Evidence of meeting #38 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rate.
A video is available from Parliament.
12:55 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you.
Our final questioner for today's session will be from the NDP.
MP Blaikie, you've got the floor for the next three minutes or so.
12:55 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
One of the things I appreciate about this chair is that he always saves the best for last.
We've talked about a number of different factors today, whether it's COVID, the war or climate change that has had an impact on inflation. We've talked about some domestic causes such as perhaps price-gouging in the corporate sector, which I think has been well documented by folks at Canadians for Tax Fairness and the Canadian Centre for Policy Alternatives. There's clearly a lot of conjecture, and we've heard some of it today, about the role of government on fiscal policy and inflation and perhaps some calls that were made at the Bank of Canada on the monetary policy question and “what if” scenarios that have come up.
If we rewind to any time prior to October 2021, a big part of that narrative from certain folks in Parliament was that pandemic benefits, particularly CERB and the CRB, were driving inflation. I mean, let's be honest: The largest share of government spending through the pandemic was on direct income support to Canadians. That's what we're talking about when we talk about fiscal policy. I think it was implicit, clearly, and sometimes explicit that the line of that argument was to say that if pandemic income supports were removed from the equation, you would see a slowing down of inflation now.
The pandemic benefit programs were all but completely cancelled at the end of October 2021. The programs that were put in place in this Parliament were quite a lot less. They were harder to access. They delivered less benefit to Canadians through the omicron lockdown than their predecessors did in previous waves, yet inflation spiked and has been doing so ever since the elimination of the benefit. I'm certainly not implying any kind of causal or even correlative link between the elimination of those programs and inflation, but it seems pretty clear to me that pandemic benefit income support was not a significant driver of inflation or we would have seen some kind of relief in inflation, had those programs not been there.
There are still people who are in significant distress, not because of lockdowns explicitly, but I think of people in the travel and tourism industry, specifically independent travel advisers. I think of people in arts and culture who, while venues are open, just haven't seen the same number of people coming back. In some cases they have, but in others they haven't.
I wonder if you have some reflections with hindsight on pandemic benefit programs and some thoughts about where there might be a need for ongoing support within certain important aspects of our economy like travel and tourism that we want to see come back. In a tight labour market, we don't want to see all those people convert to another area of the economy, because those are skills and expertise that won't be available to Canadian businesses as those industries rebound, which hasn't yet happened to the extent that we might like to see but is no doubt coming.
I wonder if you might provide some reflections on that for the committee.
12:55 p.m.
Governor, Bank of Canada
You've packed a lot in there.
I think I've been very clear about our mandate and focus. I'm going to leave it to the Parliamentary Budget Officer and other bodies to assess the government's pandemic response. I'm very focused on the response of monetary policy, the need now with an economy that is moving into excess demand to normalize monetary policy reasonably quickly.
I know the words get overused, but we've never been through anything like this. We weren't going to get everything right. At the Bank of Canada, I think we've gotten more things right than we've gotten wrong, but there have been some surprises. We're addressing those and I certainly hope that in the fullness of time, when we look back on this, we will have had strong recovery with inflation coming back to target, we'll have an economy that's well balanced and growing well, and we'll have prosperity in this country.
I do think it could have been so much worse. The collective response has taken a bad situation and made the best of it, but we're not entirely through this. We have some more work to do and we're very aware of that.
1 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Blaikie.
On that note, MP Blaikie—the best for last—I want to thank Governor Tiff Macklem and our senior deputy governor Carolyn Rogers. The members had many questions and you answered them in a very fulsome way, with a great amount of detail and perspective. We thank you for that.
On behalf of our finance committee, the clerk, the analysts, the interpreters and everyone who's here, thank you very much. We really appreciate it. Have a great day.
1 p.m.
Governor, Bank of Canada
It's a pleasure. We appreciate the committee holding us to account, so thank you.