Industry Committee on Nov. 7th, 2024

[The Chair, Liberal, Joël Lightbound]

Okay, so you wouldn't have the stats of the evolution of goods over five years, because every year you're changing to account for substitution. Is that correct?

[Jennifer Withington]

We would see through the changing weights the evolution in consumer behaviour.

[The Chair, Liberal, Joël Lightbound]

For instance, consumers used to buy olive oil because it was affordable to do so, but they're changing to canola oil. Would next year's basket potentially have canola oil instead of olive oil to calculate CPI?

[Matthew MacDonald]

They would both have olive oil in them, but we would update the weights accordingly on an annual basis, because in the process of collecting the prices and the characteristics, we also collect the quantities purchased. This allows us, on an annual basis, to update those expenditure patterns annually.

[The Chair, Liberal, Joël Lightbound]

Does that account for the fact that often people don't feel that the CPI reflects what they feel at the grocery store? They make these changes not out of their free will but because they have no choice, because prices have gone up too much.

To me, the gist of the controversy with the CPI is precisely what you've just explained.

[Matthew MacDonald]

We've seen a significant increase in food inflation since the pandemic, which has since decelerated somewhat, but it's still positive, which means that prices are continuing to rise. While we say that inflation has cooled—and, in fact, for a few months it dipped below headline inflation—it is now creeping back above, and that accumulation of price increases that has occurred over the last three years remains.

You'll often see us improving our communication now to talk not just about one-month or 12-month price change horizons but to include the cumulative effect over the last three or four years, where you see, particularly in food, that it has gone up almost 25%.

[The Chair, Liberal, Joël Lightbound]

This is my last question.

Wouldn't it be useful, then, to have different methodologies—the official CPI that you're using that accounts for substitution, but also one that's the traditional way before the changes were made?

I don't know when that was agreed to in the U.S. It was the U.S. Bureau of Labor Statistics, I think, under direction from Congress, that changed it from a basket of goods to a cost of living standard. Wouldn't it be useful to have both to alleviate some of the concerns that consumers have?

[Matthew MacDonald]

Some countries have alternative measures of the CPI. In Canada, we tend to have a one-size-fits-all CPI that tries to accomplish a variety of uses. Those include determination of monetary policy, but it's also included in contract escalations, in escalation of tax brackets and legislative escalations of social security payments like OAS and CPP, etc.

[The Chair, Liberal, Joël Lightbound]

Understandably, it has an immense impact on various sectors of our economy and on government spending as well, so that's why it's such an important figure and why it's so controversial, I guess.

Thanks for the explanation. I appreciate it.

Next is Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

That was very interesting.

Maybe, Ms. Rizzo, we can use some of your time, or time from anybody else who knows this answer. What is the debt financing percentage the Government of Canada uses right now?

[Luisa Rizzo]

That's not information I would have in terms of the CRA.

[Brian Masse, NDP, Windsor West, ON]

Okay. Does anybody know? Does Stats Canada know what the Government of Canada pays in interest in terms of its own debt financing?

[Matthew Hoffarth]

We can provide the numbers that we publish. We measure government sector assets and liabilities and the various interest flows. There is interest on public debt that we measure, and we could share that statistic. It's public.

[Brian Masse, NDP, Windsor West, ON]

That would be great. I'm willing to bet it's somewhere around the Bank of Canada rate, or lower, probably. That's just generally in terms of debt financing for our country.

I'm raising this point because, Ms. Hamel, you mentioned 35%. I'm willing to bet that the Government of Canada does not pay 35% or 60%, which the maximum rate is now, on its debt financing, but it expects Canadians to be able to be in that situation.

On the 35% that it's going to go down to, can you provide a little more detail? Your answer made it sound like this is going to actually happen in the Criminal Code, but it became unclear as to whom this applies to and to whom it doesn't.

I'd also like to know what the repercussions are—whether it's criminal, jail, fines, penalties—for those who aren't going to obey this practice. Can you give us a clear distinction as to how that's going to affect Canadians?

[Judith Hamel]

Yes, it's in the Criminal Code that this change is being made. It's a criminal offence to charge more than the rate, and there are penalties that can be charged. Depending on the gravity of the situation, it could be a higher penalty or—

[Brian Masse, NDP, Windsor West, ON]

Do you know what they are, though? Are people going to go to jail over this, or is it going to be an administrative monetary penalty?

[Judith Hamel]

It will be for the courts to decide.

[Brian Masse, NDP, Windsor West, ON]

A judge will determine it. Okay.

Can you outline—

[Judith Hamel]

It's in the Criminal Code, yes.

[Brian Masse, NDP, Windsor West, ON]

Okay. The Criminal Code will decide, so we can probably get our analysts to give us an idea of the section of the Criminal Code that states the repercussions for those who abuse this.

You have a clear list of distinction, though, of all who are going to be subject to the rate of 35% or lower. What exceptions have been allowed under the legislation? Who is not covered? Can we get those?

[Judith Hamel]

Yes, it's actually easier to define the exceptions, because it will be very broadly applied to.... By default, it is applied to all lending in Canada. Some commercial loans that are higher than a certain threshold will be exempted. It's for commercial loans, so it's to not impact venture capital activities, for example.

[Brian Masse, NDP, Windsor West, ON]

Okay, it's venture capitalists.... I'd like to see that list.

[Judith Hamel]

Also, in terms of exemptions, payday loans are exempted—

[Brian Masse, NDP, Windsor West, ON]

Payday loans are exempted.

[Judith Hamel]

—in provinces that have a regulatory regime for their payday loans. That's all provinces except the Province of Quebec, at the moment.

However, even—