Finance Committee on Nov. 8th, 2018

[Peter Fragiskatos]

I think the sincerity is there, and it's demonstrated, and we're moving forward in the right direction. However, your points are certainly well taken.

I have about a minute left I believe, and with that I want to ask you a question on coordination.

You talked about it, but I wonder if you could expand on the point. If I take your point correctly, it is that the new minister for women and gender equality ought to coordinate....

Could you speak about how specifically they can coordinate with the Minister for International Development? I think that partnership will be absolutely essential in terms of advancing gender equality on the international stage.

[Prof. Erin Hannah]

That coordination is essential, certainly.

Equally important is coordinating with the Minister of International Trade Diversification, and with the finance minister, because all of this stuff needs to be funded. There needs to be a really close collaboration between those people.

However, it's not Canada alone on this agenda. There's a lot we can learn from our trade partners. When I talk about the importance of developing this methodology, I don't think we should be doing it alone. I think we should be working with our partners in international organizations to standardize a gender-based assessment that can be applied to trade agreements around the world. Wouldn't it be wonderful if we had a lens that we could apply, not only to the impacts in Canada, but that our partners could also apply in their home countries using their data?

[Peter Fragiskatos]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Mr. Richards.

[Blake Richards, Banff—Airdrie, CPC]

Thank you.

I appreciated the presentations from all of you.

Mr. Lee, you had made some comments about the deficit and your concerns about that. I share those concerns. You focused mainly on the concerns you see as a result of situations in provinces and what that might mean for the federal government if there needs to be a bailout.

Obviously the federal government has made some decisions that have put it in a deficit as well, even though just a few short years ago it was left with a surplus coming into office. We're in a time where globally, the economy is in a pretty good spot.

I'm curious what your thoughts are on the situation that the federal government currently finds itself in terms of the deficit being somewhere in the neighbourhood of about $20 billion in a relatively good time. In your opinion, is there ever an excuse for a government, during a non-recessionary period in the economy, to be running deficits, especially ones of that magnitude?

[Dr. Ian Lee]

Thank you.

First, I'm not from that camp, and I don't think any reasonable person is, that the Government of Canada cannot afford a $20-billion deficit. Of course it can. There's no question about it. It has an enormous fiscal capacity. The PBO has documented that.

We don't need to read the PBO report; we just have to read the monetary policy reports, as I do every six months, that are published by the Bank of Canada. The numbers are laid out. Or, if you read the IMF outlook on Canada or the OECD outlook, these studies corroborate each other.

It's not a question of whether we can afford it; of course, we can.

[Blake Richards]

The question is, should we?

[Dr. Ian Lee]

The question is, ought we? Should we? If you assume, as I do—and I don't think it's a big assumption—that public resources and public revenues are scarce and they're not infinite.... You have a finite amount of revenue, and as Aaron Wildavsky, the late great dean of public policy at Berkeley said, government is about making choices.

Budgets are about making choices, and right now, yes, I am very critical of pouring $20 billion into the economy. We're stimulating in this country.... The Government of Ontario has been running a significant deficit for many years. I'm talking post-recession, post 2008-09. The Bank of Canada has had rates—monetary stimulus—at historically unprecedented low levels, and the federal government has been pumping it in throughout that period, so here we are, to use a metaphor, pouring gasoline on a roaring fire.

I'm not a purist who says not to put gasoline on a fire to get it going, although it's probably not very environmentally responsible, but I don't see the need once the economy.... We're going flat out right now. The economies of the U.S. and Canada are just going gangbusters, so there's no justification. This isn't some kind of ideology. This is straight out of John Maynard Keynes, the great liberal macroeconomist at Cambridge, who made that argument. You go into deficit when times are bad, when the economy goes off the cliff, as we did in 2008-09, and you run up surpluses when the economy is doing strongly.

In past recessions, we did it: in 2008-09, 1990-91 and back in 1980-81. Those were appropriate. I'm not a person who says that governments should never run up a deficit. When they go into a recession, yes, but there's no justification right now. There is no academic, scholarly, theoretical or pragmatic justification for running a significant deficit.

My other concern is that we are reducing our degrees of freedom in the future, because resources are finite. They're not infinite, and if they're not infinite, then that's money we're spending that we're not going to have available down the road to spend on something else.

[Blake Richards]

Right. I have a two-part follow-up to that.

First, you mentioned the 2008-09 recession and the fact that there was a need at the time to stimulate the economy, and that obviously meant deficits for that period of time. Of course, then, the government made the effort that was required to come out of that, but prior to that as well, the government that was in power, the government that I was later a part of, was running surpluses and paying down debt in that period of time. Is that something you advocate? During a good period of time, should we be trying to pay down the debt? That's the first part.

The second part when we're looking at the situation is that you've mentioned good times and running a deficit, and of course many people have talked about what that means if and when we do experience another downturn or a recession. For instance, the recent paper that the Fraser Institute put out indicated that if we were to see a slowdown like the 2000-01 variety, we would run deficits of about $50 billion if the circumstances were the same. Of course, if it's like the 2008-09 recession, that would be even more serious in terms of the numbers for the deficit. Obviously, we're seeing the path that the government is on now, with people are saying that they wouldn't be able to balance the budget until 2045. What I'm asking there is whether that is something that we should really be concerned about as well, and why?

There are two parts there.

[Dr. Ian Lee]

There are two or three questions in there.

I know that there are some people who think that deficits and national debt are bad. I simply don't subscribe to that. I think there's a very substantial body of economic theory that would argue against that. It's not the idea that there is a national debt or a deficit; it's partly whether there's a need for it. Right now, there's no need for it.

To deal with your larger question, when you are not running up surpluses, again, it's not about paying off the deficit or being very ideological, if you will, about paying off the deficit or the debt; it's that you are reducing your degrees of freedom for the future. That's my biggest argument that I want to make to parliamentarians today. You may think that this is free of consequence, but it isn't, because what we're doing is reducing our degrees of freedom in the future when—who knows?—we have to bail out the next automobile company in the next recession.

I'll say very quickly that this is the second-longest recovery in economic history in Canada and the United States. We are already on statistical borrowed time, if you will, before the next recession. When it comes, we're going to have to stimulate. It could be 2% of GDP or it might be 3% of GDP, but it's going to be very significant, because there's an expectation that governments have to do something. Then we're going to be looking at $20-billion deficits like they were nothing. We're probably going to be looking at deficits of $50 billion, $60 billion or $70 billion in the next recession. Again, then along comes the problem with the maritime provinces that are the most challenged, so we have some crises down the road. Also, tax revenues are going to start to fall as the growth rates start to decline because the boomers are all heading off into the sunset.

The economy of today and the growth of today are not going to be there in two, three or four years. We are facing a structural transformation over the next five or 10, 15, 20 or 30 years, but we're spending like there are not going to be any changes occurring.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

[Blake Richards]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Julian, go for seven minutes, if you could.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

Thanks to all of our witnesses.

As a number of witnesses have indicated—Mr. Hynes in this panel—this budget bill is badly flawed and has been rushed through Parliament. We've been given a few hours with witnesses, and we really appreciate your coming forward.

Today, witnesses have identified a whole variety of flaws. The government has given absolutely no indication that it will do anything other than bulldoze this through in a few hours, a week from next Tuesday. The special handcuff legislation it brought in means that anything that hasn't been amended is simply adopted full scale at the end of the day. It's a ridiculous approach to policy-making.

Mr. Hynes, thank you for your comments.

The Speaker has rebuked the finance minister for doing this. Certainly Mr. Trudeau promised that he would act differently from Mr. Harper. This is twice as bad as anything Mr. Harper pulled. We have to try to adjust these incredible flaws.

I'd like to start by asking Mr. Benson, Monsieur Lacoste and Mr. Hennessy about pay equity. You raised very important issues about the flaws in the bill.

Mr. Lacoste, you said that the two amendments you proposed would avoid endless litigation. You fear that women will be forced to go back to court if this bill is passed as it stands.

My question to the three of you is this. What happens if this government just rams through this legislation without making the essential changes that you and so many other witnesses have suggested?

[Stéphane Lacoste]

Thank you for the question.

Effectively, in our opinion, the few changes we are proposing are essential, as this would save time. We have seen, for example, that Quebec's pay equity legislation has given rise to many challenges in the courts. We could now take advantage of this experience and avoid making these mistakes again.

I'm thinking in particular of the wording of clause 2, from which I recommended that the words “while taking into account the various needs of employers” be removed. Indeed, if these words remain, they become an interpretive tool for the entire proposed legislation, which is contrary to the spirit of such legislation and to the Constitution, for the reasons to which I referred and presented by Justice Abella in a Supreme Court decision.

The purpose of such legislation is to restore balance and justice. Women workers have the right to be paid based on the fair value of their work on the same basis as their male colleagues. If these words are included in the proposed legislation, they will have the opposite effect and will serve those who oppose such a rebalancing exercise, essentially employers who do not want to pay women what they should receive. So there will be legal challenges that will go all the way to the Supreme Court in I don't know how many years, eight, ten years, before a final judgment is rendered that will confirm that we were right. There is no reason why these words should be included in the proposed legislation.

The situation is the same with respect to retroactivity of payments as part of the process. My colleague Mr. Hennessy and the CLC talked about it. The Supreme Court has just rendered a decision on this issue, the same one I was referring to last May. This court ruled that Quebec's legislation was unconstitutional and contrary to the Canadian Charter of Rights and Freedoms because it did not allow for retroactive payments. However, the bill contains provisions that say exactly the same thing, and there is no reason to justify it because it forces us to restart at the federal level the debate that was held at the provincial level.

These few changes, like what I had written on the issue of good faith, are basic principles. If this is not clearly reflected in the proposed legislation, the obligation to do something and whether or not it is a fault will be debated in court.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you.

Mr. Hennessy.

[Mark Hennessy]

Quite simply, we have a duty to represent our members, and so if it goes through, we would be back in the courts representing them and challenging it there, just as Stéphane mentioned.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much.

The constitutionality of that clause has been challenged by a whole variety of witnesses. A government member said that the opposition was incoherent. I think what you're saying today is extremely coherent, and the government should be listening.

I want to go to Mr. Hynes now. You were very critical of this omnibus legislation, as the Speaker and so many of our witnesses have been. Is it possible, given the size and scope of this, to simply spend a few hours on amendments?

[Derrick Hynes]

It's challenging. It certainly poses challenges to us. The two provisions on which we've come to speak today are major provisions in this bill. They are the result of a consultation that predated the bill. It would be more helpful, I think, if we could have the time to unpack some of this.

As my colleagues have done, we will have some specific recommendations around clauses with which we have some discomfort. We will submit them to you in writing. We're still consulting on that within our own stakeholder community.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

The clause deadline is in just a few days' time.

[Derrick Hynes]

Yes. That's challenging—

[Peter Julian, NDP, New Westminster—Burnaby, BC]

The government is giving you no time at all, really. They have to be submitted by next Thursday.

[Derrick Hynes]

May I speak to the previous question?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Yes, very briefly.

[Derrick Hynes]

With regard to the recommendations that have been put forward, to which you have acknowledged there has been pretty clear consensus, I would challenge some of them on behalf of the employer community. Again, we're still sort of socializing some of this, but proposed section 2 in clause—