Industry Committee on Dec. 9th, 2024

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

First, allow me to digress for a moment. You'll be proud, because it will be a good topic of conversation to start up with people at Christmas. I want to point out that Montreal is the only city in the world where three major aircraft manufacturers are present. We've made significant progress in this area. Bombardier, Boeing and Airbus set up shop in Montreal, which is exceptional. In fact, last week, I visited Airbus workers. It's pretty impressive to go to one of the Canadian cities where they assemble entire airplanes from top to bottom.

I'll go back to your question. I was at the big aerospace industry meeting. In fact, I think you and I both were there. We're working with them to develop a national strategy. I think that's going to be important, because defence plays into this.

We also have to look at how we can use Canadian businesses, and I'm thinking here of small and medium-sized businesses, or SMEs, in the major programs in place. We have to make sure that we can offer economic benefits for businesses.

That said, we're working hard to develop the strategy, and we're in discussions with the various industry stakeholders. We need to make sure we have a policy that will encourage investment here and favour SMEs. We also have to ensure that we attract talent to our country so that Canada can be a leader in the 21st‑century aerospace sector.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Why did you wait nine years to act in this area? You've been in power since 2015, and the industry has been calling for a strategy for a very long time. The industry even had to go through the COVID‑19 pandemic, an extremely difficult period when no orders were coming in. Planes were grounded.

The current government's term is coming to an end, meaning that there will be an election at the latest within a year. In addition, a change in government is really possible. That's what democracy is all about. People can choose who they want.

Why are you suddenly coming up with a draft document at the end of your mandate, that is to say after three terms and nine years in power, when you know that it may never come into force?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I would say that I'm more optimistic than you about the future, Mr. Savard‑Tremblay. I trust in the future.

I already explained the reality in a very public forum when we met with people from the industry, and I think you were there. There was a time when we needed to seize the opportunity to make generational investments, and I encouraged those investments. It's good to develop a long-term strategy, but we also have to act in the short term. That's why we've invested in next-generation engines at Pratt & Whitney, for example. That's why we worked with Bell Textron Canada to make Mirabel the civilian helicopter capital of the world. Almost all of Bell Textron's civilian aircraft are made in Mirabel. It's quite remarkable that Canada managed to get that mandate.

You can criticize me, but I'm a man of action. When I see an opportunity, I take it. A strategy had to be developed at the same time, but we certainly couldn't miss the opportunity to get this mandate from Bell Textron in Mirabel, and to invest in the new Pratt & Whitney engines, which are made in Longueuil, to ensure a strong ecosystem.

I thought that Canada should make the investments first and create a parallel strategy, which takes several months. You were there with me at the time. You know that the world is changing rapidly and that we must seize opportunities to make generational investments when they arise.

[The Chair, Liberal, Joël Lightbound]

Thank you, Minister.

Mr. Bachrach, the floor is yours. You have three minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Minister Freeland, I have a question about the GST tax holiday.

Now, we voted to support this short-term tax holiday, because we wanted to give people a break, but we recognize that it comes with some very serious shortcomings. One of the groups that I've heard from is small businesses in the communities I represent, which are struggling with the idea of having to change their prices twice in a matter of two months.

What is your response to them? How is your government going to ensure that small businesses aren't burdened by this extra administrative step at their busiest time of year, when they make the most revenue? They're really depending on focusing their energies elsewhere in their business, and they have to spend time changing their prices for only two months, only to change them back. What's your message for them?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Look, first of all, that's a really good and serious question, and I think all of us here have been spending time with small businesses in our communities and hearing from them.

My first message is that, first and foremost, this is a measure about helping Canadians. I think we are all glad that inflation has now come down to the Bank of Canada's target range and that rates are following, but I think we all recognize that things have been hard for Canadians. This tax break is about giving Canadians a little bit of extra help: helping them buy the things they need and save money for the things they want.

For small businesses, I think it's important to recognize that they work really hard. The small businesses that I've been speaking to, both the organizations that represent them.... I was in Toronto on Thursday at Treasure Island Toys, which is run by two women, two mothers, and they told me that they were really looking forward to this. They were very hopeful that it was going to bring more people into the store ahead of Christmas. They also said something I've heard from a lot of people, which is that, generally, January is a quiet month, so they're hopeful that the additional clientele that this brings in December will carry through to the usually quieter month of January.

I'm sympathetic to the challenges. I'm hopeful that this will help small businesses, as well as the people who buy things there.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay. This is not what I'm hearing from the businesses I represent, so I'll take that message back to them and tell you what they say.

The GST was never meant to be charged on essentials. It's why many essentials were exempted when it was first brought in, in the early 1990s. What's the argument against making a tax cut on essentials permanent? This is what we've proposed: take the tax off things that are clearly essential items, like home heating, phone and Internet bills, and kids' clothing.

Canadians, I think you'll agree, deserve much more than a two-month holiday from the tax on those items. Why not make the GST cut permanent?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

First, I would really like to thank you for your support for this tax holiday.

I do want to be clear that this is a temporary measure. It's something that we have the capacity to put in place now to support Canadians when they need it, but this measure is time-limited.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'm very much aware of that. I think that's the shortcoming, Minister.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Bachrach.

You're out of time, I'm afraid, but we'll get back to you shortly.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Did you give me my 29 seconds?

[The Chair, Liberal, Joël Lightbound]

I did. I gave you a minute. I doubled it.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

That's the only kind of inflation we're okay with.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Lucky you, he's never generous like that with me.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Another Liberal who went over the budget....

[The Chair, Liberal, Joël Lightbound]

Mr. Généreux, you have the floor.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you very much to the witnesses for being here with us today.

Welcome, ministers.

Ms. Freeland, do you consider that your deficit, which you claim is the lowest in the G7, gives you free rein to spend?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Absolutely not.

I know that it's very important for Canadians, as well as for international financial markets, to know that Canada's public finances are sustainable and that our position is the best in the G7. That's important, and it needs to be noted.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you very much.

You like to use the term “soft landing”. You said it a number of times already this morning.

Isn't that why public servants revealed in the media that the deficit would probably be around $60 billion instead of the anticipated $40 billion?

Are you using the term “soft landing” to sell your $60‑billion deficit to the public?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I'm here to answer questions directly, so I'm going to answer you.

I agree with you that a soft landing is very important for Canada and for Canadians. Since the COVID‑19 pandemic, our reality has been, one, to avoid a recession, two, to control global inflation and, three, to tackle the high policy rate. Those three cycles are now over. That's good news.

I'm very glad you highlighted the importance of a soft landing for Canada.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

That means that at the end of March, at the end of the 2024‑25 fiscal year, Canadians will see a deficit of around $60 billion instead of $40 billion, if I understand correctly. That's the target you set, by the way. It wasn't the opposition parties or anyone else who set that target for next year. Therefore, you won't have complied with the guardrail you put in place.

We've seen that the unemployment rate has just gone up. Therefore, we can't say that the Canadian economy is currently red hot.

You tried to find a way to put a guardrail in place, so why are you letting yourself exceed the target?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for the question.

I should point out that your question is based on a lot of hypothetical remarks.

On Monday, I will table the fall economic statement, and it will include all the numbers.

Today, I want to raise an important point.

I want to confirm and emphasize that Canada's public finances are sustainable. This is important not only for Canadians, but also for international markets. Canada is in a better position than the other G7 countries when it comes to the debt-to-GDP ratio. It's an important resource in a world where there's a lot of uncertainty, and it's very important not to let partisan bickering obscure reality. Our public finances are sustainable.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Ms. Freeland—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I would add that, on international markets, that is recognized.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Ms. Freeland, regarding international markets, you know very well that when public finances are no longer sustainable, things will no longer be the same.

You think that public finances are still sustainable compared to other G7 countries. However, all the programs you've put in place will cost tens of billions of dollars, and we don't have that money.

Once public finances become unsustainable, don't you think that will lower our credit rating?