Thank you.
Evidence of meeting #34 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
A recording is available from Parliament.
Evidence of meeting #34 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
A recording is available from Parliament.
6:50 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thanks, Mr. Chair.
Ms. Yalnizyan, if you'd like to give any more information on the benefits of public spending, around social and physical infrastructure, I can assure you that the public certainly wants to hear these kinds of ideas and these kinds of investments. If you'd prefer not to, I'll ask Ms. MacEwan if she has any rebuttals to some of the statements that have been made around the federal debt during this meeting.
6:50 p.m.
Economist and Atkinson Fellow on the Future of Workers, As an Individual
As I put in my HUMA report, which you can have in hand, it's like leaving money on the table to not invest in child care. Whereas I'm thrilled that Dr. Mintz agrees with me on this, and whereas it's absolutely true that Quebec has shown that it pays for itself, Pierre Fortin's work on subsidized child care shows that for every $100 in subsidies for child care, the Quebec government in 2008 received $104 in additional revenues and the federal government received $43 as a pure windfall. They didn't put a thin dime into the program.
When you take a look at highly learning-enriched early learning for at-risk children in the United States, four different programs show that for targeted programs, the return is from $4 to $8.75 on every single dollar invested in these programs. It's just not widely done. The market doesn't do it. Public services do it. I don't think leaving it in the market's hands and being agnostic as to whether the market can provide it or not is appropriate. All the evidence shows that for us to get the biggest bang for the dollar, we need to incorporate child care, and not just child care as warehousing, but early learning and supporting of children who are at risk of dropping out. We need to incorporate that into the educational system. It needs to be publicly accessible and it needs to be learning enriched before they hit school age for it to work its magic. That's what makes it the secret sauce.
In the other presentation I made, there is remarkable evidence on the returns on investment for pathways to education, a program that Stephen Harper expanded, I believe. It's still a pilot project. It hasn't expanded. It's not normalized. We are leaving money on the table by not investing in these programs that have returns to the individual, households, governments and society. If you want to maximize potential and maximize the future, this is the way of doing it.
6:50 p.m.
Liberal
The Chair Liberal Wayne Easter
We will end it there.
Ms. MacEwan, please hold your remarks until near the end. There might be time then. We'll take the next two questions.
Mr. Cooper.
6:50 p.m.
Conservative
Michael Cooper Conservative St. Albert—Edmonton, AB
Thank you, Mr. Chair.
Dr. Cross, you recently undertook an analysis on the economic cost of the Chinese communist regime's misinformation and mishandling of COVID-19. The evidence is clear that for weeks the regime falsified and downplayed risks associated with human-to-human transmission in direct contravention of their obligations under the WHO's international health regulations.
We know that the Chinese communist regime vigorously opposed early travel restrictions from Taiwan, Australia and the United States, and encouraged millions to leave Hubei province. As a result of the Chinese communist regime's duplicity—a regime that by the way the Prime Minister has a deep affinity for—COVID-19 was transformed from a regional health issue into a global pandemic.
Based on your analysis, what is the economic cost to Canada as a result of the Chinese communist regime's COVID cover-up?
6:55 p.m.
Senior Fellow, Macdonald-Laurier Institute
I think I calculated the drop in GDP, using the PBO's estimate, in current dollars. We're looking at a loss of something like 16%, which is a little over $400 billion.
I also calculated that the loss to the national balance sheet in wealth is in the order of a couple of trillion dollars. I also noted that we can't even put a price on a lot of these things. There's going to be a reduction of long-term productivity, and there's going to be a cost of increased bankruptcies. We haven't even begun to calculate that, so I put an estimate out there in the order of a little over a couple of trillion dollars, but when the dust settles from all of this, it could very well be much more.
6:55 p.m.
Liberal
Annie Koutrakis Liberal Vimy, QC
Thank you, Mr. Chair.
My question is to Dr. Cross, but anyone who feels comfortable can chime in.
Some of my honourable colleagues seem to be advocating for austerity in response to this government's unprecedented emergency support spending. However, following the global financial crisis, countries that took extreme steps to cut costs not only experienced slower rates of economic growth but also saw poorer health outcomes for their citizens.
Given the fact that we will be emerging from a public health crisis, one which many economists have suggested must be addressed through higher rates of economic growth, why does it make sense to be advocating for government cost-cutting and austerity measures that have historically resulted in such negative outcomes?
6:55 p.m.
Senior Fellow, Macdonald-Laurier Institute
I can give a brief start. I don't know if Ian wants to jump in here at some point.
I don't think it's obvious to me that countries that advocated austerity did worse. I know Germany and Canada, for example, had the smallest increases in deficits on the order of 5% during the crisis compared to 10% in Britain and the U.S. Germany and Canada also advocated at a G7 meeting that we should be moving toward austerity first, and I think, overall, Germany and Canada did pretty well compared to certainly the United States and even Britain, although obviously they had a banking crisis and we didn't, so it's apples and oranges.
I think it's a bit simplistic to say that countries that undertook austerity during and after the crisis didn't fare as well.
6:55 p.m.
Liberal
6:55 p.m.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
I'll be very quick.
I published, in How Ottawa Spends, I think the definitive account of the Liberal government's downsizing, 1995-98 with—full disclosure—the help of two anonymous, very wonderful public servants who fed me extraordinary amounts of data.
To answer the question, I did look at what the impact was, because I've lived in Ottawa all my life, and one of the beliefs at the time was that this was going to turn Ottawa into—if I can use Mick Jagger's current phrase—a ghost town, and it was going to devastate the city of Ottawa. In fact, if you look at the GDP data that Philip Cross just alluded to for the local economy and then you look at the national economy, Canada prospered mightily after the largest downsizing in Canadian history. We had very strong growth all though the latter half of the 1990s after the largest downsizing austerity program in our history.
I don't think that the evidence supports what you said. There's also an OECD study, and I can't remember the name or the date of it off the top of my head, but I've read it. It made an analysis of different downsizings over time. It understandably came to a mixed conclusion, saying in some instances it led to more growth and in some instances it didn't, but I don't think we can say that across the board a downsizing program will lead to diminished growth.
6:55 p.m.
President's Fellow, School of Public Policy, University of Calgary, As an Individual
I'd just like to strongly recommend that you read Alberto Alesina's book, Austerity, that came out in 2019. He just passed away, unfortunately, last week. It is a wonderful study—200 cases that he looked at among OECD countries with his colleagues—and what you said is actually incorrect.
7 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you for that.
I have one question. It relates to what you said earlier, Jack, and it's two key points. One is investment and the other is productivity. If there are answers to those two areas, we have to find them, moving ahead. On the investment side, I think both Conservative and Liberal governments have tried many ways to attract investment into the country, reducing corporate tax rates and so on, yet companies still sat on their cash, never put in new technology and never increased wages much so the capital investment still never happened.
On the productivity side, I remember doing a study way back in 1998 that was called Dignity at Work. We found at that time that if you went to a four-day work week, you would probably increase productivity and people wouldn't be taking off to do other things. I know there are no easy answers, but does has anybody have any suggestions on the key questions of increasing investment in this country, which we're going to have to have, and increasing productivity, because it is terrible?
Go ahead, Ian.
7 p.m.
Associate Professor, Sprott School of Business, Carleton University, As an Individual
That's Professor Mintz's domain. He has published more peer-reviewed...I'm sorry, I read my literature. I read deeply because I'm a professor so I have the time. He has published on that subject more than any other Canadian, period.
7 p.m.
President's Fellow, School of Public Policy, University of Calgary, As an Individual
As you said, there is no simple answer. I don't quite agree with some of the things you just said, Mr. Chair, about the investment part and the productivity record. If you go back to the period of 1989 to 1999, we had a terrible record of productivity, absolutely horrible. We were one of the lowest in the OECD. It did improve after 2000, so I would argue that the number of things we've done, including corporate tax reform...that wasn't just reducing rates, it was also doing other things. One's very helpful in attracting investment. Our investment rates and our productivity improved. It improved also for other reasons. I won't say it was just the corporate tax, but studies have shown that the corporate tax helped. There's no question about that.
The only question that I have, which has been a constant issue that has plagued everybody, is why Canada can't seem to get its productivity rate much better than, let's say, 1.5% per year. It was 1.5% through some of the post-2010s for a certain period, but it has been really laggy. People keep looking for answers, and so one view is that maybe we need moon shots.
Now we've got the Canada Infrastructure Bank, and we have superclusters. I will guarantee you, and I may not be living then, but in 15 years we will still be talking about 1% productivity rates because we still haven't got to the fundamental problem of why we can't improve our productivity. I think we're thinking too much about looking at certain little things to improve our productivity when there's something much bigger. I think some of it is simply not enough competitive pressure on our businesses to be more innovative. That's because we've done a great job protecting many businesses from competition. That's one hypothesis I have.
I may be totally wrong but I have a bit of a view of these issues from the past, and I see a lot of protected sectors in our economy.
7 p.m.
Senior Economist, National Services, Canadian Union of Public Employees
I think this ties back to what Armine was talking about earlier. Child care is going to improve productivity. If people have affordable, quality child care in place and their kids are well cared for, that improves productivity. If we have affordable public transit and active transit in livable cities, that improves productivity. It's easier for people to get to work. I agree, I think it's amazing that you were suggesting a four-day work week. People who have experimented with that find that, especially for office workers, you tend to make the work fit into the week. If you condense the week to four days, you get just as much done.
I think inequality is a drag. When they talked about the cuts to social services from the 1990s, we saw that impact on inequality in the 2000s. When people are stuck in low-wage jobs or on social assistance, they cannot contribute to society or increase their economic potential, for lack of a better word, or social potential. Those are the big things holding us back, and if we don't address those issues, we're not going to have a productive economy going forward.
7:05 p.m.
Liberal
The Chair Liberal Wayne Easter
We have certainly had suggestions right across the full spectrum on this panel today, which is a good thing because sometimes disagreements really make you think.
I do want to thank each and every one of you for your presentations and the committee members for their endurance as well.
Committee members, we will see you on Tuesday, and we'll do this all over again.
Thank you very much to the witnesses for their presentations, their time and their advice.
The meeting is adjourned.