Hon. Tony Loffreda: Honourable senators, I rise to draw your attention to the 25th International Metropolis Conference held in Berlin last month.

I was honoured to attend in a personal capacity this forum that reunited experts, policy-makers and business leaders to discuss issues related to migration, mobility, integration and inclusion.

Our very own Senator Omidvar was a keynote speaker. I was proud to join her for various events and workshops, and I must admit she was welcomed like a rock star in Germany. When Senator Omidvar spoke, people listened. Her expertise is second to none, and Canada is lucky to have her in the Senate.

For me, the conference was an opportunity to immerse myself more fully in matters of migration and integration. There are two things I took away from the conference. One was that Canada has a lot to share with our international counterparts in terms of best practices. Our immigration system is not perfect, but it’s still the envy of the world and we should be proud.

Two, the global competition to attract immigrants is on. Canada is in a good position because we’ve always been an attractive destination with successful integration policies. However, we need to accelerate; otherwise we risk losing ground to other nations.

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Canada’s prosperity will depend heavily on increased immigration. We need new Canadians to fill current and future labour shortages.

Immigration already accounts for almost 100% of Canada’s workforce growth.

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As our population ages and retires, this pool of talent will be front and centre as we grow our economy. Right now, about 6 in 10 immigrants are selected for their positive economic impact.

Inflation and labour shortages are top of mind these days, and there is a correlation between the two. Immigrants can help address these shortfalls. As the Century Initiative recently reported, “Growing our population through immigration contributes to a larger GDP” and could also increase GDP per capita if we adequately leverage the talent and skills of immigrants.

Honourable senators, “business as usual” is no longer acceptable. Our meetings in Berlin confirmed the urgency for Canada to do better and faster.

As the Century Initiative reminds us:

Canada is ranked as the world’s most accepting country towards immigrants, its policies to integrate migrants are considered among the best in the world, and immigration has widespread public and political support.

We must capitalize on this stellar reputation. Our economic prosperity literally relies on it. Thank you.

Hon. Tony Loffreda moved second reading of Bill C-30, An Act to amend the Income Tax Act (temporary enhancement to the Goods and Services Tax/Harmonized Sales Tax credit).

He said: Honourable senators, I rise today at second reading to speak to Bill C-30, the government’s proposed cost of living relief act, No. 1. I appreciate this opportunity to sponsor this bill in the Senate.

[Translation]

Bill C-30 is part of the government’s attempt to make life more affordable for low- and moderate-income Canadians who are grappling with inflation.

We all know that inflation is a big problem, both in Canada and around the world. It is a problem that I, like many senators, raised here and in committee time and again for over a year now.

Like Bill C-31, which seeks to establish a dental benefit and a one-time payment for rental housing, Bill C-30 is part of the government’s affordability plan. This plan consists of a series of measures that will cost $12.1 billion.

It also includes other measures, such as a new universal early learning and child care program, an increase to Old Age Security and climate action incentive payments.

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As stipulated by the government, this piece of legislation proposes to double the Goods and Services Tax/Harmonized Sales Tax credit, which I will refer to as the GST credit, for six months and deliver targeted support to Canadians who need it most. By way of background, the GST credit is a tax-free quarterly payment that helps people and families with low and modest income to offset the GST that they pay. Not all Canadians are eligible for this rebate. It is really targeted for those in greater need.

Indeed, there is a maximum income to be eligible for this benefit. I’ll run through some of the numbers to give you an idea: For example, for single individuals, the maximum income to be eligible is $49,166. For a couple without children, it’s $52,066. For a couple with two kids, it’s $58,506. A single parent or a couple, either married or common law, with four children is eligible for the rebate provided they do not make more than $64,946 a year. These income levels are for the 2021 base year.

In terms of how much money individuals and families will receive, this obviously depends on family size and income. For instance, from July 2022 to June 2023, eligible people, per quarter, can receive up to $467 for singles without children, $612 for married or common-law partners, and $612 for single parents, plus $161 for each child under the age of 19.

I ran through a lot of numbers there, but, just to give you an idea, the bulk of those who will benefit from this GST credit top‑up have family incomes between $20,000 to $40,000. In other words, a couple with two children and $35,000 net income could receive $1,401 between July 2022 and June 2023. This could certainly help families who are struggling with the higher costs of groceries, rent and energy.

Approximately 11 million Canadians who already receive the tax credit will benefit from this six-month top-up. This includes half of Canadian families and more than half of Canadian seniors. That’s very important — more than half of Canadian seniors will benefit.

According to the government, the price tag associated with Bill C-30 to double the GST credit is $2.5 billion. As the finance minister told us during our Committee of the Whole on October 6, the government was very careful and thoughtful in choosing this measure, striking a balance between compassionate support for those who need it most and remaining fiscally responsible.

Our Deputy Prime Minister recognizes that, at a time of elevated inflation, it’s really important for fiscal policy not to be at odds with monetary policy.

[Translation]

This brings me to my next point, namely inflation.

Some have argued that the government’s plan to make life more affordable, including this GST rebate, will contribute to the current inflationary pressure. Let’s be clear, any money injected into the economy can have an impact on inflation.

This rebate will probably not ease inflation, but I also don’t think it will put significant pressure on the economy.

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Of course, I think the current rate of inflation is seriously problematic and needs to be brought under control. We are already seeing early and positive results from the Bank of Canada’s recent interest rate hikes. The effects of interest rate hikes usually lag between 6 to 12 months. The economists in this chamber know that, but we’re seeing some encouraging signs. Inflation was at 8.6% in June; it dropped to 7.6% in July; and, again, in August, it reached 7%.

There is still some work to be done for to us reach our target of 1% to 3%, but we are slowly getting there. In fact, when the Parliamentary Budget Officer appeared before our Banking Committee a couple of weeks ago, I asked him if he thought the measures contained in Bill C-30 and Bill C-31 would put additional pressure on inflation. He explained to us that, in a $2.5-trillion economy, it’s not a significant amount of money. He said:

It will, of course, have an impact on inflation the moment the government injects money into the economy, be it through tax cuts or increases in spending, such as these measures. . . . but I don’t think it will be a measurable or significant impact on the economy . . . .

The six-month doubling of the GST credit in Bill C-30, along with the measures being debated in Bill C-31, amount to 0.1% of Canada’s GDP in additional costs. This amount is not insignificant, but it is a fraction of the country’s GDP. The material effects in terms of further fuelling inflation are microscopic.

Instead, there are other factors that have been contributing to the higher-than-usual inflation we are seeing. In my opinion, and that of many experts, inflation is mostly driven by supply-side challenges.

Of course, the war in Ukraine is also a contributing factor at the moment. Economists from the University of Calgary published a paper recently suggesting that supply-side forces are responsible for about 75% of driving costs.

Furthermore, I have always believed that inflation is driven by expectations, which can have a considerable effect on people’s behaviour. I cannot put it any more simply than this recent article in Forbes:

Rising inflation makes people believe that prices will rise again in the future, causing them to demand wage increases and not delay purchases. Meanwhile, businesses boost their prices to accommodate higher wages and demand, which drive up inflation.

Honourable senators, you may also have seen a paper in Policy Options last month that looked at the expansion of the GST credit proposed in Bill C-30. It’s a great article with lots of data, and I invite everybody to read it. Its conclusion is that the rebate is unlikely to fuel inflation.

As the authors point out, the GST credit top-up will be received by low- and modest-income households. These same households have less in savings to cover price increases from the same goods and services, unlike higher-income households which have reserves on which to draw. As they conclude, such spending would not represent new demand or increased inflationary pressures. Recipients of the top-up would simply be purchasing the same goods and services that have recently become more expensive. Because of that, I don’t believe this additional rebate will drive up further demand and exacerbate inflation. The top-up strikes a balance between providing help to those who need it most while not undermining efforts to bring inflation down.

Now, don’t get me wrong; I continue to believe that we need to address inflation, and I think it should be a priority, but I also feel this $2.5 billion measure is timely and necessary. I’m sure all honourable senators will agree with me that prosperous societies must let market mechanisms work themselves out, but they cannot let the more vulnerable be submerged by a tide of rising costs. Targeted and interim measures are smart, long-term economics.

We were reminded during our Committee of the Whole that the objective is for the top-up to be issued before the end of the year to current GST credit recipients through the existing GST credit system administered by the Canada Revenue Agency. As such, Canadians need to file their taxes in order to receive both the current GST credit and the additional payment proposed in Bill C-30. There is no need to apply for the additional benefit. It will be automatic.

For some Canadians, this method of payment may be more problematic because not every working-age Canadian files his or her taxes. Estimates vary, but in 2017 the Canada Revenue Agency estimated that the number of people who did not file tax returns was in excess of 10%. That number is way too high.

When the Auditor General appeared before our National Finance Committee on October 4, I explored with her the content of one of her most recent audits on hard-to-reach populations. Many of these individuals would likely benefit from the GST credit, but won’t receive it if they don’t file their taxes.

Myself and many senators brought this issue up during Committee of the Whole, and the minister recognized that more needs to be done to reach the most vulnerable. I was particularly struck by Senator Patterson’s comments about the non-filing rate in Nunavut. Clearly, the government needs to do a bit more work to have a clear understanding of the demographics and barriers impacting hard-to-reach populations so it can then tailor its outreach approaches in a responsive and effective manner.

It’s most unfortunate that many Canadians living in poverty may not receive this benefit because they have not filed their taxes.

[Translation]

If I may, I would like to say a few words about the government’s Gender-based Analysis Plus. I thank Senator Dupuis for raising the issue with the minister.

I believe that it is worth repeating what Minister Freeland told us in Committee of the Whole. She confirmed that this analysis was conducted on Bill C-30 and that its conclusions show that women, especially single mothers, will truly benefit from this tax credit and enhancement. She highlighted the fact that among seniors, there are more women than men. Statistics show that senior women are more likely to end up living in poverty.

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In conclusion, in my view, Bill C-30 is an appropriate answer to the current period of unusual and extraordinary economic challenges that many Canadians are facing. Like many of my honourable colleagues, I am concerned with the current state of our economy, our deficit, lack of productivity and slow growth.

The government, like most governments around the world, is looking to strike a balance between delivering support where and when it is needed most and maintaining the discipline that has given Canada a strong financial position in the G7.

Some may argue that the government isn’t going far enough, that some people are falling through the cracks or that these measures do nothing to address poverty. Others might argue that it’s too much and will have a negative impact on inflation. However, I recognize that governments need to make difficult decisions in difficult times, and I am satisfied with the content of this bill.

Personally, what I like about Bill C-30 is that it’s clear, simple and targeted. Throughout the pandemic, I often argued that we needed to have more targeted measures that addressed specific needs for specific segments of the population. We needed to be more agile, nimble and adaptive. This is a good example.

I also appreciate that this measure is temporary: It’s for six months only. The government can re-evaluate the situation later next year. I’m comfortable supporting this time-stamped transfer that is seriously needed right now.

I think the more than 11 million Canadians who will benefit from this six-month top-up will feel some relief, and hopefully it will make life a bit more affordable for them. Combined with other measures in the Affordability Plan, I think the government is on the right track.

I urge all honourable senators to support the swift passage of this bill so we can help make life affordable for those Canadians who need this support the most. They are counting on us. Thank you.

Hon. Leo Housakos: Thank you, Senator Loffreda, for your speech. I listened quite attentively, and it sounded pretty dire when we’re talking about essentially giving aid to 11 million Canadians because of rising costs. It is indeed a dire situation, despite what the government leader said earlier in an answer to a question about how the economy is so wonderful and how the government has done an outstanding job.

The reality is that we are in a country where we have the second-largest land mass in the world — yet rents are off the charts. Housing affordability is off the charts. We have agricultural capacity that is among the best in the world, yet our food costs — milk, bread — are exponentially growing. We have a need for energy, of course, to produce food at a decent cost, and energy prices are off the charts because we’re keeping our energy in the ground thanks to legislation like Bill C-69 and Bill C-48.

My question to you is the following: Nobody discredits the fact that we need to act urgently to help Canadians who are suffering. But what happens in six months if Royal Bank of Canada, or RBC, for example, is right in their prediction of a recession being around the corner? What happens if the Governor of the Bank of Canada finally wakes up and says inflation is the biggest challenge facing Canadians? What is going to happen six months from now when we face these dire realities? Are we going to come back with more aid or will we turn to quantitative economics, which clearly this government needs a lesson in? I know you understand it well.

How do we address the problem at its core? Six months from now, would you be willing to go back to the well to give maybe 15 million Canadians more help?

Senator Loffreda: Thank you for your question, Senator Housakos. It’s always interesting to hear your perspective.

I’ve said from the beginning that agility is so important. This is agile, targeted and necessary at this point in time. What we’ve seen so far during this pandemic is that it’s very hard to forecast and predict what’s going to happen in six months or what’s going to happen in a year. We have a war in Ukraine. We have so many issues going on. You discussed inflation, and I think it’s a debate that needs to be had. Inflation is always caused by excess liquidity, scarce resources and expectations.

I want to say “kudos” to Loblaws, who announced today that they are freezing prices on No Name products until January. I say that because you’re asking what happens in six months if this is still the situation. If more Canadian companies were to take action like Loblaws and freeze prices and lower expectations for increasing prices, I think we would come to easier solutions to this crisis, and it would be quicker to resolve inflation.

I’m looking at a great paper here from Professor Trevor Tombe of the University of Calgary, who attended one of our committee meetings. He appeared at a meeting of the Senate Committee on Banking, Commerce and the Economy on September 29, 2022, and he confirmed that 75% of rising inflation is supply driven, 15% is demand driven and the rest is miscellaneous. He confirmed in his paper, which I read thoroughly a few times:

We find that a clear majority of Canada’s high inflation is due to a small handful of items: energy, food, and home-ownership costs.

The home ownership affordability crisis is a major issue, and we’re seeing that increasing interest rates will help with home affordability. If you look at the numbers lately, that will help. We hope more companies will do like Loblaws and freeze prices. Kudos to Loblaws; I think they deserve a hand. Hopefully, within six months, we’ll have a better economy.

Yes, RBC was the first to predict a recession. But I’ll tell you one thing — I said then and I’ll say it again — economists are always right: There will be a recession. I’ve had economists tell me that there’s going to be a recession. Two years later, they call me and say, “I told you so.” And I say, “Yeah, but you told me that two years ago.” So there will be a recession. When will it be? Your guess is as good as mine.

With the situation we’re in now, with the pandemic behind us but the war in Ukraine, the scarce supply and the scarce resources, I think we need to find solutions. Again, kudos to Loblaws, who own Maxi and Provigo in my cherished province of Quebec. More businesses should do like Loblaws. Let’s cut the expectations for inflation. Let’s create policies. Let’s find solutions for scarce resources. If we do all that within six months, we won’t need additional aid. I hope it will be the case that we, in this chamber, look for solutions. Thank you.

Hon. Dennis Glen Patterson: Another question for Senator Loffreda. Thank you very much for acknowledging the significant number of Canadians who don’t file tax returns. My concern is about the 28.5% of Nunavut residents who — research has shown — don’t file tax returns and therefore will miss out on this important benefit, as well as the child tax credit.

It’s quite clear to me that one of the barriers to tax filing in Nunavut is the fact that the 85% Inuit population’s first language is neither French nor English, and tax forms are therefore unreadable and inaccessible. In the past, CRA — and you spoke of them today — has set up a capability within their department of Inuktitut-speaking personnel who not only did community outreach but were available for consultation in Inuktitut for residents who had tax filing questions. I’m wondering if you would use your good offices as sponsor of the bill to encourage CRA to once again address this issue. Thank you.

Senator Loffreda: Thank you for the question. I think it’s such an important issue, and this is why I quoted it in my speech and I thank you for raising that issue with the minister. Yes, I will gladly do so and will put pressure that it is done on a timely basis. It’s such an important issue, very important. As I said, 10% is way too high. If we look at Nunavut and those who don’t file taxes, it’s even higher.

It’s of concern to all of us, and I will use my office to put pressure on the minister and CRA to ascertain that problem is resolved on a timely basis. Thank you for the question.

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Hon. Marilou McPhedran: Thank you for this initiative and your explanation, Senator Loffreda. I would like to go into a little more detail, building on the question from Senator Patterson.

I think we all very much appreciate and believe your concern on the timeliness, but we saw with the series of payments during COVID that it was indeed the most vulnerable people who often waited the longest, and some never received what was supposed to be coming to them at all because of logistical challenges, shall we say.

It’s one thing for us to express concern. It’s another thing for a piece of legislation to demonstrate that there’s been learning from the problems in the very recent past. I haven’t heard any assurances to that regard. Can you speak to that, please?

Senator Loffreda: Thank you for the question. It’s a very important question. I raised the question in the Committee of the Whole and I raised it in the committee, and as a matter of fact, I don’t know of any progress that’s been made lately. CRA, like Minister Freeland, did express on numerous occasions that it was a question of timeliness, of simplicity — that vehicle was used because the data was there — to use CRA and to use the tax returns and filing. But I think it’s an issue that has to be tackled. If we have the problem today, it’s because the work — I always say, manage activities, you’ll get activities; manage results, you’ll get results. I was never strong on managing activities. I was always strong and wanted to manage results. The result today is that 10% of Canadians will not benefit from this tax credit. These are the Canadians who need it the most. Let’s manage the results going forward.

I also suggested in our National Finance Committee, in our Banking Committee that maybe it’s a study that has to be undertaken in the future as to what we could do better to ascertain that all Canadians can be identified. What has to be done? It’s not an answer I can give you in 30 seconds, but what I do promise is that I will put the necessary pressure that this situation be resolved in the future and a study hopefully be undertaken by one of our committees to see what else can be done to ascertain and identify that all Canadians in the future will benefit, and not as was the case, like you expressed, in the past. Thank you for your question.

[Translation]

Hon. Renée Dupuis: Would Senator Loffreda agree to answer a clarifying question?

Senator Loffreda: Yes.

Hon. Clément Gignac: Would Senator Loffreda take a question? Thank you for your insight on this issue. It’s always interesting to hear what you have to say.

There’s no doubt that we’re not all equal when it comes to inflation. It hits the poorest people the most, relatively speaking, compared to wealthier people. I agree with the comments made by the two senators who spoke before me. I’m a little surprised, despite the lessons we’ve learned from this pandemic, that the government was agile enough to respond in such a timely and effective way when it came time to bring in CERB. One could criticize the government, given that some people may have received it who perhaps shouldn’t have, but at least we were able to reach those who needed it the most, I think.

Statistics say, and you are right to mention it, that 11% of people don’t file tax returns, and our colleague, Senator Patterson, says it is about 28% in Nunavut. That troubles me. Yes, I will support this bill. I commend you for sponsoring it, but I just want to encourage you to pressure the government to find a solution.

When CERB was being delivered and time was of the essence, the government was certainly capable of doing things quickly. We are here on a Monday evening because time is of the essence and we need to move fast. We are taking a different route, and we may reach only a portion of the population in need. Thank you for your involvement, but I encourage you to use the necessary pressure.

Senator Loffreda: Thank you, Senator Gignac. It is always a pleasure to hear your perspective and answer your questions. As I have said several times, it is a very important aspect. One of our committees should carry out this study to determine how to identify the 11% who currently do not file tax returns.

I can say that tax returns are the best vehicle at present for reaching most of the Canadians who need this support. We must see what more we could do in future, and a study would be very much appreciated by everyone. I am looking at the chair of our Finance Committee, who says he agrees. It is a study that we should undertake with great seriousness in the future. Thank you for your question.

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