Senator Gignac: Thank you.

[English]

Senator Gignac: I don’t want to take up too much time here, since we’ll have a chance to talk about this some more. Senator Bellemare, I’d like to talk more about transparency. I find your approach to the Bank of Canada’s transparency a bit hardline. Sometimes there’s a difference between governance and transparency. In terms of governance, obviously it’s up to us as legislators and to the Department of Finance to determine the Bank of Canada’s mandate.

Regarding transparency, having spent decades running the show as a chief economist, I personally observed the evolution of transparency at the Bank of Canada. Nowadays, monetary policy reports come out every three months, and we even get things like meeting minutes. Even the International Monetary Fund said, last September, that the Bank of Canada sets a high benchmark for transparency and that its practices are broadly aligned with expanded and comprehensive practices as defined by the Central Bank Transparency Code.

Apart from the fact that the people at the table will disclose how they are voting, how will her permanent committee on monetary policy make everything more transparent than it is now? Senators will understand that a report on monetary policy is already published every three months and that there are speeches by the governor who comes to testify before the Standing Senate Committee on Banking. He also does the same in the House of Commons. Other than having external people who will disclose how they are voting, a bit like the federal reserve does right now, what more does your bill on the Bank of Canada’s transparency do?

Senator Bellemare: Thank you very much for your question. In fact, the International Monetary Fund has been publishing a very rigorous transparency code since 2020. The IMF has analyzed the Bank of Canada, and in its report, especially at the beginning, it applauds the bank — Yes, the bank is making efforts to communicate better. It communicates quite a bit with Canada and is transparent about its objectives. However, the International Monetary Fund also acknowledges that the bank could be more transparent in analyzing the results of its policy and in monitoring indicators.

That’s where I stand. I believe that monetary policy is not a one-size-fits-all relationship between interest rates and inflation. There is a whole range of opportunities and combinations, and there is also a set of strategies that could be adopted. I think it would be useful, even for the Bank of Canada, to measure the costs and benefits of its choices, to determine the financial impact on families and businesses, and to understand the consequences of all these decisions on investment and, ultimately, on productivity.

That’s where I’m at. I think the governor and his team are doing an incredible job of communicating. We see them everywhere, giving talks, producing documents. Do we know if the policy will really work, though? Doubts are setting in. I myself have doubts, but I don’t want to get into that because that’s not the purpose of my bill. The purpose of my bill is to make room for doubt and urge prudence.

I think doing this is in Canada’s interest. Canada is a great country, but it’s behind the times in many ways. Monetary policy is key to the country’s prosperity. We can’t let interest rates fluctuate wildly, just like people can’t take a small amount of blood pressure medication one day and a large amount the next. We have to be prudent.

That’s what the committee’s job would be. I wonder how people at the bank get any sleep the night before a policy rate announcement. I wouldn’t be able to sleep. As an economist who knows how the policy rate affects everyone’s lives, I think it’s far too great a responsibility to leave to one person. I think that a well-balanced committee would help a lot. It wouldn’t fix everything, but it would help.

[English]

Hon. Clément Gignac: I want to commend my colleague, Senator Bellemare, for her work on this bill. I know how motivated you are to protect the Bank of Canada’s independence and transparency. You know that I share your objectives. However, I’m wondering about the timing of your bill. Right now, every five years, the Department of Finance and the Bank of Canada sit down to review the bank’s mandate. Thanks to your intervention two years ago, which I applaud you for, the job market is briefly mentioned, not as much as you would have liked, but still.

Right now, the Bank of Canada is acting like a firefighter, as are many other central banks, to beat inflation, because the causes aren’t necessarily attributable to it. Don’t you think that launching a debate and sparking discussions in this regard at this stage — at a time when political leaders are prepared to show the current governor the door and when we are fighting hard against inflation, which is a major scourge affecting the most disadvantaged members of our society — rather than waiting three years might upset the financial markets? It will become political, and the independence of the Bank of Canada, which you and I both hold dear, will be called into question. The whole discussion surrounding the Bank of Canada will become political and politicized.

In your bill, you appoint six external members. As a result, the governor of the Bank of Canada and his two colleagues will be in the minority around the table. Since each member has an equal vote, only one third of the votes will go to the head of the Bank of Canada as opposed to the other six volunteers. Who will be flying the plane? Who will be accountable for the interest rate decisions that affect Canadians?

Senator Bellemare: Thank you, Senator Gignac. I understand your concern. You asked two questions. I think it’s too late to wait to better define the monetary policy framework. There are too many things to do. With that in mind, I think that the Senate is the best institution to begin wisely and carefully considering this issue. If we analyze a bill like this one, there is a lot less risk of things getting out of control than if we just asked the question more broadly. That is why I decided to choose specific aspects of the legislation to amend, to prevent a populist uprising or something of the sort. Australia has set up a panel of experts to make changes as part of a strict framework.

Your second question about the number of members on the monetary policy committee is a good one. I am open to discussion on that. This is the beginning of a negotiation. Perhaps the number is too high. Perhaps we should increase the number of deputy governors, or keep the number of deputy governors the way it is and have the six — I based the committee on the Australian model, but we could keep the six and add six or perhaps . . . In any case, that is something that could be considered in committee, to see what we come up with.

I am not worried about that. On the contrary, it may help us with our investments in the future.

Hon. Clément Gignac: I want to begin by commending my colleague for her speech. She did her homework and it is very impressive. She has some really good arguments. My instinct as a senator from Quebec and the son of a dairy farmer who comes from a rural area is to support the bill. However, if I put on my economist hat, I must admit that this bill makes me somewhat uneasy. I will no doubt ask you to convince me of some of your arguments in committee. The first thing that makes me uneasy about this bill is that it ties the Government of Quebec’s hands in the negotiation process.

You’re saying that Canadian taxpayers don’t subsidize this program, but the truth is that they pay more for their litre of milk and their dozen eggs than their neighbours south of the border do, and they have not been protected from inflation. The price of a dozen eggs went up by 16% in 2022, and the price of a litre of milk went up by 13%. The supply management system protects dairy farmers, but what do you have to say to Canadian consumers who are indirectly subsidizing our producers but were not protected from price hikes last year?

Senator Gerba: Thank you for your question, dear colleague. I’ll start by commenting on your statement about hands are tied and subsidies being given indirectly.

Nobody is being subsidized, and prices are very transparent. Producers set them in advance and disclose them well in advance. These prices have zero impact on inflation, and they are fair, set in advance and agreed to by all producers.

As I said in my speech, this system is not unique to Canada. Similar systems exist in all countries, and the WTO encourages states to protect certain essential sectors.

Therefore, my answer to your question is that we do not pay indirectly. We do not provide subsidies that cost taxpayers dearly. As in other countries, dairy producers disclose their prices well in advance. I hope I have answered your question.