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S'enregistrer au Flux RSS Le Sénat du Canada

Post under ‘Debt’ tag

What will the conservative government do to help canadians get out of debt?

7 October 2021 at 15h52

Hon. Céline Hervieux-Payette: Honourable senators, my question is for the Leader of the Government in the Senate. A recent report from the Certified General Accountants Association of Canada examining 20 OECD countries revealed that Canadians are deeper in debt than anyone else. Canada’s position is worse than that of the United States, the Czech Republic, and even Greece.

Contrary to what all those government-funded advertisements would have us believe, nothing is being done to change that trend and avoid a financial crisis here in Canada.

When will this Conservative government stop patting itself on the back and claiming that our country is leading the economic recovery, and admit that the measures it took in its stimulus budget only made things worse and created an unbelievable deficit?


Hon. Marjory LeBreton (Leader of the Government): Honourable senators, I hate to break the news to the honourable senator, but today the International Monetary Fund again reported that Canada leads the industrialized world in economic growth.

There is no question that personal household debt is a matter of concern to the government and to others. The state of the economy in the country shows that we are emerging from the economic recession better than any other country in the G7 although, as we have also pointed out, the recovery is fragile, and we are not immune to the instability that still threatens the global economy.

Many Canadians are still feeling the effects of the recession. That is why the government’s primary focus is the economy, jobs and creating an economic climate in this country that allows Canadians to work, save money and provide for their families. Obviously, we have some way to go yet, but we are still in the best position of any other country in the world.

Senator Hervieux-Payette: I guess there is only one way I can agree with the leader, and that is to say that we are indeed in a fragile situation.

Honourable senators, the figure that the Certified General Accountants Association of Canada provided as the total debt of Canadians was $41,740. In 2009, this amount represented a debt-to-income ratio of 144.4 per cent.

At the same time, the federal government bought roughly $70 billion worth of mortgages from Canadian banks, effectively wiping their books clean of possible toxic assets while, at the same time, failing to regulate the percentage rate of credit cards, something that even the United States did.

When will the government stop aiding big corporations and Canadian banks, and increasing their profits, while Canadians become buried under even more debt and their situation becomes more fragile as interest rates go up?

Senator LeBreton: Honourable senators, we clearly do not want Canadians to be overextended. Ensuring that individual Canadians and Canadian households make informed financial decisions is important and to prove that this is a priority of our government, let me put on the record a few of the things we have done. Obviously, the honourable senator is misinformed.

We set up an independent task force to work towards a national strategy on financial literacy. We introduced credit card reform to ensure Canadians have the information they need, and all payment networks, major credit card and debit card insurers and payment processors have adopted this code of conduct, in case the honourable senator had not noticed. We changed mortgage rules to protect Canadians when they buy their homes; we want to ensure appropriate and prudent lending by financial institutions. We have acted and, if necessary, will act again, to prevent lenders from facilitating unhealthy trends.


In 2008, we took pre-emptive steps to limit the kinds of excesses that caused trouble in other countries, including the percentage for a down payment when buying a home. We cut taxes. Total tax savings for a typical family is over $3,000. We also created the Tax-Free Savings Account, which has been used extensively by Canadians to save for their future.

Senator Hervieux-Payette: I have a correction, honourable senators. The new tax break is for people who have money to put aside. I am talking about those who are in debt, and I doubt they will be able to save $5,000 from money they do not have.

The leader has done nothing about credit card debt. The interest rate of many credit cards stands at 19.5 per cent. The interest rate charge on credit cards from the regular banks — I looked at this area recently and it was studied by our committee — is currently at 19.5 per cent. These rates are totally unacceptable. They are hurting Canadians and, as far as I am concerned, those with low and medium incomes are the ones affected. The government can offer all the tax credits it wants, but people need a decent income and they need to work. At the same time, people also need back-up from government policy and we are not seeing those policies.

Senator LeBreton: We do have these policies, honourable senators. As Senator Segal said many years ago, the best social policy is a job. We are working hard to focus on jobs and the economy. Reducing taxes for families does help. We have brought in many other measures, including the Child Tax Benefit, to help low-income families. The government has brought in many things, honourable senators.

We brought in a code of conduct on the use of credit cards. Unfortunately, we see situations where people — have experienced difficulty as a result of activities that they were not responsible for. We saw that situation in the United States. We are doing everything we can to assist these people through many programs of government. We are trying to create a climate with our manufacturers, our industries and our businesses, by keeping taxes low, so that they will be in a position to expand their businesses, and bring in new equipment, increase their productivity, hire more Canadians to work and, therefore, help our economy in the long run.

Canadian Mortgage Crisis?

21 April 2021 at 09h59

Yesterday, I questioned the Leader of the Government in the Senate about the looming mortgage crisis in Canada. Please find attached the transcript of my questions and her answers.


Hon. Céline Hervieux-Payette: Honourable senators, my question is for the Leader of the Government in the Senate. Canadians’ ratio of debt to net income now sits at approximately 146 per cent. This figure clearly indicates that we are headed towards a financial crisis that could equal the 2008 crisis in the U.S.

New mortgage rules announced by the Minister of Finance, Jim Flaherty, went into effect yesterday in order to reduce the number of Canadians tempted by low interest rates and rising housing prices and who commit to a mortgage that they may no longer have the means to pay should interest rates increase.

The Conservative government has attempted on a number of occasions to persuade the Canadian public, wrongly, that the housing bubble was not about to burst and has made no tangible efforts to prevent Canadians from going into debt in such a volatile area. What additional measures has this government taken to force financial institutions to exercise more caution when providing mortgages guaranteed by the government?



Hon. Marjory LeBreton (Leader of the Government): The honourable senator underscored in her question the problem that the government acknowledged. Changes were made to avoid a situation like that which occurred in the United States with regard to the mortgage market and problems created by people taking on mortgages they could not afford, thereby starting the whole financial meltdown.

The government has taken a number of measures to help consumers, as the honourable senator knows. These include protecting consumers in regard to debit and credit cards.

There are many suggestions as to how government can encourage banks and consumers to be more fiscally responsible. However, we live in a free economy, honourable senators. The government has taken measures in the banking and mortgage industries over the last two years, culminating in the changes that came into effect yesterday.

Based on reports I have seen, experts do not believe Canada is yet in a position — and hopefully never will be, as was the case in the United States — where people are so overextended that they cannot afford to pay their bills to keep themselves in the homes they have purchased.

Senator Hervieux-Payette: Honourable senators, I wish to salute our colleague, Senator Pierrette Ringuette, for the work she has done on credit cards. I am happy the minister recognized this work and made some changes. It is a good step in the right direction.

However, in his 51-page report, Alexandre Pestov, of the Schulich School of Business, said:

According to the CMHC financial statements, the corporation has only $8 billion equity backing $200 billion in assets. Once defaults rise, the Canadian government will have no choice, but to bail out CMHC. The scale of bailout will likely dwarf all other financial emergency responses done by the Canadian government in the history of Canada. Higher national debt, increased taxes and reduced social services will be the direct result of the Harper government’s intervention to maintain an illusion of the Canadian housing market health.

What steps will this government take to prevent CMHC from the need to be bailed out with the hard-earned money of Canadian taxpayers once mortgage rates start to increase and Canadians default on their mortgage payments?

Senator LeBreton: The honourable senator is reading the opinion of one person that is not shared by others. She is running around like Henny Penny crying that the sky is falling. Other experts believe that, although there is concern, Canada is in no way in the same position as was the United States. The Department of Finance Canada and the minister will closely monitor the situation.

To go as far as to say it will be necessary to bail out CMHC is the opinion of one particular individual quoted by the honourable senator. I will refer the statement to the Ministry of Finance and ask if they wish to comment on it. I will be happy to table their reply as a delayed answer.



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