Evidence of meeting #12 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A video is available from Parliament.
Conservative
Éric Lefebvre Conservative Richmond—Arthabaska, QC
I'd like you to comment on economic growth and how we compare to our G7 partners.
During the election, the Prime Minister said again and again that the Liberal Party would build the fastest-growing economy in the G7.
How does Canada rank on economic growth in relation to other G7 countries?
Governor, Bank of Canada
Canada's growth is comparable to that of most other G7 countries, but is lower than the U.S.'s.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Lefebvre.
I will continue with Mr. Turnbull for five minutes, please.
Liberal
Ryan Turnbull Liberal Whitby, ON
Last time, I got cut off. I'm going to continue down the same path on productivity.
I want to ask a series of short-answer questions and see if I can just get you to say yes or no. I know it's always challenging when politicians do this, but I'm doing it in good faith. I'm not trying to wedge you or anything. I just want to ask you.
From a productivity enhancement perspective in Canada, generally speaking, would a more competitive marginal effective tax rate increase productivity or tend to increase investment?
Liberal
Ryan Turnbull Liberal Whitby, ON
Would greater tax incentives for investing in machinery and equipment generally increase productivity and investment?
Senior Deputy Governor, Bank of Canada
Again, if they generate more R and D, then they'll be effective.
Liberal
Governor, Bank of Canada
Look, I think we all know the answers to these questions. I think the issue for you is that these things have to be done in a smart way. They have to be done so that they're an effective use of tax dollars, They have to be done in a way that maximizes the productivity benefit and they can work in scale to have a macro impact on a timely basis. That's what you need to focus on.
I think we know the answer. These things are pointing in the right direction, but it's going to come down to execution.
Liberal
Ryan Turnbull Liberal Whitby, ON
I appreciate that.
Someone else asked you about AI adoption. Certainly, I think that AI adoption has productivity gain potential. At the very least, incentivizing that through investments to help our small businesses and all sizes of businesses actually start to look at how they can adopt that obviously would have some productivity gain potential as well.
Liberal
Ryan Turnbull Liberal Whitby, ON
On open banking, the budget finally says we're moving forward with open banking. You mentioned competition before as being important for productivity gains as well.
Can you speak to how the open banking framework would increase productivity in the financial services industry?
Senior Deputy Governor, Bank of Canada
You basically named it. Open banking is designed to improve competition. That's the channel through which we would expect it to improve productivity.
Banking is a network sector. It's a sector that affects the productivity of other sectors, so if we can get banking to be more productive and more competitive, it should have spillover effects to the broader economy.
Liberal
Ryan Turnbull Liberal Whitby, ON
From a fiscal anchor perspective, our budget has moved to a deficit to GDP ratio. Would you say that's fairly normal as a fiscal anchor for other G7 countries?
Governor, Bank of Canada
I actually haven't gone through the fiscal anchors in the budget in any detail. I mean, I think fiscal anchors are a good thing. If they're going to be credible, you have to stick to them over time. That is what I would say.
Liberal
Ryan Turnbull Liberal Whitby, ON
On the capital budgeting framework, generally speaking, the government's focus on capital formation is certainly going to stimulate growth in productivity as well.
Liberal
Governor, Bank of Canada
It's going to be hard. These are big things. It's going to take smart execution. It's going to be a lot of work.
Liberal
Ryan Turnbull Liberal Whitby, ON
That is great as I think we're up for that work.
Thank you very much.