Hon. Wilfred P. Moore:
Minister, thank you for being here. My questions pertain to Division 8 of the budget implementation act of 2016, respecting the Financial Administration Act. In particular, clause 182 provides a repeal of a section of the Financial Administration Act. I’ve been attempting, with the assistance and support of my colleague Senator Day and former colleagues Senator Murray and Senator Banks, to restore the requirement of the government to obtain the approval of Parliament to borrow money. I just want you to confirm that clause 182 of Division 8 does indeed do that.
Secondly, there are three exceptions to that, whereby the Governor-in-Council can authorize you to borrow money.
So I’d like you to confirm that the approval requirement is indeed being restored. I know some of these things were asked by members opposite in committee in the past, so what do these three exceptions permit you and your government to do?
Hon. William Morneau, P.C., M.P., Minister of Finance: Senator Moore, I’d like to start by thanking you. Really, this inclusion in our budget is about the efforts that you’ve made. It’s about the efforts that retired Senator Lowell Murray, retired Senator Tommy Banks and Senator Joe Day have made in order to clearly tell Canadians that we need to have a parliamentary authority for spending. So that’s an effort that you’ve taken on, and I’d like you to know that we’ve taken that seriously and believe that, first of all, you’re right, and your advocacy has made a real difference in helping people to understand this issue.
Some Hon. Senators: Hear, hear.
Mr. Morneau: We believe that this is important. We believe that we need to have the authority of Parliament in order to actually get the money required to run the government appropriately.
We did put in a clause that, as you said, enables us in times of emergency, in times of crisis, to have the authority. So that was a slight change that we believed was important in dealing with potential financial crises. Our view is that we’ve stayed very true to the objective and the spirit and the respect for Parliament that we should have by putting this into our Budget 2016. Again, I want to thank the members of this house who, frankly, have made that happen.
Senator Moore: Thank you, minister. During the Chrétien and Martin years, there was no need for a borrowing authority bill because we had balanced budgets. In 2007, with the omnibus bill, that requirement was taken out, so therefore there were no more borrowing authority bills.
When do you think we might see a borrowing authority bill, minister?
Hon. William Morneau, P.C., M.P., Minister of Finance: Well, thank you, senator. I have a hunch that’s a question about balanced budgets. So maybe I can talk a little bit about our strategy. We believe that in a time of low growth and a time of global challenge around growth, Canada is in a particularly strong fiscal position. We look at our balance sheet as a country and see that we have the lowest net debt to GDP of G7 countries. I periodically have people say, “But what about including the provinces?”
My response is that when you do the analysis, when you look at our net debt to GDP, when you include federal debt and you include provincial debt and you include the assets that we have in our pension plans, we are still the country among the G7 that has the best balance sheet. Our view is that in a time of low growth, we should be making investments that use that balance sheet to enable us to actually have a better future.
We have the additional advantage, right now, that interest rates are the lowest they’ve ever been. We’re in a historically low interest rate situation, and that has led us to say that we should be making investments right now to improve the long-term future of this country.
I can tell you it has been quite rewarding to travel around the world presenting our budget. I’ve had the opportunity now to go to Chicago, New York, Washington, London and Paris to talk about our budget, and we are receiving accolades from around the world for what we’re doing. The Financial Times called us a “glimmer of light.” The Wall Street Journal calls us the poster child for the IMF’s global growth strategy; and Christine Lagarde at the International Monetary Fund credits us with being a leader for using fiscal measures to grow the economy. The reason they’re saying these things is that the impact of monetary efforts at this stage is de minimis. It’s much more challenging based on where interest rates have gone.
That means fiscal measures are the right measures. That’s the strategy we’re trying to pursue on behalf of Canadians: to enhance our long-term productive growth by making investments today. We do want to do that, though, in a prudent way. We want to do that in a way that ensures that we can have that net debt-to- GDP ratio continue to go down over time. That is what we presented in our budget, and we believe we’re going to be able to continue to do that.
What we showed in our budget is that with the growth we expect, we can get into balance in about the five-year time frame. What we haven’t done is give an exact date, and the reason we haven’t done that is that we know those investments, which are necessary, will prove to be positive and enhance our growth rate, but we can’t state with any certainty exactly what that growth rate will go to over the course of that time period.
I will tell you that our aspiration is to make those investments, ensure our net debt to GDP goes down over time and get to a balanced budget so that we can be fiscally prudent for the long term.