Thank you, Mr. Chair.
I appreciate your summarizing where we are in terms of what the ask is. We're trying, as we put it, to find Freeland and have the Minister of Finance appear for two hours on her budget implementation bill, which amends 51 acts of the Government of Canada. A number of these are not related to the actual revenue or expenses of the government.
Where I left off before the vote, Mr. Chair, was discussing the issue of how the budgetary spending in this bill is impacting not only the confidence of Canadians going forward and their feeling that we will be in a recession within 12 months, according to the Bank of Canada, but how it is impacting those on the lower income side in Canada, particularly. They are being disproportionately hurt by the high-inflation, high-interest rate environment that this spending has been a major contributor to.
I was citing some of the economic statistics on this, having gone through a few of the highlights from the Bank of Canada's most recent report. It's the hot-off-the-press report from the Royal Bank of Canada called “Proof Point: More Canadians to fall behind on debt payments” It was written by two of the Royal Bank's economists, Robert Hogue and Mishael Liu, and published on May 3, 2023.
I was summarizing the first point, which is that a looming recession, according to them, is projected as unemployment is projected to rise from its current rate of 5% to 6.6% by early 2024. That is according to the Royal Bank of Canada. Most disturbingly, as a result of the financial plan of this Liberal government and our search to find Freeland to get answers to why this is a good approach, the Royal Bank projects that consumers are going to have an increase in insolvency of “almost 30% over the next three years”. That's people defaulting on credit cards, mortgage rates, bank loans and that kind of thing.
They put in this that there were some gains. They call this the “bottom line”. It's on the front side:
The noticeable improvement in Canadians’ finances (in the aggregate) early in pandemic wasn’t sustainable.
Most of that was caused by cash payments being given to people who needed it—and, in a lot of cases, people who didn't need it and businesses that didn't need it—and the government spending about half, or $200 million, during the pandemic on things that were not pandemic-related.
The report goes on to say the following:
Those gains are now reversing and will likely erode further amid a softening economy and higher interest rates.
The Royal Bank, on May 3, went on to say:
...a booming housing market put mortgage debt on a fast track. By late-2021, Canada’s household debt-to-income ratio had exceeded pre-pandemic levels.
The next section is called “Cracks are beginning to form”. That's a typical banker understatement. They're “beginning to form”. The bank went on to say:
Over the last year, the burden of that debt has grown even heavier for Canadian households...These developments have caused an increasing number of Canadians to fall behind in on debt service payments that have suddenly swelled.
They've swelled, of course, because of interest rates. The report went on to say:
...the rate of consumers 90+ days late on their debt service payments has nevertheless risen for installment loans—
Installment loans are things, according to this report, that are typically used for one-off purposes like home renovations, unexpected emergencies and debt consolidation. The rate of consumer loans that are 90%-plus in arrears have risen in this area. These are things like credit cards and auto loans. More recently, they're seeing lines of credit. Lines of credit are based on your house.
When people are starting to dip into their lines of credit to pay for groceries, to pay heating costs and to pay increased mortgage costs, it's like using a credit card to pay for the other credit card bills. That is an inevitable economic spiral downhill, particularly with these higher interest rates caused by the $3.1 trillion of spending that this budget implementation bill sets out.
The report says:
A looming recession and the ongoing effect of higher interest rates will only add stress in the period ahead....
the modest contraction we expect for Canada's economy will likely trigger job losses.
That is according to the Royal Bank. It goes on to say:
We project our national unemployment rate will rise from the current 5% to 6.6% by 2024Q1. Historically, the loss of a job has been one of the principal factors contributing to loan delinquencies and consumer insolvencies in Canada.
That's understandable.
The next section goes on to pose a legitimate question that I think all Canadians are asking, which is: “How much more challenging will it get” for me?
The report says that “rising unemployment could push a growing number of Canadians into insolvency over the coming year—though higher interest rates and heavier debt service loads would likely contribute too.”
Remember, we've seen other reports from other companies stating that more than half of Canadians are only $200 away every month from not being able to pay their bills. When you get a spike in interest rates—whether it's your mortgage, increased costs in housing, or the annual 10% increase in food inflation that seems regularized under this government—something has to give for people. We start to see insolvency.
Now, if you pile on top of that a forecasted rise in unemployment from 5% to 6.5%, that's a lot of Canadians losing their jobs and unable to pay their bills.
The bank goes on to say in this report, “We expect the household debt-to-service ratio to rise more than 1 percentage point over the next year, to a historical high of 15.5% by 2024Q4. Consumer insolvencies could rise almost 30% over the next three years, according to our analysis.”
This is obviously a massive concern for those who are in public office who actually will see more traffic. We will see people coming into our offices looking to their members of Parliament for help as they have to sell their house or no longer have a house and can't even afford to live where they are. That's why ministerial accountability is so critical in this discussion of the amendment.
Earlier today I was giving those watching a little bit of guidance about what the Treasury Board of Canada—the spending arm of Canada—says are the responsibilities and accountabilities of ministers. Ministers obviously have to be held to account by Parliament. It's a fundamental tenet of our Westminster system.
For the interpreters, just so they know what page of this document I'm starting on, it is page 9 in English. At the top, the title is: “The Role of Parliament in the Accountability Regime”. It starts off by saying:
This section provides an overview of the role that Parliament plays in the accountability regime, specifically in relation to financial management. It highlights Parliament's involvement in the assignment of responsibility through its legislative role, explains the key mechanisms that Parliament uses to hold the government to account, and sets out the limits of Parliament's role in sanctioning ministers. In the course of explaining the practices of parliamentary scrutiny
—something we're trying to get to here is parliamentary scrutiny of this spending plan—
the key principles of collective and individual responsibility and the anonymity of public servants are spelled out and certain misconceptions are addressed. The section makes it clear that accountability: is a shared relationship between Parliament and ministers;
That's an important point. It's shared between Parliament and ministers.
Moreover it “is fundamentally political", meaning that the elected officers, in this context, are fundamentally responsible. And it "depends on the neutrality of the Public Service for its efficacy."
Next is section 2.1, “Parliament and the assignment of responsibility”. This is a Treasury Board guideline to ministers:
Parliament is the primary guarantor of the government's political accountability in responsible government.
It has a footnote here—five. If you read the footnote, it says, “The primary guarantor of legal accountability is the judiciary”, as we know, which this government has tried to interfere with a few times.
The report from Treasury Board goes on to say:
The direct accountability of ministers to the House of Commons is a central feature of this system, and its efficacy depends heavily on the will and capacity of the House to hold ministers accountable.
Let me read that one again: “its efficacy depends heavily on the will and capacity of the House to hold ministers accountable.”
We know this committee, as an instrument of the House of Commons, has the will—at least on the opposition side—to hold the minister to account. We know the House, in session and with our tools on the opposition side—like question period—has the will to hold the minister to account. However, six days of work in the House by the Minister of Finance since January.... It makes it difficult for parliamentarians to do the work that people sent us here to do, which is to hold the minister to account for the most fundamental thing.
I'm going to digress here a little—that's for the translators. On our side, and I'm sure on the government's side, too—they are, I can see, listening intently—we often get emails asking us to make sure there's a vote of confidence in the government. Just so the people watching know, every money bill of Parliament is automatically a vote of confidence in the government. It's important because, if the government doesn't have the confidence of the House to spend the people's money, it has to go to an election to seek a new mandate.
The budget we're dealing with here, Bill C-47, is a confidence vote. In determining whether or not and how we should vote in this budget in the next stages—once it comes out of committee—we need to hold the minister accountable, get answers and make a determination, as parliamentarians, about whether the government still has the confidence of the House...in our decision on how to vote on that.
I know, for example, the “supply agreement”, as it's called, between the NDP and Liberals requires the NDP to vote with the government on this, even if the NDP.... I'm sure some of the NDP members are not happy with this budget. I'm sure some of them are not happy with the fact that their supply agreement says there should be a pharmacare program, but there isn't one in this budget. I'm sure some of them are not happy with the fact that, truly, this is not a dental care program. It's just a cheque that goes out, not a true dental care program covering the large costs people have.
I'm sure that, if they were not bound by this supply arrangement, some of the members, in hearing the minister's answers—if the minister comes to this committee for two hours, at least, to deal with this half a trillion-dollar spending plan that budgets for this annually—would ask some of these questions and hold the minister to account. Perhaps, if they were truly free members of Parliament, they would be willing to look objectively at this budget and not be bound by what their whip tells them they have to do because of the supply agreement with the Liberals. They would actually vote against this budget. Alas, I fear that's probably not going to be the case. The independence of the NDP disappeared in the supply agreement.
The assignment of responsibility of Parliament is key.
It goes on to say in this report, “However, although Parliament is sovereign, it does not exercise executive authority.” Of course, executive authority rests with cabinet, not with Parliament.
Let me read that again. It's “the responsibility”—of course, we said earlier—“of ministers, individually and collectively” to look after the executive branch of the government. It goes on to say:
As Chair of the Public Accounts Committee recently put it, “Parliament is not an institution of management; Parliament is an institution of accountability. We're not here to run the government; we're here to hold the government accountable for the way they run themselves.”
There's a footnote here on that. It's number 6. Wow, look at that. It says, “John Williams, M.P., Public Accounts testimony, May 6, 2004.”
I believe that he was a Liberal member of Parliament, was he not, John Williams? It's before my time in the House. We'll check that one. It's not John Williamson.
It's John Williams, M.P., public accounts committee testimony, 2004. The footnote continues: “That said, parliamentary committees can obviously contribute significantly to policy development through debate and discussion.”