Finance Committee on Oct. 29th, 2024

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thanks, Chair.

Since I have limited time, Governor, I want to ask.... Yesterday, you commented on fixing Canada's productivity problems. One of the things you highlighted was having foreign credentials recognized, which could help people get into the workforce. I know there are many brilliant immigrants in this country we know of who end up driving taxis or for Uber. They could be doctors, nurses or engineers.

Would you agree that we should have something like a national program wherein someone could take a test to prove their skills in a certain amount of time—something like 60 days—so they could be trained here in Canada and their credentials could be recognized? After that point, whether it's a pass or fail.... If they pass, they could go into their field of work as a doctor or a nurse. That could help not only our health care system but also with the productivity issues we're having today.

[Tiff Macklem]

I think that's the kind of innovative thinking we need. Whether it's a national or a mutual recognition of provinces, yes, that's the kind of thing we need.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

I'm happy you just endorsed our common-sense Conservative leader Pierre Poilievre's national blue seal program when he becomes prime minister. Thank you for that.

To move on, we saw that the Parliamentary Budget Officer recently came out with his report saying that the government is going to overrun its budget by $7 billion. What I want to know from you is whether that is helpful in any way, not just for you but overall in our fight to bring down inflation. Does it help in any way? If that trend continues, is that going to make things harder?

[Tiff Macklem]

As I've said, we're back to low inflation. The economy is in some excess supply.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Just because that's happening, does it mean you give yourself free rein to spend more.

[Tiff Macklem]

What it means is, from the narrow perspective of monetary policy, there's less tension between monetary and fiscal policy. When you're above target and you're trying to get it back, spending more than planned creates tension. When you're back to target—

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

It's not helpful.

[Tiff Macklem]

—you have some excess supply, it's less of a.... It's not my role to comment on what is best fiscal policy—

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Would you say it's not helpful?

[Tiff Macklem]

As I say, I don't really feel I need to comment on fiscal policy, given that we're past the target.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Okay. I'll move on because I have a limited amount of time.

I know that the bank likes to give information that's digestible for Canadians. To Canadians watching today, in your opinion, is the economy today good or bad?

[Tiff Macklem]

The economy is soft.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

What does that mean for the two million Canadians—

[Tiff Macklem]

It's not bad; it's not good. It's soft, and it needs to strengthen going forward.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

If we talk in relative terms of everyday Canadians, whom we know are suffering today, which you've acknowledged.... It's the two million Canadians going to the food bank. It's the Tim Hortons workers in Timmins.

With GDP per capita coming down, what do you think they're thinking when they hear “soft”? What does that mean to them?

[Tiff Macklem]

We have a pretty good sense of what they're thinking. We survey Canadians. What we're seeing on financial stress is that, yes, there's still some financial stress. They're feeling a little less stressed than they felt.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

But, respectfully—

[Tiff Macklem]

They're feeling a little more optimistic than they felt. Are they feeling good? No, but they're feeling a little better than they felt, and we think that's going to continue to improve.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Right. We've established that rent prices have gone up and are staying stubbornly high. When you look at food bank users, 70% of them are renters, and 80% of their paycheque is being taken up by that. One in five of those food bank users are people who are employed, and food bank usage has doubled since 2019—doubled. It went from one million to more than two million people.

What does that say to those people about the state of our economy?

[Tiff Macklem]

I share your concern. There's no question that people at the lower end of income distribution are having a tougher time. Many of those are renters. If you look at financial stress, it's concentrated more in people who don't have mortgages. Obviously, they're renters. Whether it's their car loan or their credit card, that's where we are seeing more stress. That is a concern.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Hallan.

Now we go to MP Baker, please.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

By the way, Governor, for what it's worth, I didn't hear you endorse a blue seal plan of any kind, but if you're ever tempted, I would just say I'd be careful about that. Mr. Poilievre has the tendency of suggesting that certain people get fired even when they're doing very good work.

What I want to talk about is the impact of the rate cuts on people. Concerning the most recent rate cut or series of rate cuts, how do you anticipate people will feel that in their day-to-day lives?

[Carolyn Rogers]

It's very hard to generalize, because it really depends a lot on your situation. If you have variable debt, whether it's a mortgage or any other form of variable debt, you'll feel it right away, because your monthly payment will be smaller. If you're one of those people whose mortgage is renewing a year from now and you're calculating the difference between what your payment is now and what it's going to be at rates now, you're probably feeling a little bit of relief because that difference is a bit smaller.

It's very hard to generalize. You have to look at what situation people are in. Overall, even for people who don't have variable debt and don't have a mortgage that's renewing, I think there is a general sense that things are going back to normal.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

One of the things that I wonder about, and I think I've asked both of you this question a number of meetings ago, is the issue of how people are impacted whose mortgages are rolling over. It's going to depend on whether people were on fixed or variable rates, and if they were fixed, at what point their mortgage comes to term. I appreciate all of that.

In the past, you've told us that this is something that you carefully watch and monitor. Could you talk to us about your outlook on how folks are going to be impacted as mortgages come to term and they renew?

Some folks are going to be renewing at lower rates, and some folks are going to be renewing at higher rates. I want to get a sense of how my constituents are going to be impacted in the coming months and possibly years in that regard.

[Carolyn Rogers]

If you're one of those people who's anticipating a renewal, you're watching rates. You're doing the math, and every time we change rates, you're probably asking, “What's the change in my payment?” More generally, we've heard a few things as we talked to both consumers, mortgage holders and banks over the last couple of years. Canadians are very prudent. Even through the great financial crisis, we never saw mortgage arrears go above 0.5%, so Canadians pay their mortgages.

Do they cut back on other expenses, or do other things to make sure they can do that? Absolutely. We've heard from Canadians saying, “I'm changing my spending habits or I'm saving up, so that I have a bit of a buffer when that renewal happens and I can pay down my principal.”

There are a variety of things that Canadians are doing in anticipation of those renewals, but we're glad to be able to add to that by bringing rates down. If the economy continues to evolve the way we think it will, there's room for them to come down a bit more, and that'll help.