Finance Committee on Oct. 22nd, 2012

[Toby Sanger]

Well, I cited the IMF, the OECD, and a lot of mainstream—

[Dave Van Kesteren]

But you don't share. As a matter of fact, I remember Harry Truman once said that he looked for a one-armed economist because economists were always saying, "On the one hand, Mr. President, and on the other hand...."

I'm not an economist. I wouldn't want to get into a debate with you. You obviously know a lot more than I do, but from what I understand, there's the Keynesian school from John Keynes, and I think the Austrian school from von Mises. Those are probably the two mainstreams. Then there are people who go in different directions.

What would you say is an acceptable level of debt to GDP?

[Toby Sanger]

Actually, economics doesn't really provide an answer to that. What you want is something that's sustainable in that way. An economy can grow with a certain level.

A recent IMF report looked at a number of countries that had a debt to GDP ratio of over 100%, and—

[Dave Van Kesteren]

Don`t you think that's a little excessive?

[Toby Sanger]

You might want to bring it down from that. Canada is in a pretty good situation—

[Dave Van Kesteren]

What's Canada's—

[Toby Sanger]

It depends on how you define the debt—

[Dave Van Kesteren]

Well, define it with combined debt with the three levels of government.

[Toby Sanger]

I don't have those figures with me right now.

[Dave Van Kesteren]

It's about 87%.

Do you know what Canada's national debt is, the federal portion?

[Toby Sanger]

Is it around...? You might have those figures. I don't see it being that important. It's about $500 billion—

[Dave Van Kesteren]

I think it's about $650 billion.

I don't want to criticize you or your credentials, but what I really wanted to hear from you is that the opinions you expressed were your opinions. Is that fair to say, or are you hard core in thinking you are absolutely right and this is the direction we should go? Would you say there's room for the possibility that you might be dead wrong?

[Toby Sanger]

Obviously there are different opinions, but what I was citing was the IMF and the OECD saying that deep cuts and spending cuts have led to lower economic growth. The Conference Board of Canada actually came out with a report today saying the same thing. It's not only me; a majority of economists in the mainstream are saying that deep cuts are not good for the economy and, in fact, in some cases such as the U.K., they've led to higher deficits.

[Dave Van Kesteren]

Again, these are opinions. I know I could probably cite people who say that we shouldn't be cutting, as our government is doing: they say we should be taking a chainsaw to our spending. There is obviously a difference of opinion, and that's the only thing I'm asking you to acknowledge. Would you agree that there is a difference of opinion as to whether or not we should be cutting, shouldn't be cutting, or even go one step further and saying we should be taking a chainsaw? Would you agree?

Go ahead.

[Toby Sanger]

I would say there are two points there. There's basically a macroeconomic one, which deals with the level of debt and deficit and the level of spending and how that affects the economy. The second point is how you spend your money. For instance, public spending has a stronger multiplier effect than tax cuts. It's not only quantity, but quality. Those are two important factors.

[Dave Van Kesteren]

The United States is at about 120% at this point. They have raided just about everything that they can raid, and they're at a tipping point. I would think most economists would agree with that. I'm very happy that in this country we haven't reached that spot yet. We've taken the decision that the people of Canada want us to wrestle this debt down. Industry would agree with that as well.

[Toby Sanger]

Debt interest costs as a share of GDP are about half of what they were in the 1990s. The big issue there for economists is the interest rate in relation to GDP growth. That's the big issue. We were told that as the debt and deficit increased, interest rates would continue to go up. They haven't; they have gone down.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

Mr. Mai, you have the floor. You have five minutes.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Ms. Foster, we had the Canadian Doctors for Medicare here just before you arrived. I asked a question regarding the cuts to refugee health care. From our side, we are opposed to those cuts. The government says that it's a cost-cutting measure, but we know that the costs for Canada are more expensive and that a lot of things are being downloaded to the provinces and municipalities.

I know that on the other side we have the member for Saskatoon—Rosetown—Biggar, Kelly Block, who is really proud of that cut. What is your position regarding those cuts?

[Pamela Foster]

The Canadian Federation of Nurses Unions has participated in protesting those cuts. We've written to the minister about that. We will see the impact of these cuts in emergency rooms. It is a downloading to the provinces.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

In respect of the provinces, do you think saving those amounts is going to result in greater wait times? You mentioned emergency rooms, but is it going to take more time and more costs for the provinces and for society in general?

[Pamela Foster]

I don't have the statistics here, but there have been studies in regard to preventative illness and injury and savings that could have occurred if the illnesses had been treated in the primary health care system instead of the acute care system. I would be happy to provide those.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

The College of Family Physicians of Canada and the Royal College of Physicians and Surgeons of Canada are opposed to those cuts.

Coming from Quebec, we understand how important the child care plan is and how the provinces and municipalities have to work together to make sure it happens. That's something we agree with and also believe in.

Mr. Sanger, household debt is a big problem right now. The government is pushing towards temporary foreign workers. We have a law that says we can pay them 10% less than regular Canadians. From our position, it's a race to the bottom. In my riding of Brossard—La Prairie, we have people who have jobs but are now going to food banks.

Could you tell us what's happening with the way the government is going regarding corporate tax cuts and how that affects inequality and household debt?

[Toby Sanger]

I was very surprised that the last budget included a number of measures that were basically corroding wages. The temporary foreign worker program, as you mentioned, was one of those, and the new provisions on employment insurance did the same thing.

From both an individual worker's perspective and a broader economic perspective, it's the wrong way to go. We're concerned about reducing overall household debt. In Canada it's now higher than it was in the United States prior to the crisis. We need to reduce those overall debts, and there are a number of ways of doing it, but you also need to increase wages. I think we're getting into a very precarious situation.

There has been an incredible shift. Before, households used to run surpluses. We think of the federal government's deficits and surpluses. The same thing happens in other sectors of the economy. Before 2000, households used to run surpluses and lend that to the corporate sector. Since the year 2000, that has totally reversed, and the corporate sector has built up over a half a trillion dollars of surpluses, dead money that they aren't investing in the economy because people aren't buying their stuff.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Coming from Quebec, if I had more time I would ask you a question regarding investing in green technology and how that affects Quebec and McGill, but I don't think I have time.