Hon. Céline Hervieux-Payette: Honourable senators, my question is for the Leader of the Government in the Senate. Affecting humility, the Prime Minister told the nations of the world that Canada is a model of good management, but now Canadian economists are challenging his model.

Recently, two Bank of Montreal economists observed a contraction in the Canadian economy and suggested that the latest round of budget cuts could harm our faltering economy. Also, the Canadian Centre for Policy Alternatives estimated that 60,000 jobs could be lost because of the cuts, with the hardest-hit sectors being reserve housing, First Nations health care, support for low-income families and unemployed workers, and elder care.

How can the government tell the world that it is a model of good management practices when its actions have resulted in lower federal revenues and higher deficits, jeopardizing both the economy and the most vulnerable Canadians? How can the government call itself a model of good management when it has cut corporate taxes without investing in research and development, and it now plans to cut retirement pensions?

[English]

Hon. Marjory LeBreton (Leader of the Government): Honourable senators, we are very happy with the claim, however, it is not the government that is making the claim but the IMF and the OECD. It is bond-rating agencies that have made the claim about Canada’s superior-performing economy. I read the report this morning.

Senator Hervieux-Payette often gets up and reads into the record some report of some economist. Oftentimes, with the passing of time, these are just opinions of people who comment on any number of things the government does. Tomorrow in the paper perhaps there will be three or four reports of some other point of view.

What we are dealing with is an economy that has been applauded by the IMF and the OECD. This economy has created 610,000 new jobs since the economic global downturn in 2009. There are many positive things about our economy and our country. I leave it to the honourable senator to find two or three people who obviously have something gloomy to say and read it into the record.

[Translation]

Senator Hervieux-Payette: I would like to point out that my sources are economics experts. I do not think that Bank of Montreal economists would have released their findings unless they were very well informed about the situation. In his January 2012 report, the Governor of the Bank of Canada, Mr. Carney, noted an economic slowdown, and this government’s proposed measures will exacerbate that trend.

[English]

According to Statistics Canada, Canadians now have a debt-to-income ratio of 153 per cent. I am updating that number because it was 147 per cent before Christmas. The fact of the matter is that Canadians are getting more and more indebted by high-ratio mortgages.

As the leader knows, Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney have been warning for months that Canadians have been racking up more debt than they can sustain as a result of a long period of ultra-low interest rates. Of course, the U.S. will maintain those rates until 2014, so we can expect to be there also.

Furthermore, CMHC has recently issued a notice to banks and other lenders that it is nearing the limit on mortgage insurance it can offer them. They are almost at the top of what they can offer.

Will the government commit to tightening mortgage rules to reduce the increasing risk of mortgage defaults and the ease of access to credit that could jeopardize the Canadian financial system and also the economic situation of the Government of Canada?

Senator LeBreton: Absolutely, honourable senators. What the honourable senator stated about the Governor of the Bank of Canada and the Minister of Finance is exactly what they have been saying. They have been clearly speaking out about Canadians being overextended. Clearly, the mortgage rates have contributed to this. The honourable senator’s friends at the Bank of Montreal announced a couple of weeks ago with regard to mortgage rates. The government and the Minister of Finance have taken action. The minister has strengthened mortgage rules to protect Canadians from buying a home that they are not financially able to sustain.

I agree with the honourable senator that this is a concern. However, as anyone knows who has been watching the Minister of Finance for the last few months, he constantly is expressing his concern and taking actions to mitigate this problem. The Governor of the Bank of Canada has done likewise.

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We know that the global economy is very fragile. That is why we are still working on job-stimulus programs to keep Canadians working. We readily recognize and acknowledge all of these things. The government monitors them on a daily basis and has taken lots of actions to resolve the problem.

Senator Hervieux-Payette: The government made some modest steps in reducing amortization from 35 to 30 years — I think 25 years would be the standard for OECD countries — and also increasing to 5 per cent the minimum amount that people should put down to buy a house; in Europe it is 10 per cent.

I think we just have to adjust. This will take a little bit of courage on the part of the government, because this is one way of at least slowing down the increase in the indebtedness of Canadians.

Is the Leader willing to bring that to the cabinet table and ask them to act on this immediately?

Senator LeBreton: The Minister of Finance did reduce the mortgage life down to 30 years and ensured that people could not refinance more than 85 per cent of the value of the home. These are things that the Minister of Finance does on an ongoing basis.

I will be happy to give the Minister of Finance a copy of the honourable senator’s comments here in the Senate, but I will not be giving him anything that he does not already know and is not already looking to take action on.