareccia  Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives
Robert Fairholm  Director , Economic Forescasting Services, Centre for Spatial Economics
Claude Faucher  Vice-President, Centrale des syndicats démocratiques
Pierre Patry  Treasurer, Confédération des syndicats nationaux
Perrin Beatty  President and Chief Executive Officer, Canadian Chamber of Commerce
Ted Mallett  Director of Research, Canadian Federation of Independent Business
Diane Brisebois  President and Chief Executive Officer, Retail Council of Canada
Pierre Laliberté  Political Advisor, Fédération des travailleurs et travailleuses du Québec
Michel Arnold  Executive Director, Option consommateurs

4:20 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

This is for any of you. If you did a straw poll out on the street asking a thousand people on the street whether interest rates should be lower, how many do you think would come forward and say that they think interest rates should be higher?

4:20 p.m.

A voice

It depends whether it's Bay Street or Main Street.

4:20 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

Prof. Mario Seccareccia

Let me just say that the question you're posing should perhaps be expressed a little differently.

4:20 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

I'm just going back to a question that was raised yesterday, to point out that the question was invalid. I think most Canadians, if asked whether interest rates should be higher or lower, would always say lower; I would love lower interest rates. And I think that most Canadians--

4:20 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

Prof. Mario Seccareccia

What we should be asking, and the minister should be asking, is whether or not the governor is doing a good job right now. Indeed, this is of concern here.

4:20 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

No, I appreciate it, sir. I was just trying to point out—and you're doing it for me—how ridiculous yesterday's statement was. You're pointing that out for me, and I do appreciate that quite a bit.

Mr. Faucher, last year in Quebec we had 70,000 new jobs created. In Canada last month there were 63,000 new jobs created. We have record low unemployment of 5.8%. Income grew year over year by 4%. We also have record involvement in the workforce here in Canada.

By any measure, Canada is doing pretty well in a lot of sectors, isn't it. I'm not suggesting for a moment that there aren't challenges, but generally speaking, the economy, including in Quebec, is performing quite well right now.

4:20 p.m.

Conservative

The Chair Conservative Rob Merrifield

Time is running out.

4:20 p.m.

Vice-President, Centrale des syndicats démocratiques

Claude Faucher

It may well be that in certain circumstances, where some sectors of economic activity are negatively affected, others benefit for different reasons that I am not aware of. I am not an economist by training.

What we have noticed among the workers that we represent is that this job creation, which looks good on paper, does not translate into reality. The jobs that replace them are not of equivalent quality. They are jobs of the working poor, that is, people who are unable to earn a descent living, who work absurd hours, in unacceptable conditions. In short, that's what we must deal with.

4:20 p.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

Now we'll move on to our last questioner.

Ms. Nash, the floor is yours for six minutes.

4:20 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

Thank you, Mr. Chair.

My question is for Professor Seccareccia. You had said earlier that Canada's dollar had appreciated higher than the currencies of other countries vis-à-vis the U.S., and that therefore factors other than the softening of the U.S. economy were at work besides. Then, I believe, Mr. Poschmann had talked about a petro dollar.

The boom in the oil and gas sector clearly is having an impact on our dollar, and that dollar is having an impact on the manufacturing sector. We're certainly not the only country in the world to have the booming oil and gas sectors having this impact on manufacturing. Can you give us some examples of what other developed countries have done to insulate their manufacturing sector from a petro currency?

4:20 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

Prof. Mario Seccareccia

I could give the example of Norway. The problem is that obviously we have a different system here constitutionally, but if I take the example of Norway, in fact they've also gone through the process. They have North Sea oil. They've gone through the whole period of booming oil prices, but they've set up a fund out there that is being redistributed in some ways.

Indeed, this is why I mentioned the equalization formula. We've been arguing over how we could get rid of oil revenues from that; well, I would argue that we should probably have even a bit more weight on that.

What's really going on is that regionally there are sectors. I have some figures here, just to show you. Since 2000, the share of oil out of total exports has tripled in Canada, so there are those who are benefiting tremendously from that.

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

So you're saying that Norway took some of those oil revenues and put them in a fund?

4:25 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

What did they do with that fund?

4:25 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

Prof. Mario Seccareccia

They are redistributing it nationally.

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

What do they use the fund for?

4:25 p.m.

Full Professor, Department of Economics, University of Ottawa, Canadian Centre for Policy Alternatives

Prof. Mario Seccareccia

I'm not exactly familiar with all the details--perhaps somebody may be able to correct me on this--but what they've done is set up a separate fund for the purposes of being able to compensate and provide necessary funds for those sectors of the economy that have been hurt by it.

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

Okay. Thank you very much.

I would also like to ask a question--

4:25 p.m.

Conservative

The Chair Conservative Rob Merrifield

Did you want to hear from Monsieur Patry? He had his....

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

I'm sorry, yes, Mr. Chair.

4:25 p.m.

Conservative

The Chair Conservative Rob Merrifield

I didn't think you saw him.

4:25 p.m.

Treasurer, Confédération des syndicats nationaux

Pierre Patry

I would simply like to add something because I find the question extremely interesting.

The impact of the rising dollar has been discussed, but one of the main reasons behind it is the Alberta oil boom. This boom has an impact by keeping the value of the dollar high, and if the Bank of Canada maintains the interest rates at a high level, then this accentuates the phenomenon, that is, the dollar remains strong. This has no impact, or at least less of an impact, in the provinces that have natural resources. But for provinces where the manufacturing sector is strong, such as Quebec and Ontario, it's a double whammy: over and above the impact of the rising interest rates, there is the price of oil that bolsters the value of the dollar. This cannot be overlooked.

In our economy, the manufacturing sector accounts for 21% of employment income and 90% of international exports. I don't know what can be done elsewhere in the world, but it seems to me that in Canada, the government could take action in certain sectors. The Bank of Canada should intervene in monetary policy, and the government should do its part by helping business. Otherwise, the entire manufacturing sector will collapse, in large part because of the price of oil which inflates the value of the Canadian dollar.

4:25 p.m.

NDP

Peggy Nash NDP Parkdale—High Park, ON

Thank you very much.

I would like to put a question to the witness representing the labour movement. We have been told that we have not yet felt the full impact of the economic situation on the manufacturing sector. Hundreds of thousands of jobs have been lost, and this will continue for a few years.

My question is the following: if jobs are lost in the manufacturing sector, in fact if companies are lost in the manufacturing sector, if we lose all sectors such as the textile industry and serious repercussions are felt, what will happen in future? Will we be able to recover these sectors? Will they be able to start up again down the road? What do you see in the cards, if we do not act now to solve the crisis in the manufacturing sector?

4:25 p.m.

Vice-President, Centrale des syndicats démocratiques

Claude Faucher

I see a very pessimistic outlook. Earlier I heard a colleague state here that the job losses we are currently seeing are just the tip of the iceberg, given that they came in the wake of the rise of the Canadian dollar, and so I'm doubly concerned.

People are claiming that in economic terms, it is the consumers who are benefiting, but I have seen no proof of that to date. Consumers must protest and lobby to see real price cuts. And even if prices drop, who does that help? Countries who export their products to Canada, importers and retailers who sell their products at prices that are about the same as production prices here, whereas we have no more jobs, and people are unemployed and experiencing problems. This situation is extremely troubling to me.

4:25 p.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

I think we have to call it. Our time is actually over. I want to thank the witnesses for coming forward and thank the questioners.

We'll now have a very short pause as we ask our second panel to come forward to the table. As we shuffle the name tags, we'll adjourn for just a couple of quick minutes.