Finance Committee on April 26th, 2012

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

And I agree—

[Kevin Page]

You'll also see declines in agriculture, energy, forestry, etc.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I'm sorry, Mr. Page. I only have a few minutes. I'm not trying to be rude. I understand. I'm just talking about commodities.

[Kevin Page]

I think it just a language issue. I think both what you're saying and—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I know language issues, but you said low prices and he said high prices. You've said you've upped it modestly, and that doesn't sound like it's the same.

I really want to get back to the Canadian Energy Research Institute, which has indicated there's going to be $218 billion in the next 25 years invested just in the oil sands. Did you consider these investments? I see Mr. Askari shaking his head.

Did you consider those investments when you did your outlook?

[Mostafa Askari, Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament]

Sir, when we do our projections, we don't go sector by sector, company by company. We provide—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I understand, but this is an independent not-for-profit institute. The Canadian Energy Research Institute indicates that $218 billion in the next 25 years actually equals another $8 in economic value, a third of it outside of Alberta. That's going to be $1,744 billion in the next 25 years—$1,744 billion—invested in economic value just in the oil sands itself, and $600 billion of that is going to be in other parts of Canada besides Alberta.

You haven't used that. It seems absolutely strange, because that is astronomical.

[Mostafa Askari]

As I said, sir, we don't go sector by sector because there could also be a reduction in other sectors. We don't do that. It's an aggregate forecast.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

The forecast methodology is another thing I want to talk about.

I looked at the 2011 report, the last one that you did, and you mentioned in there that for the first time you're using your own medium-term economic outlook. You said that previously, and I quote, “PBO had used the average forecasts from Finance Canada's survey of private sector economists to prepare its fiscal projections.”

Your projections are actually about 30% under the average projections of the private sector. No disrespect, but I invest a lot of money, and I would bet on their forecasts over yours, just because they have a hundred people who do what one of your people does—if I know the banks at all.

To be fair, I don't understand why you would change your forecast on that basis to be in essence pessimistic, as has been said; it is nowhere near the average of the private sector people who do this for a living and are very accurate.

[Kevin Page]

Sir, just to be short, we also do this for a living. We look at the average private sector forecast. We benchmark all the time against the average private sector forecast, including in our reports.

When we made the decision to move away from average private sector forecasts, we were looking at estimates for U.S. economic growth that were in the 3% range at that particular time. They have now come down, which is essentially closer to where we are, in the 2% to 2.2% range over the next three years. We thought that to get a balanced view forecast we had to make that decision at that time.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

But it doesn't seem balanced, because to me balanced seems average.

I do want to get back to this issue of the Canadian Energy Research Institute. I would like to have some information on why you didn't use it and if you could take those into consideration, because that is a lot of money.

If you haven't considered it in your projections, I would like to have paperwork that indicates it does. We don't have employees where we are, and to give this forecast to the government I think sends us and Canadians generally in the wrong direction.

Thank you.

[The Chair, Conservative, James Rajotte]

Please give a brief response.

[Mostafa Askari]

On whether we are more pessimistic, in fact the end point of the forecast, over the five years.... We are almost at the same point. It's the transition.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

It’s in the short term.

[Mostafa Askari]

So we are a little bit below the private sector in the short term—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thirty percent below.

[Mostafa Askari]

—but above the private sector by more than 30% over the medium term. In fact it is a profile. It's not that we are being more pessimistic; it's just that the profile is different.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Colleagues, I have a couple of items to deal with as business, so we are going to stop our session here.

We thank all our witnesses, Mr. Page and your colleagues, for coming in, for presenting to us, and responding to our questions.

Colleagues, I'll suspend for a couple of minutes, and then we'll resume.

[Proceedings continue in camera]