Evidence of meeting #211 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was students.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kevin Milligan  Professor of Economics, University of British Columbia, As an Individual
Adam Brown  Chair, Canadian Alliance of Student Associations
Michael Bourque  Chief Executive Officer, Canadian Real Estate Association
Philip Cross  Senior Fellow, Macdonald-Laurier Institute
Wendy Therrien  Director, External Relations and Research, Universities Canada
Seidu Mohammed  Refugee Claimant, As an Individual

12:55 p.m.

Chief Executive Officer, Canadian Real Estate Association

Michael Bourque

I'll add a couple of points.

First of all, if our goal is to ensure everyone owns a home, then we're going to fail because that's not realistic. We support new construction in the rental market, for example, and we recently saw some announcements in Ontario that will help, I think, boost private sector investment in the rental market. Every market is different, so just as you have different impacts on communities from government policy—northern communities, smaller communities—the same thing holds for programs affecting real estate.

Let me give you a couple of examples. Someone's talking about average prices. There is no such thing as an average price or an average market. Every market is different. We calculate based on a benchmark, which is how much you took an average property and then added inflation over the years, so we call that a benchmark and we calculate those things. In Ottawa, $405,000 is the benchmark price for a single family home. In Edmonton I mentioned $380,000, but that's a little high; it's closer to $320,000 right now.

12:55 p.m.

Conservative

Mike Lake Conservative Edmonton—Wetaskiwin, AB

Michael, I'm going to have to cut you off just because I'm looking at the time and I have two minutes and I want to ask Kevin a question.

Kevin, was a 20.6% debt-to-GDP ratio in 1971 reasonable at that point?

12:55 p.m.

Prof. Kevin Milligan

I think what's always important is to look at the debt-to-GDP ratio and whether it's going up or down in the context of the macroeconomic environment of the day.

The member will know that in the 1970s we saw interest rates approaching double digits, and in the later 1970s—

12:55 p.m.

Conservative

Mike Lake Conservative Edmonton—Wetaskiwin, AB

But not in 1971. I'm talking about 1971.

12:55 p.m.

Prof. Kevin Milligan

We saw interest rates approaching double digits in the 1970s. Today we have an entirely different atmosphere and different macroeconomic environment.

When I talk about macroeconomic policy, I prefer to look at the calendar we have and the macroeconomic environment that we have today.

12:55 p.m.

Conservative

Mike Lake Conservative Edmonton—Wetaskiwin, AB

We were at 20.6% in 1971, three or four years into the Trudeau government, coming from a place of balanced budgets and almost no debt.

In 1997, the debt-to-GDP ratio was 63.8% as a result of the accumulated spending spree that Pierre Trudeau went on. Comment on a 63.8% debt-to-GDP ratio. Is that a healthy debt-to-GDP ratio?

1 p.m.

Prof. Kevin Milligan

It absolutely is not and the mistake we made over that era was to increase our debt-to-GDP ratio to have deficits that were in the high single digits as a per cent of GDP and those are certainly mistakes we don't want to repeat.

To make the context of today's 30% debt-to-GDP ratio in the context of the 1990s we would have to add over $900 billion of debt to get back to the 1990s level of debt-to GDP, but then we're at an interest rate environment that is less than one-third of what we had in the 1990s, so the idea that the 1990s is a relevant threat for today is simply not in the numbers.

I prefer to focus on the challenges that we face today, whether it's poverty, inclusive growth or making sure we have an economy that benefits everyone.

1 p.m.

Liberal

The Chair Liberal Wayne Easter

We are going to have to end it there.

I don't know about Mr. Cross, but I'm one who's sitting around the table who, at one point in my life, paid 23.5% interest. I'll tell you, I don't think anybody wants to see that period of time again.

1 p.m.

Conservative

Mike Lake Conservative Edmonton—Wetaskiwin, AB

I have a point of order.

I want to point out that in 1971, the interest rate was 5.19%, just for clarity.

1 p.m.

Liberal

The Chair Liberal Wayne Easter

That is true.

I could also get into numbers—I don't have them with me, Mike—that the debt during the Trudeau period was.... If you look at the debt levels at the time, they really escalated in the Mulroney years. They went up a little during the Chrétien years. Then they went up another $150 billion during the Harper years and they're going up a little now. If you want to get to the absolute numbers, we can get to them.

With that, we'll adjourn the meeting.