Finance committee  There is some productivity growth that picks up over the forecast horizon and yields the rate-of-growth potential. If you look at the table on page 22 in the English version, we have potential growing at 1.8% in 2011; 2%, as I said earlier, in 2012. That's the underlying improvement in the real growth in the economy, the speed limit of the economy.

Finance committee  Very quickly, it's called price-level targeting, and the idea there is that whereas in inflation targeting what happens, and what happens presently, is that we get up every day and believe it or not the first thing we think about is how do we get inflation to that 2% mandated target over the forecast rate, and we think about 12 to 18 months out.

Finance committee  Well, just like we don't publish regional economic forecasts, we don't publish regional housing forecasts, so I'm going to avoid that question--not even skilfully, I'm just going to avoid it.

Finance committee  Well, there is a host of policies that need to be put in place to enhance productivity in this country, and they're required from both the federal and provincial levels of government. I would say, on the whole, over the course of many years successive governments have put in place a number of the factors that should bring about an increase in productivity.

Finance committee  Well, thank you for the question. It's not something that we perform, a detailed analysis audit, if you will, of federal fiscal projections. The federal government uses external forecasters for the fundamental inputs for that analysis, as you know, and it uses the average of those external forecasters.

Finance committee  The good news is that since we were last before this committee, considerable progress has been made on bank reform, most importantly agreement on the Basel III capital and liquidity measures. They were endorsed this past week, and they were reviewed and endorsed this past weekend by ministers of finance and governors of the G-20.

Finance committee  I'll just finish, Mr. Wallace, by saying that those demographics are starting to move away from us. They will continue to move away from us just as they have in Japan, very importantly, and in much of continental Europe.

Finance committee  Increasingly, the preponderance or the vast majority of growth in Canada will come from productivity growth, which will explain why sometimes we seem unhappy with the level of productivity growth in the recent past.

Finance committee  Thank you. Well, no, what matters is the growth of demand relative to the growth of supply, and the balance between those in the economy, ultimately, for their impact on inflation. If we have a lower speed limit in the economy, as we do now, a speed limit that towards the end of our projection horizon is 2% rather than 3%, that means we need to manage monetary policy--given all the other factors that are influencing demand--such that, as growth approaches that level, as the economy approaches that level of potential, the economy will grow consistent with that growth of potential.

Finance committee  Thank you for the question. I'll be absolutely clear on what I have said, what we have said, with respect to this issue. The issue is that there could be an impact on some data. We don't know what the impact is, and we won't know for some time until after the national household survey is conducted, after Statistics Canada gets the results, after that's all analyzed.

Finance committee  The combination of all those factors was such that we had a very important contribution of labour input, on the order of one and a half, one and three quarters, depending, bouncing around--

Finance committee  With regard to that change and our work with Statistics Canada, I would like to inform you that we are working in close cooperation with people at Statistics Canada in order to make sure that we properly understand all the statistics compiled by that key organization. That work is ongoing.

Finance committee  Well, we wouldn't have described 3% as the magic number. I mean, 3% is obviously larger than 2%. That has something to do, I guess, with people's attachment to it. There's something else, though, that has to do with people's attachment to 3% with respect to Canada: it was more or less our rate of growth of potential for many years in the recent past.

Finance committee  It's in business investment. We see an important rebound in business investment that began in the second quarter and picked up through the third quarter, very importantly, and into the next year. And I would say, in understanding our projection, that is central to the dynamics of this projection.

Finance committee  The important difference between Canada and America is that Canada is already back to the level of activity our economy had before the recession. America will not get back to that level until early next year. That's the first point. And there's the much bigger difference, as you well know, in the performance of the labour market.