Ottawa Journal (February 23 – February 27, 2021)
David Tilson, M.P.
Softening the Credit Crunch
The global financial crisis is hurting families and businesses in our community. People are worried about layoffs and companies are watching their sales fall. One key element in this decline is the lack of available financing in Canada. Canada’s Economic Action Plan is helping to free up more financing for Canadian families and businesses. By taking action to encourage lending between Canadian banks and helping more businesses get the financing they need, the effects of the global economic crisis are being lessened.
Financing is an essential part of life in Canada. It gives businesses the flexibility to buy equipment and expand operations. It helps families purchase vehicles and homes. Unfortunately, since the start of the global financial crisis, credit markets have become tighter as the available pool of resources has shrunk. This means that credit-worthy families and businesses have been unable to get financing for their large purchases. As a result, people are buying fewer cars and homes, and businesses are feeling the squeeze from lost revenue. In fact, the global economic problem began as a result of poor credit conditions when a number of US and UK banks collapsed under the strain of too much bad debt.
In Canada, our banks remain strong and effective, and have not had any of the problems of our foreign counterparts. In fact, many international experts cite Canada’s financial sector as the one the most sound in the world. However, credit markets are international and our banks depend on free-flowing international credit to do business. A tight international market has led to a tight domestic market.
Late last year, the Conservative government took action to give our banks some extra room to lend money by accelerating the transfer of up to $25 billion in mortgages and loans. This was a good start as it helped to hold off the effects of the global crisis in Canada for longer than many countries but it was inevitable that as our largest trading partner declined, we would feel the effects.
What is important to understand about these actions is that we were able to accomplish them without giving taxpayer money to the banks. On January 27th, Finance Minister Jim Flaherty introduced Canada’s Economic Action Plan. As part of that plan, we’re helping more families and businesses get the financing they need for big purchases. We’re providing additional support to small businesses through organizations and programs like Export Development Canada, the Business Development Bank of Canada and the Canada Small Business Financing program. We’re also helping more families get mortgages by expanding the Insured Mortgage Purchase Program.
Our Plan gives banks more flexibility to access cash from the credit market. By doing this banks are then able to lend more to Canadian families and businesses. As a result, Families and businesses can take advantage of low interest rates and make purchases that stimulate our economy. Canada’s Economic Action Plan is a coordinated strategy to strengthen our economy and get us back on track. The Plan provides further flexibility to banks while at the same time stimulating businesses and industries across the country that have been hit hard by the global downturn. It also provides more protection for workers who have been put at risk.
In the weeks ahead, I will continue to give you updates on our community’s economic recovery and how Canada’s Economic Action Plan is helping to ensure that Canada emerges from the global downturn stronger and more competitive than ever before.