Finance Committee on March 31st, 2022

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

In your earlier remarks you mentioned that the CPI really is a composite, that it doesn't reflect any one particular individual situation. The extent to which the CPI maps well onto the experience of a particular individual or a group of individuals depends on many factors. Certainly, one of the things I've heard a lot over the six and a half years in which I've been a member of Parliament is from seniors, who really feel that CPI increases to their public pensions don't match the cost pressures they experience.

I'm wondering if there has been any work done—or if you think it would be possible, or indeed advisable, if you'd be prepared to go that far—on having something like a Canada seniors price index, which might be a better tool for increases to seniors' pension income and other income support benefits, and which would better represent the cost pressures faced specifically by seniors.

[Greg Peterson]

You're exactly right: When we take a look at the basket of the consumer price index, it reflects all expenses by all Canadians, aggregated together. A senior won't necessarily face day care expenses or tuition expenses. It is a composite. In order for us to do something like that, it would require us to have very detailed information on what seniors are purchasing, so we'd have to construct a kind of a basket of consumption for seniors.

What we have done, though, is that we've produced a personal inflation calculator, which enables you to enter into a kind of website, essentially, your own pattern of expenses, and produce your own individual CPI. That's something we've done in order to try to allow Canadians to see themselves better in the data we're producing.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Would that tool or some other method provide—if there were a campaign around trying to get a critical mass of seniors to use that tool—the basis for constructing a seniors basket that could be used for seniors' income benefits and pensions?

That's so they're not faced with a CPI that.... I mean, one of the downward factors within the CPI right now is child care. As you rightly point out, that's not a factor for many seniors. To the extent that some costs of the Internet and a few other things have gotten a little lower, that's also something that is maybe disproportionately not beneficial to seniors, who don't necessarily avail themselves of those things as much.

Do we have the means to be able to create a seniors basket, or is the infrastructure to be able to do that missing?

[Greg Peterson]

I don't think there's infrastructure missing. I think there's data that's missing, and it would be an understanding of what the consumption patterns are with seniors.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

We'll move to the Conservatives and Mr. Fast for five minutes.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Peterson, I want to go back to the discussion you had with my colleague, Mr. Albas. I just want to be very clear about what we're asking.

Given that we talk about inflation being the highest in 30 or 31 years, obviously there must be a comparator of apples to apples to allow you to make a statement like that. I'm wondering about the basket of goods that you use to make comparisons like that. Is it equivalent?

[Greg Peterson]

In terms of the basket of goods we use, we change the basket of goods on a periodic basis in order to reflect changes in the consumption patterns of Canadians.

If I take as an example what we faced early on in the pandemic, a critique of the CPI early on was that with the closing of stores and the lack of availability of services, the CPI basket didn't properly reflect the consumption patterns of Canadians, so there was a bias. At that point, we worked with the Bank of Canada to get updated consumption data in order to come up with an alternate CPI basket to reflect that change in consumption patterns. When we did that analysis, in the end we found that there was no significant change as a result of the change in the basket over the course of the pandemic.

[Ed Fast, Conservative, Abbotsford, BC]

Are you seeing that when you make a statement about current inflation rates versus historical rates, there is an equivalency that is fair and that properly reflects the changes that have happened? Does it also properly reflect a proper comparison between two different times, say between the 1980s and today?

[Greg Peterson]

I would say the answer is yes. It's common practice among national statistical offices to update the consumption basket in the CPIs. We are no different.

[Ed Fast, Conservative, Abbotsford, BC]

I'm asking you to provide us—either now, or more likely in writing—an analysis of what the inflation rate would have been back in the early 1980s, compared to today. As closely as possible, using an apples-to-apples approach, could you provide the committee with that?

[Greg Peterson]

Absolutely. However, again, I would caution that there are some commodities that were sold in the 1980s that are no longer sold now—

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

[Greg Peterson]

There were VHS tapes in the basket in the 1980s. Of course, there were no streaming services available back then either.

[Ed Fast, Conservative, Abbotsford, BC]

I understand that.

You also mentioned that there were a number of different factors that [Technical difficulty—Editor] inflation. The war in Ukraine was the key one. With transportation prices, it was a bad year for food production. I wanted to ask you about a couple of others.

One is taxes. When a municipality raises property taxes, when a province raises the property transfer tax, when a federal government raises excise taxes, carbon taxes or income taxes, does that drive inflation, and does that factor into your CPI calculations?

[Greg Peterson]

It depends on the nature of the tax.

Maybe I can turn to Ms. Ertl.

[Heidi Ertl]

Yes, it depends on the nature of the tax, but most taxes are included with product prices. Taxes are included, so we know, for example, within each province and territory what the tax system structure is. Those get updated as needed. We will see carbon taxes, for example, as they're introduced in the CPI, so yes, those would be included.

If Taylor has anything else to add, she would be the expert on this particular topic.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Ertl, can you confirm that taxes are inflationary in nature?

[Heidi Ertl]

I can tell you that the taxes that are brought in would be included as they apply to specific prices of goods and services.

[Ed Fast, Conservative, Abbotsford, BC]

It sounds to me like you're a little reluctant to say whether they're inflationary or not. Are you including them in the CPI?

[Greg Peterson]

That's correct.

[Heidi Ertl]

Yes.

[Ed Fast, Conservative, Abbotsford, BC]

I have one other question. Stimulus spending by government is also inflationary. Is that correct?

It can be inflationary.

[Greg Peterson]

We've seen over the course of the pandemic that household wealth has increased. We have a large increase in savings rates across all income quintiles. That would put households in a position to buy more stuff, yes.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Fast. That's the time.

Now we're moving to Mr. MacDonald from the Liberals for five minutes.