44th Parl. 1st Sess.
June 21, 2023 02:00PM
- Jun/21/23 6:23:26 p.m.
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Madam Speaker, my colleagues are applauding me because I am announcing that I will be sharing my time with the member for La Prairie, who is also my esteemed House leader.
Populism is proposing simplistic solutions to complex problems in order to pander to the population's most basic instincts. Today's motion is a good example of that. After giving an accurate picture of inflation, household debt and the housing crisis, the Conservatives are saying that the solution is simply to eliminate deficits. I guess that housing prices will then magically drop and households will have less debt. That is populist rhetoric.
Beyond the rhetoric, the motion asks only one thing, which is that “the House call on the government to table a plan to return to balanced budgets.” That is what we are voting on today, and the Bloc Québécois wholeheartedly supports that, because governing involves planning and forecasting. Bringing forward a plan to return to balanced budgets is the least that we can do. Had the motion called for approval of the rhetoric of the Conservatives or the Liberals, the Bloc Québécois would vote against it in either case.
Canada is going through a tough time right now. On the one hand, a spendthrift and unserious Prime Minister is spending lavishly on one-size-fits-all programs to promote his ideology rather than to meet immediate and real needs, including in areas that are outside federal jurisdiction. On the other hand, the populist and somewhat mean-spirited Conservative leader is proposing nothing except to get rid of the Liberals. His sound bites serve as economic policy, and his vision of the economy and the environment is stuck in the 20th century, the century of oil.
Between the two, there is the Bloc Québécois, which proposes tangible measures. It proposes flexible and targeted programs to meet people's real needs. These are much less costly and more effective programs than the current one-size-fits-all initiatives. It proposes to bring some order to how the government operates to end waste and the chronic inability to manage properly. This is all related to my question.
The Bloc proposes to end interference by having a government that uses its flexibility to address matters within its jurisdiction rather than increasing initiatives in areas that are not its responsibility. The Bloc proposes to end support for oil companies and shift that money to programs specifically designed to transition to renewable energy rather than remaining trapped any longer in the 20th century of oil.
The Bloc proposes a federal government that stops spreading itself too thin and focuses on its fundamental responsibilities, which are the following: stopping the erosion of purchasing power, especially for seniors; providing a level of health transfers that ensures the sustainability of public services; creating a Marshall plan for the construction of social and community housing; and ensuring we have employment insurance that works.
In short, we are proposing a real plan to balance the budget, which will strengthen the core responsibilities of the government and avoid the full-scale austerity that could risk plunging the economy into a recession. A plan to return to a balanced budget is necessary, especially since the government is increasing its initiatives in areas that are not within its jurisdiction, which causes tensions, boondoggles and costly duplication of efforts.
A study by the Centre of Excellence on the Canadian Federation, a research group at the Institute for Research on Public Policy, analyzed federal spending since 2015 and came to the following devastating conclusion on June 7, saying, “the current Liberal government has used federal funds to seek provincial engagement with its own social policy priorities....the current trend is toward a more directive and less collaborative use of the spending power....Partnership seems to be conditional on a province accepting the federal government's policy vision.”
A plan to re-establish balance is also a way to put an end to federal paternalism that uses its spending to impose its own political choices on Quebec.
Things have also been mismanaged. Every time Ottawa touches something, it ends up costing too much. Ley us take the gun registry fiasco. They spent $2 billion to maintain a list. At that price, Quebec could not afford to keep a registry of vehicle license plates. Managing employment insurance costs two and a half times more than managing social assistance. Ottawa's management of passport files costs four times as much as Quebec's management of drivers' licences.
That is another product of fiscal imbalance. Since Ottawa is collecting more taxes than it needs to meet its responsibilities, it does not need to be a good manager of public funds.
For the Bloc Québécois, a plan to re-establish balance means putting an end to waste. There is a way to manage the state a little more rigorously. That rigour will make it possible to avoid the austerity the Conservatives are inviting us to accept today in their speeches.
Historically, the biggest driver of price volatility has been oil prices. The best way to protect against this is to move to the post-oil period as soon as possible. Already, 98% of Quebec's electricity comes from renewable sources and is immune to oil prices. Oil and gas account for only 13% of home energy consumption. The rest is electricity or firewood. These are all energy sources that are not affected by oil prices.
The Quebec fleet is the most electrified in Canada. The network of charging stations in Quebec is the most developed. The price gap between electric vehicles and gas-powered vehicles is constantly shrinking. The sale of personal gas-powered vehicles will be banned in Quebec as of 2035.
We need to accelerate this shift. The best and cheapest way to do that is to redirect the money currently earmarked for modernizing the oil industry to clean energy. In the post-oil world, Quebec has everything it needs to be the most prosperous society on the planet.
Since the government has not taken any budgetary or legislative measures to address the sources of inflation, it is the Bank of Canada that has had to act with the monetary tool it has at its disposal: rising interest rates. Yet there are things the government could have done.
In order to provide relief for pensioners on a fixed income, the government should have increased old age security. The government increased OAS only for those aged 75 and up, leaving those between the ages of 65 and 74 to fend for themselves.
As we know, according to OECD estimates, the net pension replacement rate was 50.7% of pre-retirement income in Canada. In other words, the transition to retirement means a major drop in the average standard of living for Canadians and Quebeckers.
The average net pension replacement rate for OECD countries was 57.6% and the EU average was 63%, so Canada has a poor record in this regard, lagging far behind Italy, India, France and Denmark. We are doing only slightly better than the U.S., where inequality is skyrocketing. We need to take action. We need to better protect the standard of living of our seniors.
To reduce pressure on the cost of housing, the government needs to increase the supply of social and community housing. The current funding will not make up for two decades of underfunding and the resulting housing shortage.
To limit price increases on consumer goods, we need to improve competition laws. Last December, the Governor of the Bank of Canada told the Standing Committee on Finance that concentration in the food distribution sector and the lack of competition had led to the prices hikes we saw, which resulted in significantly higher profits for that sector, on the backs of consumers.
The competition regime needs to be reformed, particularly to slow down the trend towards concentration and the abuse of dominance that naturally ensues.
In the face of rising household debt, we need to regulate credit card fees, which are the costliest form of debt for heavily indebted households. The government's announcement in the last budget that it trusted credit card issuers to set and maintain reasonable fees is woefully inadequate.
In the face of supply chain problems, we need to make it easier to increase local production; support investments that help boost productivity to counter the adverse effects of higher interest rates on investments in production equipment; address the labour shortage, which is getting in the way of adjusting the supply to meet demand; encourage seniors to keep working by not penalizing them with GIS clawbacks; and make it easier to use temporary foreign workers in professions where there is a labour shortage by transferring management of the program to Quebec City, which is already doing the impact assessments that the federal government is asking business owners to do.
Those are some of the measures the government could take to address both the cause and effects of inflation.
Lastly, let us not forget the importance of seriously addressing the use of tax havens by major banks, multinationals, web giants and the wealthy. It is high time that this grossly unfair loophole was closed. It is immoral and we must make it illegal.
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- Jun/21/23 6:37:56 p.m.
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Madam Speaker, I will follow up on the fine speech by my colleague, who let the cat out of the bag: We will be voting in favour of this motion. The arguments contained in the motion, and I think that he elaborated on them, are obviously not to our liking. However, we agree with the conclusion: that “the House call on the government to table a plan to return to balanced budgets”.
When it comes to inflation and interest rates, things can get quite complicated. What better way to simplify issues than with populism and things that seem obvious to everyone, when they are actually not?
Why do we have inflation? Some will say that inflation is caused by government spending. I want to sound a note of caution, however. Inflation happens if the government spends money and if it creates deficits. Some people will therefore be tempted to say that deficits lead to inflation. That is not necessarily true. This is what is known in economics as the crowding-out effect, a term we do not often hear. It means that government deficits might not result in inflation because there is a crowding-out effect, meaning consumers save money to make up for the government deficit. The result is that there is no impact on inflation. The crowding-out effect may mean that there might be an impact on interest rates, however.
Why am I saying this? I am saying it because the thing is not so easy to understand. We could spend a long time discussing economic theories. Furthermore, some theories clash. Keynesianism is different from classical or neo-liberal economics, and so on. We have to be careful to avoid simplistic analyses or we run the risk of ignoring real solutions.
Is government spending to blame for the deficit? Is the Government of Canada responsible for global inflation? Did it ride around on a scooter, waving its arms, saying it was going to send us money and create inflation, before running away like Batman and Robin? The answer is no.
I just spelled it out in simple terms. The government is not to blame. The fault lies with the global pandemic, and with the fact that governments were forced to spend like never before in history. I never saw anything like it before. Governments were spending money hand over fist, like it was going out of style.
That is the reality. Faced with an extraordinary situation, we came up with what we believed were the best solutions at the time. That is why we have inflation. I have the figures. Inflation rose to 6.8% in 2022 and fell to 4.4% in June 2023. We can therefore agree that inflation was mainly caused by a pandemic.
Why is that? It is because we have economists who are monetarists. Monetarists believe that inflation is caused by printing money and that abundance reduces value. The more money is printed, the less that money is worth. This means that the value of money is eroded by inflation. That is the view of monetarists. A lot of people agree with this.
That is why it is the Bank of Canada that finds solutions to Canada's inflation. Our colleague, the leader of the official opposition, believes that it has fangs and prowls around at night, but in reality, the Bank of Canada is one of the most renowned banks in the world. When we travel abroad, for example to universities, we only have to mention the Bank of Canada and the audience applauds for half an hour. It is unbelievable. It is so renowned that the English decided that they wanted the Governor of the Bank of Canada for themselves. It is a little like Bedard in the world of hockey. He was that sought after.
I am just talking, but if members want to read something that is well done, they should read the Bank of Canada Review. It is well done. When they finish their university degree in economics, good economists often end up at the Bank of Canada—except for me, because I escaped. I was in the washroom when the recruiters came by. Some say that they are crazy, but they really do know their stuff. It is a renowned bank.
In 1991, they said that the only way to fight inflation effectively is to tweak interest rates. Starting in 1991, the Bank of Canada was the second bank, after New Zealand, to say that it would adjust interest rates to keep inflation between 1% and 3%. That worked beautifully until the pandemic hit. It was going so well. We were a model for the world. Now, with the increases, what did they do? They were forced to raise interest rates. It is a bit complicated.
When a government adjusts monetary policy and plays with interest rates, it takes 18 months for it to have an impact on the economy and 24 months for it to have an impact on inflation. This requires projecting two years in advance before starting to play with things. That is the reality. It is not easy.
Having said that, we could all go for a beer and tell ourselves that there is no point in us being here because the Bank of Canada manages inflation. Wait a minute. That is not true. There are things that the government can do.
First, the government can introduce well-defined policies. If wages are very high and workers are scarce, then perhaps workers could be found if the government offered tax exemptions to older people who want to go back to work. Is that complicated? A guy with glasses and a computer can do that.
No, the government would rather use the stick. They bleed dry seniors between the ages of 65 and 75 and hope that once they are at the end of their rope, they will surely want to go to work. No, that is not how to create jobs and ensure that these people can go to work.
Let us talk about housing. There is a lack of housing. It is a matter of supply and demand. We need more supply. The government needs to invest in housing. That is the smart way to fight inflation.
As for oil, we have been ripped off by shameless increases in the price of oil. Perhaps it is because we should be doing something other than burning oil. Perhaps we should be investing in the energy transition of oil companies.
With regard to productivity, we have to increase worker productivity without making more widgets. If we make more widgets, then there are more widgets on the market and the value of widgets will drop. This is not complicated.
People are wondering where I stand because I have not talked about it yet. The last part of the motion reads, “the House call on the government to table a plan to return to balanced budgets.” I would like to emphasize two things. We need restraint, not austerity. The government must stop wasting, stop encroaching on the jurisdictions of Quebec and the provinces, stop proposing one-size-fits-all measures, and stop giving money to oil companies because doing so is wrong. It has to get smart about its spending. That does not mean embracing austerity. Most of all, it must not achieve these things on the backs of Quebec and the provinces, or else services to the public will be disrupted. Most public services are delivered by Quebec and the provinces. The government must not try to rebalance its budget by cutting back on health transfers to the provinces like Jean Chrétien and Paul Martin did in the past. That must not happen.
There is something called the fiscal imbalance, which proves beyond a reasonable doubt that the needs are in Quebec City and in the provinces, and that the money is in Ottawa. This means that, even if the government remains virtually static, it will be so drowning in money thanks to the taxes it collects and the fact that it has few areas of responsibility that 40 years from now, in addition to not having a deficit, it will no longer have any debt, and some provinces will not even be solvent. They will be forced to start from scratch under another name. I do not know if they will, but they will no longer be solvent. There is a problem somewhere.
Some think that a plan to return to a balanced budget means austerity measures. That should not be the case. There is no reason why it should be, for the reasons I outlined. This government must become responsible in how it spends money. No one can claim that it is an example. I understand that the country has weathered the COVID‑19 pandemic, but after returning to normal, no one can say that it has been rigorous and intelligent in its spending choices.
I just mentioned some ways in which the government could have done better. Some people spoke earlier about how the government provides its services. Let us just say there is a lot of room for improvement. To impose a plan would make this government more serious, less frivolous and less careless.
The government needs to make do with the amount of money it has available. It must be intelligent. It must not cut transfers to the provinces, because they are the ones who deliver the most important services to the public. It must be preventive with regard to inflation, which is currently eroding the purchasing power of those least well-off. As I said, this government needs to have targeted, intelligent spending to protect people in need. Doubling the GST tax credit was the right thing to do. I applaud that. However, we also need to fight inflation intelligently, not in a populist way.
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