The Senate resolved into a Committee of the Whole on the subject matter of Bill C-30, An Act to amend the Income Tax Act (temporary enhancement to the Goods and Services Tax/Harmonized Sales Tax credit)

Senator Bellemare: Welcome, minister. We’re pleased to have you here with us.

Bill C-30 is obviously welcome, and I will vote to support it. I do think this is a bit of a weak measure, however, when you consider the significant increase in the cost of groceries and transportation, and the increase in government revenue from the GST. As you know, GST revenues have increased by almost 50% in one year. This increase is partly linked to inflation and represents roughly five times the cost of your bill.

Minister, has your department considered anti-inflation strategies targeted directly at prices, such as a temporary reduction in the GST and certain energy taxes?

France has experimented with similar kinds of measures and, according to its National Institute of Statistics and Economic Studies, they have had a meaningful and significant impact. France’s current inflation rate is 5%, not 8%.

In your opinion, should the federal government use such interim measures to reduce the rate of inflation caused by temporary problems in the supply chain?

Ms. Freeland: Thank you for your question, senator. I want to begin by saying thank you for your support of this bill. I also share your concern because, over the past few months, it’s been difficult for our government to strike a balance between compassionate support for those who need it the most and remaining fiscally responsible. We have kept that balance in mind during every decision we have made.

You asked me whether we had considered other potential measures to combat inflation.

In our view, the primary measure in our type of economy, in our institutional system to fight inflation, is the work of the Bank of Canada. Our government has great respect for the importance of the Bank of Canada. To help the Bank of Canada, we need to respect its institutional independence and demonstrate fiscal responsibility. That is the balance we have tried to strike, and we believe that in Canada, those are the most important tools that we can use.

Senator Bellemare: Of course, I understand your point of view, but lowering the GST would have reduced the rate of inflation and supported the work of the Bank of Canada. In this state of affairs, the economic costs of the current strategy to fight inflation could be high and there’s no guarantee that it will work. One thing is certain, the current monetary policy has cost 110,000 Canadians their jobs since August and EI costs will increase.

Will the federal government decide to start paying into the EI fund again as it did until the 1990s, especially since there may be a downturn on the horizon? Wouldn’t that be a fairer approach? At present, only employers and workers pay into the fund.

Ms. Freeland: Thank you for your question. I think that our EI program is a very important component of our support system for the most vulnerable and for all workers.

Given the uncertainty in the global economy, it is very important to have a solid and well-funded EI system. That is why our government doesn’t support lowering premiums. We believe that, at present, given the fragile global economy, which the managing director of the International Monetary Fund spoke about today, it’s important to have a well-funded EI system. You’re right. My colleague, Carla Qualtrough, spoke to the House of Commons about this today. We’re currently examining the EI system. We plan to modernize it, and I believe everyone supports that.