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.
6:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
What I will tell you is that no matter how many times the Conservative members ask us to follow the playbook of the previous Conservative government—
6:15 p.m.
Conservative
6:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
—we won't do it. What we will do is continue to invest in Canadians, to make sure that we find ourselves in a positive situation, to make sure more Canadians are working, and to make sure we do it in a responsible way. Demonstrating that responsible approach to reducing debt, as a function of our economy over time, is the way we can ensure we are balancing things in the appropriate way. We are not taking the Conservative approach to cutting things that might be of enormous value, to find ourselves in an illusory advantage that is only short term.
6:15 p.m.
Liberal
Michael McLeod Liberal Northwest Territories, NT
Thank you, Mr. Chair.
I don't think the minister will be too surprised about my line of questioning. I've raised the issue of investment in the north many, many times. Over the last while, we've really built up a deficit in many areas, including infrastructure. However, we've started to see a steady stream of ministers and staff from our government coming to the Northwest Territories in the last while, including the Minister of National Revenue, and we've really had some good discussions. The CRA and the Government of the Northwest Territories recently reached an agreement to launch automated benefit services across the territories.
Could the minister just talk a little bit about the benefits of having this service in the Northwest Territories, and what change it will bring families in the north?
6:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
As we have considered the importance of getting benefits to Canadians, one thing that we have addressed in our budget this year has been thinking about two key benefits that are critically important, either for individuals as they get into the workforce, which is the Canada workers benefit, or for families, which is the Canada child benefit. In both of those cases, we found that people were not necessarily automatically getting those benefits. The impact was worse in places where there was a higher likelihood that people were completing their tax returns on paper. In places where there weren't the same levels of broadband, for example, we found that it was more likely that people were completing their tax returns on paper. Of course, that is a continuing challenge in some parts of the north.
Our approach to dealing with that was to make those benefits automatic—and we did that with both the Canada child benefit and the Canada workers benefit, which will increase the take-up rate, having a big impact on people in the north—and to make investments in getting access to technology. You know that we made a $500-million investment in broadband in budget 2016. In this budget, we made an investment in what's called low earth orbiting technology, looking at a new approach to getting access to broadband for people in remote communities, which we think will have an impact over time.
We continue to be focused on how we can impact people in all parts of the country, recognizing that there are unique challenges in rural communities, but also in northern and remote communities. We think this will have a measurable impact on those.
6:15 p.m.
Liberal
6:15 p.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you, Mr. Chair.
As you know, according to the latest report from Statistics Canada, household debt has now reached 171%. When that figure was revealed, we found out through the media that the Department of Finance has no tools to assess the dangers that it could represent for the Canadian economy.
Can you confirm that the Department of Finance is not currently conducting any impact studies of the dangers that household debt represents for the economy, nor any analysis that would allow us to determine a threshold beyond which the level of indebtedness poses a very major problem? Personally, I find that 171% is a lot. Can you tell us if there are any studies on the matter?
6:20 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
We do a lot of analysis on household debt, because the matter is very important to the Department of Finance. The Bank of Canada is also concerned about the matter. We have implemented a number of major steps in that regard.
For most families, about two-thirds of the debt, maybe more, is from their mortgage, especially from fixed rate mortgages. We know that we have to study the changes that will have to be made with mortgages. We have done so several times in the past and the steps we have taken have had a real influence on the situation. So we see it as important and we will continue to take a great interest in household debt in order to reduce the risks that it may cause in the future.
6:20 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, all. Thank you, Minister and Deputy Minister, for coming.
We will now suspend for a few minutes, while departmental officials come up, then we will go until 7:15 p.m.
6:25 p.m.
Liberal
The Chair Liberal Wayne Easter
We'll reconvene. We have departmental officials here from the Department of Finance: Ms. Laniel, Chief Financial Officer; Mr. Botham, Assistant Deputy Minister, Economic Development; Mr. Stewart, Assistant Deputy Minister, International Trade; and Mr. Charland, Director General, Social Policy, Federal-Provincial Relations.
Welcome, folks. I don't believe you have an opening statement, so we'll go to questions.
Ms. O'Connell, you're first up.
6:30 p.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you, Mr. Chair.
I'm so disappointed. We don't have any women on the Conservative side anymore. I was really looking forward to walking the talk, but I guess it was just when the cameras were here for the minister.
Getting to the department, you might not be able to answer this, but, in the statements, home care and mental health expenses are up 200%, in terms of the agreement with provinces.
I'm just wondering if the provinces and territories have actually provided more details on how that funding will be used.
6:30 p.m.
Adelle Laniel Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
We did update the numbers in the statutories. They're not included as part of these interims today, but they were updated, based on the rules behind those transfer payments.
6:30 p.m.
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
We'll be seeing that in the main estimates.
6:30 p.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Fair enough, so I'll wait until then.
In terms of budget projections and market volatility, we've seen some fluctuations, certainly from the U.S. and different policies there, but that's not always the only cause and effect.
What's the process for recalculating some of these projections based on volatility, and what are some of the risks that the department is building in for things like NAFTA, and also some of the policies in the U.S. that impact some of our markets? Is that kind of a global risk always factored in?
6:30 p.m.
Nicholas Leswick Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
As part of resetting the economic and fiscal framework in the budget, similar to how we do it in the fall update, we survey our group of private sector economists. The economic projections that underpin the budget are effectively a straight average of the group of 14 private sector economists.
To answer your question, in that group of economists, there's a broad range of different risk scenarios, and there's a broad range of factors that they include in their baseline forecast. For instance, when we surveyed this group of economists in December, leading to our preparation of the budget, about half of them anticipated successful passage of the U.S. tax reform plan, which came to fruition toward the end of the month. Likewise, there were a handful of economists who assumed some impacts with respect to the uncertainty around NAFTA trade negotiations.
All that considered, we take a straight average. There are the highs and the lows, but we take just a straight average, and build it into our forecast. Likewise, we include in this budget a bottom line risk adjustment, or a contingency, that manifests itself in terms of a $3-billion adjustment to the baseline forecast, again, to give ourselves some risk adjustment should we need it, which is considered prudent fiscal planning assumptions.
6:30 p.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
That risk adjustment had been a common practice previously, and then was taken out, and then added back in. That's my understanding, or is that completely a ministerial departmental kind of discretionary decision?
6:30 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
It's discretionary, but it has been standard practice for a generation now. It has changed in value from $3 billion to as high as $6 billion in previous budgets, but this budget maintained it at $3 billion over the forecast horizon.
6:30 p.m.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
In the Library of Parliament briefing note—I'm not sure if you've all seen that—there are several slides and there are several indicators in terms of the GDP ratio. Obviously, there are lots of discussions on what is the best economic forecasting and determination of the health of our economy.
Can you speak to why the debt-to-GDP ratio is significant, and why in terms of the forecasting—and certainly in comparison to other G7 countries—this standard of measuring long-term projections is important?
6:35 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
There are two ways to look at deficits. One is just on a nominal basis, so just straight up what is the value of deficits that the government is incurring over the forecast horizon. But, quite frankly, it probably doesn't give you the true picture of the magnitude of the deficit unless you position it against the size of the economy. Then, from nominal switching to a relative term, it's putting that nominal value on top of the value of the economy that gives you the deficit-to-GDP ratio and then over time a debt-to-GDP ratio. This gives rating agencies and other commentators and people who purchase our debt, and frankly, just general Canadians, an understanding of the debt load that we're carrying as a relative size of the total Canadian economy.
