Public Accounts Committee on June 1st, 2026

[Francis Bilodeau]

I will say two things.

Number one, the department's support for the industries—particularly during COVID and in its aftermath—was a significant lifeline to the industry, which was otherwise very hard hit.

Number two, returning to some of your specifics around examples of targets, one of our targets is the value of creative exports. We set a target of $20 billion. We're really happy that, recently, the creative export strategy was renewed and funding was made permanent for that program. That program will hopefully allow our creative and cultural industries to export and thrive both in Canada and more broadly and contribute to the economic well-being of the country.

[Michael Ma, Liberal, Markham—Unionville, ON]

I have a question similar to one my colleague asked earlier about local community initiative funding. How do you proportion it between local and large national organizations? In my riding, a lot of constituents are seniors. They're feeling the squeeze because they don't have a lot of income, but they're being turned down for supportive funding and so forth.

[Joëlle Montminy]

We have a multitude of programs in our department, and we always look to make sure that there's a good balance between supporting local organizations that create.... Across the department, we have programs that do a number of things, but we always ensure that there's a good balance between supporting the production of Canadian content, which we do with different organizations...and also large ones, because it's an ecosystem. We need some of the bigger players. They can sometimes have a bigger impact on some of the objectives that are pursued in some of these programs. There's also a local reality with organizations that contribute significantly to the ecosystem.

I think of programs in journalism, in the audiovisual sector and for music and books. We support organizations across different kinds of business models, even if they're quite small. For media organizations, we will fund organizations that have two journalists and very large organizations as well.

[Francis Bilodeau]

The only thing I would add is that every single one of our major pillars and activities, whether it's creativity, arts and culture; heritage and celebrations; sport; diversity and inclusion; or official languages, will include programs targeting local initiatives. Whether it's on official languages through the community life programs, on the sports element with the community sport for all initiative, or the local arts and heritage festivals, each of the pillars has dedicated programming streams aimed at local initiatives.

[The Chair, Conservative, John Williamson]

Thank you. That is the time.

I want to thank the witnesses for their testimony, for coming in today and for participating in our study of the public accounts for 2024-25.

I want to move to the next round of witnesses right away. I'm going to come back as soon as I can—in about a minute or maybe 90 seconds.

This meeting is suspended.

[The Chair, Conservative, John Williamson]

Welcome back, everyone. I'm glad everyone could make it.

For our second hour, we have the Bank of Canada. With us is the senior deputy governor, Carolyn Rogers. Coralia Bulhoes, the managing director and chief financial officer, is accompanying the deputy governor.

Thank you for coming.

There is no opening statement, so I'm going to begin things right away.

Mr. Scheer, you have the floor for six minutes.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you very much, Mr. Chair.

It's a pleasure to welcome you here to the committee this morning.

Ms. Rogers, you wrote a piece on productivity that I'd like to ask a few questions about.

When I look at the last budget the government tabled, I see the eye-watering amount of money that Canadian taxpayers have to spend on debt servicing costs. In that budget, it's $59 billion the Government of Canada is going to spend just to pay the interest on the debt. That's more than it pays for health care right now. It also stands in stark contrast to the commitment the government made about a year ago that the deficit would be only about $30 billion. This budget has come in at well over $60 billion with the deficit.

Is all the money that's being spent on servicing the debt acting as a drag on productivity? If that money came down and the government had to spend less on debt servicing, it would free money up for tax cuts and investments in infrastructure. Would you agree that the money spent on debt servicing is having an effect on productivity?

[Carolyn Rogers, Senior Deputy Governor, Bank of Canada]

I think your point that money spent on debt servicing could be redirected to other things is accurate.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

The bank has also warned us recently—I think it was just a few days ago—about the high risk of volatility in the future. When interest rates go up, it affects the government's debt servicing costs.

Do you have any estimates on what interest rates going up a half or full point would do to the amount the government spends on servicing the debt?

[Carolyn Rogers]

No, I don't have that number at my fingertips. We're here today to talk about our own financial statements.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

All right. I appreciate that.

On those financial statements, the bank announced last year that it was ending the quantitative tightening phase of its settlement management, but I think it still has about 150 billion dollars' worth of government bonds on its balance sheet.

What is the timeline for normalizing the bank's balance sheet position? Other central banks are trying to get those increases in settlement balances off the books, but the Bank of Canada seems to still be at about $150 billion. Is there a timeline for moving that off, or is that where the bank is comfortable?

[Carolyn Rogers]

We have pretty much completed the normalization process. I think our balance sheet has settled into a steady-state position.

Settlement balances move in relation to a couple of things. They move in relation to the overall size of the economy. They move in relation to regulatory capital requirements. There are a number of reasons that members of the payment system want to hold higher levels of settlement balances.

We're through the balance sheet normalization period. We think we're probably going to settle in around here. It could move up or down a bit, but we're pretty well where we think we need to be.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Okay, so about $150 billion will be...?

[Carolyn Rogers]

Is there an actual settlement balance number?

[Coralia Bulhoes, Managing Director, Financial Services, and Chief Financial Officer, Bank of Canada]

The settlement balance is $74 billion.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

I'm sorry, but when I say “settlement balance”, maybe I should clarify. I mean the amount the bank holds in government bonds. Would that be closer to $100 million?

[Carolyn Rogers]

That's a different thing altogether.

Do you have that number?

[Coralia Bulhoes]

Yes. For government bonds it's $167 million.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Is that where the bank is going to stay, then?

[Carolyn Rogers]

That was in relation to the demand for money in the economy. When we put money into the economy, we offset it with bonds, so that will move around, but yes, that's about the steady-state number—for now, at least.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

How does that compare with pre-COVID levels?

[Carolyn Rogers]

It's slightly higher.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Okay.

I was just looking over the course of the last month.... I know that the banks restarted the purchase of treasury bills back in the fall. When I looked at the numbers for the money supply over the last 12 months, in every category I could find on the bank's website, from M1+ to M2++, they had all increased substantially—some 6.8%, some 6.7%, some 3.8%.

We're currently in a position under the Liberal government where the economy is contracting. We just saw results—out on Friday—that Canada is in a recession and that GDP is actually contracting. With the money supply expanding and GDP contracting, are you concerned at all about another inflationary period?

[Carolyn Rogers]

I'm a bit confused by your question, because you started with the T-bills on our balance sheet. Do you want me to address why—

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

I'm just observing that some of the decisions the bank has made also correlate—whether it's causation or not—with big increases in the money supply. That's at the same time that the economy is contracting.