Mr. Speaker, as I pointed out before the interruption, according to the Parliamentary Secretary to the Minister of Finance, the government had been coordinating with the central bank to produce these funds and these funds had been used to spend.
The massive dollar figures involved that I mentioned earlier are not only staggering and unprecedented, but may also be illegal. In fact, I stumbled on a section of the Bank of Canada Act, section 18(j), only hours before I was originally planning to make this question of privilege. Having read that section and looked at the numbers, I came to the conclusion that there very well might be a breach of law involved in what the bank and the government have colluded to do.
Allow me to read the section in question, section 18, which states that the bank may:
(j) make loans to the Government of Canada or the government of any province, but such loans outstanding at any one time shall not, in the case of the Government of Canada, exceed one-third of the estimated revenue of the Government of Canada for its fiscal year...
I turn your attention, Mr. Speaker, to table A1.4, “Summary Statement of Transactions”, budget 2021, projected revenues $355.1 billion. To respect section 18(j) of the Bank of Canada Act, which limits the bank's ability to lend money to the government to no more than one-third of projected budgetary revenues, the bank would be effectively capped in its loans to the government at $118 billion, $118 billion being one-third of the $355 billion of projected revenues. In fact, the Bank of Canada balance sheet shows that it now holds $415 billion, almost $300 billion more than the legal cap provided in the act.
When I discovered this apparent breach, I immediately delayed my introduction of this question of privilege to spend the time to verify and re-verify my calculations. I had never seen a government body quite so flagrantly violate limits that Parliament has placed upon it in statutory law, so I thought there must be some mistake. However, as I crunched the numbers, I realized that no, in fact, the one-third limit was breached.
I then reached out to the Library of Parliament to conduct a full review of all the legislation passed to approve emergency COVID spending since the spring of 2020 to find out if maybe the section was temporarily suspended or a special exemption to it was created to allow this kind of dollar figure to be lent from the bank to the government. Sure enough, the Library of Parliament said that there was no such exemption or suspension of the section; it is still in place.
In other words, this research shows, and I ask that you, Mr. Speaker, and your trusted advisers and the officials at the Library of Parliament to verify my claim here, that the Bank of Canada has breached limits that Parliament has imposed on its ability to lend money to the government.
These limits do not exist without reason. There is a reason Parliament chose deliberately to write a section into the Bank of Canada Act limiting the amount of debt the bank could buy. The reason is this: Parliament foresaw that future governments might try to use the printing presses over at the bank to pay for spending that it could not raise through the more normal process of taxation.
With the limits Parliament placed on the Bank of Canada's purchase of government debt, Parliament effectively banned the government from raising taxes by inflationary money creation instead of by legal and legitimate taxation. That the government and the bank have circumvented that ban and broken a law of Parliament breaches the privileges of every member of the House to vote on laws that are made and repealed.
In the process, the government has breached the principle of the independence of the central bank. This breach is not the result of the independent action of the bank.
The parliamentary secretary to the finance minister, during the appearance of the Governor of the Bank of Canada before the finance committee on June 16, 2020, said, “There's been an enormous coordination between OSFI, the bank and the federal government.”
I have given the fiscal and mathematical evidence to show that this coordination has occurred. In fact, not only did it occur last year when the bank bought effectively 85% of the government's deficit, and wherein the bank increased the money supply by exactly the same amount that the government borrowed in the previous fiscal year, but that “enormous coordination” has continued into this fiscal year.
On April 19, the Minister of Finance introduced a budget in the House projecting a $154 billion deficit, or borrowing effectively $3 billion a week. Two days later, the Governor of the Bank of Canada held a press conference, announcing that his bank would be buying $3 billion a week of government debt. In other words, the government is borrowing $3 billion a week and the central bank is buying $3 billion a week. The government is running roughly a $155 billion deficit and the bank is lending roughly $155 billion throughout the year. In other words, this coordination is not just in words—