Finance Committee on May 11th, 2021

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you, Mr. Fraser.

I do want to start by underscoring, as I did in my reply to Ms. Jansen, the strength of my agreement with you about the CERB and the CRB. Our government really stepped in when literally millions of Canadians through no fault of their own were suddenly left without a job and without the ability to find a job. I am really, really glad that we took action to support them. I want to say to those Canadians that we will continue to be there. The support is there to September 25.

On students, again I find myself in violent agreement with you, Mr. Fraser. When it comes to the unprecedented support for students in this budget, let me offer three motivations.

I really believe that young Canadians have made a huge and very particular sacrifice during the pandemic. They have curtailed their social lives and many of them have had to learn virtually. They've really done it for us, for their parents and for their grandparents. I think we owe it to them to support them now.

There is a robust body of academic research suggesting that if you graduate into a recession, your lifetime prospects on everything from income to likelihood of having children to likelihood of marriage to even your health can be stunted. This budget really believes in supporting young Canadians. It does that through the measures to support students that you listed and through aggressive action to create work experience and job opportunities. About 500,000 work experience and job opportunities will be created in this budget.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Chair, is there any time remaining?

You're on mute, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

No, there isn't. I guess that's why I muted myself.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

You'd like to do that to the rest of us, wouldn't you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

We are out of time. There are always far more questions than we have time for, but we will have to turn to officials.

Minister, thank you very much for appearing and taking the time today. We wish you much future success in your duties, which are not an easy chore these days, that is for sure. All the best.

We will turn to officials, and I'll go—

[Sean Fraser, Liberal, Central Nova, NS]

I have a point of order, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Yes, Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

I'll be very quick.

I know we're at the beginning of a study. I tried to circulate, in advance of our last meeting, a proposal for how we should conduct it. I'll put everyone's mind at ease: I'm not trying to pull any fast ones or table motions on the floor right now, even though the rules would preclude that. I just want to give us an opportunity to have a very short discussion about the next steps in our study.

I'd like to thank each of the critics for taking the time to speak with me over the weekend, or as recently as this afternoon. I had initially envisioned that we would farm out some portions of this bill to different committees purely as a way to expedite matters. Certain members indicated they didn't wish to do that, and I'm happy to oblige if we want to do the entire study at the finance committee.

I've prepared a draft motion and circulated a copy of it to Mr. Fast and Mr. Ste-Marie. Perhaps the clerk can circulate a copy of that motion, if I send it momentarily, to you, Mr. Chair. It is a starting point for future discussions on what the shape of this may look like.

I spoke with Mr. Julian earlier today, and we haven't reached an agreement or anything like that. However, from a technical point of view, we will need to establish our next steps at some stage. Some members have indicated a preference to do this at the steering committee. I'm okay with doing that, and technically speaking, I know you mentioned previously that you sought room for a steering committee meeting.

Given that we're supposed to hear from the officials on Thursday, I'm wondering if the committee would agree to one of two options. I'm happy with either, frankly. We can either adjourn a bit early to allow the steering committee to use the remaining time to develop the plan on how we should proceed, or set some of the meeting time aside for committee business to do the same thing, if that is technically a better option for securing meeting space.

With that, Mr. Chair, I'll have the clerk circulate my proposal, but I'm happy to accommodate feedback. My interest is less in the format of the meetings and more in making sure that we deal with the measures outlined in the BIA in a timely way.

[The Chair, Liberal, Wayne Easter]

Are you going to send that proposal to the clerk so people can—

[Sean Fraser, Liberal, Central Nova, NS]

I can do that momentarily.

[The Chair, Liberal, Wayne Easter]

Okay. Maybe we'll come back to that in the last five minutes, after the officials who are here, and talk about that a little further to see where people want to go, whether or not they want to farm sections out or try to do it all themselves and set a timeline.

Would it be okay to go that way? Then we can figure out what we're doing on Thursday.

I see some heads nodding, yes. Okay.

We have the officials from the Department of Finance. I'll give you the lineup for questions first. I have Mr. Fast, Mr. Fraser, Mr. Ste-Marie, and Mr. Julian.

We have with us Andrew Marsland, senior assistant deputy minister, tax policy branch, who is here a lot of the time; Nicholas Leswick, assistant deputy minister, economic and fiscal policy branch; Leah Anderson, assistant deputy minister, financial sector policy branch; Evelyn Dancey, associate assistant deputy minister, economic development and corporate finance branch; Katharine Rechico, assistant deputy minister, international trade and finance branch; and Galen Countryman, associate assistant deputy minister, federal-provincial relations and social policy branch.

Thank you very much for attending the first hour and the work you do in this struggle with COVID.

Mr. Fast, the floor is yours.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you very much, Chair.

To our officials, during the budge lock-up, one of your colleagues stated that all government spending is stimulus. Is that the department's position, that all government spending is stimulus, or did I understand that incorrectly?

[The Chair, Liberal, Wayne Easter]

I have to interrupt for a minute. The clerk sent me a note that the phone lines are down in some quarters.

What's the situation there, Alexandre? Do we have to suspend?

[The Clerk of the Committee, Mr. Alexandre Roger]

There are phone lines that enable people to listen in real time. People who can listen on ParlVU have a 30-second to one-minute delay, but in real time they can dial into the phone lines. I am being told by the IT technicians here that we would have to suspend the meeting for at least 10 minutes to get the phone lines back up.

That is not my decision, and I put it to you as chair. I don't know how important it is for the people who are listening to be able to use the phone lines right now.

[The Chair, Liberal, Wayne Easter]

I understand there will be a record of the meeting in Hansard anyway. Correct?

I think we will continue.

Mr. Leswick, we'll go to you.

[Nicholas Leswick, Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance]

Very good. Thank you for the question, Mr. Chair.

I guess more precisely, all government spending feeds through into some real economic activity. Basic national income accounting would suggest that government spending would feed through and provide some sort of fiscal impulse into the economy—some more, some less, depending on the type of government spending.

Yes, it was probably I who answered that question, Mr. Member, and it was just to try to exemplify that a dollar spent by government feeds through into the economy in some way. Some of it leaks out of the economy, such as through exports, but it does find its way into either the pocketbook of a consumer or the income statement of a business.

[Ed Fast, Conservative, Abbotsford, BC]

Nicholas, that wasn't supposed to be a “gotcha” moment. I didn't ask you to out yourself, knowing that you said that. I just wanted to confirm that.

[Nicholas Leswick]

It's quite all right.

[Ed Fast, Conservative, Abbotsford, BC]

I did want to talk about stimulus, because in the fall economic statement, when the growth projections weren't as robust as they now are in the budget, the minister set aside anywhere from $72 billion to $100-billion worth of stimulus. She couched it by saying that the government would measure how much and how it allocated the stimulus based on economic growth and the needs at the time. Now we realize that revenues are up, economic growth is up, yet the full $100 billion-plus has effectively been pumped into the economy.

Can you give me some justification as to why there wasn't a more graduated response to any economic headwinds that might arise?

[Nicholas Leswick]

Thank you again for the question, Mr. Chair.

I mean, there's no exact science. It is all a relative calibration. There was a whole lot of slack in the economy from the government's perspective as it was writing the budget, and we can see evidence of that even in the most recent labour market report, where you can still point to over one million Canadians who are unemployed or suffering from a severe reduction in hours. Likewise, business closures are hovering at anywhere between 3% and 5% of normal pre-pandemic baseline operations.

The justification is that there is still a lot of slack to absorb and, beyond that, there's some intent to make up for the potential scarring effects over the last year so that we don't get into a position where these businesses never reopen their doors and unemployed people never get attached and properly matched to a job that their skill sets are suited for.

In that context, the budget tries to make a strong case that part of the spending was securing the recovery and building our growth potential beyond the pandemic.

[Ed Fast, Conservative, Abbotsford, BC]

Has the department done any modelling as to the impact that household and corporate savings could have if those savings were injected into the economy? There are impacts from all over the place. You have massive infrastructure and stimulus spending on the American side, you have corporate and household savings and you have fairly robust economic growth right now. Have you done modelling that would help you understand and also measure how the stimulus is actually applied?

[Nicholas Leswick]

Thank you again for the question, Mr. Chair and Mr. Member.

Of course, we do that kind of modelling. There are three significant tailwinds. One, as you said, is just the spillover of potential U.S. stimulus into Canada. Number two is just this kind of release, this kind of post-pandemic euphoria effect, where consumption patterns snap back to normal. On top of that are these accumulated savings, this so-called pre-loaded stimulus, which we try to factor in.

The honest answer is that it's all just very extremely uncertain: The timing of U.S. stimulus as it works through Congress in the U.S., the actual attitudes, and consumer and business confidence and at what pace those will snap back so that we can resume normal savings and consumption patterns.... The analysis we do is no different from what the Bank of Canada and other economic shops do—like the commercial banks.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Chair, how much time do I have?

[The Chair, Liberal, Wayne Easter]

You have one more question, Ed.

[Ed Fast, Conservative, Abbotsford, BC]

On the stimulus that's injected, one would think that at some point in time you're going to do what the minister suggested she would do, which is to withdraw it. Tell me what you mean by the word “withdraw”, because you can't take back the money that has been committed in the budget. When the minister speaks about withdrawal, is she simply saying that she won't add any more to the stimulus that she's already committed to, which is the $100 billion plus?