Evidence of meeting #36 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was quebec.
A recording is available from Parliament.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Thank you, Chair.
Mr. Dufort, as you know, the Prime Minister announced a so-called sovereign wealth fund today. The government says that it will provide $25 billion over three years. The only issue is that the federal government can't earn royalties as the provinces do except in lands above the 60th parallel or on federal Crown land. I don't imagine there's $25 billion of royalties that could be had by the federal government, meaning that this would most likely be funded by debt, and this would ultimately have to be paid by the taxpayer.
Do you think this is a fiscally sound plan?
President and Chief Executive Officer, Montreal Economic Institute
This seems like a tax-and-spend economic industrial policy. Quite frankly, I don't believe it is going to pan out.
Conservative
President and Chief Executive Officer, Montreal Economic Institute
If you look at this idea, from what we know so far, the government would be picking categories in which this fund would be investing.
This is analogous to what France did under the Monnet plan. So it's economic dirigisme.
There's a whole history of these failed attempts to direct the economy in one direction or another, instead of letting entrepreneurs invest their money in projects that they believe to be legitimate.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
To add to that, we, as Conservatives, believe that private enterprise should lead this. Would you agree with that?
President and Chief Executive Officer, Montreal Economic Institute
I believe in a system of lower taxes and less-stringent regulation that would enable actors to invest their money.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Hear, hear.
The government created other bureaucracies. We heard about the Infrastructure Bank. It absolutely failed with the Canada Growth Fund, and they made CDEV into its own Crown corporation, just to invest in Canada. Why do you think they needed to create another Crown corporation to invest public money into Canada?
President and Chief Executive Officer, Montreal Economic Institute
If you're going to look at various sectors of the economy in which we have regulation that is stifling private investment or foreign investment, these are the kinds of regulations we should do away with in order—
President and Chief Executive Officer, Montreal Economic Institute
Bill C-69 is really part of the problem.
I'm less familiar with the issues raised with the other legislation you were mentioning, but certainly the approach that has been taken—that is, to circumvent the regulatory framework for select projects rather than having clear regulations—
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
In other words, would you say the government is too involved in picking winners and losers?
President and Chief Executive Officer, Montreal Economic Institute
Absolutely.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Okay. That's a very fair statement.
Norway and Saudi Arabia have sovereign wealth funds, as we know, but they use surpluses and royalties to capitalize on their funds. They then invest all over the world.
We know that the CPPIB and Maple Leaf Canadian pension funds do that. What risks are there to having a fund capitalized with borrowed money investing only in Canada?
President and Chief Executive Officer, Montreal Economic Institute
Certainly, Norway is investing outside of the country to prevent inflation. I'm not as confident that this kind of risk profile would exist in Canada, but certainly, active management of these funds would expose Canadians to the risk profiles of the aforementioned investments, instead of being invested in index funds or things like that, which might be more appropriate.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Norway's sovereign wealth fund does not invest in Norway. The way the Liberals have set this up, Canada would invest only in Canada. Could this possibly be inflationary? Would inflation impact the wealth fund negatively?
President and Chief Executive Officer, Montreal Economic Institute
Many factors would have to be taken into consideration here, but the main issue is that this would be more industrial policy: economic policy that has failed and is likely to fail again in the future.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Right, and to cap it off for what we would call the “sovereign debt fund”, is it worthwhile for Canadian taxpayers to be in debt so the government can invest in Canada?
President and Chief Executive Officer, Montreal Economic Institute
There is certainly education to be done about the nature of the fund—
Liberal
The Chair Liberal Karina Gould
Mr. Dufort, I have to interrupt you because Mr. Hallan's speaking time is up.
We'll continue with Mr. Sawatzky for five minutes, please.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you, Chair.
Thank you, Ms. Schirle, for your opening remarks. You were mentioning the importance of early learning and child care for the economy. I was wondering if you could elaborate on a few things.
To start, what's the return on investment when we invest in programs for early learning and child care?
Professor, Department of Economics, Wilfrid Laurier University, As an Individual
There are several papers out there with many numbers to consider, but I'll point to a recent one from a paper by Michael Baker, Jonathan Gruber and Kevin Milligan. They looked at women whose children were born when Quebec first introduced their larger program for affordable care.
Over the course of their lifetime, they find themselves with higher wages and better occupations. That effect lasts much longer than just the time when you have a small child. They found the fiscal return to be somewhere between 75% and 117% of the initial expenditure.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
That's very significant. How does this investing in child care allow mothers to perhaps return to the workforce? What is the outcome there?
Professor, Department of Economics, Wilfrid Laurier University, As an Individual
The simple thing is certainty in having high-quality care.
When looking at some recent data, researchers found that roughly 90% of mothers want to find affordable and good care for their children, but more of them stay home with their child because they can't find it.
If we improve the first few years when a child is young, with the mother's opportunity, she builds a much better career entirely, including planning for that career with the investment she might make in education beforehand.