Hon. Elizabeth Marshall: Honourable senators, I rise to speak to Bill C-30, which proposes to double the GST tax credit for six months to support those most affected by inflation.

The objective of the Bank of Canada, according to the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.” Last year, the Bank of Canada and the Government of Canada renewed their agreement on Canada’s monetary policy framework. The cornerstone of their agreement remains an inflation target of 2% inside a control range of 1% to 3%.

Inflation in Canada has been well above the 2% inflation target since April 2021. Inflation was 8.1% in June, 7.6% in July and 7% in August. The Bank of Canada has been raising its policy interest rate in an effort to bring inflation within the control range of 1% to 3%. It has raised interest rates five times this year to 3.25%.

Last month, in Halifax, the Governor of the Bank of Canada said that more interest rate hikes are necessary to bring inflation down. A sixth rate hike is due on October 26.

For those of us who renewed our mortgages at 22% in the 1980s, interest rates really aren’t that high yet. Having said that, high inflation is having a devastating effect on the majority of Canadians. One only has to speak with one’s neighbours to realize that many people are concerned, especially about the increasing cost of food, the heating of one’s home and the price of gasoline. The cost of groceries alone has increased over 10% in the past year, and the average family of four is spending over $1,200 more each year to put food on the table.

More Canadians are using food banks to help them feed their families, and there has been a significant increase in the number of people looking for meals at soup kitchens. There’s also concern that many people who are food insecure will not access food banks or soup kitchens, but will rather reduce the amount or quality of the food which they, their families and their children eat.

Given the increase in inflation, Bill C-30 attempts to provide some financial assistance to, as the minister said, “those who need it the most.”

I will support the bill, although I am disappointed that the bill was not referred to the Standing Senate Committee on National Finance for study. The Parliamentary Budget Officer did provide a legislative costing note on the proposed bill.

According to the Parliamentary Budget Officer, the estimated cost of this initiative is $2.6 billion, and 11.6 million beneficiaries will receive financial help under this initiative. Specifically, those with a family net income of less than $39,826 in 2021 will receive the maximum amount allowed, which is $467. Those with family net income above $39,826 in 2021 will see the amount of the benefit reduced as income increases. The full phasing out depends on family type. For example, it is fully phased out at $49,200 for a single person without children and at about $58,500 for a couple with two children.

It is important to note that the 11.6 million beneficiaries represent the number of families or households and not individuals, since the GST credit is a measure calculated at the nuclear family level.

Since there are 22,150,000 nuclear families in Canada, and 11.6 million of these will receive benefits under this program, approximately 53% of families in Canada will benefit from this program.

As discussed at the National Finance Committee two weeks ago, and as raised by several of my colleagues during Committee of the Whole with the minister, about 10% of Canadians do not file income tax returns and therefore may not receive the GST credit, although they would probably qualify. If this is correct, then more than 53% of households in Canada would benefit from this program.

I was surprised by the number of households benefiting from this program, as I thought it would be more around the 35% rate. In my opinion, our Finance Committee would have benefited from a study of this bill, especially me.

Once this bill is passed, inflation will continue into the future, raising the possibility of further financial assistance targeted to a specific group or groups. However, even the Minister of Finance said during Committee of the Whole that the government cannot compensate every single Canadian for increasing costs due to inflation.

While the government was able to help Canadians and businesses cope during the pandemic and are now helping some Canadians cope with high inflation, our next challenge is waiting around the corner. Many economists are now predicting a recession in Canada next year. In addition, last week, the International Monetary Fund, or IMF, said it expects a substantial further cooling of the Canadian economy, and advises the federal and provincial governments to refrain from spending windfall revenues as our country teeters on the edge of recession. Those are the IMF’s words, not mine.

In fact, government spending remains high and we have not reverted to pre-pandemic levels of spending.

The IMF is predicting that the Canadian economy will grow 1.5% in 2023, which is substantially lower than the 3.3% they predicted earlier this year. The IMF also said that the economic outlook for Canada could be substantially worse if inflation remains high and the Bank of Canada is forced to keep raising interest rates or if the country’s key trading partners, especially the U.S., fall into a deeper slump than anticipated.

There are already signs that inflation is now becoming embedded in the economy, and it is starting to show up in discussions in labour negotiations.

Of particular concern are rising interest rates intended to cool inflation. Canadians are the most highly indebted people in the world. If interest rates rise, so will the cost of their mortgages and other debts. Although the government intends to financially assist renters, it raises the question of financial assistance for homeowners whose homes are still mortgaged.

Homeowners who recently purchased their homes are likely to see the value of their homes decrease. Canada Mortgage and Housing Corporation expects national average housing prices to fall 15% by the second quarter of 2023 from the peak level of $770,000 earlier this year as the economy enters a recession by the end of the year. The 15% is a much bigger reduction than the 5% reduction they forecasted in July.

The cost of the government’s debt — now about $1.6 trillion — will also increase. While the Minister of Finance did say we have maintained our AAA credit rating, our high debt and rising interest rates elevate the uncertainty over our economy. In any event, we should be prepared for a shock-prone world.

In responding to the affordability of this initiative, the minister said that Canada has the lowest deficit and lowest net debt‑to‑GDP ratio in the G7. However, in the budget earlier this year, the government did announce some cost-saving or cost‑cutting measures which would help pay for this initiative.

There was a commitment to save $9 billion through a review of government programs, and the implementation — by next year — of a publicly available beneficial ownership registry intended to help the government track money laundering and tax evasion. Both of these initiatives would help fund the GST enhancement. An update on these initiatives would be appreciated.

In addition, many people are convinced that the government is not targeting tax evasion and offshore accounts as aggressively as it should, and that the tax gap is in the multi-billions of dollars. If the government were to focus more diligently on the tax gap and collect the revenues it is entitled to, the government’s bottom line would improve.

I hope that the government has the firepower to cope with the recession that awaits us around the corner.

My last comment is on the national child care strategy and how I see it relating to Bill C-30. The majority of people want to earn their own living and not be dependent on government handouts. In his legislative costing note, the Parliamentary Budget Officer identifies two groups with children that will benefit from Bill C-30 — one adult with children and two adults with children.

The lack of child care spaces, along with the shortage of child care workers, is affecting workers, especially women, who cannot find child care for their children. The national child care strategy is supposed to reduce fees, create 250,000 new child care spaces and recruit additional child care workers.

In speaking with parents of preschool children across the country — and I have spoken with parents in four different provinces — they have told me that some costs have been reduced, but the availability of spaces has actually deteriorated over the past year. There are simply not enough child care spaces or child care workers to meet the demand, and parents are unable to commit to full-time work. This problem deserves attention now as the successful implementation of the $30 billion child care strategy is at risk.

Honourable senators, these conclude my comments on Bill C-30.

[Translation]