Evidence of meeting #139 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
A video is available from Parliament.
7:05 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Sir, he just offered me his time, so I'm just taking him up on that.
7:05 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
You have to be careful how you word your questions [Technical difficulty—Editor].
7:05 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
We understand that, and hopefully.... Most times it's not very substantive.
My next question is in terms of the reform of the interim and main estimates. When I first came to Parliament Hill, even with a finance background it was very difficult for me to discern between the budget process and this thing called estimates. It goes back to the comment from Mr. Moreau on transparency. I believe we've improved it considerably, and our government has put it forward.
Can someone please provide some feedback on that line in terms of how we've improved that estimates process for MPs, including myself and other people who will have the privilege of sitting here in the years to come?
7:05 p.m.
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Earlier, when I was asked about the new main estimates process and how it impacted our current process, I only addressed the interim side. I didn't address the mains side.
The fact that we'll be producing the mains later in the process will make the information in those mains more up to date. It will have the budget information somewhat in it. Obviously, there will be some funding that we'll have to do after, but it will contain more up-to-date information, which will improve the transparency.
7:05 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you very much.
I have a final comment for Mr. Leswick.
In terms of our debt-to-GDP ratio, we're on a declining trend, if I ascertain that. On a percentage-of-GDP basis, how did we rank against the other G7 countries, including our principal trading partner, the United States?
7:10 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
I'll just repeat the message that the minister conveyed: we have the lowest net debt-to-GDP ratio on this internationally comparable standard in the G7.
7:10 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
It's AAA with a stable outlook.
7:10 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
How many countries in the world have an AAA rating?
7:10 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
I think there are a handful.
7:10 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
There are fewer than probably five, maybe: Australia, Germany—
7:10 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
No, not Australia, not with a stable outlook. There are a few more AAAs, but there are just about a handful with a stable outlook: Liechtenstein, and some other....
7:10 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I believe most of the rating agencies have opined on our finances in the recent past and reaffirmed our ratings, if I'm not mistaken.
7:10 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
As I said...a stable outlook, yes.
7:10 p.m.
Liberal
The Chair Liberal Wayne Easter
Who wants in? Mr. Poilievre and Mr. Dusseault.
Before I turn to them, I hear that we seem to have slipped money on infrastructure spends in that the spending that's planned doesn't happen, which is really sad because that creates economic growth, too.
How is that accounted for, and where are we at on the spending on infrastructure? What had we planned to do, and where are we at currently?
Mr. Botham.
7:10 p.m.
Richard Botham Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
I'm looking for the reference in the text. I want to make sure I give you the right numbers.
7:10 p.m.
Liberal
The Chair Liberal Wayne Easter
It's partly because it's negotiation with the provinces and communities, but we predict certain spending and we never seem to get it spent. That happened with the previous government; it happened with the previous, previous government; and it's happening with this one. How is that accounted for?
7:10 p.m.
Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
In the last budget the government provided a reconciliation of spending through infrastructure programs, both those that are referred to as legacy programs, which predate the current government, and in some cases predate the previous government, as well as programs introduced by the current government in the first phase of the infrastructure plan, so that was in budget 2016, and then in budget 2017.
I'm just trying to find what might be the best expression of that on an aggregate basis. If I look at the legacy program, pre-2016, I see there's funding that has been moved from the previous fiscal year, the coming, and the subsequent into future years, so why, in that case? Those programs are old enough that it really has to do with projects that were planned to go ahead and didn't, and those funds have been allocated to new projects that are brought forward by municipalities and provinces.
7:10 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay.
We'll have Mr. Poilievre, and then Mr. Dusseault, and then we'll wrap it up.
7:10 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Mr. Sorbara made the mistake of confusing the Canada Mortgage and Housing Corporation with a mortgage lender. It's not a mortgage lender, it's a mortgage insurer, so the Canadian people don't owe the money for their houses to the Government of Canada, as he had stated. They owe it to lenders for whom, sometimes, the insurer is CMHC.
There is a corresponding liability with that insurance in that if there is a mortgage default loss, that loss goes to CMHC. There are certainly billions of dollars in the coffers of CMHC to protect against those losses, but that is distinct from believing, as Mr. Sorbara apparently does, that Canadians will be paying CMHC mortgage payments, with the exception of about $75 billion of mortgages that the CMHC purchased during the financial crisis in late 2008. That is not something CMHC does.
That being said, I am glad he highlighted CMHC because across the spectrum, financial experts agree that we have overpriced housing in very large markets across this country, particularly Toronto and Vancouver. That is a major risk, particularly as interest rates rise.
The ability of Canada to withstand a significant rise in interest rates, and the consequential reduction in housing prices in those markets is really at question. That kind of risk should lead us now, while times are good in the world economy, to store away our financial resources rather than building up debt that future generations will have to withstand.
I wonder if the assembled witnesses are interested in commenting on risks that are associated with Canada's high level of personal debt and the inordinately high housing prices in major Canadian markets.
7:15 p.m.
Liberal
7:15 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Some of the regional housing market dynamics that have played out over the last two years are definitely something we're monitoring very closely at the Department of Finance. You've seen the government take action in terms of the measures it put in place in 2016 in increasing the down payment requirement, and working with partners such as OSFI in implementing the most recent stress test on uninsured mortgages.
Price inflation, namely in the Vancouver and Toronto markets, has been pretty high. It goes without saying that we anticipate some moderation or correction in those markets, for two reasons. One reason is that we want to make sure those markets can maintain a resiliency and they don't get so overheated that we can't pull them back; and, two, behind these house prices are interested new entrants into the housing market. We have to make sure that we straddle this financial stability and housing affordability issue.