Finance Committee on May 15th, 2012

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Thank you, Minister. I have to tell you that from my perspective, this is an excellent budget for our future. I come from an area where there are a lot of jobs and very few people who are prepared to fill those jobs. We've had the burden of outrageous red tape and systematic problems throughout the employment sector. I come from northern Alberta, and I have to say that part 3, particularly, is an excellent first step, I think.

I was asked by local media in my community about some comments made recently. For 45 years I've been in Fort McMurray, which, from only 1,400 people, has seen tremendous growth. They asked me to comment in relation to the NDP leader's comments recently about the oil sands being a “disease”. To be blunt, most of my constituents laughed at it because they thought it was so ridiculous, until I had to explain to them that he is the leader of Her Majesty's loyal opposition. Then, quite frankly, they responded that it was quite scary. In fact they referred to it as negligent.

I think many Canadians don't understand the importance of the oil sands and the resource sector to Canada. I just wanted to ask you your opinion of that. I know that right now we're producing about 1.3 million barrels a day. We anticipate within 22 years getting up to about 4.3 million barrels a day, which in government revenues means somewhere around $15 billion to $18 billion per year, both provincial and federal.

I have to tell you, Minister, that I'm afraid for our country and the future of our country if these types of comments go unchecked, unsubstantiated as they are. I'd like your opinion in relation to who actually benefits from the oil sands production. I know we've heard evidence here at this committee that an equipment manufacturer from Ontario would be out of business if it weren't for the oil sands. I know that most of the constituents in my riding are from Ontario, Atlantic Canada, Newfoundland and Labrador, and Quebec. In fact, I would suggest that probably 70% or 80% of my constituents are from these provinces.

Is that your recollection and understanding of what's going on in northern Alberta?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes, it is. There's a lot of misinformation.

Really, the comments attributed to the opposition leader are divisive and not good for the country. You know, it's as if one would say that all the cars assembled in Canada are assembled in the province of Ontario, and therefore there's something wrong with the balance being in favour of the province of Ontario and not the province of Quebec, or the province of New Brunswick, or some other province.

The aeronautics industry is very strong in Quebec. Of course the resource sector is very strong in western Canada, but it's also strong in Newfoundland and Labrador.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

And northern Quebec.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

And northern Quebec; Plan Nord is in northern Quebec.

Some of the data on this certainly confirmed that the rising tide lifts all boats. According to Statistics Canada, trade in goods and services from the Atlantic provinces to Alberta grew 14.8% per year from 1998 to 2008. Ontario and Quebec also benefited from stronger demand from Alberta, with trade flows growing 6.2% and 7.3% per year over the same period of time. Stronger demand from Alberta was mainly for primary metal products, fabricated metal products, and machinery. Estimates suggest that there are 130,000 jobs based in Alberta, with indirect suppliers and induced employment representing another 270,000 jobs across the country.

As you've indicated, the oil sands industry in Alberta is going to grow and is expected to purchase $63 billion worth of goods and services from companies in Ontario alone over the next 25 years.

So this is all good for all of us as Canadians from coast to coast to coast.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

In fact the Canadian Energy Research Institute, an independent not-for-profit organization, actually identified that in the oil sands industry alone $218 billion was going to be invested over the next 25 years, and for every dollar invested it is $8 worth of economic value. One-third of that is outside of Alberta.

Some friends and I got together and started to add up all the promises the NDP had been making in relation to funding. If the NDP leader gets his way and shuts down the oil sands industry, is there any air of reality regarding the ability to make these payments and follow through on the promises that he has done?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well it obviously would not be possible. The oil sands are a very important economic driver in this economy, now and in the future. They are not alone, of course. We have other major projects—the hydroelectric efforts in Newfoundland and Labrador, Plan Nord in Quebec, the Ring of Fire in Ontario, all of the development in northern Manitoba, hydroelectric projects in Saskatchewan, and oil and gas in Alberta and British Columbia.

All the way across the country, there are a lot of major projects. We want them, of course, to proceed as expeditiously as possible with appropriate environmental reviews.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. Marston, please.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Thank you, Mr. Chair, and welcome, Minister. It's great to have you back before us.

You will know from my approach in the House that I often talk about my constituents, and my constituents and the media and some others have raised some grave concerns regarding the transparency of this government and what people in my riding have called the abuse of the parliamentary procedure.

Minister, today you say that because of changes that won't come into force until 2023—and obviously my interest is still the OAS because I had the pension file for a number of years—it is hard to predict the savings that you'll actually achieve. Now how could the government predict that the savings were in fact necessary, if those predictions were not made previously using a macroeconomic model?

Sir, you must surely have made projections. Your department would have made these projections. Minister, can you tell us or will you share with us at least the projections so that we can fundamentally understand the “why” behind your move?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well to understand the why, one has to appreciate the demographic facts, which I've been through before. This is true in most of the major western economies—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

No, we have heard you on the facts around why, from your perspective, relative to the numbers on that. We're saying, sir, would you share with us those projection figures so that we can have an understanding?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We don't project beyond five years. Our fiscal framework plan is over a five-year period.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

If that's the case then I'll move on to one of your favourite people, the Parliamentary Budget Officer. He's responsible for making estimates of any proposal concerning issues that fall within the government's authority. He discloses the economic and financial consequences of raising the age of eligibility for OAS. He has mentioned that the government could show greater budget transparency if it disclosed its analysis and long-term projections. You say they are five years, and I will take you, certainly, at your word.

We need to know the consequences. If we are supposed to, as a committee, discuss this and work through, can the minister make these analyses available to the parliamentarians on this committee?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The budget planning cycle as you see in the budget documents, which we tabled at the end of March, runs five years from now. By delaying OAS from age 65 to 67, we know the numbers of people involved who will be of that age. What we don't know, of course, is how many people will be claiming OAS because it is not a pension; it's a social program. It's based on need—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I won't disagree with you on that point, sir.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

—it's not based on contributions.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

But on the basis that people at the lower end use this $6,000 that they get from OAS to survive on, it's a crucially important one to them.

Now not only will Canadians have to wait longer, to 67—that's very clear—before accessing OAS, but they will also have to wait for the benefits and the guaranteed income supplement. Again, sir, I am referring to the poorest of the poor. Chances are these people are already on either a disability pension from a provincial government or perhaps social assistance, and they are going to have to stay on there and that has them already below the poverty line because of these two programs. Can the minister provide us with the details of his plan to assist the provinces?

You've spoken, sir, about the fact that you're going to assist the provinces. Is there a detail that you can provide to us?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

No, there is not because one will have to see what additional benefits any of the provinces would end up paying some 15 years from now. It's a long time from now. One would hope that we'll have a strong, vibrant economy and very few people will need to have the benefit of this social program.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I hope along with you. But the reality is that when you did your assumptions—or at least apparently—and talked only about age and cost, you said yourself that if we have a booming economy.... The growth in GDP is where the Parliamentary Budget Officer came from, in saying that this program was sustainable as it is. The concern is still there.

Your department works on statistics, assumptions, and models. Would you share them with us?

[The Chair, Conservative, James Rajotte]

Just be brief.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

As I've indicated to you, the fiscal framework is done on a five-year basis. You can make various assumptions and do modelling if you make assumptions about how many people will be entitled to OAS 15 years from now.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Marston.

We will go to Mr. Allen, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair. It's great to be here for this kickoff meeting and welcome the Minister of Finance.

Minister, I want to talk to you a little about stability in the housing market. That's a very important consideration for us here in Canada. I know that in New Brunswick we have a lot of forestry operations that cater to the housing market in both Canada and the U.S., from an export standpoint.

In division 11 of this, it talks a little about some of the changes in the Canada Mortgage and Housing Corporation, and specifically about reforms around the governance and the oversight framework for CMHC. It's also important that there be increased oversight from the Office of the Superintendent of Financial Institutions, which will take a more active and formal role in monitoring the commercial activities of CMHC.

I got some pretty good feedback on that, including from Louis Gagnon of Queens University. He said that the Office of the Superintendent of Financial Institutions is responsible for the oversight of insurance companies, so it only makes sense to bring CMHC under that purview, since they're a systematically important insurance entity.

Can you talk a little about this increased oversight and the importance of it for CMHC? I guess the second part of that question is: can you highlight some of the other actions we've taken to strengthen the housing market in Canada?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Since our government was elected in January 2006 we have taken action three times to tighten the mortgage insurance market: in July 2008, February 2010, and January 2011. Then there are the most recent initiatives in the budget bill about governance and supervision of CMHC. We will take further steps if necessary to tighten the mortgage insurance market.

CMHC was created after the Second World War with a mandate to make sure there was adequate housing for veterans after the war. So it had an affordable housing or social housing mandate when it was created. It has grown over the years to have a component that is a significant financial institution in Canada. Federally regulated financial institutions in Canada are regulated by the Superintendent of Financial Institutions, who reports to Parliament through the Minister of Finance.

The office has a very good reputation. Our banks, as you know, did not require bailouts when we went through the very difficult credit and recession crises a few years ago. A good part of that is due to the excellent regulatory and supervisory skills of the Office of the Superintendent of Financial Institutions.

That office will now do the monitoring, governance, and supervision of that part of CMHC, which is the securitization and commercialization branch.