Evidence of meeting #32 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was question.
A recording is available from Parliament.
Liberal
Annie Koutrakis Liberal Vimy, QC
What guarantees can we give Canadians who are still somewhat anxious and frustrated or who are still struggling that the federal government will support them until the end of this crisis?
Liberal
Mona Fortier Liberal Ottawa—Vanier, ON
That's a very important question.
From day one, the government has made health and safety the focus of its decisions. It also worked with the provinces and territories to ensure national coordination. That goes a long way in reducing anxiety. Canadians can see that we are putting their interests first.
The federal government has created a number of benefits, including the one announced last week to help families. Families received an additional $300 per child. Seniors who are receiving old age security will soon be entitled to receive an additional $300 and those who also receive the guaranteed income supplement will receive $200.
We have really listened. We are focusing on Canadians during this unprecedented crisis.
Liberal
The Chair Liberal Wayne Easter
We will have to end it there.
Thank you for your appearance, Madam Minister, and thank you, officials, for the work you do.
Minister, I do like those pictures on the wall behind you, against that yellow background. If that soil were a little redder, it could represent P.E.I. Thank you again for your appearance.
Liberal
Mona Fortier Liberal Ottawa—Vanier, ON
Thank you. It was my mother's art, just so you know, Mr. Chair.
Liberal
The Chair Liberal Wayne Easter
It's very good.
We will now turn to the officials. We have with us representatives from the Canada Revenue Agency, the Department of Employment and Social Development and the Department of Finance. Many of them have appeared before us in recent weeks.
I do want to say a sincere thank you to the officials for the work you're doing during this pandemic crisis, with long hours, short nights and long weeks, I know. We really respect the work you do.
I'll give members the list of questioners so you can be prepared. We'll go to five-minute rounds. We have Mr. Poilievre first and then Ms. Dzerowicz, Mr. Ste-Marie, Mr. Julian and, hopefully, Mr. Morantz and Mr. Fragiskatos.
Pierre, the floor is yours.
Conservative
Pierre Poilievre Conservative Carleton, ON
Thank you very much, Mr. Chair.
Finance officials, I sent you an advance copy of the question I would be asking you, and I shared it with the chairman as well.
Given that we are taking on record debt in a short period of time, of all the debt issued by the Government of Canada since March 2020, I wanted to know how much of it was issued in short-term treasuries, two-year bonds, three-year bonds, five-year bonds, 10-year bonds, 30-year bonds and 50-year bonds, each separated out in dollars and percentage terms?
Do you have that information prepared, given that I provided you with the question 24 hours in advance?
Liberal
Soren Halverson Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Hi there. I was checking to see whether my deputy was still on the call.
Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
But I'm thinking that he's not.
Thank you, Mr. Poilievre, for sending the question in advance. It did allow us to put your answer together for you.
If you would like, I can provide this in writing after as well.
Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
In total, between March 1 and March 27, we've issued $371.5 billion in debt. Of that, 76.2%, or $283 billion, is in the form of T-bills; $26 billion, or 7%, in two-year bonds; $9 billion, or 2.4%, in three-year bonds; $16.5 billion, or 4.4%, in five-year bonds; $9 billion, or 2.4%, in 10-year bonds; $2.5 billion, or 0.7%, in 30-year bonds; with the remaining 6.9%, or $25.5 billion, being issued in CMBs, Canada mortgage bonds.
Conservative
Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Yes. They are 90-day, short-term.
Conservative
Pierre Poilievre Conservative Carleton, ON
Three months, so 90 days.
Look, all of us have renewed a mortgage. When rates are nice and low, you lock it in. You don't take variable, especially if you know rates are going to go up. The Governor of the Bank of Canada came before this committee and told us he thinks that rates will go up. They can't go anywhere else but up. I mean the two-year is going at 0.25% right now.
I'm looking at the numbers here, and 83% of the new debt you've issued is two years or less, which means it will come up for renewal in two years. With all of this talk we're hearing from deficit advocates about how now is a great time to borrow because the rates are low, that will be out the window in two years when all of this debt rolls over and has to be borrowed again, presumably at higher rates.
What is the thinking behind this short-term lending when long-term rates are so low?
Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
The reliance on T-bills in the short term is really reflective of T-bills essentially being a shock absorber, if you will. It's the most flexible part of the debt market.
The other comment I would offer is that if you look at the overall distribution of our debt, we have about 20% in T-bills, about 38% in the short-term and medium-term bonds, and about 42% in the long-terms. As we progress through 2021, we expect to see probably 70% of our financial requirements funded through bonds. You'll see some terming out of the debt that's currently being issued at the short end.
There will be significant increases in all sectors in the—
Conservative
Pierre Poilievre Conservative Carleton, ON
Right, because we're borrowing so much money. Our great-grandchildren are going to be paying for it all.
You've borrowed $371 billion since March, and 83% of it is in short-term lending in an environment when any responsible borrower would want to lock in for long-term rates.
We're going to have rates going up in the medium term, and then we're going to be in a financial crunch, because this enormous stock of debt will be far more expensive than it would have been if Finance Canada had locked in below 1% rates over the 30-year terms and 50-year terms.
Liberal
The Chair Liberal Wayne Easter
We'll have to end it there. I'll give Mr. Halverson a chance to respond, but I think that's a point you want to make.
Mr. Halverson, if you could send the response to those questions to the clerk, we can feed it out to the committee. That would be much appreciated. Is there anything you want to add?
Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
We'll do that. Thank you.
Your point is well taken, Mr. Poilievre. You know, you will see some terming out of the debt. The reliance on the T-bills to the extent that you've seen is really, as I've said, a function of that being the shock absorption part of the market.
Liberal
The Chair Liberal Wayne Easter
Thanks, both of you.
Thank you for coming prepared with those answers.
Conservative
Pierre Poilievre Conservative Carleton, ON
Yes, thank you for that, by the way. I really appreciate you coming here with specific data. It's much appreciated.
Liberal
Liberal
Julie Dzerowicz Liberal Davenport, ON
Good afternoon, everyone. Thanks so much for being here today and, as always, thanks for your hard work.
My first question is focused on data. I think it's directed mostly to Employment and Social Development and CRA officials. I know that we've put in the programs at historic speeds, which is really wonderful because we needed to get money as quickly as possible to as many people in need as possible.
Are we trying to collect as much data as we can in a disaggregated manner that will allow us to have a good understanding of who the programs are helping and what the impact of our programs is?