Evidence of meeting #29 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was target.
A recording is available from Parliament.
Prof. Mario Seccareccia
... there are other aspects. The exchange rate stems from that, but it is not...
Conservative
Shelly Glover Conservative Saint Boniface, MB
I'm sorry, it is my turn. You can leave it at that. I just wanted to correct what had been said.
I'm going to switch to something Mr. Julian said about losses in manufacturing jobs. The statistics are clear, with 600,000 net new jobs being created because of a number of factors. Yes, there was a bad month there; we are not immune to the effects of the European challenges and the challenges in the United States.
But when he talks about manufacturing job losses, I mean, we're talking about monetary policy. But there's fiscal policy, as you've said, that's linked, and I mean, this is a colleague of mine who is emphatically against trade, and trade agreements are what is driving much of the recovery in the manufacturing sector--
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you, Mr. Chair. It's a point of order to correct my colleague. I'm not against trade, of course. I'm against bad trade--
Conservative
The Chair Conservative James Rajotte
Mr. Julian, as an experienced parliamentarian, you know that's not a point of order. It's a point of debate.
We'll return to Ms. Glover, please.
Conservative
Shelly Glover Conservative Saint Boniface, MB
As I said before, he's emphatically against trade agreements.
The reality is that we as a government have to also make decisions, hard decisions on things like having moderate increases to EI instead of the 35% increase that both the Liberals and the NDP suggested, which would have been a $4-billion hit. Maintaining those anchored expectations, when we're talking about corporate tax rates, is another way we are trying to leverage what we already have as far as a fiscal advantage goes.
So I found it very interesting that Mr. Julian would bring up losses of jobs, because, frankly, if we had followed the plan on that side of the table--a $10-billion tax hike, EI rates that total $4 billion, doubling of the CPP--that, in my opinion, would have absolutely negatively impacted on jobs and killed jobs.
I'm going to ask you, Mr. Ragan and Mr. Alexander, to switch hats for a moment and just comment on whether inflation would have had any kind of benefit. If we had gone on that track, would we have seen worse losses in jobs?
Conservative
The Chair Conservative James Rajotte
Okay. We have about two minutes, so that's about a minute per person.
Prof. Christopher Ragan
I think my answer is that you have seen a massively expansionary monetary policy in the last three years, and I can't imagine.... Well, I can imagine what a more expansionary policy would look like; it would have been U.S.-style or U.K.-style quantitative easing. But we have had expansionary monetary policy. It's still expansionary. It's not obvious to me that there would have been a big difference if the Bank of Canada had been following a different targeting system.
Also, I certainly agree with Craig that the current inflation targets were not constraining the Bank of Canada's actions.
Senior Vice-President and Chief Economist, TD Bank Financial Group
Well, we certainly have seen weakness in the manufacturing sector, but when we think about the weakness we're seeing, a lot of it is a reflection of the external environment that is happening in terms of demand for Canadian exports. We have a very weak U.S. economy, which in my opinion is experiencing a lost decade. Regrettably, it's the destination for 73% of our exports, and an awful lot of those exports are manufactured goods. So it's a reflection of the weakness in the external environment.
In terms of fiscal policy, I think the best thing the government could do was to provide the right incentives for business to invest, and I think in fact that has happened. The problem is that business confidence has impaired the reaction of businesses to those incentives. Again, as I said earlier, I think the concern here around confidence relates to the external environment.
When we look at the last three quarters, we've actually seen very strong business investment, even at a time of very volatile financial markets. You can just imagine how much stronger it would have been if confidence had been higher.
Conservative
The Chair Conservative James Rajotte
Okay. Thank you.
I want to thank all the gentlemen for being with us here today and for their comments and responses to our questions. It was a very interesting discussion, and we sincerely appreciate it.
Maybe we will take up Mr. Ragan on his suggestion that we do a future panel on the impact of Europe on the Canadian economy. That would be a very interesting discussion as well.
Mr. Sumner, thank you so much for joining us by video conference. We appreciate your time here as well.
Colleagues, I just want to remind you all that we need you to give your pre-budget recommendations to the clerk on a USB key by tomorrow at 9 a.m.
Again, thank you all for being here.
The meeting is adjourned.