44th Parl. 1st Sess.
May 19, 2022 10:00AM
Madam Speaker, in a few minutes it will be my second opportunity to debate against a bill introduced by the hon. member, which is based on what I consider to be facile assumptions, but it is a pleasure to debate the member. We were elected in the same year, 2004, and it is nice to see him up, partaking in debates in the House.
There has been a flurry of attempts recently to impugn the Bank of Canada, and this bill feeds into that trend. It is not only the so-called Liberal establishment that objects to these attacks on the bank's independence. As a matter of fact, the member for Abbotsford objects to those kinds of attacks as well.
I am wondering if the hon. member can tell us whether his entire caucus will be supporting his bill, given the comments of the member for Abbotsford.
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Madam Speaker, I expect every member of my party to support it, because our party is in favour of accountability and transparency. The member has it all backwards. It is his party that has undermined the independence of the Bank of Canada. When Liberals turn to the bank and ask it to act as the personal ATM of the Prime Minister of the day to bankroll his spending decisions, that is what undermines the Bank of Canada. What I am proposing in this bill is simple, non-partisan oversight by the Auditor General, who provides that same function for all kinds of independent, non-partisan departments and agencies.
I do not know why the member does not welcome this bill. Canadians want to see what is going at the bank. That member should support it.
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Madam Speaker, I will let the member for Abbotsford explain what he meant, but this bill is about accountability and oversight. This bill is about empowering the Auditor General to provide the same type of oversight role that he or she provides for every other government department, agency and Crown corporation. That is what this bill is all about.
When it comes to the performance of the Governor of the Bank of Canada, the Bank of Canada has only a few core mandates, one of which is to keep inflation low, at 2%. Inflation has been well over 6% for several months now. Every other Canadian who missed the target by such a massive range would face some kind of accountability. It is not to punish the guy or get even with him, but on behalf of Canadians, they deserve to have a Governor of the Bank of Canada who understands that printing money during a period of economic contraction leads to inflation. It is that simple. This—
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Madam Speaker, what is clear is that the Conservatives are ideologically driven, and the Conservative leadership candidate, the member for Carleton, has been on a path to try to discredit and politicize the Bank of Canada. That is clear as day.
The Conservatives do not have any trouble in trying to invoke their ideology into the Bank of Canada, but they are ready to criticize others in the manner in which they are. What is interesting is that this bill calls for another audit, for the Auditor General to audit the Bank of Canada. Of course, the Bank of Canada already has independent audits going on, in any event, yet when the Conservatives were in government, they did not actually want to fund the Auditor General to do his work.
When will the Conservatives step up and make sure that all the departments within government, including the Auditor General, are actually properly funded to do their jobs?
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Madam Speaker, accountability is already enshrined in the Bank of Canada Act. This act requires that once a year, two independent firms are to audit the affairs of the bank simultaneously. The bank is the only federal Crown corporation subject to this requirement. The act also gives the Minister of Finance the authority to enlarge or extend the scope of the audit and to request special audits and reports.
Contrary to what the bill might suggest, the auditor general already has the authority to exercise an oversight role in certain areas of the bank's business functions. Specifically, she can review and audit the bank's operations and records related to its roles as the government's fiscal agent, advisor on public debt management, and manager of the exchange fund account.
The Bank of Canada Act also makes it clear that in the event that there is a difference of opinion between the Minister of Finance and the Governor of the Bank of Canada on monetary policy, the minister may, after consultation with the governor and with the approval of the Governor in Council, give to the governor a written directive that shall be laid before Parliament.
The governor and deputy governor are regularly called to testify before committees of the House of Commons and the other place, including the Standing Committee on Finance, to be held accountable. I commend them for their willingness to appear and their transparency. I also thank them for systematically answering my questions in impeccable French.
In addition, there is also an Audit and Finance Committee, which has the mandate to review the bank's annual and interim financial statements; approve interim financial statements; make a recommendation to the board of directors with respect to the approval of the annual financial statements, as appropriate; oversee and ensure that the external and internal audit functions are carried out in an appropriate manner; review the adequacy of the bank’s risk management, internal control and governance framework with respect to financial reporting; and oversee the bank’s financial management, including the medium-term financial plan, the annual budget and expenditure reporting.
This bill is an expression of a philosophy and a strategy that should worry us, an attempt to cast doubt on the bank and undermine public confidence in this independent institution. That is exactly what we saw when the bill's sponsor was his party's leader and during the last election campaign. This strategy is still a factor in their leadership race.
The Bank of Canada is a complex institution, and it is difficult for the general public to understand. It just might be the perfect victim for politicians seeking a scapegoat for economic ups and downs. The current Conservative Party leadership hopeful openly attacks the Bank of Canada and has even promised to fire the bank's current governor. This same technique has already been used by none other than Donald Trump south of the border.
Firing the governor of the central bank just because the prime minister does not agree with the monetary policy could have a devastating impact on our economy, its stability and its attractiveness to investors. It would put us on par with banana republics where financial and monetary crises happen all the time.
It is of course perfectly appropriate and healthy to be able to criticize the work of a central bank and its governor. We are seeing this now. Economists have said that central bankers waited too long before raising interest rates. The governor has also been criticized for being slow to recognize that inflation was not transitory and that monetary policy tightening should have started well before 2022.
The Bank of Canada has recognized some of its own errors. In a speech given in Toronto on May 3, the deputy governor focused on the importance of maintaining public confidence in the central bank. She said the following:
So we are acutely aware that, with some of the extraordinary actions we have taken during the pandemic and with inflation well above our target, some people are questioning that trust.
To bring down inflation, the bank's current policy calls for a sharp rise in interest rates, followed by an end to the rollover of government bond assets held by the institution.
Once again, criticizing the central bank and its management of inflation is legitimate, but we must also take the time to explain the multiple causes of these price increases, which is a global phenomenon.
The rhetoric that tends to undermine public confidence in the Bank of Canada is beyond worrisome. It can have a real impact on the economy, and this bill seems to serve that rhetoric.
The Bank of Canada is a public entity separate from both the banking sector and the political process, let us not forget. Its fundamental responsibility is to guide the economy in the long-term best interests of the public.
The bank was created in 1934. The Bank of Canada Act established the bank as a Crown corporation with special status and considerable independence to conduct its business. The act sets out the bank's business and powers as they relate to its core responsibilities of monetary policy, the financial system, currency, funds management and, more recently, retail payments supervision. The act also provides for the operational independence the bank needs to carry out its activities and meet its responsibilities, free from political influence.
In other words, the act dictates what the bank does, but not how it does it.
Over the years, the bank has made major changes to how it achieves its mandate. The most significant was in 1991, when the government and the bank reached the country's first inflation-targeting agreement.
As its name indicates, it is a sort of contract between the bank and the government that establishes an inflation-control target but confers on the bank the authority to decide how it will achieve this target. The agreement has been renewed on a regular basis, most recently in 2021, following consultations.
From the signing of the first agreement 30 years ago to the most recent agreement, the inflation rate was kept to almost exactly 2% on average. The bank is working to return to that level of price increases while ensuring the economy's stability. I will repeat that it is facing disruptions at a global level, and we are confident it will succeed.
In closing, I would like to remind members that the bank has a board of directors composed of the governor, the senior deputy governor and 12 independent directors. The board of directors does not have a say in monetary policy decisions, which fall to the Governing Council, but it does have oversight of the bank's activities and finances. Its independent directors appoint the governor and the senior deputy governor, with the approval of the Governor in Council.
The bank also enjoys financial independence. The expenditures of the bank are financed by its own activities, and it therefore does not rely on public funding. Its budget is approved by the board of directors.
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That is very kind.
I will take the next few minutes to review the purpose of this new bill introduced by the former Conservative leader. It is essentially designed to give more work to the Office of the Auditor General of Canada, but to do what? To investigate the Bank of Canada? Why?
As my colleague before me already said, the Bank of Canada is already accountable to Parliament for its own administration, its work, its monetary policies and its decisions through House and Senate committees.
It seems that the reason behind this is to hype up the bill introduced by the member for Carleton, who is pointing the finger at Canada's central bank, accusing it of creating all our inflation woes and blaming it for the current decrease in purchasing power that Quebeckers and Canadians are unfortunately experiencing. As we said earlier, the Bank of Canada is not perfect and we have a duty to criticize it and to demand accountability.
This bill is a thinly veiled threat, an attempt by the Conservatives to intrude on and interfere with the Bank of Canada, an independent body. They are doing this for partisan and political purposes. They want to use the Office of the Auditor General for partisan purposes, in a thinly veiled threat to Canada's central bank.
This bill reeks of populism. I think it is pathetic that they are taking up hours of our time in Parliament to help give a Conservative Party leadership candidate some credibility on this issue.
Of course, from a libertarian or far-right economic perspective, the likes of which can be found in the ranks of the Conservative Party, no one blames anything on big business and the massive profits these companies are making. They think it is perfectly normal for the big oil companies and big grocery chains to profit off the pandemic, the crisis and the supply chain issues by unreasonably increasing prices at the expense of workers, the least fortunate and families that are struggling.
The Conservatives are leaning into right-wing populism and will never explain why billionaires should exist or why companies make billions of dollars at Canadians' expense. Instead, they blame the Bank of Canada.
I do not necessarily agree with dramatically raising interest rates as a way to fight inflation. It has tragic consequences for people who, for example, are already having trouble paying their mortgages and bills. That is one way to do it, but it is really not in the best interests of the poor, workers and the middle class. I will come back to that later if I have time.
They want to discredit Canada's central bank in order to give more credit to cryptocurrencies. I do not know whether anyone has been following what has been happening lately with the collapse of cryptocurrencies. They are not governed or controlled by anyone, and no one is accountable to anyone else.
Of course, cryptocurrencies are an unbridled capitalist's dream. I am not sure that this is the kind of society that we want to live in. I am not sure that we should be telling people to trust this virtual currency and that this is how the country's currency is going to be run from now on, because some shadowy forces are controlling the evil Bank of Canada and that this is not in everyone's best interests.
This is really a bill that is being used for partisan purposes, for the leadership race that is going on right now.
If we want to point the finger at those largely responsible for the current price increases, then we must not be afraid to look at the facts and see who exactly is lining their pockets right now at the expense of the average citizen.
The Association des distributeurs d'énergie du Québec recently published a chart to make comparisons between the number of cents in the price at the pump between 2008 and 2022, that is attributable to different factors. In 2008, the price of oil was 84¢, while it is at 91¢ this month, May 2022.
That is not a huge increase. Pollution pricing rose from 1¢ to 9¢. Taxes have gone up, but not that much, just from 45¢ to 60¢. The refining margin, in contrast, has gone up from 9¢ to 48¢. That is the biggest contributor to rising pump prices over the last 15 years, and it is profit for big corporations like Suncor and Imperial Oil, which made billions in profits in the first quarter of this year.
We have to be able to tell people the truth. We have to be able to tell them that there are solutions other than raising interest rates. The NDP has solutions to help people get through this crisis. Increase the GST tax credit, which helps hundreds of thousands of people in Quebec and across Canada, and increase the Canada child benefit, which is a good way to redistribute wealth.
We need to be able to tax these companies that are making billions of dollars in profits so that we can redistribute that money to the people who really need it, people who are suffering right now and struggling to pay their rent and buy groceries.
There are other solutions. I would point out that, in this morning's edition of Le Devoir, a dozen economists went over different ways we could be helping people, including regulating Airbnb rentals, lowering the cost of public transit, building massive numbers of social housing units and bringing in rent control. Not all of these measures would come from the federal government, but there are some excellent ideas and solutions.
What is currently before us is not only unnecessary, but also dangerous for our democratic institutions.
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- May/19/22 10:42:31 p.m.
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Mr. Chair, can the government instruct banks like First Nations Bank, TD Bank and Scotiabank to open branches in places like my riding?
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