Public Accounts Committee on June 1st, 2026

[Carolyn Rogers]

It's not good today. Our productivity continues to decline.

We need to continue to invest in capacity building and some of the education objectives that my colleague talked about. We need to try to create an environment for business investment.

All of the plans the government is laying out are good plans. There needs to be a sustained focus on implementing some of these plans. The tricky bit really is that a lot of these things are going to take time to bear fruit.

There's sort of a lag in how soon you're going to see the results of some of this investment show up in the types of things we watch. In productivity, certainly, it's going to take a while. They're things like GDP, growth and even our employment numbers. These investments take a while to get traction and really help boost the economy.

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

Thank you.

My next question is, what economic indicators should Parliament monitor to determine whether Canada's trade diversification strategy is succeeding? I recognize that you said a lot of these programs will take time.

[Carolyn Rogers]

I can tell you how we're thinking about this and how we're trying to get a gauge. That's just by talking to businesses. Often, what businesses are doing to diversify their trade doesn't really show up in their own numbers for a while, and then by the time it shows up in their numbers, it takes a while to show up in national numbers. What we're doing to try to gather more real-time data and really understand some of the structural changes in the economy is get out and talk to businesses more.

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

Do you look at export concentration in investment flows? You talked about investment earlier.

[Carolyn Rogers]

Certainly. That's the data that it will eventually show up in, but I thought your question was about what we can be looking at now to understand the change.

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

Now and in the future, yes. You also talked about employment and productivity, so that's very helpful, indeed.

[The Chair, Conservative, John Williamson]

You have time for one last brief one, Mr. Ma.

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

Okay.

In budget 2025, with the promise of major investment intended to strengthen productivity, from the bank's perspective, what economic indicator should Parliament monitor over the next five years?

[Carolyn Rogers]

There are probably many. I would say that business investment would be a really good one. I'd keep my eye on that.

[The Chair, Conservative, John Williamson]

That was a nice succinct answer. Thank you very much.

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

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

First, I'd like to thank the witnesses for being with us.

Last week, we learned that Canada is in a technical recession, given that real gross domestic product, or GDP, has declined for two consecutive quarters.

What steps can the Bank of Canada take to rectify the situation?

[Carolyn Rogers]

Thank you for your question.

Let me talk a bit about the data and this “technical recession” label.

When there is a lot going on in the economy, as there is right now, and there are things pulling different parts of the economy in different directions, you're going to get some noise in the data.

The first thing I would say is that we want to be careful not to over-rotate on any one number, on any one indicator. Two quarters of annualized contraction in GDP does meet one definition of a recession, but the simple fact that you have to put the term “technical” in front of it tells you that you need to look past that one indicator. You need to look at employment. You maybe need to look at some of the leading indicators. We know, for example, that the flash data—flash is the early warning—on GDP for April tell us that there's been a bit of a rebound. We need to be careful not to put too much weight on any one indicator. Let me just start there.

As for your question about what the bank can do to respond to this, we'll be making our next decision in just over a week from Wednesday. We'll be starting our deliberations on that decision later this week. I'm not going to prejudge those deliberations, but we'll be taking in all of the current economic data, including last week's data. We'll have some more data later this week on the labour market. All of that will be factored in as we think about what our next monetary policy decision is.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

At a press conference last week, you argued that high stock prices, rising corporate debt and the amounts borrowed by investment funds pose significant risks to Canada, particularly given the economic and geopolitical situation.

Indeed, when it comes to youth unemployment, Mr. Vincent, a deputy governor at the Bank of Canada, noted that 22.5% of the unemployed had been out of work for more than 27 weeks, in a market where employers are looking for more experience. These factors have an impact. One of the tools available to Bank of Canada, and I think you alluded to this at the end of your response, is the policy rate.

Am I to understand that the Bank of Canada could adjust its policy rate in the short term?

[Carolyn Rogers]

Do you mean our policy decision rate?

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Yes.

[Carolyn Rogers]

Certainly we will be reviewing it in the short term. We'll be starting deliberations later this week on our next policy rate decision. That decision happens next Wednesday. We will be deliberating on that in the near term.

Just to back up to your other questions, yes, the speech that my colleague gave on youth unemployment did cite that as a concern in the economy. It's not unusual when you see an economic downturn or a slow labour market like we're seeing right now, with some of the headwinds that the economy is facing.

Youth are usually one of the first groups of people hit by a tough labour market. They're trying to get their first job. Employers are pulling back on hiring. They put a high premium on experience, so they maybe won't hire as many new employees. It's not unusual to see youth unemployment being higher than the overall rate of unemployment, but it is a concern. We are watching it.

As I said, one point that my colleague made in his speech is that we need to be thinking about whether or not our education programs are setting our youth up for the jobs that are available in our economy. Particularly when our economy is going through a bit of a structural shift, those types of jobs are going to change, and we want to make sure we're preparing a labour market both for the sake of the economy and for the sake of the youth who are going to be looking for jobs.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Let's move on to the last point. Canada's gold reserves have all been sold. I come from a mining region, specifically a gold-producing region. In 1965, Canada had 1,023 tonnes of gold on its reserves. Starting in 1985, Canada began to reduce its reserves, and the last ounce was sold in 2016.

Today, if we still had the gold, if we still had 1,023 tonnes of gold, it would be worth $235 billion. That would obviously have an impact on our debt.

Are you going to start stockpiling gold again to give us reserves that have clearly been very effective in stabilizing the Canadian economy?

[Carolyn Rogers]

The gold reserves you're talking about are held in the government's foreign currency exchange fund account. That is not on the Bank of Canada's balance sheet. That's the government's account. As the fiscal agent, we manage that account for them. We don't make the decisions of what to hold in that account. We make the purchases once the government decides what to hold in that account.

More broadly, though, the way I would address your question is by saying that the purpose of that account is to have on hand some liquidity in different currencies. For something to be liquid, you need to be able to deploy it quickly. Gold doesn't really meet that definition. I think the decision to move out of gold and into actual currencies was probably to make sure that that account is liquid and can serve the purpose that it's there to serve.

[The Chair, Conservative, John Williamson]

Thank you very much.

We will begin our next round of questions.

Ms. Kusie, you have five minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Mr. Chair.

Welcome. Thank you so much for joining us here today.

Madam Rogers, I see you have an M.B.A., like me, but I think you've made better use of yours than I have in being up there rather than here. I also see you went to Brandon University, which leads me to believe you might be a Manitoban, like my husband.

[Carolyn Rogers]

I am.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's excellent. I'm Albertan, but our two provinces share a strong bond in our household.

Last week, you released the bank's financial stability report, and I wanted to ask you a few questions about it.

The report notes that vulnerabilities have increased in some parts of the Canadian financial system and that “a new shock or a combination of shocks could cause several vulnerabilities to crystalize at once.” I haven't heard my colleagues use this quote as of yet, which I think is very good.

In your opinion, what would a crystallization of vulnerabilities look like for Canadians?

[Carolyn Rogers]

What we worry about is a huge, sudden demand for liquidity that would create, as we term it, dislocations in core funding markets. When that happens, the core funding markets that make sure there is liquidity and funding for all kinds of things in our economy—everything from governments funding themselves for rolling over debt to corporations rolling over their debt to making sure there's stability in markets like mortgages, consumer loans and commercial loans.... When you have a very sudden spike in demand for liquidity, what happens is that you can get margin calls on investors and, in order to meet those margin calls, investors can start selling assets. There can be more assets available for sale than there are buyers in that type of stressed environment, and you can get very large moves in prices that disrupt markets.

That's the scenario we picture when we think of more than one thing going wrong at one time. Some of these things can interact with and feed each other, and you can get a bit of a confidence spiral.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I'm very concerned about this at the household level in Alberta. I saw a report last week that said Calgary, unfortunately, leads the way in non-mortgage consumer debt, with an average of $24,500 per household. Shortly behind is Edmonton, with $24,000. I see the trickle-down effect that you are referring to. It's very easy for these callbacks to domino very quickly back down to Canadians.

How would that and what you described affect the bank's decision-making? You talked about next week as a very pivotal point, with June 10 approaching in fewer than two weeks. You discussed vulnerabilities and touched on several factors that the bank will be considering. You referred to employment. Of course, we've seen significant, high unemployment rates. I like what you said about youth. We've seen youth having trouble obtaining employment across the country.

How will those vulnerabilities affect your decision-making as you make a decision for June 10, after two quarters of negative reporting?

[Carolyn Rogers]

You jammed a lot in there.