Evidence of meeting #69 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was inflation.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Yves Giroux  Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Kristina Grinshpoon  Director, Fiscal Analysis, Office of the Parliamentary Budget Officer

3:50 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, and thank you, MP Baker.

We're now going to the Bloc with MP Ste-Marie.

3:50 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. Chair.

Minister, greetings and thank you for being here in the Standing Committee on Finance this afternoon.

At our meeting here last Wednesday, we heard from the Governor of the Bank of Canada, Mr. Macklem. One of the issues he raised was competition among businesses. He was concerned that competition mechanisms might not be fully playing their role, since, in the current inflationary crisis, businesses can pass on all input cost increases through the selling prices of their goods and services.

What does your government intend to do to solve that problem?

3:50 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Thank you for your important question, Mr. St‑Denis.

It's a very important concern, and I'd respond to it with two points.

First, your question underscores the importance of fighting inflation. I believe we all agree that today's inflation rate is too high and that it's important for all of us to help fight it. That's the reason we've chosen to take a responsible fiscal approach to avoid undermining the Bank of Canada's work in combating inflation.

Second, with regard to competition, I completely agree with you that we need competition among businesses for the market to function properly. That's one of the reasons why our government has targeted issues such as the green transition and productivity in our economic policy.

3:50 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you for your answer.

Minister, with all due respect, my name is Gabriel Ste‑Marie, not St‑Denis. That's just a detail.

3:50 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Pardon me, Mr. Ste‑Marie.

3:50 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Not at all.

It's good to increase productivity and promote the green transition. However, food distribution chains, for example, manage to pass on their costs to customers, in other words, to consumers. From what I understood of the remarks the Governor of the Bank of Canada made, the competition mechanism isn't efficient enough. The signal it sends is that costs are passed on to consumers. I'm discussing this particular sector, but there are many others.

In Canada, we have the Competition Act and the Competition Bureau. What does the government intend to do to bring the forces between business and consumers back into equilibrium?

3:50 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Thank you very much for your question, Mr. Ste‑Marie. I apologize once again for my mistake. My team and I are working closely with you and your team, and I thank you for that.

I agree with you that competition is an important aspect of the Canadian economy and that we must always encourage it. You mentioned the institutions and mechanisms that ensure there's enough competition in our economy.

I can assure you I'm working closely with Mr. Champagne, the Minister of Innovation, Science and Industry, and I will continue to do so to ensure that there's competition in the Canadian economy. I agree with you that competition is the sole reason why consumers enjoy satisfactory services and prices.

3:55 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

I'm expecting specific measures from your government. One thing the Governor of the Bank of Canada noted is that today's institutions and mechanisms aren't properly playing their role and that there's a problem with the current competition system.

Last Wednesday, the Governor of the Bank of Canada reminded us that his focus is inflation and economic growth. In economic crises and situations such as the one we're now in, a certain amount of arbitrage has to be done, and it's really not easy or obvious. The governor also monitors employment and unemployment rates but not inequalities. However, if there's one lesson that we've learned from every economic crisis, whether caused by inflation or recession, it's that every time a crisis occurs, inequalities increase and low-income earners and the poor pay the price.

Certain measures set forth in the economic update, the economic statement and the spring budget are designed to support the less well off. More broadly and generally speaking, what does your government intend to do in the longer term to reduce these inequalities, which increase with every new economic crisis?

3:55 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Thank you for your very important question, Mr. Ste‑Marie.

I personally think the inequalities problem is very important for the Canadian economy. I'm proud that our government has managed to address inequalities since 2015 through permanent measures such as the Canada child benefit and the national child care services plan.

We thought long and hard about this issue during the pandemic, and it's one of the reasons why it was important for us to put significant measures in place to support all Canadians during that national crisis. As you also noted, in the fall economic statement 2022, based on a balanced approach combining fiscal responsibility and compassion, we decided to target less well off Canadians with our assistance measures, particularly the goods and services tax, student aid, housing assistance and dental care. I agree with you that much work remains to be done, but I think we're headed in the right direction.

3:55 p.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Minister, and Mr. Ste‑Marie.

Now we will hear from the NDP.

I have MP Blaikie for six minutes, please.

3:55 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Thank you, Mr. Chair.

Thank you, Minister, for appearing today before the committee.

In your opening remarks, you made reference to some measures your government has already taken in order to provide financial relief to Canadians. Among them were items from the supply and confidence agreement with respect to the dental benefit, the Canada housing benefit and the doubling of the GST tax credit that New Democrats had been pushing the government to do for some time this year before that decision was finally taken.

Another thing that New Democrats have been calling on the government to do as part of a package of financial relief is to remove the GST on home heating, but we have not seen any commitment from your government on that, either in the House or in the fall economic statement or its accompanying legislation.

Could you explain to the committee why it seems your government is not open to the idea of providing GST relief on home heating?

4 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

First of all, if I may, since you mentioned dental and rental support, they say defeat is an orphan and victory has a thousand fathers, or maybe a thousand mothers, a thousand parents. I think that the rental support is much needed, and I'm glad we're able to provide it now.

When it comes to dental care, I think that is a historic measure and I'm glad we're able to co-operate with the NDP on providing it. I'm going to be really sincere for a minute. I think future generations of Canadians are going to look back on that and they are going to say, “Wow, we can't believe it took so long, and we're glad it's there”. That's certainly what I hear from people.

In terms of your specific question on home heating, I think the right approach is to provide targeted support to the Canadians who need it the most and to let them spend that money in the ways they choose to spend it.

We have been talking a lot about the need for fiscal responsibility. I take that very seriously. I think the funds available to us to support Canadians in these challenging times are necessarily finite. I think the best way to do it is to figure out who the people are who need support the most, to send the money directly to them and to let them make the choices as to how they spend that money.

4 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

As winter sets in and people are getting their heating bills, I look forward to hearing some kind of concrete proposal from your government on how we can help Canadians who are being affected by that cope with those additional costs, beyond what has already been announced.

I want to talk a bit about some folks who have a fair bit of money. Loblaws, of course, is one of them. They are not the only one. Oil and gas companies have been making record profits. The big box stores have made record profits during the pandemic.

In this legislation, there's the Canada recovery dividend, which you talked about in your opening statement. It's another supply and confidence agreement commitment. Something we have made no secret about is the fact that we would like to see it applied to the oil and gas industry and to big box retailers, including grocery stores. In some cases, you have said that it would be unfair to apply the Canada recovery dividend to those companies, despite the fact that they have been able to use their position within particular industries that provide essential goods to Canadians to increase their profits during these times.

I think the reports by the Canadian Centre for Policy Alternatives and the Canadians for Tax Fairness have said that up to 25% of the current inflation we're experiencing could be attributed to price increases beyond increases in costs. We're not talking about passing costs on to customers. We're talking about extraordinary price increases that have resulted in these higher profits.

What principle of fairness is at stake here such that you don't think it would be appropriate to see some of these businesses that have Canadians by the throat, so to speak, whether it's on food or on energy....? Why doesn't it make sense to ask that they pay relatively more, commensurate with their increase in profits, in order for the government to be able to provide assistance to people who are truly struggling?

4 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Thank you for the question.

Building on Gabriel's question about inequality, many of us here agree that paying your fair share is an important social and economic principle in Canada. I would say our government has taken real, meaningful action in this space. I mentioned, in my opening remarks, the 1.5% permanent tax on banks and insurers, the 15% COVID recovery dividend and the permanent luxury tax. We are bringing in some new measures now. I think the 2% tax on share buybacks is a good measure to address some of the challenges you've been talking about.

From my perspective, there are two elements of the tax on share buybacks that make it the right approach for Canada. One, it creates an incentive for companies to do what I think is the right thing, which is to invest more in their productivity and workers. The second element that I think makes it valuable for Canada, given our geographic location, is that it's also a tax the U.S. has put in place with the Inflation Reduction Act. For these two reasons, we thought it was a good approach for Canada to take.

I also want to point out that we're introducing, in this bill, many other tax measures, some of them less headline-grabbing, but significant. I want to take the opportunity to thank Mio and his team, because this is very sophisticated work—things like IFRS 17 and so on.

4:05 p.m.

NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

I want to ask whether there's—

4:05 p.m.

Liberal

The Chair Liberal Peter Fonseca

That's the time we have. I know it goes very quickly.

This concludes our first round. We're into our second round. In this round, we have the Conservatives up first.

I have MP Hallan for the Conservatives.

4:05 p.m.

Conservative

Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB

Thank you, Mr. Chair.

Minister, your government is projecting that, next year, Canada will only have a 0.7% growth in GDP. Your government had 15 good LNG projects on the table when it took over in 2015. Not a single one has been completed. You oversaw the cancelling of northern gateway, energy east and Keystone XL. Your government brought in Bill C-69, the “no more pipelines” bill, and Bill C-48, the tanker ban, which shut out Canada's potential to supply the world with Canada's responsible oil and gas, at a time when there's energy poverty around the world. It's caused home-heating costs to almost double.

In 2020 alone, 28,000 direct and 107,000 indirect jobs were lost in the energy sector, according to CAPP. The carbon tax is killing the energy sector, which is now unable to invest more of its capital into clean technology and emissions reduction. The Liberals demonize the energy sector, which is the same energy sector that helped any growth on the government's books. That's quite ironic. Also, the OECD predicted that Canada will be the worst-performing advanced economy over 2020 to 2030.

Would you agree that, without the success of Canada's energy sector growth, growth would be far lower than 0.7%?

4:05 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Again, there are lots of points raised there. I'm going to start with one assertion with which I strongly and personally disagree: the notion that our government demonizes the energy sector. I'm going to say something very personal.

Mr. Hallan, you represent an Alberta riding. Nick and I are both originally from Alberta. Nick's from outside Calgary and I'm from Edmonton. I know, personally, that my education was built on the Alberta energy sector. All through my high school and university, I benefited—as did so many Alberta kids—from support from the Alberta heritage trust fund. I remember that, and I am very aware of the support the Alberta energy sector provides Canadians in Alberta and across the country. I'm glad to have the chance to underscore that right now.

When it comes to Canada's growth and the role of the energy sector in Canadian growth, it is worth pointing out that Canada has the strongest growth in the G7 so far this year. I think it's important that none of us talk down the Canadian economy right now.

November 28th, 2022 / 4:05 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Mr. Chair, we're over the time—

4:05 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

I don't know how much time I have left. It was a long question.

4:05 p.m.

Liberal

The Chair Liberal Peter Fonseca

We're at two minutes and 50 seconds. We still have time.

4:05 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

Okay. Thank you.

I would also like to point out that the west coast LNG project is a very significant project that is creating good jobs in Canada and will provide important support of LNG as a transition fuel—

4:05 p.m.

Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

I have a point of order, Mr. Chair. I understood that we were going to share and roughly match the time. My colleague spoke for a minute and 24 seconds. The minister is now well over a minute and 40 seconds.

4:05 p.m.

Liberal

The Chair Liberal Peter Fonseca

We're not going second by second for a question and an answer. We're allowing for a question to be asked and an answer to be given, so we'll allow the minister to conclude.

I believe, MP Lawrence, you're going to be on next.

4:10 p.m.

Liberal

Chrystia Freeland Liberal University—Rosedale, ON

I'll just raise one more point, which is the importance of the Canada growth fund. This will invest in the green transition across the country. It will play a very important role in Alberta, including the role it will play in providing contracts for difference. I have spoken to many leaders of Alberta's energy sector and they have underscored to me how important that will be.