Evidence of meeting #9 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.
A recording is available from Parliament.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
That was not my point, sir. I was talking about the car bought in Canada at a higher price than the same car built in Canada that would be sold to an American consumer.
President, Canadian Vehicle Manufacturers' Association
It would be sold to an American consumer?
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
The reason for my question is that you come before a committee and say that the Canadian government should be very attentive to your needs. And this government is elected by consumers, who are our electors, and we'll have to sell to those electors the fact that this government should be doing favours for the automobile industry because of the Canadian dollar. Yet the same industry is still skinning alive some consumers who just want to buy a car that's built in Canada.
Do you understand that this has some kind of effect on the support the government will get from the population for helping you?
President, Canadian Vehicle Manufacturers' Association
I'm not sure I agree with your analogy. You have to separate vehicle pricing from vehicle manufacturing investment. They're totally separate issues. But I can see why you're suggesting there could be this perception there. You just have to separate out vehicle manufacturing investment from vehicle pricing.
Where were the Canadians, however, when the Canadian dollar was the other way? When they actually had cheaper vehicles than in the United States, did anybody object at that time?
President, Canadian Vehicle Manufacturers' Association
Now is now, and then was then.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Mr. Beatty, should Canada be ashamed of the high dollar?
President and Chief Executive Officer, Canadian Chamber of Commerce
No, nobody is suggesting that Canada should be ashamed of the high dollar, Mr. Arthur.
I think the important thing is for us to be aware of the impact of the high dollar. I think we would feel that if the high dollar reflected improvements in productivity, this simply wouldn't be an issue; indeed, it would be a source of considerable pride for Canadians. I think the concern that many Canadians have, and that Canadian businesses have in particular, is that the dramatic appreciation of the Canadian dollar has not reflected a similar appreciation in the productivity of Canadian business. We need to close that gap if we're going to protect our ability to ensure jobs in Canada.
Conservative
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you for having me. Like a bad rash, I'm back.
NDP
President and Chief Executive Officer, Canadian Chamber of Commerce
It's not my deck. I've changed jobs, Mr. Masse.
NDP
Brian Masse NDP Windsor West, ON
Oh, I'm sorry. That's right, yes.
I have the deck here, but I actually do want your opinion on this, and maybe Jayson's as well.
Congratulations on your recent appointment.
One of the things it says is “Government cannot do anything to stop the depreciation of the U.S. dollar or shore up the faltering U.S. economy”. I don't know if it's been discussed here tonight, but the U.S. has been playing with their dollar. They've been intervening to certainly weaken it in many respects. There's been a lot of discussion—the Japanese yen, the Chinese, and so forth—but I think there can be no doubt that there is an attempt in the U.S. to manipulate their dollar.
Should there not be at least some discussion about the fact that they are doing currency movements, and that potentially Canada...? In this deck there is a recommendation that this issue should be looked at from our policy standpoint.
President and Chief Executive Officer, Canadian Chamber of Commerce
Is that addressed to me or to--
NDP
Brian Masse NDP Windsor West, ON
I know it's their issue, but I'd like your opinion on it. Then we'll go over to Jayson and anybody else who wants to--
President and Chief Executive Officer, Canadian Chamber of Commerce
I don't have evidence that the United States is manipulating their currency. I do have evidence of extreme weakness in the economy of the United States, and it is certainly affecting us. When we look at the dramatic appreciation of the Canadian dollar relative to the U.S. dollar, I think it is important to realize that a significant part of that appreciation is not a result of something we've done here, but of what they've done there, and the poor performance in their economy. This certainly is of concern to us.
NDP
Brian Masse NDP Windsor West, ON
They just seem more apt, though, to really look at their interest rates and the strength of their dollar, and to connect them really closely. They review it a lot more often than we do, or so it appears.
NDP
Brian Masse NDP Windsor West, ON
Notwithstanding the fact that the Bank of Canada will say to you that they've only one instrument, one policy, that being the control of inflation, and that they have one average they have to look at—the Canadian economy as a whole—I don't doubt that when the board of the Bank of Canada is taking a look at its rate-setting, they also look at the economic context in which that's taking place and at the impact of their decision. The same occurs, I believe, in the case of the Fed.
I think there is scope, obviously, for people outside government to comment about whether it's desirable to see interest rates go up or down. The manoeuvring room, though, of the Bank of Canada is constrained, and at the table today you haven't been hearing from people calling for some dramatic action on the part of Bank of Canada to devalue the Canadian dollar. What you certainly have been hearing from us is the likelihood that we'll continue to see a Canadian dollar that is stronger than our productivity performance in Canada would suggest. As a result, then, we need to look at what measures can be put in place by government to ensure the competitiveness of Canadian business under those circumstances.
President and Chief Executive Officer, Forest Products Association of Canada
I would like to jump in on this. Comparing our attitude toward our currency to, say, that of the U.S. or Europe I think is worthwhile. Certainly the head of the European Central Bank was very clear that extreme currency fluctuation undermines the economy. The German currency went up 10% as opposed to our 40%, and already the central banker was saying he's deeply concerned at the rate of fluctuation. Currency is not a commodity. It's the very foundation of an economy.
I don't think the bank or the Department of Finance should start using it for political purposes or try to manipulate it beyond what the differences in markets are. But the difference between the Canadian economy and the U.S. economy did not change 25% this year or 40% over the last couple of years. The classical economists were saying no, it's the difference between productivity when the dollar was low.... All of a sudden they're silent.
So I think there is room for the bank to consider its role within the responsible margin to be more aggressive in dampening the wild fluctuations that make people think, why invest in Canada, I don't know what their currency is going to do next. I think there is room to leave the almost naive classical economic orthodoxy that says, we can't touch it, we can't touch it, and to act within the responsible range to have our currency move with more gravitas than a mining stock.
Conservative
