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Decentralized Democracy

House Hansard - 108

44th Parl. 1st Sess.
October 5, 2022 02:00PM
Context: House Hansard - 108 - Oct/5/22
Ms. Nathalie Sinclair-Desgagné (Terrebonne, BQ)
Mr. Speaker, we are here to discuss Bill C‑253, an act to amend the Bank of Canada Act and to make consequential amendments to other acts, including the Auditor General Act. This bill seeks to ensure that the Auditor General of Canada and the auditor for the Bank of Canada have access to the Bank of Canada's operations. Basically, as the member for Carleton and others have suggested, this means that the Auditor General could conduct an audit of the money spent during the pandemic, for example, which actually came from money printing by the Bank of Canada. Essentially, the idea is to examine and evaluate Canadian monetary policy through an audit by the Auditor General. Since the Bloc Québécois will always respect Canadian institutions as long as Quebec is part of Canada, it should come as no surprise that we believe that the Bank of Canada should be totally independent. In my speech, I would like to add some qualifications to the Conservative Party's comments and also recall the importance of the Bank of Canada's independence. First, I would like to clarify some of the comments made by the member for Regina—Qu'Appelle, the sponsor of the bill. He said that the Bank of Canada is exempt from the Auditor General's oversight. I would like to qualify that. The Auditor General can review 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. I will start by saying that the Auditor General has access to a study on the structure of the Bank of Canada, the review of audits, certain records and so on. It is not the Auditor General's role to assess the quality of a policy, let alone the quality of monetary policy. It is very important to make that clear. Moreover, control measures are already in place for the Bank of Canada. I would like to list a few of them. Under the Bank of Canada Act, once a year, two independent firms are to audit the affairs of the bank simultaneously. The Minister of Finance has the authority to enlarge or extend the scope of the audit and to request special audits and reports. The point is, the Bank of Canada already has an accountability process; it is accountable to the government. The Bank of Canada also reports to the committee, and it is up to the committee to determine whether certain monetary policies are appropriate. I happened to be there when the Governor of the Bank of Canada appeared before the Standing Committee on Finance. Committees can call Bank of Canada governors and deputy governors to appear. They can review the bank's books and make recommendations in that respect. Committees can oversee internal and external audits. Lastly, they can review the adequacy of the bank's risk management, internal control and governance framework and its information communication. Clearly, the Bank of Canada already has an accountability process. The member for Regina—Qu'Appelle also suggested we should follow the example of our Commonwealth partners, such as the United Kingdom, Australia, and New Zealand. Taking a look at what is done in some of those countries, we note that the auditor general of New Zealand can indeed audit the central bank. However, the AG's role is to ensure that the financial statements are accurate and free of any errors. It is explicitly stated in the constraints placed on the auditor general that he or she cannot comment on the efficiency of the central bank. In Australia, the auditor general's objectives are to obtain reasonable assurances that the financial statements taken as a whole are free from significant anomalies, whether due to fraud or error, and to issue an auditor's report to confirm that. Once again, in these countries, whose example we should supposedly follow, the auditor general has no mandate to audit monetary policy. Things are a bit more complicated in the United Kingdom. We recognize that. The auditor general examines whether the Bank of England has a sufficiently ambitious strategy to develop appropriate efficient and cost-effective central services to help the bank deliver change and control costs. Once again, there is agreement that the auditor general does not make findings about the strategic objectives of the central bank. Consequently, an audit of a monetary policy would not be acceptable in any of these Commonwealth countries. There is no mention of issuing an opinion or criticizing a monetary policy. In short, in these three countries, the auditor general can audit the administrative integrity of the central bank, but not the effectiveness of its monetary policy. The Bloc Québécois does not oppose the idea of increasing accountability. On the contrary, it is something we frequently ask for and we are quite in favour of the idea of asking the central bank good questions especially at committee. However, the Bloc is opposed to this bill because it does not use the right means to attain its objective, which is to evaluate a monetary policy by having the Auditor General conduct an audit. That is not her function, nor is it the place for her to carry it out. I would now like to focus on the importance of the central bank's independence. I would never venture an opinion on monetary policy even if I were an economist. It is a very complex exercise that must be very nuanced. That is also the case for the independence of central banks. I would remind members that a central bank uses monetary policy to help establish price levels, for example. It has an impact on the level of employment in an economy. The central bank has a major impact on our economy. That said, the medium- and long-term stability objectives of a central bank are completely different from the objectives of a government that is elected for a maximum of four years. A government's objectives are short-term, in some cases more than others. Long-term stability is a different objective, and that is why a central bank must be completely independent from a government. The two have different objectives. One is aiming for long-term economic stability, while the other is likely to develop a budgetary policy that is shorter term. For example, when a central bank increases its key policy interest rate, that will affect the economy about 18 to 24 months later. I would remind members that we have a minority government with a potential lifespan of two more years. Therefore, at no time would the two objectives coincide. Developing a budgetary policy is completely different from developing a monetary policy, and that is why the central bank must remain independent. Without that independence, a government might choose a short-term monetary policy that is to its advantage, but that is not optimal in the long term. Central bank independence falls within a wide spectrum. There are as many degrees of central bank independence as there are central banks. However, I would like to talk about the good practices developed by the Organisation for Economic Co-operation and Development, which says, “Central banks hold considerable power in their countries' economies [as we know]. While their mandates vary, they generally aim to create the conditions for economic and financial stability. Their most important tools are monetary policies, which are decisions about the value of money. These include decisions about the amount of money in the economy and ways to keep inflation stable.” We agree that the central bank plays a tremendous role in keeping inflation stable and we agree that inflation is too high at the moment. The central bank set out to keep inflation at 2% and it had and agreement with the government on that. However, we know that the causes of inflation are much more complex than a monetary policy. In this case, there is indeed a shortage of labour, materials and semi-conductors. There are global supply chain problems. No central bank has managed to truly address the problem of inflation. In conclusion, I would like to cite my favourite economist, in other words my father. He says that a monetary policy is as complex as medicine. Economists are a bit like doctors. The difference is that doctors have seven billion patients to test a drug or new method on, while economists have just one economy. The central bank may make mistakes. It is the role of committees to look at its mistakes and ask questions. It is not for the Auditor General to do that. Independent institutions make for a healthy democracy.
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