44th Parl. 1st Sess.
April 25, 2022 11:00AM
- Apr/25/22 12:30:29 p.m.
- Watch
Madam Speaker, I will be sharing my time with the member for Fleetwood—Port Kells.
I would like to focus my talk on the following important items in the budget.
The first is Canada's critical minerals and clean industrial strategies. In my view, this is, at the same time, the biggest opportunity and the most critical need for Canada today. Daniel Yergin is an economic historian and writer about whom Time magazine said, “If there's one man whose opinion matters more than any other on global energy markets, it's Daniel Yergin.” Mr. Yergin said in his latest book, “You're creating whole new supply chains that don't exist, and you're trying to do it in a very fast time. That means transitioning from Big Oil to Big Shovel.”
The second is launching a world-leading Canada growth fund with $15 billion, which will help attract $45 billion in private capital. We need to transform our economy at speed and at scale.
The third is creating a Canadian innovation and investment agency, a market-oriented agency, one with private sector leadership and expertise similar to those that have helped countries like Finland and Israel transform themselves into global innovation leaders.
The fourth is the review of tax support to R and D. The decades-old scientific research and experimental development program has been a cornerstone of Canada's innovation strategy, which provides tax incentives to encourage Canadian businesses of all sizes in all sectors to conduct R and D.
The fifth is cutting taxes for Canada's growing small businesses, enabling more small businesses to avail themselves of the reduced federal tax rate of 9% compared to the general federal corporate tax of 15%.
The sixth is supporting Canada's innovation clusters for innovation ecosystems for plant-based protein alternatives, ocean-based industries, advanced manufacturing, digital technologies and artificial intelligence.
Before I speak on these six items, I would like to recognize this budget as prudent and fiscally responsible. My personal political ideology is at the centre of the political spectrum, and for me being fiscally responsible is very important. I notice that our fiscal anchor, the debt-to-GDP ratio, is expected to fall to 45.1% this year, and go down to 41.5% by 2026-27, closer to the prepandemic levels. We need to go in this direction so that we have the same fiscal strength if we get hit by another disaster like the current pandemic.
Related to this is the composition of our borrowing. We had very low interest rates for a long period of time, and now they have started to trend upward. When the rates were low, our government locked in these interest rates with increasing the size of our long-term borrowing. In the decade prior to the pandemic, on average, about 20% of the bonds issued by the government were issued at maturities of 10 years or greater. Over the course of the last year, the federal government allocation of long-term bonds was about 45%, which is a good thing.
The third general observation about this budget is what I have been asking for a couple of years. I have been asking that we launch a comprehensive review of government programs. Some of the programs have been around for many years, and some were introduced in recent times as part of our urgent need to fight the pandemic. We need to evaluate if the programs are delivering what they were intended for. We need to know whether the objectives or the end results are still relevant and/or effective use of taxpayers' dollars. I have said that we need to repurpose or reallocate resources to programs that contribute to quality economic development. I am glad the budget announced the launch of a comprehensive strategic policy review to assess program effectiveness and to identify opportunities to save and reallocate resources to adapt government programs and operations to a new postpandemic reality.
Last, the budget dealt with housing, immigration, skills and child care. Yes, these are social policies, but what is just as important is that they are economic policies, too. I entered politics with three objectives. My first objective was affordable housing for all who need it. I am happy to note that the budget builds on the national housing strategy and addresses both affordable housing and housing affordability.
Now, I move on to development of critical minerals. As I said earlier, a big opportunity for Canada, and at the same time a critical necessity for Canada today, is developing and implementing critical minerals and clean industrial strategies. The global energy market is worth $10 trillion, and it is undergoing tremendous change. Many significant geopolitical events during the past 100 years were due to energy market considerations, so much so that some have said many countries' foreign policies are totally based on their energy policies.
Now, another dimension has been added. What was behind the scenes is now in the front. Energy is a national security issue for all countries. It is both an opportunity and a necessity for Canada to focus on the energy industry. The nature of the energy industry is changing. The transportation sector is going from gasoline-powered vehicles to battery-operated vehicles. Renewable energy sources, such as wind energy and solar energy, are not only becoming financially feasible on their own, but can enhance their standing with battery energy storage systems.
Right now, the battery industry is dominated by China. To secure continued availability of batteries in a future battery-dominated world, we need to have our own supply of batteries manufactured in Canada. We have one strong advantage that many countries do not have: We have the critical minerals required to manufacture batteries. Critical minerals are also central to major global industries such as green technology, health care, aerospace and computing. They are used in our phones, our computers and even our cars.
Critical minerals are already essential to the global economy and will be in even greater demand in the years to come. We are talking about nickel, lithium, cobalt, graphite, copper, rare earth elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, the platinum group of metals and uranium. Canada has an abundance of these valuable critical minerals, but we need to make significant investments to make the most of these resources.
A thousand-pound electric battery requires about 500,000 pounds of earth to be moved. As Daniel Yergin said, “You're creating whole new supply chains that don't exist, and you're trying to do it in a very fast time. That means transitioning from Big Oil to Big Shovel.”
In Canada, we have knowledge, expertise and a long track record of financing and developing mineral projects. We are indeed the world leaders, but we need to move fast now. We need to support the industry with incentives, which this budget proposes. More importantly, we should make the critical minerals regulation process simpler so companies seeking to invest look for a balanced and predictable regulatory environment and a collaborative approach among different orders of government. I am glad that the budget would make important investments in improving our regulatory processes.
I will touch on just one other aspect: the Canadian innovation and investment agency. Let us face the bitter truth about innovation in Canada. Our main innovation challenges are the low rate of private business investment in research and development, and the uptake of new technologies. These are key requirements for our knowledge-based quality economic growth and for creating very good-quality jobs. This agency is being modelled similar to those that have helped Finland and Israel transform themselves into global innovation leaders.
I look forward to hearing the questions.
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- Apr/25/22 12:45:57 p.m.
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Madam Speaker, the occasion to comment on the 2022 federal budget includes an opportunity not only to highlight certain aspects of the government's plan that people in Fleetwood—Port Kells and indeed right across Canada will find of great value, but also an opportunity to illustrate the budget as yet another sign of a choice Canadians have in their relationship with the federal government.
Prior to 2016, we had 50 years of social and economic ideology that counted a great deal on the free market lifting us to prosperity. The results, though, have been economic and social inequities and gaps that have become more deeply rooted.
The legislation our government has shepherded through Parliament, including our budgets, has sought to address the gaps that the free market cannot or will not address. These are economic gaps between those few who have the leverage to grow their wealth much faster and the rest of us, social gaps that threaten the well-being of too many marginalized people, and gaps in the security of achieving and maintaining a quality of life that those who work hard should reasonably expect in a nation as wealthy as ours.
The highlights of budget 2022 I will cover today are the ones chosen by independent third parties. It is all right for us, as government, to say that this or that is important, but it is really interesting to see what people at street level, and the commentators and observers, have to say. My own thoughts will focus on areas where perhaps the budget itself has been silent.
In the time available, I am going to concentrate only on the number one issue at home in Fleetwood—Port Kells: The budget's measures concerning housing.
Budget 2022 takes steps to return some semblance of equity for first-time homebuyers. Here is an area where the underregulated laissez-faire free market has left the dream of home ownership entirely out of reach for too many and has left some Canadians literally out in the cold.
The Edmonton accounting firm Hahn Lukey Houle highlighted the tax-free first home savings account, which would help first-time homebuyers save up to $40,000 to help with their down payment. Money going into the account would be tax-free and money taken out of the account to buy the home would be tax-free.
The market could not offer something like this. Only the government could do it, and this one is. The market has been unwilling or unable to deal with practices that disadvantage homebuyers and distort prices along the way.
The Vancouver legal firm Clark Wilson, the most named firm in rankings by the publication Business in Vancouver, highlighted the concept of a homebuyers' bill of rights in budget 2022. Over the next year, this bill of rights would put an end to blind bidding, where buyers have no idea what has been bid by others for a property. That is a key driver of higher housing prices.
Prospective buyers would have the right to get the property inspected. Too often, it is a corner now being cut by people forced to rush some kind of a home purchase. There would be more transparency on the sale price history of properties and a new disclosure agreement for real estate agents if they happened to be working both sides of a transaction.
The bill of rights could also include a requirement for lenders to offer a six-month deferral of mortgage payments when families experience a job loss or other major life event, such as a pandemic.
Most media outlets have identified the provision in budget 2022 of a two-year prohibition in Canada on the sale of non-recreational residential property to foreign commercial enterprises and people who are not Canadian citizens or permanent residents. Exemptions to this ban are expected to include refugees, individuals in Canada on work permits and international students who could be on the path to permanent residency. That last group has been identified by people I have spoken with as one that needs to be carefully monitored, because many believe the treatment of international students creates loopholes for foreign capital to buy up real estate.
Most commentators expected something on property flipping, and the budget delivered. Any individual selling a property that has been held for less than 12 months would be subject to full taxation on any profits as business income. The measure would apply to residential properties sold on or after January 1, 2023. There would be some exceptions to this for Canadians who sell their homes due to certain life events or hardship circumstances.
Another version of speculative trading in the Canadian housing market has to do with assignment sales. Those occur when someone reaches a deal to buy a housing unit that has not even been built yet and then flips the right to buy the unit for a profit. This can happen multiple times as a townhouse, condo or home is under construction, and each time, the ultimate cost goes up for the family who will eventually actually move in. GST will apply to all assignment sales of newly constructed or substantially renovated housing. That is going to happen very soon. It will be a week from Saturday, in fact, on May 7.
Storeys, a real estate news and industry publication, noted that the housing accelerator fund will apply $4 billion in 2022 to help municipalities speed up their development permit and approval process. I know this is a huge issue in Surrey, one of Canada's fastest-growing municipalities and soon British Columbia's biggest city, but the long lag to get construction approved by city hall is driving up the prices of finished homes because labour and material costs increase over time, especially during the long lag that it takes to get something built. Add the flipping and assignment sales and the development cost charges, and the cumulative impact on prices is significant.
I have heard stories too about another area that we really have to pay attention to. During the two weeks we had away from Parliament, I had a chance to touch base with a lot of people. I heard stories of people who leveraged the lift in their own home's value to qualify for another mortgage to buy a revenue property. Then, using the rise in that property's value, they got another mortgage for another property and so on. Is this actually going on? It would be worth finding out, because it sounds like the whole thing is a gigantic bubble, and if it pops due to mortgage rate increases, the banks could end up owning a lot of property.
Then there are trusts. The Globe and Mail, in an article focused on money laundering, noted the still unresolved issue of large, suspicious transfers between lawyers' trust accounts. These transfers are shielded from reporting requirements that are in place for banks, accountants, real estate companies and securities dealers. Even casinos have to report, but lawyers do not. In 2000, the federal government passed a law that allowed FINTRAC to carry out warrantless searches of law firms and seize materials. The Federation of Law Societies lawyered up, and by 2015 it was ultimately deemed unconstitutional by the Supreme Court, which told us to go back and improve the language. One would hope an improved version of that legislation is somewhere on someone's to-do list.
More broadly, trusts are perceived as offering perfectly legal loopholes to avoid taxes and obscure the real ownership of property. Watchers at street level say there is a fairness problem here. While budget 2022 aims to tackle the long-standing need to identify the beneficial ownership of real estate through a public registry, right now it is only going to apply to federally chartered companies. This is a good start, but for the provinces it is voluntary, a gap that knowledgeable people say needs to be closed.
Our government is attacking affordability issues that have been allowed to grow and mutate for decades. Fixing them is going to take time plus the talent and commitment to adjust and refine measures as we move forward. That said, all of us here should not underestimate the talent and commitment out there in the community to find ways around any step we take. This is more than a high finance or sound legal game of whack-a-mole. To the people faced with no prospect of qualifying for a mortgage, much less actually owning a home, this is not a game. It is in their interest that we get to the heart of a question our citizens ask at every election: What should government's role be when things are tilted against people?
Just over a year ago, former Bank of Canada and Bank of England governor Mark Carney spoke about what the role of government should be if Canadians believe in free enterprise but with a social conscience. Mr. Carney called our free markets “the most powerful instruments we’ve ever created. Their energy and dynamism can be...directed to serve great purposes, but the market is also indifferent to human suffering, and it can be blind to our greatest needs.” That's why politicians who worship the market tend to deliver policies that hurt people, and those who default to laissez-faire, or who leave the free market to its own devices, leave us unprepared for the future. Put simply, as he goes on, “Markets don’t have values, people do. And it’s our responsibility to close the gap between what we value and what the market prices. That’s the work of politics.” Or, in a view well represented in budget 2022, it should be and it will be.
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- Apr/25/22 2:26:46 p.m.
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Mr. Speaker, at a time when we are seeing in Canada incredible economic progress, in fact 110% beyond where we were at prepandemic levels; when we see our GDP exceeding where we were at prepandemic levels; and when we see the challenges that are faced by Canadians here in Canada and around the world, I would expect that in question period we would—
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- Apr/25/22 4:11:55 p.m.
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Madam Speaker, I would like to thank my colleague for his very interesting speech.
The Conservatives appear to be very concerned about inflation. There are all sorts of ways of countering inflation. One good way is to foster green financing. This is a factor that the Bloc Québécois has been looking into for several months, even years. Right now, as we speak, green financing is becoming key to a healthy economy.
I would like to hear how my colleague envisions green financing as a way to foster economic development geared toward protecting the environment and reducing greenhouse gas emissions.
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- Apr/25/22 5:00:28 p.m.
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Madam Speaker, I would first like to thank my colleague for sharing her time with me.
This year, I was fortunate enough to be one of the privileged members of Parliament who participated in an in camera review of the budget before other members and prior to the minister's speech. It was an opportunity for us to understand it and analyze it.
When I walked out of the room, a little earlier than expected, the first thing that came to my mind was that this was a missed opportunity. It is a missed opportunity to address real problems and, in the process, to create a sustainable economic recovery. Let me briefly go over the context in which this budget was tabled.
First of all, there is a labour shortage, a supply chain shortage, and a customer shortage, since people no longer want to return to performing arts venues, movie theatres and so on. The hospitality and tourism sector is still suffering, and I would remind members that the measures to help it will end next week.
Second, we have an inflationary context. Just this morning, the Governor of the Bank of Canada revised current and projected interest rates upward. Third, we are in a climate crisis.
Given these three overarching factors, the Bloc Québécois made five demands: higher health transfers, which my colleague talked about; a better standard of living for seniors; measures to fight inflation, including short-term protection measures; measures to encourage sustainable finance; and, lastly, indigenous housing. Of these five measures, only indigenous housing is in the budget. We are happy about that.
Unfortunately, none of the other four proposed measures wound up in the budget. My colleague did a great job describing the government's approach to the Canada health transfers and seniors' standard of living.
As for the fight against inflation, unfortunately, the budget contains very few measures to help people get through what is likely to be a longer period than expected, as the governor said this morning. In 2022, we are going to see high inflation.
Given the need for economic recovery and a green transition, I have to say again that this budget is a missed opportunity.
First of all, the budget proposes numerous measures for housing, especially for affordable housing. A few days ago, the Gatineau newspaper Le Droit reported that affordable housing means a one-bedroom apartment costing $1,950 a month. I wonder who here would agree that this is really what is needed. Imagine a single mother of three who does not want to transfer her children to another school and who is offered affordable housing at $1,950 for a one-bedroom unit. I think most of us would agree that this is not necessarily what will most help those suffering from inflation.
Second, the budget proposes dental coverage. Clearly, this encroaches on an area of provincial jurisdiction. As we keep saying over and over again, we do not want measures that encroach on provincial jurisdictions. It is also important to remember that the proposed coverage is meant to help children aged 12 and under, but Quebec already has a program that covers children aged 10 and under. We therefore thank the federal government for wanting to help 11- and 12-year-olds, but that is not exactly what we were asking for.
Finally, on the environment, the budget proposes some good measures, such as electric vehicles. At the same time, however, it is completely undoing its own environmental efforts, particularly by increasing funding for an extremely expensive technology that is not even proven: carbon capture and storage. If this technology were reflected in gas prices, the consumer price index I mentioned earlier would be even higher.
This response to the climate crisis is disappointing, especially since only a few days earlier, the government had approved the Bay du Nord project, which will involve the extraction of almost one billion barrels of oil over the next few years.
We expected a bit more ambition and vision in this budget. As far as the five Bloc measures are concerned, sustainable finance was not addressed either. There are very few measures in the budget.
Once again, we saw very little with regard to fighting inflation. There are several measures that could have been proposed to fight inflation, such as social housing instead of affordable housing, as I was saying, as well as measures to fight monopolies and cartels. We know that that helps boost consumer purchasing power.
The government could have brought in tangible measures to deal with the semiconductor shortage that has been mentioned and that is causing a major problem for the supply chain. As I was saying, there is a shortage of products in the supply chain.
The budget contains a lot of proposals about creating working groups and task forces, but it is weak on tangible action. The proposals in the budget are sorely lacking in vision in areas that are very important.
The proposed measures intrude considerably on provincial jurisdictions. In a nutshell, the federal government is putting money into areas where Quebec has already made investments. It is rather rich that the new areas in which the federal government is innovating with this budget, such as electric vehicles, dental insurance, or even the day care system that copies the Quebec model, are all already covered in Quebec. It is unbelievable that the budget proposes to interfere in provincial measures that already exist in Quebec. What this means is that Quebec is already doing quite well.
I have a question for the Quebeckers watching me today: Why are we still part of a country that is undermining us?
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- Apr/25/22 5:43:16 p.m.
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Mr. Speaker, the member, right off the top, mentioned build back better. I am wondering how long he has he been getting his talking points from the World Economic Forum.
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- Apr/25/22 5:54:06 p.m.
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Mr. Speaker, I really do believe there are a number of Conservatives who completely close their eyes when it comes to economic matters. Do they not realize when they talk about inflation that there are some things they need to factor in, such as that there is a war taking place in Ukraine and there is a world pandemic that has taken place over the last two-plus years?
If we look at the inflation rate in the U.S.A., it is higher than in Canada. If we look at the inflation rate in many of the European countries, it is higher than in Canada. Yes, as a government we have invested in the people of Canada. Yes, this is a budget that will ultimately provide hope and future jobs. By the way, when it comes to jobs, Canada again is ahead of the U.S. in regard to recuperating the jobs that were lost during the pandemic.
I am wondering if my friend would open his eyes and acknowledge that inflation is a concern, but we need to put it into a proper perspective.
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- Apr/25/22 6:09:57 p.m.
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Mr. Speaker, I listened attentively to the speech from my colleague from across the way, and she particularly talked about the debt-to-GDP ratio in Canada. I think what she misses is the bigger picture, and in the bigger picture we have the second lowest debt-to-GDP ratio among the G7 countries, at least for 2021. We have prepared ourselves in a way that allows us to benefit from the investments we made in Canadians during the pandemic by coming out stronger on the other end of the pandemic. We are seeing that with the levels of employment and we are seeing that with the economic growth in Canada.
I realize that Conservatives will quite often say, “Do not worry about what other countries are doing; just worry about what is happening in Canada.” The reality of this situation is that in a global economy and with a global market, where we are continually interchanging goods and services throughout the world, we cannot look at one country in isolation.
I am wondering this. Can the member at least comment on the fact that we do have the second-lowest debt-to-GDP ratio in the G7 countries, and does she think that is a good thing?
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