Evidence of meeting #2 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A video is available from Parliament.
4:45 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
In the PBO report, it also says what the average change in federal income taxes will be by family type in 2023. With the first category, “Individual's Net Income”, it just gives the number in 2023.
I'm wondering if your department has the numbers, starting with 2018, as to what the tax benefit will be, for example, in the first year, second year, third year and fourth year.
If you have that data, I would like to receive that as well.
4:50 p.m.
Senior Assistant Deputy Minister, Tax Policy Branch, Department of Finance
I can certainly look into that.
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Okay, that would be great.
Getting back to the TMX, for my own clarification—others may know this already—with regard to the $7.4 billion, is that incremental to the acquisition cost?
4:50 p.m.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
The $7.4 billion was to cover the portion of construction that had already taken place.
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
So that's incremental to the acquisition price.
4:50 p.m.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
No, the—
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
It's in addition to the cost of acquisition.
4:50 p.m.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
Yes.
4:50 p.m.
Conservative
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
To make sure we're clear on that, the cost of acquisition was $4.5 billion, and you're saying there's another $7 billion on top of that?
4:50 p.m.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
The $7.4 billion is the construction cost.
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you for that clarification.
Mr. Leswick, I have one quick question.
4:50 p.m.
Liberal
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Mr. Leswick, I want to circle back to something you said earlier when one of the members opposite was asking about the potential for a recession.
You didn't have a chance to finish your thought, but you uttered the words, “We'll have a lot less monetary policy room”. I'm wondering if you could elaborate on what you meant by that.
4:50 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
In entering the last recession, the great recession in 2009, the Bank of Canada was operating at a monetary policy rate of I think 4.75%. I mean, they had a lot of room between 4.75% and, let's just call it the lower bound at that time, of 0%. They had a lot of monetary policy room to ease rates—to provide monetary policy easing into the economy.
However, that was then and this is now. Our policy rate now is 1.75%. It gives you a sense that if the recession were to happen tomorrow, which I'm not predicting it is, the Bank of Canada would only have so much space to provide monetary policy stimulus. When you think of what the tool kit is, then there would be more burden of stimulus falling on other parts of the tool kit: provincial governments, federal governments and macroprudential....
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you. That was a good point.
Do you have a supplementary question?
4:50 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
I just want to paraphrase this in more laymen's terms. In other words, if we had another recession, the government would have fewer tools at its disposal, given current monetary policy, than it had in the last great recession.
4:50 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Yes, and I just want to say this isn't a Canada-specific thing. This is a global phenomenon where central banks have been easing through conventional and unconventional monetary policy for the last 10 years, so every central bank has a whole different starting point than it had 10 years ago. There is a global conversation amongst smart economists about how this recession is going to have a different character because it's likely that more of the burden will fall on other tools.
4:50 p.m.
Conservative
4:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay, thank you all.
I'll go to Ms. Dzerowicz, then back to Mr. Ste-Marie.
4:50 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thanks for your patience today in answering all our questions.
We have been talking quite a bit about the state of our economy, today and moving forward.
I want to talk a little bit about our competitive climate, since it has come up a little bit. Can you talk a little bit about the investment climate in Canada today for foreign direct investment, and then business investment in general? Could you just tell me the state of both of those?
4:50 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
It is kind of a longer story line. You just look at investment levels and the Canadian economy, let's say in the early 2010s when oil prices were riding near $100 a barrel and there were a lot of capital inflows into the Canadian economy really concentrated in the energy sector. Then suddenly there is a global energy price shock and there was a huge deceleration in energy sector investment, so you're coming off some pretty steep highs there in the early 2010s to a point where there was a massive contraction.
Over the last four or five years or so, it has been a real game to recover those lost investment flows, and it's been very challenging. In the energy sector any people you would invite to this committee who would have a commentary about what's going on in western Canada would suggest that it's been very difficult to regain those lost flows and just get back to level.
In the non-energy sector, there has been a little bit more encouraging momentum—outside the energy sector, in particular in services-based economies, service companies in Canada investing in high tech and in productivity-enhancing machinery and equipment, and then the factory sector, also where we've seen encouraging signs of growth over the last couple of years and in the last couple of quarters.
That said, it hasn't been off-the-charts record growth either, so anything governments can do—and this government has put in place incentives like it put last fall to accelerate capital writeoffs—to encourage business investment, encourage foreign direct inflows, is hugely important.
That's our advice to the government. That's where the government's policy approach is.
4:55 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Okay. First, thank you very much for the excellent context and reminder about that. It is important and also helpful to know that we've put a number of measures in place that have been helpful.
Right now running through the House of Commons is the updated CUSMA, as we call it, or as I call it, NAFTA 2.0. I know that we have signed a number of trade agreements in addition to what's going through the House right now.
What's the importance of those agreements to our competitiveness?