Mr. Chair, I appreciate your allowing the intervention by my colleague.
I was indeed referring to both. If you compare Canada's average term to maturity, which is 6.9 years—now the government's been issuing more long-term notes over the years, which I suppose is good—we're way below our peers. I think Mexico's average term to maturity is around 18. The Province of Ontario has been issuing mostly long-term notes, as it did during COVID. The majority of the issuances of the Province of Ontario were long term. This notion there's no market for long term is bunk, to borrow a phrase. Of course, with an individual like Mr. Carney, I would love to explore some discussion about the government's borrowing during COVID and the central bank's participation in QE. As I recall, in 2013, then finance minister Jim Flaherty said that Canada would not do QE. Those were very wise words.
The countries that didn't engage in quantitative easing have far less inflation, far less asset price inflation. The people who benefit from inflation are those with assets. In a bizarre world where the government at one point was applauding itself for all of the work it had done to take people and families out of poverty, over the last three years has done more to put more families in poverty than all of the work they've done over the last nine years to help bring them out, because those individuals in the lowest income sectors are hurt the most. Bank of Canada Governor Tiff Macklem couldn't have been clearer, both at committee and in a speech he gave in May 2021, that the most vulnerable are the most affected by inflation.
Stats Canada is going to come out with the household balance sheet survey this week or next week, which will redraw the poverty line. That will be the first time that data will be available that will include the first full year of inflation, because I think the current data goes to the end of 2021. In this data, the poverty line will be drawn based on numbers until the end of 2022, if I'm not mistaken. What that will show is that, indeed, the lowest income individuals are hurt significantly by inflation.
Finally, along the same lines, the government's policies, mostly its spending policies, and its unwillingness to admit any role in inflation at all have contributed to inflation, or they haven't taken steps that would reduce inflation. By doing so, they have inflated the assets of wealthy Canadians, most notably in housing.
For a generation, Canada prided itself and had a pretty good Gini coefficient—low income inequality, very low wealth inequality—and we are now going in the opposite direction under a Liberal government that claimed that they really cared about income inequality. This data will show that we're losing ground. We're having more wealth inequality, and we're having more income inequality because the government has been unwilling to take any responsibility for causing inflation and are therefore not taking any steps to reduce inflation.
It's a bit bizarre to me that we're here, and it's this government.... Even the Prime Minister, just the other day, said that income inequality is not good. Yes, but with respect, Mr. Prime Minister, while your policies may not have been the sole cause, they have certainly contributed to inflation, and you're not taking any steps to reduce inflation, which is hurting income inequality and, certainly, wealth inequality.
On that basis alone, it doesn't really make sense. The government's fiscal plan certainly doesn't make sense. They want you to believe that all of the inflation happened outside of our borders. Inflation was already at 5% before Russia invaded Ukraine. It was going in the wrong direction. Multiple economists, including Larry Summers and Jason Furman, notably, in the U.S. at least, said that the fiscal expansion and the fiscal supports for COVID were going on too long and were going to create inflation. Very few people listened to them except for the leader of the official opposition, who said on the record multiple times that the government's loose fiscal and monetary policy ran the risk of creating significant inflation and, in fact, even asked questions of the finance minister about what would happen to the debt interest costs if the interest rate doubled.
Little did the official opposition leader know that, in just a few short years, the interest rate wouldn't double; it would quadruple. We went from debt interest costs of $24 billion a year to, now, $55 billion a year. In a few years from now they are projected to hit $60-some billion per year, but that assumes interest rates will go down. If interest rates just stay where they are, that $60-billion debt interest payment is going to get higher. That is even if they just stay where they are for six months, because the government is rolling over hundreds of billions of dollars of debt per year, but they're rolling it over at higher rates, including debt interest payments.
Then you have the Bank of Canada losses. I'm hoping we get a follow-up from the bank. I think they're supposed to provide us with a projection. This might be at OGGO, but the finance department is supposed to provide a projection of Bank of Canada losses for the next five years. The reason that's important is the assumption—the losses of the Bank of Canada—is interest rates are going to start falling over the next five years, but if that is delayed even by six months, the Bank of Canada losses will be higher because the Bank of Canada has basically underwritten, or is covering, the difference between the interest rate at which it initially purchased the bonds and the interest rate today. That's how we get Bank of Canada losses.
Never before in history has the Bank of Canada returned losses to the shareholders—the taxpayer and the government—but we have them now because the bank purchased all of that debt and now has to make up for the losses as interest rates have risen and the price of those bonds has fallen.
What's also interesting is I had the opportunity to talk to the senior deputy governor, Carolyn Rogers, who has been quite excellent as of late. This is why we have another voice at the table with experience in monetary and fiscal policy, as Mr. Carney has.
M2, which is the measure of money in the system, is still growing. The amount of M2 in the Canadian economy is still growing, which is bizarre, because the Bank of Canada is in a mode of what they call quantitative tightening, which is taking money out of the system. How is it possible that M2 is growing while the Bank of Canada is shrinking its balance sheet and taking money out of the economy?
Some of that could be related to M2 including the measure of money market funds, but to foreshadow a future answer from either Mr. Mark Carney or Ms. Carolyn Rogers when we get this information back from the bank, maybe the government's bond issuances, the new bond issuances, have the effect of creating money in the economy, that is, that fiscal policy is overriding monetary policy.
When that happens, the central bank has less control over the creation of money, because when the government decides it's going to issue another 70 billion dollars' worth of debt, it goes to the market, issues bonds and takes cash from those who buy the bonds, but then those financial institutions go to the Bank of Canada and they get the balance.... Basically, in not so many words, they get credited for it. They can borrow against the collateral of that bond, which creates more money.
The government's own fiscal policy is creating more money in the system.
The Bank of Canada, even just a year ago, released a paper. The title of the research paper is “The Central Bank Strikes Back!” It looked at how fiscal and monetary policy interact together, and where fiscal policy starts to dwarf out a central bank's monetary policy tools, notably, the ability to create money and the ability to set interest rates.
With the Government of Canada's fiscal plan from the time of COVID until now, the doubling of the national debt and the debt management strategy that sees every year between $60 billion and $80 billion of new borrowing required to meet the government's financing plans, its fiscal plans, has the effect, or may have the effect—I hope the bank will clarify this for us—of increasing the money supply, which—guess what, Mr. Chair—increases inflation. It is a contributory factor to creating inflation when you have money creation, and the central bank is now cut out of the decision on whether to create money, because it's the fiscal plan that's doing it.
Now, I did want to turn back to the podcast. I'm just kidding for the interpreters, because I know they don't have it. It's okay. I'll save you that. I would like to apologize for my performance the other day. It's a very good lesson for those people who go on podcasts to think about what the transcript will look like when you're done, because, oh my gosh, was that garbled. All I did was just read it like it was provided.
I feel that Mr. Carney's book, Value(s), would be.... It has obviously been edited, so it's probably written in a way that's more consumable. If I thought that Mr. Carney would give me royalties on narrating that book, I think I would do the audio version. I don't think it is available on Audible.com in an audio version, but I think I would make my services available to Mr. Carney, only in one official language, of course, because I'm not well skilled in the other. I could maybe read it, but it would be very bad.
If Mr. Carney's book is not translated, I could read the book. Then, we could take the transcript, and it would be translated.
I wonder if he would enjoy that. We could make it available in multiple languages.
I've gone on almost as long as it seems. I don't know if that joke translates well in French. I'm not sure. I'll have to check the transcript.
There is a good joke, actually, that minister Flaherty used to use. You're giving a speech in an auditorium, and people start leaving the auditorium one by one until there's one person left. The speaker says, “Sir, I really appreciate the fact that you stayed to hear my speech.” He says, “Don't thank me. I'm the next speaker.”
With that, I've held off my friend Mr. Genuis for as long as I can.