44th Parl. 1st Sess.
June 6, 2023 10:00AM
Madam Speaker, unfortunately, I must rise today to talk about a crisis we are going to have to face in the medium term.
I am not talking about the fact that, right now, after eight years of this Prime Minister, nine out of 10 young people believe that they will never be able to buy a house. I am not talking about the fact that one out of every five Canadians are skipping meals because of the cost of food after eight years of this Prime Minister. I am also not talking about the fact that 1.5 million Canadians need to use food banks to be able to eat. I am not even talking about the fact that, after eight years of this Prime Minister, Canadians have to allocate 63% of their pre-tax income to pay their monthly housing costs. In Vancouver, they are using 98% of their pre-tax income.
That is not the crisis I am referring to. The crisis I am referring to is something no one is talking about, but that could explode if we do not change direction. The crisis is the following. When the government decided, in 2021 and 2022, to print $400 billion to finance excessive spending, one of the effects was to create inflation, which always happens when you print money. This also caused a huge bubble in our financial system, caused by the mortgage situation.
Huge numbers of Canadians took out mortgages because they were easily available and because of their artificially low cost. In fact, 38% of all current mortgages were taken out between January 2021 and June 2022. Almost 40% of all mortgage debt today dates from that 18-month period, because interest rates were extremely low. People decided to go to the bank, make changes to their mortgage and borrow huge amounts of money, because it cost almost nothing to borrow money from the bank.
The problem is that these mortgages have a five-year term. These high mortgages will all be renewed in 2026 and 2027, at a significantly higher interest rate. We are not talking about billions or tens of billions of dollars. We are talking about mortgages totalling hundreds of billions of dollars that will be renewed at a higher rate. Even the Bank of Canada acknowledged that it was a systemic risk, not only for people who took out mortgages, but also for the banks, which will probably have trouble getting their money back.
If families cannot pay the increased interest rates, what will they do? They will have to sell their homes. However, if everyone is selling their house at the same time and there are no families that can afford the increased interest rates, there will be sellers but no buyers. That could cause house prices to fall. We already have the largest housing bubble in the G7 and almost the largest in the world. What are we going to do about it?
We are stressing the importance of balancing the budget today precisely because that is a key element in avoiding this serious looming crisis. Even all the Liberal experts are saying it: deficits cause inflation. Inflation causes interest rates to rise. If we do not lower inflation rates over the next year, we will be unable to reduce interest rates in time to avoid a housing bubble in 2026 and 2027.
What we want is a government plan aimed at balancing the budget in order to reduce inflation and interest rates. I know that it is the Bank of Canada that sets interest rates, but the economic environment in which it makes these decisions is a determining factor.
If the government drives up inflation with inflationary deficits, the Bank of Canada will be forced to raise interest rates. Former minister of finance John Manley said that, when the Bank of Canada puts its foot on the brake, the government puts its foot on the inflation accelerator. We need to take our foot off the accelerator to reduce inflation and allow the Bank of Canada to reduce interest rates before the crisis hits. That is plain common sense. It is nothing new.
Deficits drive up inflation and interest rates. Balanced budgets reduce both. That is what we are going to do. We will put a ceiling on spending to eliminate deficits and waste in order to balance the budget, reduce inflation and allow all Canadians to continue paying their mortgage and keep their home.
We recommend that the government proceed with the utmost caution, and we are asking that it keep the promise it made six months ago to balance the budget in the medium term. As soon as the government does that, we will allow a vote and perhaps let this budget pass if the votes in the House permit it. It is just common sense. We will bring back common sense.
There is a crisis in this country, and the crisis is not just that 1.5 million people are eating at food banks or one in five are skipping meals because of the price of food. The crisis not just that a majority of Canadians now tell pollsters they are struggling to make ends meet or that even nine in 10 young people believe they will never afford a home. The crisis is not even that it takes 63% of average monthly income to make monthly payments on the average home, a record-smashing height. The crisis is not even that it now takes 98% of pre-tax income in Vancouver for the average family to pay a mortgage on the average house. Those things are all insane and unprecedented, but they are the reality after eight years.
The real crisis is that there is massive mortgage bubble that is ready to detonate in the years 2026 and 2027. Here is how this bubble occurred. Today, 38% of all mortgage debt was originated between January of 2021 and June of 2022, all when rates were at rock bottom because the government printed $400 billion of cash and pumped it into the financial system, causing it to be artificially abundant and artificially cheap. People took on mortgages they would otherwise not be able to afford. This inflated housing prices and mortgages together, but those mortgages come up for renewal five years later. That will be between January 1, 2026, and June of 2027. If interest rates are as high then as they are now, these people will run into a brick wall.
The Bank of Canada says that they will face a 40% increase in mortgage payments, so if their payment right now is $3,000, they will be paying an extra $1,300 a month, which equals almost $15,000 a year. If the average Canadian does not have more than $200 left at the end of each month, they will not be able to pay it. That will lead to mass selling and there will be no buyers because the buyers will not be able to pay the higher rates on those prices. That is a real crisis that we face if we do not change course immediately, so what must be done?
We need to reduce inflation so that the Bank of Canada can reduce interest rates. How do we do that? We do it by doing the opposite of what we are doing now. Even top Liberals, like former finance minister John Manley, have said that deficits are like putting the foot on the gas of inflation. What we need to do is take the foot off the gas to balance the budget, to reverse the $60 billion of inflationary spending that the government has put forward and to honour the promise the government made just six months ago to have a medium-term plan to balance the budget within a half decade.
If the government will do the common-sense thing, rise to its feet and present a plan to balance the budget, then Conservatives will allow a vote to occur. We know that the only way to rescue people from this crisis is through common sense: by balancing the budget to lower inflation and interest rates, bringing down the tax burden so that there are more powerful paycheques and allowing people to pay less and bring home more. This is just common sense. It is the common sense of the common people, united for our common home: their home, my home, our home. Let us bring it home.
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Madam Speaker, it plays strongly into the equation. That is why the fact that the government has had the slowest real per capita economic growth since the Great Depression is such a big problem, and debt actually drives down growth because it weighs down the economy.
As for the deficits of previous Conservative governments, the Mulroney government did not have any operating deficits. Its deficits were simply interest on the previous Trudeau government's debt. Of course, I am going to inherit the same kind of mess from his son.
Let me quote Stephen McNeil, former Liberal premier of Nova Scotia, “Happening on the inflation side, if governments both nationally continue to spend beyond their means, not spending for infrastructure, spending to pay the credit card of the government of today, they are going to continue to have inflation that continues to increase, which continues to put pressure on household budgets across country.... Number two, get your spending in order, we would all benefit from all governments being able to manage their own budget a lot....”
That is from a Liberal. Top, common-sense Liberals no longer recognize themselves in this radical, nonsense government. We need balanced budgets to lower inflation and interest rates so Canadians can keep their homes and build a life.
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Madam Speaker, we know that the Bloc Québécois wants to eliminate 100% of federal health transfers. With sovereignty, the Bloc wants Quebec to receive $0 for health care. I find it very strange and ironic that the Bloc would stand in the House of Commons to ask for more from Ottawa when its ultimate goal is to receive nothing. It makes no sense. We should not waste time talking about sovereignty.
Quebecers are struggling to pay their bills because of taxes and and the government’s inflationary deficits. What is the Bloc doing? They are asking for more debts, more spending, more taxes and inflation.
Only the Conservative Party has the plain common sense to control spending and balance the budget in order to reduce inflation, interest rates and taxes.
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Madam Speaker, we see the NDP socialist paradise playing itself out on the streets of Vancouver, where we have had, up until recently, a socialist government at the federal level, a socialist government at the provincial level and a socialist mayor, a former member of that caucus, at the municipal level, and what has it given?
It has caused tent cities, massive, raging crime and a situation where it now costs in the city of Vancouver 98% of the average person's family income to make monthly payments on a home. That is the paradise they have been promising. Utopia means “no place” in Greek. Actually, it means “no place” in English too.
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- Jun/6/23 2:20:46 p.m.
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Mr. Speaker, we learned today that David Johnston's report was not written by him alone, in other words, by a former family friend and member of the Trudeau Foundation. We learned that the assistant who wrote the report is a Liberal donor. On top of that, Mr. Johnston also hired Liberal and NDP consultants to help him with PR matters.
When will the Prime Minister finally put an end to this farce and launch a real public inquiry?
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- Jun/6/23 2:22:05 p.m.
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Mr. Speaker, Mr. Johnston was forced to remain behind a veil of ignorance. By his own admission today, he said that he was not aware of information that the former Conservative leader already knew about the government in Beijing spreading disinformation using state organs. This is on top of learning today that Mr. Johnston hired a lifelong Liberal donor who was at a fundraiser with the leader of the Liberal Party just two years ago.
In addition to other Liberal consultants and NDP strategists to do damage control, will we put an end to the act, fire this rapporteur and call a public inquiry now?
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- Jun/6/23 2:23:38 p.m.
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Mr. Speaker, that is another reason it is so tragic that the Prime Minister has destroyed the reputation of this man. By putting a former member of the Trudeau Foundation in this terrible position and surrounding him with Liberal staffers, Liberal donors and Liberal lawyers, he has ruined perceived objectivity and caused a conflict of interest, one that he could reverse at any time.
Why will the Prime Minister not put an end to the charade and launch a full public inquiry now?
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- Jun/6/23 2:24:58 p.m.
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Mr. Speaker, it is no longer just me who is pointing out that deficits cause inflation. It is the former Liberal finance minister John Manley, who said the government is putting its foot on the inflationary gas while the Bank of Canada is slamming its foot on the brakes by raising interest rates on Canadians. There are literally hundreds of thousands of families that took on big mortgages when interest rates were artificially low that will face massive increases in their monthly payments when they come up for renewal if the rates do not go back down.
Will the Prime Minister balance the budget to bring down inflation and interest rates so that Canadians can keep their homes?
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- Jun/6/23 2:26:47 p.m.
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Mr. Speaker, families are already dealing with austerity.
Speaking of cuts, parents are being forced to cut back on how much food they eat and on other needs for their family. What we are blocking is the $60‑billion inflationary deficit that is driving up the cost of living and the interest rates. Even the Minister of Finance admitted that deficits add fuel to the fire of inflation.
Will the Prime Minister finally listen to his own Minister of Finance and stop throwing that fuel on the fire of inflation for Canadians?
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- Jun/6/23 3:10:31 p.m.
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Mr. Speaker, several years ago, a group of shady consultants gave fake admission letters to mostly Punjabi students who came here in good faith to study and be part of the Canadian family. They came here. They followed the law. They studied. Many of them completed their programs. It was the incompetent Liberal government that had accepted the letters in the first place.
Now, the government is kicking them out of the country and sending them home to poverty and bankruptcy for their families.
Why will the government not reverse its incompetence and show a little bit of common sense and compassion? Why will it not halt the deportation and allow those who came here in good faith and are contributing to our economy to apply for permanent residency?
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