Finance Committee on Dec. 11th, 2020

[The Chair, Liberal, Wayne Easter]

There is a point of order. Just hold on, Mr. Poilievre.

Mr. Fraser, do you have a point of order?

[Sean Fraser, Liberal, Central Nova, NS]

Yes, it's just a technical issue.

I think my colleague Mr. Fragiskatos was disconnected. I see him here now.

Peter, are you back and able to hear and take part in the meeting?

[Peter Fragiskatos, Liberal, London North Centre, ON]

I am back, Mr. Chair. I think you can all see me. I can see all of you.

I am not sure what happened. I was frozen out. It could be a tech issue, or it could be connectivity challenges on my end. I know that IT can check to see how well my computer is running, but I have logged back in.

I have been here long enough to hear how Mr. Poilievre continues to politicize the role of the Bank of Canada—

[The Chair, Liberal, Wayne Easter]

We will go back to—

[Peter Fragiskatos, Liberal, London North Centre, ON]

—to the detriment of the public interest, but I appreciate Mr. Fraser for reaching out to ask.

[The Chair, Liberal, Wayne Easter]

Okay. Mr. Poilievre, the floor is yours.

[Pierre Poilievre, Conservative, Carleton, ON]

It is, in fact, the Liberals who are politicizing the Bank of Canada by using the bank as an ATM to fund government spending.

I would note that the Minister of Finance and the Governor of the Bank of Canada went out on the same day to say mutually supporting things on the actions of the bank. On the one hand, the minister said she wants to borrow for the long run by selling long-term bonds. Within hours, the central bank governor went out and said that he wants to lend by purchasing long-term bonds, effectively fulfilling the borrowing demands of the government. The central bank is now on track to owning half of the government's debt with almost no scrutiny.

The bank admits that its actions are inflating asset prices and has admitted that the people who are at the top of the economic ladder, the very rich, are going to benefit from that. The bank has also admitted that, if this action, which is to print money, leads to inflation, as has been the case in the past, it would be especially painful for the poorest among us. The poorest people in the country will pay the most for inflation, because their wages will be devalued, and the cash that they use as a larger share of their source of transactions will be devalued with it.

There is a very serious chance of a major wealth transfer from the working poor to the wealthiest 1%, something that runs opposite to the government's purported claim that it wants to redistribute money back down to the poor and middle class. Remember the middle class and those working hard to join it? How quickly they forgot about those folks. They're bragging in this fall economic update that they're going to bring in a $50 million tax on stock options, supposedly to redistribute wealth. Fifty million dollars is not even a rounding error for the massive sum of money they are pumping into financial markets through this quantitative easing program.

According to Bloomberg News, in Canada the wealthiest 15 billionaires have seen their net worth raise 32% since the pandemic began. That is even the case for those who are in sectors that have not done well in the pandemic. Why is that? It is because their assets are being inflated by the central bank's actions, actions that it proposes to continue indefinitely without limit.

We're told that we're not even allowed to ask questions about this. When I asked the minister, “To whom is the central bank accountable?”, she said, “The people.” Well, we are the people's representatives, so why is it that we, the people, cannot see the data on this massive movement of currency? This is our money. It doesn't belong to the governor of the central bank. It doesn't belong to any one person. It belongs to every single Canadian.

The idea that it's somehow an intrusion into the independence of the bank to ask it to publish information about its transactions in public markets is insane. That would be like saying that it's an intrusion for government to publish details of how it spends tax dollars. Of course it's not. The money belongs to the people, and the people deserve to know the facts.

What I'm asking for is the same kind of detail that corporations would publish in their quarterly reports. These transactions have all happened in public markets, but they're very difficult to track, because they're so large in scale and it's very difficult to match up what bonds the central bank sold with the ones it purchased. The bank has the expertise to perform these calculations and transactions, and if it chooses not to, then the Parliamentary Budget Officer could do so instead.

There are reasonable people who support the central bank interventions. I happen to have my criticisms, but I respect those who have told me that they believe the bank is doing the right thing. You're entitled to your opinion, and a reasonable, thoughtful person could arrive at that perspective.

I am not proposing a motion to condemn the central bank or to disagree with the decisions it has made. I will do that in another forum. I'm also not asking committee members to render a judgment for or against what the bank has done. I'm simply asking for the information about what its done to be public so that Canadians can judge for themselves.

You can support a program while simultaneously believing that the details and numbers of that program should be transparent to all. I supported the Harper government's decision to increase funding for the armed forces, but I also supported publishing all of the details of where that money went, how it was used and what we got for it. I supported infrastructure investments when we were in government, and I believe that all of those investments should be published and that Canadian taxpayers should be able to decide whether the money was well spent.

As the Prime Minister said, sunlight is the best disinfectant, so let's shine the light on this and let Canadians judge for themselves. Maybe we will get the information back and it will show that everything was above board and perfectly executed and that the bankers deserve a pat on the back. Maybe not, though. There's only way to find out, and that's to get the data.

If the government has nothing to hide, then its committee members here will do as the minister suggested and vote to ask the Bank of Canada for this information.

[The Chair, Liberal, Wayne Easter]

Mr. Julian, are you speaking to this motion or are we back to discussing the agreement. Do I go to a vote on the former?

Mr. Julian, the floor is yours.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Mr. Chair, I disagree with Mr. Poilievre on many things, as you well know, but I support this motion for the simple reason that it is our responsibility, as mandated by the House of Commons, to look at all aspects of the COVID-19 relief supports that were put into place. The finance committee was given that job by the House of Commons when we rose on March 13, so we have a responsibility to get to the bottom of this.

I do note something that has come up many times and has also been very present on social media: the incredible amount of liquidity supports to the banks, and the Bank of Canada's role in that. It is very controversial.

We saw, under the former Harper government in 2008, about $116 billion in liquidity supports coming through a variety of mechanisms, including the Bank of Canada, CMHC and other institutions. Current supports are six times as big.

Getting that information is vitally important for Canadians. The issue of transparency is extremely important as well, and it is arising more and more as an issue among the public. Certainly journalists are asking questions that are not being answered.

I think we owe it to Parliament, and to the mandate we were given on March 13 for this pandemic, to get these answers. We certainly owe it to Canadians. This is our responsibility as a finance committee.

I don't see why there would be any controversy around adopting this motion. It is common sense, and it is very much in the logic of what we were given as a mandate by the House of Commons back in March. I am therefore supporting the motion.

[The Chair, Liberal, Wayne Easter]

I will ask the clerk to poll committee members and we will go to a vote.

[The Clerk of the Committee, Ms. Evelyn Lukyniuk]

Mr. Ste-Marie has his hand up.

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

Mr. Chair, I want to speak about the motion. I'd like to take a few minutes before we vote on the motion, because there was a debate on the matter.

[The Chair, Liberal, Wayne Easter]

I'm sorry, Gabriel, but I couldn't see you. The floor is yours.

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

I don't understand the purpose of the motion. I'm not convinced of its relevance.

The Bank of Canada produces its monetary policy reports and releases the information. All the financial markets around the world look at this with great interest.

We're living through an unprecedented pandemic, which has led to fiscal policies with unprecedented deficits. This was necessary. That's what the leader of the Conservative Party thinks.

To back that up, I'll add that the Bank of Canada's role was to provide the necessary liquidity and credit to ensure that we don't fall into a liquidity trap or into financial crises such as the ones experienced in recent decades around the world. The central bank had an important role to play. I applaud its work.

At the end of his term, Mr. Poloz came to explain the Bank of Canada's role. He reiterated the importance of credit. He emphasized that, even with an injection of liquidity or an increase in credit in difficult times, there isn't any inflationary goal. We've seen this in recent months. The markets haven't damaged the value of the Canadian dollar because of this monetary policy. Interest rates haven't increased, and so on. There isn't any inflationary pressure at all, because liquidity was necessary.

When the Bank of Canada buys and sells government bonds, two things can happen.

First, if it resells or buys back the bond at the same price that it sold for, there isn't any gap for the market. Ultimately, this costs the Bank of Canada and taxpayers nothing because there were no risk premiums. The measure didn't do anything. It just stabilized what was put in place.

Second, if a gap exists, the reason is that the Bank played a role in addressing market concerns and ensuring sufficient credit for the provinces, the federal government or businesses. This helps stabilize the economy. Without this, we run the risk of major crises, which is a serious matter.

Yesterday, Paul Beaudry, the deputy governor of the Bank of Canada, took the time to give an interview to La Presse. This interview is directly related to the motion and to the topic brought up by the member for Carleton in the past few days, or even weeks.

Mr. Beaudry said that “the Bank of Canada's low borrowing rates aren't providing a free lunch for the government.” He added the following:

...the recent central bank bond-buying program isn't the equivalent of printing money or underwriting government debt at no cost. Instead, the program is a way to keep borrowing costs in check and to support households and businesses in the wake of the pandemic...

When we play around with these matters, it worries me. I've seen too many economies around the world collapse as a result of monetary policy games. The policy must be strictly enforced. We can't joke around and play politics with this issue, in my opinion. The information is transparent and available. When it isn't, financial markets around the world react very quickly.

I also want to remind the committee that, during the Great Depression in the 1930s, there was a rejection of Bank of Canada financing. This was the policy of Alberta's Social Credit premier, John Edward Brownlee. When the stock market crashed in 1929, this was his attitude. Alberta went bankrupt in 1934.

If the Bank of Canada were doing a poor job, there wouldn't be a larger deficit. The markets would step in and say that what we're doing is wrong. We would see an increase in risk premiums, a devaluation in the dollar or an increase in interest rates. This hasn't been the case at all.

The information is being shared properly. If the Parliamentary Budget Officer and his team, who have already been doing a tremendous amount of work since the start of the pandemic, were asked to carry out a lengthy and challenging research project and to submit it just before the holidays, this would delay all their other work.

That's why, Mr. Chair, I don't support this motion at all.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Ste-Marie.

Ms. Jansen.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Just before I go to you, Ms. Jansen, there are still some hands up from before.

Everyone check your “raise hand” or “lower hand” function so that I know what we're dealing with.

We'll go to you first, Ms. Jansen.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

What I'm really concerned about right now is that we're talking about undermining the credibility of the central bank, but what we're about to do would undermine the credibility of this committee.

First of all, we have all decided, it seems, that we're going to take a month off. We all have good jobs. We're not losing our jobs. We're going to take a month off, and we're going to vote at the same time to make sure that we don't get information from the Bank of Canada that Canadians are concerned about. Canadians want to know about this issue. Transparency, as we all know, is absolutely imperative, especially right now when people are losing their livelihoods and their lives. We need to really consider who's going to actually have their credibility undermined if we go through with turning down this motion.

[The Chair, Liberal, Wayne Easter]

Okay.

Your hand is up, Mr. Poilievre.

Go ahead.

[Pierre Poilievre, Conservative, Carleton, ON]

I am very disappointed that the Bloc Québécois does not want to do what an opposition party is supposed to do and press for more transparency on this issue. It wants to help the government and the banks keep their secrets so taxpayers have no idea how their money is being used.

The member can agree with the Bank of Canada's statements and still be in favour of transparency. That's precisely what Parliament and this committee did when it came to government spending in response to COVID-19. We said yes to the benefit to support people who lost their jobs, we said yes to the wage subsidy so that people could keep their jobs, and we said yes to loans for small and medium-size businesses, but we also said yes to transparency. We want to know what the money was used for.

That is why we asked the Auditor General to investigate and release her findings. That is why we are asking the Parliamentary Budget Officer to take a deeper dive into the issue. That is also why we are asking questions and why we, as a committee, met all summer long: to scrutinize spending.

We could debate the member's comments at length. I find it fascinating that he thinks the Alberta government controlled the Bank of Canada in the 1930s. I'm not sure whether he's aware, but provincial governments don't control the Bank of Canada. He may not know this, but Alberta has never been a sovereign country. It was an interesting take on history, nonetheless.

He also said the Bank of Canada did not print money, but that's obviously not true. The Bank of Canada does print money. That is evidenced by the bank's own data. The number of banknotes in circulation has gone up 8%—the biggest increase since the 1980s—and the supply of coins has gone up 17%—also the biggest increase since the 1980s. To say, then, that the Bank of Canada does not print money is false, both figuratively and literally. The available data show it.

As far as crises are concerned, it is true that, when politicians meddle with the banks, it's dangerous. That's exactly what I am trying to prevent. During a similar period in the 1970s and 1980s, the bank printed too much money. The inflation rate was above 10%. This eventually led to higher interest rates, of course. When a central bank buys back all of a government's debt, interest rates become temporarily high. Here's the real question: If this continues and we see inflation in a few years, what effect will this policy have had?

In the 1970s and 1980s, inflation shot up 10% or more, and interest rates went from 8% to 22% in two years.

All that to say the use of central banks to pay a government's debt has led to a number of crises, as history shows. If the members believe that they are right and that they are taking the right approach, why not make the information public?

If everything is above board, releasing the information should be no problem. We can all look at it and have absolute confidence in the system, knowing that it's working as it should. As I see it, the only reason for wanting to keep the information secret is the fear that it will not support the opinions expressed by the politicians and bankers and that it will contradict their claims.

I say yes to transparency, yes to open information and yes to accountability by all those who make decisions affecting our money and our finances. I suggest that everyone on the committee who is in favour of transparency, openness and democracy vote for the motion and against secrecy.

Thank you.

[The Chair, Liberal, Wayne Easter]

I believe we're ready for the motion, Madam Clerk, if you could poll the members, please.

(Motion negatived: nays 6; yeas 5 [See Minutes of Proceedings])

All right, we are back to the original discussion on the agreement. I think we had relative agreement on Mr. Julian's suggestion.

It was somewhat along the line that we would have the analysts pull together the work from the submissions prior to mid-August from the COVID-19 hearings, and from witnesses who had appeared before the committee and from the speaking notes of the witnesses who had been invited, but not heard. The information would be translated and sent out to committee members. We'd come back at the first opportunity, when the House meets after January 25, finalize our report, work on our recommendations and table it as soon as possible.

Is that the agreement relatively speaking?

[Some hon. members]

Agreed.

[The Chair, Liberal, Wayne Easter]

Okay. We're agreed that will be the process going forward.

That does conclude our last meeting of 2020.

[Some hon. members]

: Oh! Oh!

[The Chair, Liberal, Wayne Easter]

To say that it's been a challenging year would be an understatement. I will say that on this committee we had some interesting times. We've heard from a lot of witnesses overall throughout the year—a lot of good witnesses. We've heard some short speeches and some long speeches. We've had quite a few days of filibustering. Through it all, I think we've done our duty as MPs.

You know, off camera, I find that nobody's lost their sense of humour even though we had some strong words from time to time. Nobody's lost their sense of humour and there's still pretty good collegiality among members on this committee. I want to thank everyone for their endurance and their effort throughout the year.

We, as a committee, want to thank the numerous clerks that we've had throughout the year, the analysts who worked hard for us, the people who work in the translation booths and also the ones who look after the committee rooms and all of the technology. On behalf of the committee, I want to sincerely thank them and wish them and their families a very merry Christmas.

With that, merry Christmas to all. Stay healthy. We'll see you in 2021.

The meeting is adjourned.