Evidence of meeting #13 for Finance in the 43rd Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was communities.
A recording is available from Parliament.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
Thank you for your answer. Hopefully, this will be resolved as soon as possible. I also clearly heard your request to raise gas taxes. The advantage is that it can be implemented immediately for infrastructure. That model works.
Could you give us a few concrete examples of another issue you mentioned, climate change? You said that you are already seeing it where you live. You have named categories, but can you give us some concrete examples?
Mayor of Fort Smith, Northwest Territories Association of Communities
I can talk about the riverbank in my own community. It has been sliding, and we had a major slide 50 years ago. Because of the impacts of climate change, with permafrost across the north and rising water levels, we are seeing, in communities like Tuktoyaktuk, the water advance into the community. Buildings have had to be pulled back from the shoreline.
This year, the water levels have been “unprecedented”, which is the word for 2020. I think the Great Slave Lake, which is one of the largest lakes in Canada, was five feet higher than normal. The Mackenzie River and the Slave River were high too. A lot of our communities are on the rivers—the Hay River, the Mackenzie River and the Slave River—and on the lakes, and these levels are affecting our community infrastructure, our water intake and our sewer systems. I think there's not any community that is unaffected by climate change in the Northwest Territories.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Madam Mayor.
We will now go to Mr. Julian, who will be followed by Mr. Poilievre.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank very much, Mr. Chair, and thanks to all of our witnesses for being here today. We certainly hope that you and your loved ones have been safe and healthy during this pandemic.
I'd like to start with you, Mayor Napier. I'd love to give a shout-out to two residents of Fort Smith: my former roommate Dennis Bevington and Joan Bevington. Next time you see them in Fort Smith, if you could say hi, I'd appreciate it.
You've spoken very eloquently about climate change, the lack of connectivity and the lack of housing. This week, of course, the Parliamentary Budget Officer revised his estimate of the cost of the Trans Mountain pipeline. Construction costs, now revised, will most probably be $14 billion. Of course, we know that Canadian taxpayers will lose a lot of money on that, which is another conclusion of the PBO report. This is the choice the government can make: to invest in Trans Mountain or make the investments that are actually going to resolve many of the issues you're raising.
I'd like to get a sense from you, with the Northwest Territories Association of Communities, of how much you think it would cost to meet the response on clean energy to make sure the Northwest Territories and northern communities are actually part of the clean energy grid and have those options available to them. How much would it cost to meet housing requirements and address the housing shortage in the north, particularly in the NWT? For telecommunications to get communities interconnected, are there any costs?
I'd like to get a sense of what it would take to resolve those issues in the north.
Mayor of Fort Smith, Northwest Territories Association of Communities
Thank you, Mr. Julian.
I will certainly say hi to Mr. Bevington. He comes to our “lunch with the mayor” meetings every month.
I'm sorry that I don't have the costs of what that would be. Certainly it is far less than $14 billion.
We know that housing across the territory is dire. We have a lot of what we call “hidden homeless”, where people are not homeless in the same circumstances as you would see in the south. We have overcrowding of housing units at an extreme level.
Just as we've seen in Nunavut in the past month, if we have an outbreak of COVID, it will spread because of the interconnectedness of the communities. We don't have the same medical services you have down south—which, again, are already over-taxed for the people who are being serviced.
The dire state of housing inadequacy and the deficit of housing supply in the Northwest Territories will require an extraordinary allocation of federal funds to overcome. A long-term federal funding commitment is critical to address the unmet housing needs.
I am very sorry that I don't have numbers for you today. We can certainly look into that and get something to the committee as best we can.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you so much for your response.
I'm going to move to Mr. Wildeman. I'm very intrigued by your proposal around having fitness training as part of health care. You're certainly making a very strong argument for the positive impacts that would come from that.
Has the Fitness Industry Council done any statistical analysis to know how many Canadians might benefit in that kind of situation? How much would we save the health care system if Canadians were healthier?
President, Fitness Industry Council of Canada
That's a great question. We have done modelling. We've looked at, for example, expanding the Prescription to Get Active program over 10 years, leveraging not only federal government investment, but also the facilities. The Fitness Industry Council of Canada is made up of facilities from coast to coast, and those facilities would also fund the initiative.
We believe we can—in the long term, over the course of 10 years—provide savings to our health care system of well over $100 million. In terms of people getting started and continuing with their physical activity, we could get well over 250,000 Canadians who are not currently exercising and being active onto that path. That's where you'll see the health care savings.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you very much.
I have to move on to Mr. Stratton. I'm a long-time member of the New Westminster Chamber of Commerce and a proud member of the Burnaby Board of Trade.
What small business people raise consistently is that web giants and companies outside Canada are not paying any corporate tax at all. Is the Canadian Chamber of Commerce in favour of levelling the playing field and forcing the web giants to actually pay corporate taxation and pay their fair share in Canada?
Chief Economist and Vice-President, Policy, Canadian Chamber of Commerce
We are certainly in favour of the digital sales tax that was just announced.
When it comes to corporate taxes, I think it's very important to understand that there is also an international conversation taking place at the OECD as part of the larger BEPS process for taxation where they're discussing this very issue of corporate taxation for digital technology companies.
Our position has always been that we need to defer to what is decided multilaterally and internationally, instead of going on our own and making a made-in-Canada approach and then having another international system that becomes the standard that we have to adapt to later on.
Liberal
The Chair Liberal Wayne Easter
We'll go on to Mr. Poilievre, who will be followed on a split between Mr. Fraser and Mr. Fragiskatos.
Mr. Poilievre, welcome. You're in a different room again. I'm going to invite you to P.E.I. where you have to stay in the same room for 14 days.
Go ahead.
December 11th, 2020 / 1:50 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I think you'd like to lock me up and throw away the key, Mr. Chair.
Conservative
Pierre Poilievre Conservative Carleton, ON
Mr. Di Matteo, you're one of Canada's leading fiscal historians. The Bank of Canada has expanded its balance sheet by $400 billion [Technical difficulty—Editor] 400%. Has this ever happened before?
Professor of Economics, Department of Economics, Lakehead University, As an Individual
That's a very good question. I guess my first answer is that I actually don't do monetary economic history.
The size of the increase is certainly outside of my living memory and my recollection of similar types of events, even during times of increases in public spending. The last time there was a major ramp-up of this nature—during World War II, for example—most of it was standard deficit financing in terms of Victory Bonds and actual purchases, as opposed to money creation and monetization.
Conservative
Pierre Poilievre Conservative Carleton, ON
Right. So even in defending western civilization against Hitler and Mussolini, our government actually raised its money by borrowing real dollars from real people rather than credit creation at the central bank.
Professor of Economics, Department of Economics, Lakehead University, As an Individual
Well, at that time, that was the approach they used. I mean, with World War II, the debt was contracted at, I guess, what you would term “patriotically low” interest rates, given that it was the fight to save democracy. That, in a sense, assisted the process of borrowing, because the rates were quite low at that time.
Conservative
Pierre Poilievre Conservative Carleton, ON
Your research shows that the biggest deficits as a share of GDP in Canadian history happened in the mid part of the war, and those are the only deficits, as a share of the economy, that are bigger than those today. But your research also demonstrates that in 1946-47, we ran the biggest surpluses as a share of GDP in Canadian history, rapidly paying back that debt.
Do you see the current government on track to doing that after this crisis is over?
Professor of Economics, Department of Economics, Lakehead University, As an Individual
Well, that's a function of two things. In terms of the rapid paydown, first, there was a large demobilization after the war effort, so expenditures, of course, came down very quickly. There was also, in the immediate period right after the war, essentially a very large economic boom. I mean, in terms of the demographic factors at the time, there was the baby boom. There was a natural resource boom with natural resource exports.
The growth rate of the economy, moving into the end of the 1940s and into the 1950s, saw economic growth, in real terms annually, in easily the 4% to 5% to 6% range some years. You have—
Conservative
Pierre Poilievre Conservative Carleton, ON
Do you see that kind of growth repeating itself to pay for all of this new spending?
Professor of Economics, Department of Economics, Lakehead University, As an Individual
You're asking me to conduct a forecast, and I don't really want to make weather forecasters look good.
Essentially, the factors for that type of rebound don't seem to be there. However, the one thing I would offer is that in the wake of the pandemic, if you want to think about human psychology, there might be a lot of consumer spending to make up for lost time, given the restrictions that have been faced. Again, I don't see the signs there—
Conservative
Pierre Poilievre Conservative Carleton, ON
Consumer spending is interesting. It increases demand, but in the absence of supply, in fact with a possible supply reduction that has occurred over the last year while supply chains have been downed, there could be faster growth in consumption than there is in production. We know that historically this has led to inflation. None of the experts believe that's going to happen, but the experts are often wrong. In 1978 there was high unemployment and high inflation at the same time, leading interest rates to move from 8% to 22% in 24 months, with no prediction of that from the experts and without the Bank of Canada ever anticipating it.
Is it possible that interest rates could rise faster than all of the experts are predicting, based on your knowledge of history?
Professor of Economics, Department of Economics, Lakehead University, As an Individual
Let me answer that in two ways. Unpredicted changes can happen. No one predicted the pandemic and its effect on the economy. The other thing you have to keep in mind is what's happened over the last 20 years. Inflation has been low. Part of that has to do with internationally integrated supply chains.
Basically, the aggregate supply curve, if you want to think of it that way, has stayed flat in response to demand. There's been disruption to that process. There's been a lot more protectionism. If that aggregate supply curve, because of all these disruptions in productions internationally, starts to go upward, at some point, with increased demand, prices will go up. Once prices start to go up, you're going to have to see a response in terms of interest rates if there seems to be any possibility of inflation taking off.
I mean, ninety—