House of Commons Hansard #119 of the 43rd Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was bank.

Topics

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5 p.m.

Liberal

The Speaker Liberal Anthony Rota

I will interrupt the hon. member for Carleton.

We have a point of order by the hon. parliamentary secretary to the government House leader.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5 p.m.

Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I am having a very difficult time understanding the question of privilege. Can the member specifically and concisely indicate what the new tax is that he is referring to. I do not understand the question of privilege at all. He seems to—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5 p.m.

Liberal

The Speaker Liberal Anthony Rota

I will point out that I did ask the hon. member to be a little more concise and maybe not so descriptive with all the examples, though we appreciate them.

I will let the hon. member for Carleton continue.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Mr. Speaker, just because the member does not understand the fact, that does not erase that it is indeed a fact.

I thank the member for Timmins—James Bay for his help along the way.

Peter Hogg, who, until his death last year, was Canada's leading constitutional scholar, underscored the point that I am making now in a 2002 article:

It must be remembered that the taxing power is the one upon which the rest of governance depends. As the King and Parliament both recognized in the 17th century, nothing important can be done without resources, and it is control of the taxing power that provides the resources. Moreover, no other power has as direct and immediate an effect on citizens as the taxing power, and (for that reason) nothing government does is as unpopular as the imposition and collection of taxes. There is a huge incentive for governments to offload this power to a delegate, who can raise taxes quietly without any irritating fuss in the Parliament or Legislature, and who can shoulder the blame when the media do get wind of the action.

As Professor Hogg noted, this is not a new problem. In fact, it is one of the oldest and most important matters in the system of parliamentary democracy. It is hardly an exaggeration to say that taxation is the reason we are all here today. The Crown's power to tax and the need to obtain the consent of those paying the taxes is why Parliament exists in the first place. We could look at 800 years of history, going back to the Magna Carta, to find that the principal disagreement between Crown and commoner has been on the subject of taxation.

It is essential to the privileges of every member of this House that every single levy or tax come before us to be voted on before it is enacted. I think I have clearly proven that it is the privilege of every member to vote on a tax increase before it is imposed.

What is the tax of which I speak? The answer is, it is the inflation tax. Is excessive inflation, which results from excessive money creation, in fact a tax? We can look to the definition of “tax” found in Oxford Languages, a 150-year-old dictionary, which defines taxes as follows:

A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

I will break down that definition. First, it is state revenue, “levied by the government”. Second, it is “added to the cost of some goods, services, and transactions.” Third, it is a “compulsory contribution”.

First, is the inflation tax designed to generate state revenue, levied by the government? I will give the data to prove that in fact it is. In February 2020, the Bank of Canada owned $106 billion of government debt. As of the end of last month, that number had reached $412 billion. That is an increase of almost $300 billion in one year. It is also an increase of 300%. Last year, the amount that the Bank of Canada produced for the government by purchasing government debt was over $300 billion. It was the single biggest source of revenue for the government, bigger than income tax, consumption tax, tariffs and private loans combined.

Never before has the Bank of Canada been the single biggest provider of funds for the government's operation. It does this through a process whereby the government sells debt onto the market and the bank buys it back at a higher price. This has the effect of flooding government coffers with cheap credit that it could spend liberally, as it did last year and continues to do right now.

The result is a massive increase in the money supply. When the Bank of Canada uses its balance sheet to buy government debt, it increases the number of dollars in circulation. In the period since late winter and early spring of 2020, the money supply has increased by over $300 billion. In fact, from February 2020 to February 2021, the money supply grew by $354 billion. The deficit for the last fiscal year was $354 billion. In other words, the same amount the government needed to borrow was the amount that the Bank of Canada created.

This led to a 20% year-over-year increase in the number of dollars in coins, bills and bank deposits. That is the biggest increase since 1974, which was the last time the government went on a money-printing binge, which led to major inflation crises thereafter. For context, the increase in the money supply is so large that it could fund our Canadian Armed Forces for 10 years. To use another measure, fully one in six dollars in the entire M2 money supply has been created in the last year alone.

In the fiscal year 2021, the Bank of Canada was the single largest source of funds for the Government of Canada. All revenue from other sources was $294 billion, and net new borrowing was $41 billion, but revenue from the bank was $303 billion. That $303 billion is an extraordinary and unprecedented sum.

The bank did not do this on its own. Let me now speak about the direct coordination between the government and the bank that led to this massive increase in the money supply.

The Parliamentary Secretary to the Minister of Finance actually said that there was coordination between the bank and the government. The coincidence that we see in the amount of money printed and the amount of money spent demonstrates this coordination as well. For example—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

The Speaker Liberal Anthony Rota

I am sorry to interrupt the hon. member, but I believe we have another point of order.

The hon. parliamentary secretary to the government House leader.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I have been listening very closely and it seems to me the member is saying there is an inflation tax, so whenever inflation goes up or down it should be brought to the House so that members can say no to inflation by way of a vote. That is the best I can tell. If the member could just move on so that you can make a decision on the issue, because I do not see this—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

The Speaker Liberal Anthony Rota

I do not believe that is a point of order, but I do ask the hon. member for Carleton to be a bit more concise.

The hon. member for Timmins—James Bay is also rising on a point of order.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I am getting frustrated as well. I am not really sure where the inflationary tax element comes in, but I am very frustrated by the fact that just because the member for Winnipeg North does not understand something the House has to stop and change direction. I would ask him to let the member finish so we could actually understand whether we agree with him or not. I think it is unfair that whenever the member for Winnipeg North is confused he is always interrupting.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

The Speaker Liberal Anthony Rota

We have another point of order, from the hon. member for Kingston and the Islands.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

Mark Gerretsen Liberal Kingston and the Islands, ON

Mr. Speaker, I am getting a real kick out of the fact that the NDP is now on the floor of the House of Commons supporting these antics by the Conservatives. It looks as though the New Democrats have decided they are interested in doing this. I would suggest that you rule that the previous comment by the member from the NDP is out of order because, quite frankly, it was not a point of order.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Liberal

The Speaker Liberal Anthony Rota

I am going to stop the hon. member. I ask all hon. members, when they raise a point of order, to please refer to the point or the standing order they are referring to, and we can go from there.

I ask the member for Timmins—James Bay and the member for Kingston and the Islands to respect the hon. member for Carleton and let him continue.

Again, I want to ask the hon. member for Carleton to be as concise as possible and respect the chamber's time.

The hon. member for Carleton.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:10 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

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, they may 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 why 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—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:15 p.m.

Liberal

Mark Gerretsen Liberal Kingston and the Islands, ON

Mr. Speaker, I rise on a point of order. How much longer are you going to let this go on? When I rise on a point of order or the member for Winnipeg North rises on a point of order, you are very quick to shut us down if we are not addressing the point of order. The member has been going for almost 30 minutes on what is obviously not a question of privilege.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

The Speaker Liberal Anthony Rota

I want to point out that we are letting the hon. member get his information out, and it is a question of privilege that has been raised.

The hon. member for Louis-Saint-Laurent is rising on a point of order.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Mr. Speaker, we shall listen to the member who has raised the question of privilege. It is the basis of the House of Commons to respect the will and thinking of each and every member. We could disagree with what the member is saying, but at least we shall listen to him, especially on a privilege question, which is not easy to address; we recognize that. It is so important for the Canadian taxpayer that we listen to the member.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I rise on a point of order. The member for Kingston and the Islands can attack me all he wants but he cannot attack the role of the Speaker. He should offer you an apology. You were doing your role, and you were doing it in an impartial, non-partisan manner.

I would ask the member to withdraw those comments and apologize to you, Mr. Speaker. for trying to interrupt the work of the House.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

The Speaker Liberal Anthony Rota

I just want to point out that we are getting into argument here, which is a debate. As I asked earlier, if members are getting up on a point of order, let me know what rule is being broken, and then we can go from there.

The hon. member for Kingston and the Islands.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

Mark Gerretsen Liberal Kingston and the Islands, ON

Mr. Speaker, I do apologize if I by any means challenged your authority. You do an excellent job as Speaker. However, I certainly did not do that, I do not believe. I merely asked a question as to how long you were going to allow this to go on.

To the point made by the member for Louis-Saint-Laurent, let us just be honest about what is going on here. The Conservatives—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

The Speaker Liberal Anthony Rota

I am going to interrupt the hon. member, because it is turning into argument.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Some hon. members

Oh, oh!

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

The Speaker Liberal Anthony Rota

I would ask for order. I will let the hon. member for Carleton continue. I will ask him to be concise, as I did earlier, to get to the crux of the matter and let us know exactly where he wants to go so we can continue.

A question of privilege is very important in the House, but we do want to ensure we get the point so we can rule on it.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Mr. Speaker, as I said when I quoted the Oxford dictionary, a tax has three characteristics: that it is a state revenue levied by government, that is adds to the cost of goods and services transactions and that it is a compulsory contribution.

I have just gone through the first point in which I have demonstrated that this cash creation is state revenue levied by the government—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

Kevin Lamoureux Liberal Winnipeg North, MB

Mr. Speaker, I rise on a point of order. Within our Standing Orders, and you alluded to this yourself, it does state that members do need to be concise and virtually to the point in regard to how a member's privilege might have been taken. There is a bit of frustration in the sense that we have witnessed other members from the Conservative Party use privilege as a way to—

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Liberal

The Speaker Liberal Anthony Rota

I am going to interrupt the hon. member. He is absolutely right that a point of order should be concise, but now we are moving into argument or debate, and I do not want to move into that.

We will let the hon. member be as concise as possible, and I will let him continue.

The hon. member for Carleton.

Alleged Breach of Members' Right to Vote on a New TaxPrivilegeRoutine Proceedings

5:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Mr. Speaker, as I said, the second characteristic of a tax is that it adds to the cost of some goods, services and transactions.

Just today, Statistics Canada released fresh data showing what consumers have known for months; that inflation has rocketed up to 3.6%, well above the Bank of Canada's 2% target. This data was essential to my argument today, thus one of the reasons why I waited for its publication before presenting this.

As of this morning, three of four measures of the Bank of Canada for inflation show that inflation has breached the 2% target. Several product groups were well above that. Gasoline is up 43.4%; home ownership replacement costs, 11.3%; and durable goods, which includes things like cars, appliances and furniture, is up 5%. That is just to name a few. This is demonstrated proof that people are, in fact, paying the cost of the inflation tax.

Food prices are also on sharp rise. According to the latest Canada Food Price Report, food costs increased 2.3% last year, with an expected 4.5% to 6.5% increase in meat, 3.5% to 5.5% increase in bakery and 4.5% to 6.5% increase in vegetables this year.

Housing prices have ballooned 30% from March 2020 to March 2021. This is where the cause and effect is most evident. COVID should have reduced housing prices. The wages with which people buy houses dropped. People lost their jobs, making it harder to place offers on homes. To escape lockdowns, more people moved to the countryside, where prices per square foot are lower. Immigration came to a halt, reducing the number of buyers in the market. All these factors would have driven demand and therefore prices down.

In fact, the country's top housing regulator, CMHC, predicted prices would drop as much as 14% for those reasons, and they did begin to drop in March and April of last year. Then, suddenly, as the Bank of Canada's increase in the money supply began flooding into the market, prices began to reverse. The government pumped $356 billion of brand new, newly created cash into the system, and that was exactly the size of the deficit and the size of the money supply growth—