Mr. Speaker, the government was proud to put forward its budget on March 19, but what Canadians got was another budget absolutely filled with another huge deficit.
As noted by Ian MacDonald, editor of Policy Magazine:
For [the] finance minister..., the budget was an opportunity to move on from a legacy of broken promises—he pledged $10 billion a year of deficits over four years to balance the books by 2019. Four years later, the projected cumulative deficit from 2016 to 2022 is more than $100 billion, with balance nowhere in sight....
Today I am going to focus my remarks on the current economic climate in Canada, specifically in relation to the housing markets and the government's drive to continue to spend, spend, spend.
Across Canada, there are many thoughts about when to run a deficit and when to increase the national debt load. In my riding of Elgin—Middlesex—London, I recently did a survey. In it, over 90% of my constituents said they would like to see a balanced budget in the near future.
I recognize that there is a time for deficits and there is a time to ensure that our economy is strong, but we have a Prime Minister and a finance minister who do not seem to use the same philosophy as many economists.
There is a big question here, and it comes down to the word “affordability”. I checked the Cambridge Dictionary for its definition, because affordability is going raise big questions as we move into the 2019 election. According to the Cambridge Dictionary, affordability is defined as “the state of being cheap enough for people to be able to buy”.
In its budget, the government brought forward two specific programs focused on first-time homebuyers, trying to find something to make sure that housing was more affordable. First the government increased the RRSP withdrawal amount for homes. Previously, people could remove $25,000, and that has been increased to $35,000. Second, the government introduced the first-time homebuyers incentive.
With respect to the first measure, I have had the opportunity to speak to many real estate agents from LSTAR and the Canadian Real Estate Association. For several years, they have been asking the government to increase the RRSP amount to $35,000. Although I totally agree with that, we have to recognize that right now Canadians are being nickel-and-dimed. They do not have extra money to put into RRSPs so that they can take out more money when buying a home.
This is a huge concern for me. We are talking about affordability here, but people are going home with less money from their paycheques. Canadians are paying more into the Canadian pension plan. They are also now paying the newly introduced carbon tax, especially in the province of Ontario. When I was driving last week, I noticed that Canadians are now spending up to $1.60 a litre on gasoline.
Canadians cannot afford what the government has to offer. Saving money in an RRSP is truly not an option for Canadians.
The government also put forward the first-time homebuyers incentive. Earlier today, a PBO report came out, and I want to read its findings into the record. It noted:
Estimation and projection method:
The cost of the program reflects the cost of borrowing $1.25 billion over three years. CMHC would borrow $250 million in 2019-20, and $500 million in both 2020-21 and 2021-22.
The estimate was calculated using PBO marginal effective interest rate projections on Government of Canada borrowing.
The uncertainty assessment is the key here, and this is what the PBO reported in that respect:
The estimate has high uncertainty. Many of the details relating to the program have yet to be determined or published, therefore many assumptions are used. We assume no credit losses on debt; no gains or losses in the equity holding; 100% of the loans are administered at the beginning of the fiscal year, except in 2019-20 (September 1); the portfolio is fully dispersed at all times, that is, any principal repayments are immediately redistributed to other eligible buyers.... The estimate is sensitive to changes in interest rates, which can vary over time. There is insufficient information on the program to quantify a behavioral response.
This is similar to what my colleague said earlier. It is as if Liberals come up with some of these plans on the back of a napkin. When coming forward with plans, they should be asking how things are actually going to pan out and what we will get in the long run.
Douglas Porter, who members may know is from BMO, has indicated:
The program will only apply to those with household income below $120,000, and with a maximum mortgage and incentive amount of 4-times income. As such, the impact will be contained to the lower end of the market below roughly $500,000 and, arguably, that’s the level where affordability challenges only really begin.
He provides an example here. He notes that the first-time homebuyers incentive looks great on paper, but we have to understand the reality of the markets in both the greater Vancouver area and the greater Toronto area.
One cannot find an average home of $500,000 in those locations. When we are talking about this, although the Liberal government has come out with this great plan, the biggest areas with affordability issues will not even come close to what the buyers are looking for. One will not be able to buy a house in Toronto or Vancouver because that amount is lower. I am not saying it is a good or a bad program. However, as I said, it looks like it was done on the back of a napkin, because the affordability issue has not been addressed through this new program.
Also, according to a Bloomberg report, we have to look at household debt. The report states:
Household debt in Canada, a nation generally known for moderation, has reached levels that could be qualified as excessive. Canadians owe C$2.16 trillion—which, as a share of gross domestic product, is the highest debt load in the Group of Seven economies.
Until recently, Canada had been lauded as a bastion of sound financial management. The country of 37 million emerged relatively unscathed from the global financial crisis, thanks in large part to the strength of its banks. But the extended run of low interest rates that followed sparked a boom in borrowing, with the ratio of debt to disposable income rising to a record 174 percent in the fourth quarter, from 148 percent a decade earlier.
It further says:
Households are feeling the strain. The debt service ratio—a measure of how much disposable income goes to principal and interest payments—climbed to 14.9 percent in the fourth quarter, almost matching the 2007 record high. A total of 31,900 Canadians filed for insolvency in the three months through December, the most since 2010. Credit growth is running at its slowest annual pace since 1983.
That takes us back to the deficit. That is why I wanted to talk about where Canadians are at: what they actually have, what their own credits and debits are, what they have as a bankroll and what they have for savings. We have a Canadian Prime Minister who is now spending more per person, inflation-adjusted, and has accumulated more debt per person than any other prime minister outside of a world war or recession. We are talking about good fiscal times and extraordinary spending.
Why should this concern us? With increased debt load, there are fewer resources available to provide the programs Canadians need. The final result are financial burdens on future generations, generations that are having increased debt loads due to things like housing, education and, actually, the carbon tax. People need to go to the grocery store and put gas in their tanks, although everything costs more.
This is a generation that has less money to save and less money to invest in the future. Why? We now have a government that is going to continue to spend, spend, spend, so the debt load at home continues to get larger, and the debt load here at the Government of Canada continues to get larger. This brings me back to my original quote indicating that, under the current government, the deficit is projected to increase to over $100 billion.
It also brings me to the data that I have been looking at in different magazines, looking at the growth of the total industry and the goods industry. At the beginning of the government's mandate, we continued to see increased growth in the GDP, growth that started under the former Conservative government. According to data received and published, we have seen an ever-growing decline in the goods industry. By looking at those charts, we can see that we were going up and in the last year and a half to two years, we are beginning to go down, climbing down to lower rates.
As Kevin Page states:
Output in the goods sector has declined over the past year due to weakness in mining and manufacturing. Business investment is falling. Both the World Bank and the International Monetary Fund recently raised alarm over rising uncertainty due to trade tensions, the potential for financial market corrections and geopolitical issues. Projected growth rates in the Budget for 2019 (GDP up 1.8 per cent) look strong given the weakness in the latest GDP estimates. Projections for future sales in the Bank of Canada business outlook survey have flatlined.
This is the part where we must be concerned. We are talking about debt loads at home continuing to increase and the government continuing to have increased debt loads as well. How can people prepare themselves for the future?
I always state when I am in this House that I am a proud mother of five. I am very concerned about their future, as I know that the government has no problem just continuing to throw the debt load on top of that. That is why I want to finish off with a quote that I found from Kevin Page, who quotes the writer Stephen King: “There is no harm in hoping for the best as long as you're prepared for the worst.” I feel that the government has not prepared Canada's economy and it has not prepared our future generations for what it has left behind.