44th Parl. 1st Sess.
October 20, 2022 10:00AM
- Oct/20/22 12:36:07 p.m.
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Madam Speaker, I thank my colleague for his question.
As I said earlier, what is important now is to act quickly to fight the inflationary crisis, which is boosting interest rates.
Many people in my riding still heat their homes with propane. We need to act quickly for them, and that is the purpose of our motion today.
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- Oct/20/22 1:32:27 p.m.
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Madam Speaker, we have heard, time after time, Conservatives come forward and talk about inflation as though it is a specific problem only to Canada. They say that Liberals and the Canadian government created this inflationary problem, but the reality is that just about every developed country in the world followed a similar pattern with their monetary policy in order to support their populations during the global pandemic. If that Conservative member is saying that inflation is strictly a Canadian problem and that monetary policy in Canada is what led to inflation, he is essentially saying the same thing for every developed country in the world.
Is the Conservative Party basically saying that it is against the western world?
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- Oct/20/22 2:19:38 p.m.
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Mr. Speaker, this Prime Minister added $100 billion to our national debt before COVID‑19 and $500 billion to it before Russia's invasion of Ukraine. He doubled the national debt by adding more debt than all of the other Canadian prime ministers in the history of our country combined. All of that money is driving up the cost of the goods that we buy and the interest that we pay.
All of a sudden, today, the Minister of Finance has done a flip-flop by recognizing that these inflationary deficits are increasing the cost of living. How can we trust the people who caused inflation to reverse it?
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- Oct/20/22 2:21:01 p.m.
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Mr. Speaker, what a flip-flop. After adding $100 billion of new debt before the first case of COVID, half-a-trillion dollars of debt before the Russian invasion of Ukraine, doubling the debt, adding more debt than all other prime ministers combined, now the Prime Minister's government is saying that it is going to cut $9 billion and even bring in my “pay-as-you-go” law to find savings for every new dollar of spending. However, it now admits that deficits add fuel to the inflationary fire. Can we really trust the arsonists who lit the fire to put it out?
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- Oct/20/22 2:24:55 p.m.
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Mr. Speaker, now the member blames the war in Ukraine for inflation, when less than 0.3% of Canada's trade is with Russia and Ukraine combined. Furthermore, the very things that the Russians and Ukrainians produce, oil and agriculture, are abundant here at home if only the government would get out of the way and let our farmers and energy workers produce them. If we cannot do that we have bigger problems still.
It is time for the Liberals to actually take responsibility. A half-trillion dollars of inflationary deficits have made life more expensive and have been bone-crushing for our consumers. When will they reverse these inflationary policies?
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- Oct/20/22 3:52:01 p.m.
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Mr. Speaker, I am pleased to take part in today's debate because this directly affects Canadians. If there is one thing on the minds of every Canadian family from coast to coast to coast, from British Columbia, to Manitoba, to Quebec, to Newfoundland or the Far North, it is inflation.
Unfortunately, things are not really getting better. The most recent figures show inflation hovering around 7%. That means a 7% increase in the general cost of just about everything. The area where inflation is hitting the hardest, where it is most directly and acutely affecting every Canadian family, is the cost of food. If there is one part of the budget that cannot really be cut, it is food, because it is essential.
I am laughing, but I do not find it funny, because Canadian families are really struggling. According to the latest figures, food prices have risen by more than 11.4%. These are goods that are considered essential, such as cereal products, which have risen by 18%, coffee, by 16.4%, bread, a basic product, by 15%, and fresh fruit, by 13%. Even more dramatically, the price of pasta has risen by 36% and, for those who like it, peanut butter, by 42%. With a 42% increase, I doubt anyone will want to try it. The reality for all Canadians is that inflation is skyrocketing.
It is important to understand that one of the things that is driving food prices up is the cost of shipping. Food does not fall from the sky. It must be transported. As we know, most products are transported by truck, and most trucks run on gas. This Liberal government's carbon tax is taking its toll. If the Liberal carbon tax were having any impact on reducing greenhouse gas emissions, we could call it a success, but that is not the case. The government has never met any of its targets for combatting or reducing greenhouse gas emissions. It is not working.
It is now the end of October, and it is starting to get cold. The Canadian winter is coming. Everyone in Canada knows that we use more heat in winter. Fully 3.8 million Canadians, or one in 10, use propane or traditional fuels such as oil. This affects a lot of people. When transportation is directly involved, it impacts heating and food. That is why the government must implement good, positive and constructive measures to tackle the problem of inflation.
This government is a little bit difficult to follow. Being the finance minister is no small role, yet we are increasingly seeing the Deputy Prime Minister and Minister of Finance beginning to act as the prime minister, the foreign affairs minister, the natural resources minister and the environment minister. In short, she is taking on all the roles and speaking to groups all over the world. That is how the government finds out what its new finance policy is. Even worse, the finance minister is completely contradicting the government's record. Today, she stated that her government's policies have had an impact on inflation. Unfortunately, she is right about that.
It is unfortunate because we have been saying for years that the Liberal government's policies have fuelled the inflation that is now hitting Canadians. When members talk about inflation, they often say that it is affecting the whole world. However, I would point out that inflation does not happen overnight. There are situations that fuel inflation, and this government has been demonstrating that for seven years and one day. The election was seven years ago. That is when this government was elected.
Let us not forget the big campaign promise that the government made about public finances in 2015. It said it would run three modest deficits and then achieve a zero deficit in 2019. What actually happened during that first term? It was three major deficits, followed by a fourth deficit.
That is the track record of this government, which got elected by promising to run three small deficits and then a zero deficit. That did not happen. On the contrary, the government increased the debt by over $100 million.
When the pandemic hit, the government started handing out money like drinks at an open bar. We understand that crises can occur. When we were in office in 2008, we expected that there might be deficits but that they would only be temporary. Most importantly, in the wake of the 2008, 2009 and 2010 crisis, our government implemented a plan to balance the budget, and that plan worked. The fact remains that, in 2015, we were the first G7 country to get back on our feet after the financial crisis of 2008, 2009 and 2010. We led the pack in terms of countries that weathered the crisis best. Today, we are at the back of the pack when it comes to this government's management of the public purse.
The deficits the government ran because of the pandemic were to be expected, but that is not the case for the enormous deficits this government decided to rack up. It added $500 billion to the debt. Some will say that these deficits were due to the pandemic, but $200 billion of that amount was not COVID-19 related. We must therefore be wary when the Liberals say that the deficits are due to COVID-19, because that is not the case.
We can do a very detailed review of all the government's measures and its out-of-control spending. The latest financial disaster is ArriveCAN, a major hassle for just about everyone in Canada on top of not producing the desired results. We want to take a close look at why so many tens of millions of dollars were spent on something that never worked and could have been developed for a fraction of the price.
This government's track record includes over half a trillion dollars in accumulated debt. Of that, over $100 billion predates COVID‑19, and over $200 billion has nothing to do with COVID‑19. Now we have to deal with it.
What is the government's plan to try to curb inflation or reduce its impact on Canadians? Unfortunately, it does not have one. Worse still, it refuses to temper its greedy desire to raise taxes, which is the wrong thing to do. I realize that when inflation is high and taxes are kept at the same rate, it can be very profitable for a government. As people pay higher prices, the tax is obviously higher. The amount of money that the government takes in is much higher than it would normally be. While the government is lining its pockets, Canadians are having their pockets picked because of rampant inflation and a government that refuses to cut taxes.
There are two things that should be noted about this government. Personally, I like to compare myself to the best. Let us compare Canada's current Liberal government to the other G7 countries, which are the most industrialized countries, the best countries in the world. Unfortunately, the Canadian government is the only G7 government that has not cut taxes. The other six countries have done so.
Even the Prime Minister's close friend, President Biden, lowered certain taxes. Every country on the planet wanted to provide relief to taxpayers. Only Canadians, who are living under the yoke of this Liberal government, are not getting any relief. Canada is the only G7 country to have raised taxes on fuel, but this is not producing the desired results, in other words lowering greenhouse gas emissions. Worse yet, it is increasing the burden on the citizens.
That is the reason for today's runaway inflation, which is affecting the lives of every Canadian. When the price of traditional energy is directly affected, that directly affects the price of transportation, heating and food. These are necessities for Canadians, who live a big country and who need to eat, get around, and heat their homes. The government is maintaining the Liberal carbon tax and the planned increase on April 1, but that is not the right approach to solve the climate problems, much less to help Canadians who are dealing with the inflationary crisis that is hurting all families right now.
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- Oct/20/22 4:47:31 p.m.
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Madam Speaker, more than 50 countries, including those in Europe, which he referenced, have cut fuel taxes or have cut a tax during this period of inflationary pressure. When the government spends money on programs, some of those programs do not hit very many people at all, and that drives the cost of everything else up. We know that. Bank economists here have said that. Without vaporizing all of the money it is giving back to Canadians, on top of the money Canadians are not getting back when they pay more carbon taxes than they get back, it does not matter. It is fuelling an inflation crisis. Everybody knows it.
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- Oct/20/22 5:05:51 p.m.
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Madam Speaker, the current inflationary crisis is affecting everyone and putting millions of households in hopeless situations. Families must make agonizing choices to be able to continue making rent or mortgage payments. Many low-income Canadians are cutting back on food and going hungry. The same is true for many middle-class households that are heavily in debt. Such a huge increase in prices, especially for food, energy and housing, creates considerable hardship, and that is not something to take lightly. My thoughts are with the millions of seniors who were already struggling to make ends meet before prices started going up. They are now facing an impossible task, making choices or making cuts to their budgets.
The inflation crisis is one of the most worrisome issues in the world, and I commend those who are trying to address it and find solutions.
As members know, the current increase in prices we are experiencing is essentially a global phenomenon and analysts generally agree that the situation is primarily attributed to a decrease in aggregate supply. The supply chain problem led to a significant drop in supply. It is the same thing with the war in Ukraine. Crop failures due to droughts or floods are also reducing supply in the food sector. Labour shortages, which existed before the pandemic but have gotten worse since, are limiting business activity, leading to a decrease in total supply, and so on.
On the demand side, we have seen more of a change than a significant increase in demand. During the pandemic, people shifted their usual consumer choices to new sectors. Supply was unable to adapt quickly enough, so we saw new price increases and often shortages, resulting from the imbalance.
We are seeing the same type of imbalance in the real estate market, where the construction of new housing is insufficient to meet demand. Inflation in that sector is also being spurred by the labour shortage and the increase in the price of building materials, which is itself explained by the current inflationary situation and the change in consumer habits during the pandemic, not to mention the impact of the war.
Even though the central bank's injection of money into the economy and the government's support to maintain consumer spending during lockdown were more generous than necessary, because they were not always well targeted, the effect of those interventions on the increase in global demand and on prices is generally secondary. The government's actions are not the main reason for the global inflationary crisis.
Unfortunately for us, and especially for those impacted the most by the current rate of inflation, there is no simple solution to a decrease in aggregate supply. The best solution is to support businesses as they adapt to the new reality. It is a long and complicated process, but as I said, even if the effect is not felt immediately, it is the best solution.
For example, let us look at the labour shortage. The government could provide support for the automation of some economic activities. The government could also change the tax system to entice young retirees who want to remain in the labour market, perhaps with part-time work. The government could provide support for companies that invest in resilience, for example by making decisions that cut their energy consumption. The government could also do this for households, of course. That is the primary solution for addressing the supply side of the issue. Unfortunately, this government is doing very little about it.
It is said that the central bank is well positioned to use monetary policy to counter inflation. The Bank of Canada must ensure that the overall economy is in good shape. To that end, its main policy objective for the past 30 years has been to keep the average annual increase in prices within a range of 1% to 3%. As we know, we are well past the upper limit now.
Although the central bank is extremely well equipped to control inflation when the economy is overheating because of an increase in demand, the situation is very different in the event of a decrease in supply. That is because successively raising its key interest rate does not allow the central bank to influence supply. It simply reduces demand.
In other words, since production is insufficient to meet demand, equilibrium prices rise. All the Bank of Canada can do is lower demand to reduce the price increase. However, at the end of the day, there are not more goods and services available, only less room to manoeuvre and borrow to make consumption or investment choices.
The risk of such a monetary policy is that if we are not in an overheated situation when the policy is implemented, the central bank's action could also slow down the economy or even plunge it into recession.
Again, there is not much that either monetary or fiscal policy can do to respond to a supply crisis. These policies aim to reduce demand in order to lower prices, but they do not allow for increased production in the short term.
I want to reiterate that the best government policy is to support businesses and help them adapt and become more resilient in order to push supply back up, even though that does not happen automatically.
We should also take advantage of the current situation to accelerate the shift to a green economy. We can kill two birds with one stone. The government's response to the current crisis must be tied to the goal of reducing pollution.
I also want to reiterate that we need to avoid falling into the very tempting trap of responding to a decrease in supply by giving everyone money. That kind of policy may appear to meet people's needs, but it will quickly fuel inflation. It is therefore a futile, ineffective policy, especially if it drives society as a whole into debt. It is a good solution, but not for a supply-side crisis. In the same vein, the inflationary crisis should not be an excuse to shirk our much-needed climate change commitments.
I would like to remind the House that the federal carbon tax does not apply to Quebec, which has its own approach using a carbon exchange. I would also like to remind the House that very few households in Quebec heat with oil. They heat mainly with electricity, which is renewable.
Finally, let us not forget that the provinces, such as Newfoundland, are free to set up their own environmental plan and can choose to waive taxes on home heating fuel. Provinces like Newfoundland that are fortunate to have significant hydro power capacity can also offer incentives for people to switch from oil to electric heat.
Finally, with respect to the current inflationary crisis, again, there are no simple or easy solutions. We can help companies pivot. We also have a moral obligation to help the most vulnerable people and the hardest-hit sectors cope. Think of individuals and households with low incomes. Think of seniors who depend on small, non-indexed pensions. Think of sectors that are bearing the brunt of inflation, such as agriculture.
The European Central Bank's chief economist reminded us that a good way to fight inflation is to redistribute wealth rather than go into debt to support households and individuals. This means targeted measures for the less fortunate financed by a special tax on the wealthiest. Let us seriously consider that suggestion. The one thing we must not do is react to the crisis by once again abandoning our efforts to fight climate change.
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