Finance Committee on April 24th, 2020

[Pierre Poilievre, Conservative, Carleton, ON]

But you're not answering the question.

[Prof. Kevin Milligan]

I would like to answer your question.

[Pierre Poilievre, Conservative, Carleton, ON]

Please do, then. Please try.

[Prof. Kevin Milligan]

Sure.

I do take policy questions when they come from the Department of Finance, when they come from the Prime Minister's Office, and also when they come from an opposition member who's looking for some help on a private member's bill, as you would know from the summer of 2017, when you gave me a call to get some advice.

[Pierre Poilievre, Conservative, Carleton, ON]

I did.

[Prof. Kevin Milligan]

I was happy to do it. It was a solid bill. I will do it again.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. Great.

I'll just ask the question again, because you didn't come close to answering it. Do you, or any organization for which you work, do any paid policy work for the Government of Canada or for the Liberal Party of Canada? Just give a quick yes or no on whether you've done it over, say, the last five years.

[Prof. Kevin Milligan]

I've taken no money from the Liberal Party of Canada. I do currently have a contract through ESDC about a microeconomic simulation.

[Pierre Poilievre, Conservative, Carleton, ON]

Excellent. Thank you very much.

My next question relates to the debt as a share of GDP. We've had numerous economists, you included, make the case that debt is benign, that the government's debt as a share of GDP is 30%, and therefore we ought not to be worried about it. But the people who make this argument forget that the debt that the economy of Canada has to support is not just of one level of government. If you take all levels of government, our-debt to GDP ratio, according to the IMF, is now 89%. On top of that, we have corporate and household debt, the combined total of which is 356% of GDP, which is the second-highest in the G7—the only one bigger is Japan—and near an all-time record. The record was in 2016.

Do you believe, Dr. Milligan, it is sustainable for us to continue to add to our total debt as a nation when it was already 3.5 times the size of our economy in 2018, before the coronavirus struck?

[Prof. Kevin Milligan]

I think what's important for our fiscal policy, whether it's federal, provincial or thinking of everything together, is to have a fiscal policy that is sustainable in the long run. What we're facing right now in the current crisis is an extraordinary circumstance. By partially shutting down the economy, debt is being created. That debt might be in the form of households taking on more debt. It might be in the form of businesses taking on more debt. If they were to go bankrupt, it would be in the form of banks taking on more debt.

Now, on the debt that is being created, what we're doing is reallocating that debt from the household sector and from the business sector, some of it going to the public sector. The question here is not whether we should have debt, but how we allocate it across sectors. That debt is being generated by the virus. It's not being generated by anything else right now. The question is how we allocate it. There is some question of what should go on the federal books, on the provincial, and how much the household and business sector can sustain. I think that's a very healthy conversation to have now.

[Pierre Poilievre, Conservative, Carleton, ON]

Right. But the conversation you're not having is the shell game of moving debt from this side of the table to that side of the table. All of that debt has to be supported by the same table, which is the Canadian economy. The quantum total of debt is now 3.5 times the size of our GDP. The existing government added, with your vocal support, roughly $100 billion to the debt before the first case of coronavirus was ever detected here in Canada. That goes to our total debt. It's not that it lifted debt off of someone else's back. It increased the total debt that the Canadian economy has to support. As a result, after this is over we will have a greater burden on our shoulders and less manoeuvrability.

You talked about the future. Do you believe we have to return to a balanced budget at the federal level at any point, or do you believe we can just continue to add to our national debt even after the economy is fully reopened?

[Prof. Kevin Milligan]

I hope the member would agree with me that when the crisis has calmed down and partially abated, it will be time to take stock of our fiscal policy to ensure that it is sustainable for the long run. I certainly would agree that we need to have a sustainable policy and that the emergency measures that we have are not sustainable for the long run. What we have now are extraordinary emergency measures.

What I would counsel the committee and the government is that we should not worry right now in the course of the emergency about the sustainability of the measures that are being taken right now, because if we have too much concern about that, that will mean paring back the measures that are supporting Canadian families and supporting Canadian businesses right now, which are going to allow them to survive. That income we're transferring to them now is what will give us the best boost to restart the economy on the other side of the crisis. I think every penny of that is well spent.

[The Chair, Liberal, Wayne Easter]

Okay, we're slightly over, Pierre. We have to end it there.

We go now to Ms. Dzerowicz and then on to Mr. Cumming.

[Julie Dzerowicz, Liberal, Davenport, ON]

Great. Thank you so much, Mr. Chair. Thanks so much to everyone for the wonderful presentations and for this very important conversation.

We have a lot of people on, and I can direct my questions to only a few people because I have less than five minutes. I'm going to direct my first question to Mr. Saul from the Community Food Centres Canada.

You mentioned there was an announcement by the federal government of $100 million to improve access to food for Canadians who are facing difficulties, whether social needs or economic needs. I know that the Community Food Centres Canada did receive some of that money.

My question to you is twofold. First, do we yet have an idea about the increased need at our food banks, in terms of the numbers and of who is actually going to these food banks? That's part one.

The second part of the question is what more do you feel we have to do around food security right now, not only in our cities but along the line?

Could you take a stab at responding to that?

[Nick Saul]

Having spoken to some of the leaders in the emergency food space, I think I can safely say that demand is up by anywhere between 25% and 50%, depending on the region. I think we need to be very clear that the sector was haemorrhaging long before COVID came in. The vast majority of people who are food insecure in this country would never visit a food bank for a whole variety of reasons, which I won't get into here.

The folks who are showing up—racialized communities, women, young people—are groups that have historically been marginalized, and COVID has absolutely magnified that problem. Let's be very clear that people have been affected disproportionately by COVID. There's simply no way you can self-isolate if you're one of five people in a single apartment with one bathroom. There's no way if you're poorly employed that you're going to find a flexible employer, and there's no way you're going to buy extra food, because you simply have no money, often, to buy food in the first place.

There is much anxiety and stress in communities across this country, and many people showing up for the first time because they were shed from the labour market and they're showing up and saying, “I need help”.

For the short term I think the $100 million that was released, as I said in my remarks, has had a very good impact and supported many people through a very difficult time and will continue to be important in the medium term.

However, I think we do need to return to social supports and building incomes that will fireproof us over the long term. I've talked about some of those things. It is about income. Food will not solve hunger. Income will, and we need to have a strong social infrastructure and an economy that produces jobs that support people to actually make a living and take care of themselves and their families.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

My next question is related to comments that Professor Milligan and Mr. Céré made.

Professor Milligan, you mentioned that there's data that we should be gathering that we're not gathering.

Mr. Céré, you mentioned that the pandemic is presenting us with an opportunity to think about how we can shift our social welfare system to a system that will better support our workforce in the 21st century. You didn't use those exact words, but I'm paraphrasing you.

I'm wondering, Professor Milligan, if you could start off by being a little bit clearer about what data we should be gathering, because I truly believe we should be gathering more data and that we should be very aware of what.

Mr. Céré, I'll ask you for any comments about additional data that you think we need to have, and we'll go from there.

[Prof. Kevin Milligan]

For some aspects of data, Statistics Canada has to go out to the provinces or to Canadians and do a survey, and it can take a long time. For other pieces of data and data sources, the Government of Canada is already collecting it. This is what we call “administrative data”, data that's used in the administration of programs. We see that in the emergency response benefit.

Now, as of last week, they're updating the number of applicants to the emergency relief benefit three times a week, which is why we know there are now 7.1 million Canadians who are on that benefit. That's exactly the kind of thing we need, but we need to make sure that we have that very timely up-to-the-day data for the other emergency benefits being put in place. That's one aspect of it, but we can do better than that by using the same kinds of administrative data in different government sources and making sure they become available in a secure and privacy-compliant format to inform the policy decisions and the decisions of all Canadians that need to be made.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

Mr. Céré, I don't know if you have anything to add to that.

[The Chair, Liberal, Wayne Easter]

Mr. Céré, do you have anything to add?

[Pierre Céré]

We understand that the employment insurance system was not prepared for a situation like the one we have experienced. It is truly a cataclysm. Currently, the employment insurance plan protects only 45% of workers. It leaves out large segments of the population, and this crisis has shown us that.

There are approximately 20 million people in the labour force in Canada, 15% of whom are self-employed. They have no protection through employment insurance, aside from a few sickness benefits. It's a bit complicated, and few have paid into it.

Given gig employment and the many changes in the working world, such as telework, there will be environmental transitions. These will transform the working world, and the employment insurance program is not ready for that at this time. That is why the government must start the vast initiative needed to reflect on all of this and give us a modern system.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Céré.

Yes, I think there are going to be some lessons learned by the time we come out of this.

We will now turn to Mr. Cumming and then go on to Peter Fragiskatos.

Go ahead, James.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, Mr. Chair.

Thank you to all the witnesses today.

My first questions are for Mr. Brown.

I know it may not look like it, but I was a student at one time. One of the things that I recall quite fondly about my time as a student was that summer work wasn't just work to be able to pay my tuition; it was about an experience and about being able to get out and contribute.

My question for you follows up a little bit what Raquel was speaking about. Do you not think that we should have something tied to helping out the food industry or those businesses that are still open or those front-line businesses that certainly need help? I've heard from the engineering school in our province, and they have suggested that they could put many students to work on research projects.

I would just like to get your feeling on that. I think students want to contribute rather than just take the benefit.

[Adam Brown]

Absolutely. I think there are two parts to that. The first is that with students going to work in this situation where the virus is still very alive and well in Canada, we need to make sure that they are going into workplaces that are secure and safe for them, or that they are doing work from home that can be done at home.

I think that hiring students, whether for various research projects or within other industries that are helping to combat this crisis, is helpful. I certainly hope that the student service grant can be used in situations where companies or organizations may not be able to pay students in that way as well.

[James Cumming, Conservative, Edmonton Centre, AB]

I wasn't suggesting putting them into an unsafe environment. In fact, I think anything they do would be regulated, and we would follow proper health standards.

I want to follow up that and have you follow it up with your members. There's going to be a food crisis, and I think there's a huge opportunity for students to be able to help in that area as it becomes more difficult to get foreign workers into the province.

I want to shift to Mr. Lee.

Mr. Lee, in your testimony today, one of the things that struck me is that this is unsustainable. We do have emergency funding, and we all recognize that it's important to have that, but you did say that there should be some planning around restarting the economy and getting people back to work. That's what people want to do, and you've suggested doing it through a sectoral analysis. Can you elaborate a little bit on that and give us a little more of your thinking along that line?

[Dr. Ian Lee]

Yes. I feel very strongly about this and I'm not being casual or dismissive of those who are in a risky situation. I am exhibit A for that because I'm 65 and a male who takes immunosuppressive drugs for arthritis. So I'm a triple risk from this horrible virus.

In my enormous readings of the The New York Times, the Globe and The Wall Street Journal and of as many of the leading epidemiologists as possible, I have noticed the repeated point they have made that not everyone is equally at risk. We know this anecdotally.

We know that in the nursing homes, the senior citizens homes, Extendicare homes, whatever we want to call them, these people are tragically at very great risk, partly because they're in an enclosed space and because of their age and health vulnerability, whereas if I dash into Loblaws for 10 minutes at 7 a.m. where I stay three metres away from the nearest person, the idea that I'm in the same risk profile as the front-line health workers working every day with people with coronavirus is just preposterous nonsense. I am not at risk.

Paraphrasing the epidemiologists, we should be evaluating each of these firms and occupations in what Professor Streeck at the University of Bonn called “low contact, low risk”. Going into a retail store for five or 10 minutes is low contact, low risk, as opposed to people in nursing homes or in bars or at sporting events. By the way, the virus started in Germany at a music event where thousands of people were drinking and dancing together.

So we should be measuring and determining which businesses are low risk and then bringing those businesses back slowly, albeit with appropriate distancing measures. Right now, my only criticism is not of the government's response to the crisis but that we're treating everybody as being at equal risk. We're saying, let's close everything except essential services. The essential services are not being closed down because they're less at risk, but because they're essential to the economy.

I'm suggesting strongly that we should be making a measured, scientific, evidence-based analysis of each of these jobs and companies and so forth, and I would suggest that many of the retail businesses are low contact, low risk, except of course bars and restaurants. If I go into a framing store with my diploma and I'm there for five minutes, and I talk about the frame and the colour and the glass and leave the diploma there, it's not credible to say that I'm equally at risk as a doctor if I'm standing three feet away compared with that doctor in a hospital dealing with people with that risk. We need to make that assessment.