QUESTION PERIOD — Ministry of Finance
Economic Indicators
May 14, 2019
Thank you for joining us today, minister.
My question relates to Budget 2019 and, in particular, the relationship between running deficits and the decreasing debt-to-GDP ratio. As we all know, national debt is one of many factors used in determining a country’s economic health. Another is the debt-to-GDP ratio, and ours appears to be on a general trend toward decline.
Economists agree that a government that invests directly in its society and public infrastructure can lead to job creation, a higher standard of living and boosting economic growth. There are a few governments, including one in the G7 that I lived in for a while — Germany — where there is a constitutional debt brake and where economists and others are pushing to alleviate that so as to deal with crumbling infrastructure, a near zero interest rate and an economy that appears to be cooling.
My question is related to the decline in commodity prices and the turbulence in the global trading system. What is your prognostication? As you look ahead, what factors are you looking at as you try to determine the path of the Canadian economy?
That’s the hardest question yet. Senator, in a sense, you’re asking for a forecast. Maybe I can start by saying that the best I can do in terms of a topline forecast is to go back to what we did in our budget, which was to get a consensus view among private-sector economists. Of course, that isn’t the whole picture. The consensus view of private sector economists is that we will continue to grow, and we will find ourselves in relatively good company in terms of G7 growth patterns because of an expectation that we will be growing at or near the top of the G7 countries, which is positive.
But I think it’s incumbent upon us to ensure that continues to be the case. From our standpoint, what does that mean? It means we need to continue to make investments that will enable us to be successful and grow. We have been very clear that investing in Canadian success is important. We’ve focused on how we can ensure families are doing well, middle-class families in particular. The Canada child benefit has been an important measure that helped the overwhelming majority of families. That money going back into the economy was positive and helped us with the growth we saw in 2017.
We also need to be thinking long term, about laying down the path for long-term success. Infrastructure growth, as you point out, is critically important. In this year just passed, we made significant investments in infrastructure. When you look at both the investments that were shown, plus the amount we put into the municipal infrastructure top-up, it’s been around $15 billion in infrastructure investments during the course of the 2018-19 calendar year. Those are significant investments that will have a long-term impact on our ability to grow.
In our budget in 2019, we also thought about how we take from those infrastructure investments and think about how to deal with long-term challenges that we’re going to face. We thought about the infrastructure around high-speed Internet, as an example. We put together a plan where we can get all Canadians high-speed Internet between now and 2030.
We thought about how we can ensure Canadians continue to be successfully able to deal with a fast-changing economy. That involves long-term training approaches so people can train to have the skills required for a changing economy.
These are the things we think are the backbone of what will be a growing economy: infrastructure, the kind of things people need for digital economy and the way they build their skills for today and tomorrow. Put those things together, and we have a continuing ability to be successful for the long term.
We are also resilient enough to deal with what might be eventual challenges around the corner because of that low debt-to-GDP you mentioned. We are the country among the G7 countries with the lowest amount of debt to GDP. We continue to lower that amount of debt and invest it as a function of our economy each and every year. That makes us resilient in the face of challenges while we continue to invest in the things we think matter.
