Finance Committee on Aug. 11th, 2023

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

I call this meeting to order. Good afternoon, everybody.

Welcome to meeting number 99 of the House of Commons Standing Committee on Finance. Pursuant to a request by four members of the committee under Standing Order 106(4), the committee is meeting today to discuss the pressing affordability challenges facing Canadians and Canadian businesses.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely by using the Zoom application.

I will now open the floor to the members who submitted the request for this meeting.

Go ahead, Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Mr. Chair, would it be appropriate at this time to move the motion that was sent in advance?

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Yes.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

Thank you very much, colleagues, for agreeing to meet with us. I appreciate the resources provided by the House on a Friday afternoon in the summer, when the House is not sitting.

Obviously, inflation and affordability constitute the number one issue. We did provide the notice of motion in advance for the benefit of members, but for those of you who may not be regular committee members or who have not yet been sent that motion from the clerk, this is a one-sentence motion. I'd like to read it into the record.

I move as follows: “That the Standing Committee on Finance call the Deputy Prime Minister and Minister of Finance to appear before the committee by herself for three hours, and that the minister appear at committee within seven days of the adoption of this motion.”

Now, we've debated many motions requesting the minister's attendance in the past. We are, or at least I am, open to some reasonable amendments that would see the minister appear, but we need to have some comfort that the minister would appear.

Inflation and affordability are the number one issue across the country. The impact they are having on Canadians is drastic. Rents have doubled over the last eight years. Mortgages are up about 137%. When people are renewing mortgages, which is happening every month, for the last six months they've seen incredible increases in monthly mortgage payments. These payments are not tax-deductible; this is after-tax money that people need to find to pay additional mortgage costs.

The CMHC says we need about 3.5 million homes by 2030, but we're on track to have the lowest and fewest housing starts since about the 1970s.

Just recently, OSFI has been concerned about rising insolvencies for both consumers and businesses. I would point out that just before the 2008 financial crisis in the United States, mortgage delinquencies and defaults tracked very, very normally for the months leading up to the financial crisis and then immediately jumped overnight. Just because we might be at a historical low level for mortgage defaults does not mean there isn't an incredible growing risk. I'm concerned that we are not paying close enough attention to what is happening in the mortgage market.

Finally, with respect to inflation, yes, the rate of inflation has dropped, but all that means is that the prices are not going up as fast as they were. The primary reason for inflation dropping, according to the Bank of Canada, is falling energy prices. That has nothing to do with government policy. In fact, the government is trying its very hardest to make energy more expensive, with the carbon tax going up every April, and then the new carbon tax, carbon tax 2.0—the clean fuel regulations—going up every July 1. Then, just yesterday, the Minister of Environment announced new electricity regulations that will increase the cost of energy. If the number one target for dropping inflation is energy and the government is actively trying to make energy more expensive, that is completely counteracting the work that the Bank of Canada is doing.

Now, there is some confusion at the committee around previous motions inviting the minister to attend and whether the minister has actually satisfied those invitations. The motion that was passed in November by this committee, which was the will of this committee—and we heard very much about the will of this committee—was that the minister appear for 90 minutes on a quarterly basis until inflation came back into the control range, which is 1% to 3%. The Bank of Canada governor was also invited. He appeared twice in respect of or in answering that invitation. The minister did not appear.

Frankly, what's most important is that these invitations were supposed to be “in addition”. This is from that motion: “these meetings are in addition to other key committee appearances and that these meetings start in 2023.”

The only time the Minister of Finance and Deputy Prime Minister appeared before this committee was to advance pieces of her government's legislative agenda. That is not acceptable when the minister has been invited to appear on multiple occasions. The minister was also invited to appear with respect to the inflation study. That has not occurred yet. That study is still open. We're still waiting for the minister to accept that invitation.

The reason we're here, colleagues, is to increase the level of accountability we have with the government and find out what they are planning. Energy prices are very volatile. They might think the job is done. They're doing a bit of a victory lap that inflation is back down within the control range, but it could very easily tick up. I'm very concerned about what's going to happen in the fall when people continue to renew mortgages every month at a much, much higher interest rate.

You know, the minister tweeted just a couple of days ago, “we are focused on making life more affordable...by bringing inflation down”. That's a very interesting comment to make. The government wanted no credit for inflation happening in the first place but wants to take all of the glory for inflation coming down. Other than the HST rebate, the doubling of the rebate for one year, which they have renamed the grocery rebate, the government actually has not taken any steps to bring inflation down. By the way, the grocery rebate is a step that helps Canadians with the affordability crisis, but had actually nothing to do with bringing inflation down. It was just helping to give people a little bit more funds to support themselves and deal with inflation. It didn't actually do anything to bring inflation down.

I'd be very interested to hear from the minister on what steps the government has actually taken to bring inflation down in the short term. They might have done some things in the longer term, but certainly they've done nothing to help bring inflation down. By the way, this is a government that also says the Bank of Canada has complete independence with respect to monetary policy.

I'd be very interested to hear the thoughts of my colleagues around the table from the government and from other opposition parties. I would press the minister to accept the invitation, if it is the will of the committee. I would also make one more last-ditch request for the Prime Minister's Office to allow the Minister of Finance to appear and defend the government's economic record.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Chambers.

Mr. Ste-Marie, I see your hand up.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Hello, everyone.

We are here today in the wake of the statistics released in June by the Office of the Superintendent of Bankruptcy, the OSB. We see that there is a growing number of bankruptcies by consumers and businesses alike. It is very worrisome. This could have a snowball effect and become even worse in the coming weeks and months in light of the current economic conditions. We will have more figures at the end of the month. In my opinion, this is bordering on an emergency. We need to know what the government plans to do about this.

This week, in Quebec, we found out that the dessert chain, Juliette & Chocolat, an institution back home for many years, is shutting down because of pandemic debt and current economic conditions. Mortgages are harder to pay because of higher interest rates, which is leading to an increased number of consumer bankruptcies.

This is a critical issue. We want to know what the government is doing. I believe that the purpose of this meeting is to invite the Minister of Finance to appear before the committee to explain what she is doing right now, her game plan and how this situation can be turned around.

It would be important to invite her to find out her reaction to the current crisis.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Ste-Marie.

Go ahead, Mr. Blaikie.

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

Thank you very much.

I'll start by recognizing, as others have around the table, the importance of the issue. I think it is quite disconcerting to see insolvencies on the rise. We know that these numbers represent a state of affairs that existed prior to a number of subsequent rate hikes by the Bank of Canada. This is certainly something of concern. It's something that the committee has looked at in various other ways as well. We've talked to folks from banks, particularly around fixed-payment variable term mortgages. We can ask what's going on there.

As the committee knows, whether to talk about inflation or whether to talk about interest rate increases, I think the minister ought to come. I think she has a sufficient number of invitations to be able to come if she so chooses. I'm not exactly sure why this particular motion is the one that's going to put us over the top, particularly since this motion retains a lot of problematic and unhelpful elements that have been the subject of a lot of discussion around this committee table before, whether it's the length of the invitation, the idea that she should appear without her officials, or, in this case, the relatively tight turnaround for the appearance.

As I say, I don't think this is a particularly helpful motion in the way that it's constructed. I don't think it's likely to get the minister before us. I do think it would be good to have the minister come quickly to committee at the opening of session in order to address some of these issues. There has been some change, as Mr. Chambers referenced, in terms of the inflation rate since we last met. I think it would be useful to discuss those things. I am determined to be optimistic about getting the minister here in the context of our inflation study so that we might close it off, but I think that is the best way for her to appear.

I don't think this particular proposal really fits the bill, if I'm being honest. I think there's a lot of context on the record for why I feel that way, so I won't belabour those points any further. I just wanted to make it known that while I do support the idea of the minister coming here, as I have for a long time now, to talk about the issues of inflation and interest rates, I think there are better ways to do it than what's been presented here today.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Blaikie.

I have Ms. Dzerowicz next.

[Julie Dzerowicz, Liberal, Davenport, ON]

I believe my colleague Yvan was up first.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Sure.

[Julie Dzerowicz, Liberal, Davenport, ON]

I'll let Yvan go first, and then I don't mind going after him.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Go ahead, Mr. Baker.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank very much, Julie. I appreciate that.

Let me start by saying that the underlying issue that's referenced in the request to meet today is incredibly important to my constituents and to Canadians. I think we all agree on that. I have a lot to say about this issue and some of the things that Mr. Chambers in particular spoke to at the beginning, on the underlying subject matter of inflation, the cost of living, and what's being done about it, but I would rather just focus on how we move forward.

I think we've been working throughout the summer to hear from Canadians and to listen to their ideas on a range of topics as well as to improve the functioning of this committee. I think we've all agreed that there have been moments of dysfunction at this committee in the recent past. I recall that we ended our spring sitting of the committee with the objective of reworking, rethinking and working together on how our committee works going forward to make sure it is more productive and better serves Canadians on important issues.

Today we are in an emergency meeting with an invitation for the minister to speak to us within a week. I think this motion is unreasonable. I agree with a number of the points that Mr. Blaikie made about why it's unreasonable. I really think the focus of this committee should be on working together to try to discuss the issues that are most important to our constituents and to Canadians. I do think the motion is unreasonable. I think one of the things we could be focusing on concretely as a committee, to advance the concerns of Canadians and the issues that are important to Canadians, is the pre-budget consultations that are coming up and that the committee is planning for. To me, that would be the next immediate thing we could do to try to advance the concerns that Canadians have.

As I said, I do think having the minister come in within seven days to speak to us is unreasonable, as well as a number of other aspects of the proposed motion.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Baker.

Go ahead, Ms. Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

I think there's a proposal on the table, Mr. Chair, for a few amendments to what has been proposed by Mr. Chambers, so I don't know whether.... Oh, there are no amendments that are being proposed. Okay.

I am going to talk for a couple of minutes. I think it's always good to do a point-in-time check.

Mr. Chambers has put forward a very important motion. I think that all of us have been meeting with thousands of our constituents over the summer, and we have been blessed to be able to hear first-hand from them. I have also heard very much from the constituents in my riding of Davenport that they are struggling.

I'll say to Mr. Chambers that nobody on our side and no one in our government—it doesn't matter what political stripe—who's actually doing any type of victory lap. The pandemic and its aftermath, I think, have caused a major ripple within all global economies, and I think it's going to take some time for us to find our way out of it.

I can go on, but I want to let Canadians or anybody who's listening know that we, as a government, have not been sitting idle. We have introduced a number of measures to help support Canadians through this really tough time and to try to find the balance between making sure we are providing targeted support and not in any way spending so much as to fuel inflation. Whether it is the grocery rebate or the increase in the Canada child benefit, whether it is the Canada workers benefit, whether it's the dental benefit or various other things that we have put in place, we've put in a number of measures. We have not been idle. We will not be idle. We will continue listening to Canadians. We will continue to be open to all the best ideas from any political party, from any person, in terms of how to continue to address the affordability issue that continues to make so many Canadians suffer.

I'll also say to you that as I read international newspapers, as I'm sure we all do, I see that we're unfortunately in good company: Most of our peer countries around the world are tackling the same issues. As much as we have it bad—and I know we are struggling—our inflation numbers are among the lowest in the world. I think it's important for us to understand that there is a collective struggle around the world in dealing with affordability issues. I don't want anybody who's listening to think that we are not thinking about this every day, that we're not working on this every day and that we're not open to every single idea that someone might put on the table on how we continue to support Canadians through this really difficult process.

What I'd like to propose, Mr. Chair, is that we vote on the motion that is at hand. I think Mr. Chambers has done a good job of putting forward a motion, and I'm ready to vote on it.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Ms. Dzerowicz.

We have a list, and once that's exhausted, then we can definitely go straight to the vote.

Next I have Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much, Mr. Chair. It's a pleasure to be here and it's always an honour and a privilege to serve the Canadian people.

I think it's fair to say, and I think everyone around the table is pretty much agreed, that we are dealing with some very challenging economic times.

The numbers on the uptick or increase in bankruptcies perhaps don't really tell the whole story, because when a business goes bankrupt or an individual goes bankrupt, it has real impacts on Canadians. That's potentially a parent who has to sell their home or have their house foreclosed on. That's a child, as we get up to Thanksgiving and Christmas, who won't have presents or who may not have enough to eat. These are serious consequences.

This government has just undergone a cabinet shuffle, and it appears, from media reports and even internal leaks, that they're looking in a different direction. Given the difficult economic times that we are headed into, I think the Minister of Finance owes it to the Canadian people to tell them in what direction they are going.

I heard Mr. Baker's comments with respect to the dysfunction of this committee and I agree. I also heard some of Mr. Blaikie's comments with respect to some changes he might be looking for to amend this motion and maybe make it a little less partisan, and I'm open to that; I think he's right. He's been consistent in calling for the Minister of Finance to come here. Perhaps we could change some of the parameters, and I would leave it up to him to make the amendments, because I think he's obviously a better choice to speak for the NDP and for himself than I would be. However, I would think it would be—I don't use this word lightly—irresponsible for this committee not to have the Minister of Finance before us, given the fact that we have an uptick in bankruptcies and insolvencies and that we have continued issues in the housing market.

Recently we have even seen troubling international data that maybe some of the advanced economies around the world are also going to be having some struggles as well, so in the background of the new direction that it appears this Liberal government might be embarking on, I think the minister owes it to the Canadian people to come before the people's representatives, before the committee selected to discuss finance—that being the finance committee—and discuss it with us. Therefore, I'm very open to an amendment from the NDP with respect to the parameters if Mr. Blaikie believes there might be a better way to kindly invite the minister to come before our committee and talk about the actions her government is going to take to counteract these very difficult economic times we're facing.

I don't want to be partisan, but the record is clear: Over the last 10 years, we've had the lowest economic growth per capita ever in Canadian history—or since the Great Depression, I should say—and I think she needs to come and explain that she's learned some of her lessons and that maybe she'll be taking a new direction. Otherwise, if she wants to double down, then she should tell the Canadian public that as well. As I said, I know that my NDP colleague Mr. Blaikie has been absolutely consistent in calling for the Minister of Finance to appear, and I trust that he'll keep to his track record of calling for her to appear.

We are very open to changing. I will yield the floor with hopes that Mr. Blaikie will take it, but please do put me back on the list, Mr. Chair.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Lawrence.

I don't see anyone else's hand up....

I see Mr. Blaikie. Mr. Blaikie, go ahead.

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

Mr. Chair, over the past couple of years, a lot of attempts around this table to try to fix motions on the fly have come to naught for various reasons, so I can't say that I'm particularly inclined in that direction or that I think I have a successful solution for today.

I'm open to continuing a dialogue with my colleagues on the opposition bench about how we invite the minister to try to get her here to talk about these things. I do think that in the context of the inflation study, which has been open now for a little over a year and a half, it would be nice to have the minister appear so that we can wrap up that study and start on some other things as well and I'm open to a discussion about that, but I'm not hopeful that we're going to solve this situation on the floor of the committee here today.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Blaikie.

I just wanted to double-check. I thought I saw Mr. Chambers' hand up.

Go ahead, Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Colleagues, if we are going to go to a vote, I think that's fine. Eventually, we will get there.

If the minister continues to wish to appear at committee only when there is legislation to move, we will have or continue to have challenges at the committee. I did not hear any of my colleagues from the government side indicate that there's a willingness for the minister to come, that she's interested in appearing to close out the inflation study, that she's interested in appearing to make up for the two appearances that she did not attend with respect to the previous motion that was passed. Unless we get some assurances that the minister is taking the committee and its work seriously....

If the minister would love to come and tell us the studies she's interested to see the committee conduct to make her job easier, we have opportunities to put more studies forward. I think there's a very good study to be considered with respect to housing and mortgages. We're in the mortgage study right now on how we will meet our housing requirements. If the minister wants to give us some direction or steer us toward what she's interested in before the next budget, that would also be helpful. However, in the absence of any government member indicating that the minister takes the committee seriously or is interested in attending, whether it's for three hours or 90 minutes or even an hour, it's going to be very hard for us to get any work done.

Frankly, it was the will of this committee to ask her to appear for 90 minutes with the Governor of the Bank of Canada. That request was never even responded to. If that's going to be the continuation of the committee, we'll live with the results of a vote today. If that's going to be the continuation of the thought process of the minister and the Prime Minister's Office, we will have a challenging fall and we will have a challenging spring and we could be back to the lectures from Mr. Perkins, which were all very interesting, but we weren't very productive as a committee last year. This is an attempt to put something on the table. If the minister is interested in taking it or if the government is interested in taking it or making some amendments, that's fantastic.

This government—and the minister, frankly—were cheering that we are now down below 3% inflation. You know what? Some will look at that and say it's great news; other people will look at it and say, “Guess what? My groceries are still up by 9%.” There is a discussion to be had there. The minister just recently said in a news conference that “we are very close to the end of this difficult time”, except three weeks later OSFI said that insolvencies were up for consumers and businesses. Therefore, I would like to know which data the finance minister is looking at.

The minister and the government think everything is fine, as they've been saying all along. Canadians have a right to know what the minister and the government are thinking about in advance of the next budget. If we can't get the minister to appear and have a discussion with us, then it's going to be a little difficult to get anything done in the fall.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Chambers.

I have Mr. Lawrence next.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Mr. Chair.

I do recognize my colleague's comments and Mr. Blaikie's comments, but I am an eternal optimist. I still hold some belief that the Minister of Finance will uphold her obligations, I would say, to the Canadian public and appear in front of this committee. At the very least, if she won't do the right thing, then maybe she'll feel the heat for not responding.

In that spirit, I would offer the following amendment to Mr. Chambers' motion. I'll read the revised version, and if the clerks need it, I can go through it and clarify any revisions, and we will circulate the amendment as well.

The amendment is as follows: “That the Standing Committee on Finance call the Deputy Prime Minister and Minister of Finance to appear before the committee”—we'll delete “by herself”—“for 90 minutes and that the minister appear at the committee within 14 days of the adoption of this motion.”

[The Vice-Chair, Conservative, Jasraj Singh Hallan]

Thank you, Mr. Lawrence.

Are we going to be drafting the amendment and sending it around? Okay.

What we can do in the meantime is open debate on the amendment. Go ahead, Mr. Baker.