Finance Committee on May 1st, 2020

[Pierre Poilievre, Conservative, Carleton, ON]

All right.

I just found it astounding that someone who is supposed to be our top banker wouldn't know how much debt we have. It turns out that it's over $7 trillion, which is three and a half times the size of our economy, and that was before COVID-19.

Mr. Booth, now that the Bank of Canada is pumping over $300 billion of newly created money into our system, do you think the Bank of Canada should be audited by the Auditor General when all of this is over to find out who benefited and who suffered as a result of the bank's decisions?

[Jeffrey Booth]

I point this out because this is the same thing that happens in every company facing a structural change. It's logical that governments would be caught in the same loop.

I don't have an exact suggestion on your question as to whether they should be audited, but what I would say is that it's going to be hard to understand this if you don't understand all the connections to what's happening. It's a structural break, and nothing that governments do by playing by the old rules will solve it.

It's easy to point fingers and everything else, but the best businesses do exactly the same thing. When dealing with a structural break, they can't see that structural break and build to the future; they keep building to the past.

If you looked at all the economic models going back through history, they've never dealt with what we're dealing with going forward. It's logical to think that everybody who's sitting on top of that is sitting on top of the same problem. All of the advice that people are getting is sitting on top of the same problem.

If I had a stronger recommendation, I would put together a group of people who can see where this is going into the future, different thinking that can help the transition. Pointing fingers at the past, that's already done. It won't solve it. We need to think about how we can use this as an opportunity to build a better future for Canadians.

[Pierre Poilievre, Conservative, Carleton, ON]

Absolutely. I think that, as we come out of the lockdown, we'll again hear the same voices telling us that we need to borrow more in order to consume more. That's the problem we're in now. We have the second-highest debt-to-GDP ratio in the G7, when you take total debt as a share of our economy. Only Japan is worse. Even France and Italy, which have almost collapsed under their debts, have a lower total debt-to-GDP ratio than does Canada. Yet, when we come out of this, I guarantee you there will be those voices that say that the only way forward is to pile more debt on the backs of our businesses, taxpayers and consumers in order to “get the economy going”. What that will do is make us more vulnerable to eventual rises in interest rates, which will impose incredible costs, unsustainable costs, on our economy.

What would you say to those who are continually advocating debt as the solution to all of our problems?

[Jeffrey Booth]

“It's worse than you think” is what I would say. That additional debt is driving up passive prices to stratospheric levels, which is driving the break in our societies. There are whole bunches of people sitting on both sides of that. The people who have been enriched by that don't know that they've been enriched by that. They think it's because of ingenuity, but it's mostly because asset prices were artificially raised. Then the government has to step in on the other side and protect all the people we're driving into the ground through the same solutions.

I would repeat what I would say. I would say that this takes different thinking. Entrepreneurs don't go and build the exact same business; they think about where that business is going. Why Netflix was built and Blockbuster was destroyed is the same function. They don't go and build on top.

There are a whole bunch of people sitting around the table and getting advice. I have tremendous empathy for a lot of the people asking for money right now on this call. People are hurting, and if we don't do that, there's going to be more pain. But if we just paper over this, it is going to explode, and you're going to drive society to the breaking point.

[The Chair, Liberal, Wayne Easter]

Okay, we will have to end it there. Thank you, both.

We'll go to Mr. Sorbara, and then to Mr. Ste-Marie.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

Good afternoon, everyone, and welcome on this Friday afternoon. Please stay safe, everyone.

First of all, I wanted to give a quick shout-out. This morning the finance minister announced the appointment of Tiff Macklem as the incoming Bank of Canada governor. I think that's a fantastic choice. We have someone with a lot of years of experience in the Department of Finance. I read in an article this morning that he was known as “the fixer” during the 2008-09 financial recession. I can see this transition being a seamless one at this very unique and critical time in our financial history and the world's financial history.

I also wish to point out that Governor Poloz has done a fantastic job for Canadians and for our economy in fulfilling the mandate of the Bank of Canada, for example with the inflation targeting of 2%. He was appointed by the former prime minister of Canada, Stephen Harper. Mr. Harper appointed Mr. Poloz and had faith in him. Mr. Poloz was there at critical junctures of our economy, and I applaud him and his leadership during the crisis we're in.

Switching gears very quickly, I will move over to the City of Winnipeg. We know the FCM. We know that cities out there—I live in Vaughan—are facing some financial pressures. What would you like to see happen in terms of getting some relief for cities, with the caveat that we know that spring construction season is going to be largely behind us? Getting those shovels in the ground, if we can do it quickly, is going to be a great solution.

What would you advocate for and ask for to give cities relief, both long-term and short-term?

[Scott Gillingham]

I'll maybe restate some of what I said in the presentation, as an answer to your question.

In the short term, cities are hurting right now financially and are facing significant financial pressures. I can only speak to the situation in Winnipeg. That's why we support the Federation of Canadian Municipalities' ask for some immediate relief for cities.

Looking at the longer term, though—and you mentioned getting shovels in the ground—one of the reasons why we have made the decision in the City of Winnipeg to go ahead with our capital program in its entirety is that it will provide much-needed jobs in our local economy, which is struggling like every other local economy.

Further, we're facing a $6.9-billion infrastructure deficit, so the longer we delay that infrastructure investment, the more those prices will continue to grow. We have needs that we have to meet.

In the longer term, we look for the federal and provincial governments to continue to see municipalities as key partners in reopening the economy and investing in our economy.

Finally, this idea of establishing a new longer-term, predictable, growth-oriented funding model for municipalities is key as well.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Yes. Our government's relationship, whether last term or this term, has been phenomenal with the cities and the FCM and all the comments coming out. Last year, we doubled the gas tax for cities, and I know they used those monies to invest wisely. We need to continue to work with cities—for example on infrastructure, with the $180-billion plan we rolled out and continue to roll out. We need to get that money on the ground, not only for today, but in the future.

Switching gears to the potato farmers, here in Vaughan there are tons of restaurants. Unfortunately, all these restaurants are closed right now. They use a lot of potatoes. I know they use a lot of Canadian homegrown potatoes, of course. I'm not an agricultural expert, but I wanted to get this on the record. Are any of the programs we have implemented to help agri-food and agri-food processors coming to assist the potato farmers? Is there anything we need to put on the radar screen of the agricultural minister that we can quickly do?

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Webster.

[Jason Webster]

The short answer, to my knowledge, is no. We don't have any specific one to do that. Currently, in our province, as I mentioned in my speech, we have come up with a plan to try to get all of the 2019 crop processed. That's a joint plan between our provincial government, our potato board and our processors to process the product and put it into cold storage—they've managed to supply that—and we're hoping to have it ready for later. That's great.

The real fear now, though, is that it's not quite so possible for the rest of the country. There isn't that much cold storage available. There are going to be a lot of potatoes that can't get processed. We certainly need something to deal with that, and of course our seed growers, with product that just can't be processed.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

As we can all understand, and I think everyone appreciates quite well, we're in unique circumstances and time. No one could have predicted this scenario for potato growers or for whatever crop individual farmers grow across Canada. It's just a unique time. Obviously, we are listening quite concisely.

Chair, do I have time, or am I over?

[The Chair, Liberal, Wayne Easter]

You are out of time. I was just going to interrupt you.

We have Mr. Ste-Marie, and then on to Mr. Julian.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to thank all the witnesses for their very interesting presentations.

My question is for Mr. Gilroy. If Mr. Webster wants to comment as well, I would invite him to do so.

Mr. Gilroy, you mentioned existing crop insurance programs such as AgriStability. Can you explain to us why they are inadequate, what changes we should make and why this is urgent?

[Brian Gilroy]

The main program.... There's production insurance. Some crops have access to it, and some crops don't. We have 120 different crops in horticulture, and certainly the greenhouse sector does not have access to crop insurance. Even if they do, labour shortage or labour issues are not an insured peril in almost all areas of the country.

The main program for support is AgriStability. I believe that back in 2013 the coverage level was reduced from 85% of 85% to 70% of 70%—

[The Clerk]

Mr. Chair, I will have to intervene once again. I apologize for this, but we cannot interpret at the moment. I'm not sure what the issue is, Mr. Gilroy. I think it's because of the sound quality.

I don't know how you want to proceed, Mr. Chair. Maybe we can—

[Pierre Poilievre, Conservative, Carleton, ON]

Point of order, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Yes.

[Pierre Poilievre, Conservative, Carleton, ON]

I just wanted to speak to the interpretation branch. I can hear the witness just fine. When I was speaking earlier, the interpretation said they couldn't hear me. In fact, I've had people message me since, saying that my audio was fine as well, so I think the problem might be in the interpretation branch. I think the witness's audio is just fine, as far as I can tell.

[The Chair, Liberal, Wayne Easter]

I think it's about getting through to translation. I think it's in the booth.

Do you want to give us another try there, Brian? We'll see how it goes.

[Brian Gilroy]

Sure.

As I mentioned, back in 2013 the AgriStability levels were dropped to 70% of 70%, and that makes the program not worthwhile, not usable, for a very large percentage of farmers.

[The Chair, Liberal, Wayne Easter]

Does Jason Webster want to take a stab at that question? Did you hear the translation of Gabriel's question?

[Jason Webster]

I think so, yes.

I'll echo what Brian was saying. The AgriStability program has been reduced considerably for several years now, and quite frankly, it's extremely complicated and difficult to predict. Most farms like mine, which are in a contract situation at a steady level going across, don't have the big up-and-down dips, so we don't have a whole bunch of years in a row when we can get our profit margin way up and then take a smash and get a payment. We're running at a low margin to start with, so when something like this comes along and hits us, it probably won't take us down to 70% of where we already were, but we're already on the edge.

We feel there are a lot of us out there, and we're just as important to the economy as everyone else. My farm operates with 10 people full time year-round, and 20 to 30 people in the seasonal times when we need more. We'd like you to consider ways to make these programs more effective, and try to target the people who need it.

[The Chair, Liberal, Wayne Easter]

We'll now come back to Gabriel. We had a lot of fooling around over translation.

Go ahead, Gabriel.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

My question is for Mr. VanderHout. Maybe his device's sound quality will be better than his colleague's, which will make things easier for the interpreters.

Mr. VanderHout, could the current situation result in food shortages this fall if nothing is done?

Also, is it true that a number of farmers are opting not to plant their fields because they are afraid they won't have the labour they need at harvest time?

[The Chair, Liberal, Wayne Easter]

Jan, go ahead.