Government Operations Committee on May 13th, 2008

[The Chair, Liberal, Diane Marleau]

We have a quorum, so we will call the meeting to order.

We have before us Mr. Jacques Sabourin, who is replacing Mr. Young from the Library of Parliament. Mr. Young, for health reasons, hasn't been able to attend.

With Mr. Sabourin is Mr. Kevin Page, the new parliamentary budget officer. This is a new position that's been created to help the members of Parliament, committees--maybe this committee more than many, I would like to think--to understand and to have some continuity, because it can be difficult, especially when the committees change quite often.

We're very pleased that you're here, and welcome.

I'm going to start with Monsieur Sabourin for a few minutes and then Mr. Page.

You've been before a few other committees before--you're almost a veteran, although you've only been in your job for about a month--so we're not too worried about your knowing what to do.

Monsieur Sabourin.

[Jacques Sabourin, Acting Director General, Parliamentary Information and Research Service, Library of Parliament]

Madam chair, members of the committee, thank you very much. Ms. Marleau has informed you that Mr. Young is unable to be here, as he is ill. He sends his regrets.

However, given your interest and because of the specific reason for this meeting, Mr. Young thought we should proceed as planned so that you can initiate a dialogue with the new parliamentary budget officer.

Mr. Young has asked me to make a few very brief opening remarks. I will then hand the floor over to my colleague, Mr. Kevin Page.

I welcome the opportunity to appear before the Standing Committee on Government Operations and Estimates. As you mentioned, I am here today with Kevin Page, Canada's first Parliamentary Budget Officer.

As you are aware, Parliament legislated these new functions, creating an officer of the Library of Parliament—a position that would operate within the Library's established mandate of providing authoritative, reliable, non-partisan and independent knowledge and information to parliamentarians.

For the Library of Parliament, and we think for you as parliamentarians, the creation of a parliamentary budget officer constitutes a significant initiative to strengthen Parliament's ability to hold the government to account. As the oversight committee for government operations and supply, we believe you can play an important role in making the parliamentary budget officer an effective instrument for Parliament, one that complements, not competes with, the work and resources currently available to improve parliamentarians' understanding of the fiscal position of the government.

What is fundamentally important is that the parliamentary budget officer add value to your work. As such, we know we would benefit greatly from your insights as we begin implementing new services through the PBO.

In fact, I might suggest exploring a consultative approach as a vital part of the Library's efforts to shape these new functions to serve parliamentarians effectively.

An ongoing, informal dialogue with members will help us deal with the questions that will certainly arise as statutory provisions are interpreted and given life through the delivery of this new service. What are the specific needs and requirements of parliamentarians? How should priorities be set in the face of competing demands? Who better to answer these questions than the clients of these services? I hope you agree.

Kevin Page, the man who took on the formidable challenge of being Canada's first parliamentary budget officer, started work with the Library of Parliament just after Easter. For those of you who may not have seen his curriculum vitae, I believe copies are available.

Kevin is one of a very few individuals with experience working on relevant fiscal forecasting and policy and expenditure portfolios within all three central economic agencies. His broad perspective will be of tremendous value to parliamentarians, and certainly, if required, to the Standing Committee on Government Operations and Estimates.

As you will see, Kevin is a “people person” with a good sense of humour and a great reputation.

I am told that his phone is already ringing off the hook with calls from skilled professionals who want to work with him. This is great news for Parliament.

It is also a huge opportunity for us to build the Library's research capacity and add value to the services that we already provide to parliamentarians.

Thank you for the invitation to appear before you this morning.

I will now hand the floor over to my colleague, Kevin Page.

[The Chair, Liberal, Diane Marleau]

Before you start, Mr. Page, I want to say, as a long-time parliamentarian, that I know the very valuable services the Library of Parliament offers parliamentarians. I want to thank you for that. I'm sure that the other parliamentarians here will join me in this thanks. We know you're independent, and as much as possible...as fair, and the information we get from you is quite valuable. Thank you.

Go ahead, Mr. Page.

[Kevin Page, Parliamentary Budget Officer, Library of Parliament]

Madam Chair and members of the committee, thank you for giving me the opportunity to speak to you today.

I would also like to thank the parliamentary librarian, who is ill today, Mr. William Young, for all his efforts in implementing this position to increase the Library of Parliament's capacity to serve Parliament, and also Mr. Allan Darling, a retired senior public servant who worked diligently with the parliamentary librarian to make this position a reality.

In my opening remarks, I would like to take the opportunity to tell you how I will approach the work of the Parliamentary Budget Officer. I have four messages. They are the same basic messages I delivered in recent weeks to the Joint Committee of the Library of Parliament, the National Finance Committee in the Senate, and the House of Commons Public Accounts Committee.

I have four messages for you today. First, it is an honour and a privilege to serve Parliament. Second, we have an important and timely opportunity to move forward on the role of the parliamentary budget officer. Third, the building process will take time. And fourth, today marks an important but early step in the consultation process.

I am honoured to be Canada's first parliamentary budget officer and to be an independent officer within the Library of Parliament, an institution, as Madam Chair has noted, with a long and prestigious history in Canada and a tradition of providing objective, non-partisan analysis and advice to Parliament.

It is important that the parliamentarians be comfortable with me as their Parliamentary Budget Officer. Trust must be supported by unbiased and professional advice for me to be an effective servant of Parliament.

As Mr. Sabourin has noted, I've spent more than 25 years in the federal public service. Many of these years were spent in central agencies where I had the opportunity to work with others in the provision of advice related to economic, fiscal, and expenditure management issues.

This is my first opportunity to work as an independent officer of the Library of Parliament. I have lots to learn about how Parliament works, and I am looking forward to serving and working with you in this new capacity.

I believe we have an important and timely opportunity with the creation of the role of Parliamentary Budget Officer. The importance stems from Parliament's “power of the purse” which is a fundamental feature of democracy.

The genesis of and momentum for the creation of the parliamentary budget officer role reflect a number of important concerns expressed by parliamentarians over the past decade. First were concerns that the size of fiscal forecasting errors were hindering public and parliamentary debate on budgetary choices. Second were concerns that more was required to strengthen accountability and effective scrutiny by Parliament of government spending and future spending plans. Third were concerns that private members' bills needed to be costed earlier in the legislative process and better integrated into the budget-making process.

The mandate of the Parliamentary Budget Officer is outlined in the Accountability Act and is now part of the Parliament of Canada Act. It has three components.

One is objective analysis for the Senate and the House of Commons of trends in the economy, the state of the nation's finances, and the estimates of the government. Second is related research, when requested by a committee of the Senate or the House of Commons. And third is estimating the financial costs of proposals introduced by members of either House or by a committee.

The mandate includes one important provision that gives power to the parliamentary budget officer for “access at convenient times to any financial or economic data in the possession of the department that are required for the performance of his or her mandate”. This will help stretch the budget of the officer and the analytical capacity of the supporting team.

I believe the launch of the Parliamentary Budget Officer position comes at an opportune time.

The economic and fiscal situation of Canada remains relatively strong as measured against many macroeconomic indicators. It can be argued that it is better to launch this role in a period of relative economic strength rather than weakness.

We are in a Parliament with a minority government. Political scientists, like Professor Peter Russell, have noted that this situation encourages debate about budgetary choices and negotiation and compromise on legislation.

As we look ahead, we can envision many important and interesting debates. These include the current debates about the impact of the weaker U.S. economy on Canada's economy and fiscal situation and the adjustment pressures in manufacturing related to a higher dollar and higher input prices. They also include long-term debates about raising the standard of living in Canada, ensuring balanced income growth, addressing issues related to aging demographics, ensuring environmentally sustainable economic growth, and realigning fiscal resources to new priorities in a balanced budget framework.

As well, as we have seen in recent years, there are always challenging initiatives that are launched by government departments and agencies with good intentions that benefit from additional scrutiny by Parliament. In these types of cases, the Parliamentary Budget Officer should play a positive role in supporting Parliament through the provision of financial analysis based on best practices.

With respect to the government's estimates process, in 2003 this committee recommended a number of improvements to address both the quality of information and its assessment by parliamentarians. The committee's report also urged the government to move forward to a results-based approach to management. In spite of the advice, much work remains to be done to realize the full potential of the estimates process to help this committee and Parliament in general exercise their important role in the oversight of departmental expenditures.

I believe the parliamentary budget officer can strengthen Parliament's ability to hold the government to account by improving parliamentarians' understanding of the financial and operating performance of the government through targeted research, analysis, and advice. This enhanced due diligence capacity will enable a comparison of the government's plans with external best practices, the government's stated objectives, Treasury Board's policies, and the standards expected by taxpayers.

Building the capacity to support the mandate of the parliamentary budget officer will take time. A number of months are required to build and integrate new analytical capacity within the Library of Parliament. With the 2008 budget tabled and the 2008-09 estimates now before standing committees, the next key milestone for the parliamentary budget officer, in a normal budgetary cycle, will be the 2008 economic and fiscal update in the autumn and the 2009 pre-budget consultations.

One can envisage a number of overlapping phases of development in the building process. Firstly, a consultation phase with parliamentarians on priorities (needs), and potential products, as well as consultations with departments and agencies on the way we will exchange information.

Secondly, there will be a team-building phase, in which the office will be staffed within the Library of Parliament to serve parliamentarians. Thirdly, there will be an implementation phase, in which products and services are provided to parliamentarians.

With respect to the team-building phase, I am pleased to confirm that we have recently hired two new assistant parliamentary budget officers: Sahir Khan, who will help us with the expenditure and revenue analysis and who started on April 28; and Mostafa Askari, assistant parliamentary budget officer for economics and fiscal analysis, who started on May 5—big increases in the size of my office.

In the context of establishing the role of the Parliamentary Budget Officer, a number of concerns have been raised publicly including concerns about independence of the advice; about the size of the budget for the position; and about whether or not the officer will provide independent forecasts.

In this regard, I wish to note that the parliamentary budget officer will, one, maintain the tradition of the Library of Parliament in the provision of independent non-partisan advice; two, utilize all the resources provided in the most effective manner possible, and that includes leveraging current resources in the library, from federal departments and agencies for the provision of information, and through external stakeholders interested in serving Canadians; and three, work with private sector forecasters to ensure that there is satisfactory comprehension and oversight by parliamentarians of the economic and fiscal outlook, the related risks, and the choices for fiscal planning and budgetary choices.

As I close, I want to thank you for giving me this important opportunity to open the dialogue on the implementation of the role of the Parliamentary Budget Officer.

It will be an honour and a privilege to support your efforts to ensure that the revenue and spending measures that are authorized by Parliament are fiscally sound, that they meet the needs of Canadians with available resources, and that they are implemented effectively and efficiently.

I am looking forward to hearing the views of parliamentarians on their expectations for this office and how it can best support their activities.

Thank you very much.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Page.

We will go now to Mr. Mark Holland, for seven minutes.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Madam Chair.

Thank you to the witnesses for appearing today. Congratulations, Mr. Page, on your new position.

I am concerned about a couple of things. The first is that we've seen a real disconnect between the reality of what's come forward and the rhetoric of what's offered. I have some concern in this regard with some of the constraints that are being placed on your office, when we see a government that campaigned on transparency and we have all kinds of things that we still just simply haven't seen, whether it's the appointment of a public appointments commissioner, new rules for lobbyists, or whether it's the fact that access to information times have dramatically increased by a factor of about five times, the killing of the CAIRS database, and the list goes on and on.

In this specific example, the Conservative Party election platform said governments cannot be held to account if Parliament does not know the accurate state of its public finances. The problem I have with that is that your office is not going to be up and running until the fiscal update in the fall of 2009. It's going to be nearly three years after the government took power before it comes into place. That's three federal budgets. That's two fiscal updates.

Not only is there an enormous amount of time that has transpired, but my real concern is that you're going to be operating out of the Library of Parliament. The Library of Parliament performs an extremely important function on providing non-partisan advice to Parliament, but in this instance, instead of being like an auditor with the ability to challenge and really take on the government when it disagrees, you're going to be relying upon the finance department for your analytics and are going to be within the Library of Parliament.

I'm wondering how you're going to be able to challenge the government or how you're going to be able to take a look at this information and be able to provide Parliament with an alternative viewpoint when you're relying upon the finance department for your analytics and when you're in the Library of Parliament, whose traditional role has been more to supply non-partisan information and not necessarily take a position or advocate for a particular viewpoint as, say, an Auditor General would.

[Kevin Page]

Thank you very much, Mr. Holland, for that question.

There are a couple of parts to that. One is just really the timing issue in terms of my arrival to this job and the time it will take to build the office. I don't think I'm really in a position to provide an effective response to that question.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I understand that it would be difficult for you to answer that. It was just an observation.

[Kevin Page]

Having said that, I am glad that this capacity is in place now, and there are lots of budgets and estimates processes to look forward to, in which we could, hopefully, support your efforts.

As to the second part of your question, to what extent will we be relying on Finance Canada's analytics, and are we adequately resourced and well positioned within the Library of Parliament to provide this advice, it's obviously early going, sir, but I am comfortable that we will be in a position to provide the challenge function that you'll want us to provide.

While we'll certainly be reviewing Finance's analytics very carefully, we won't actually be relying on them to provide that challenge function. As you know, depending on the nature of the economic and fiscal analysis forecasting issues, there are a lot of private sector companies we can work with to look at the range of forecasts that are out there—low and high—and that also provide a lot of analysis of the measures Finance puts forward in the budget.

So we could leverage a lot of resources from just the community out there right now in order to provide this advice. Some of those leveraged resources are in the Library of Parliament as well, which, as Madam Chair has pointed out, has actually served committees well.

We also plan on staffing. We have a fairly substantial budget; it's not necessarily substantial in comparison with the Congressional Budget Office, which is a very different system, but it's certainly substantial for a Westminster system. Within that ongoing budget of roughly $2.7 million a year, if we hire very strong analysts, we think we could go a long way in supporting a good challenge function.

We've already made two very careful hires, sir, in terms of the director positions, one on the economic and fiscal analysis side, Mr. Mostafa Askari. Mostafa has a PhD from Queen's University. He's taught at Queen's and Trent universities. He's worked at the Conference Board, a private sector institution, looking at private sector forecasts. He helped build Finance Canada's models in the 1980s. He's worked at the International Monetary Fund. Recently he was a research director at Health Canada, dealing with a wide range of issues. So he has a broad knowledge.

We have also hired Sahir Khan to help us on revenue and expenditure analysis issues. Mr. Khan has an accounting and economics background from Queen's and Columbia universities. He spent almost 10 years working in New York City in the turnaround environment there, so he's quite familiar with dealing with challenging issues. These are issues that this committee has looked at, issues of procurement and real property, etc. He's quite capable on the financial analysis side.

So if we staff underneath these people with some other capable people, we could provide a lot of horsepower. I think it would be helpful. That is our objective, sir.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Maybe I'll articulate the concern in a slightly different way, because I understand that you're going to have other fiscal forecasts from third-party agencies, and you're going to be able to contrast them against what the government provides. To some degree, that's something that we do now as parliamentarians.

Let's take a scenario—unfortunately, it's not as hard to imagine as one would think, as it's happened in many instances—where you have a government that has misrepresented the fiscal position, either of a province, or the nation in this case. You can take the example of Ontario, where the government said they had a surplus when they were in fact running a deficit. So you have instances where governments are not providing accurate information; it's information that is tainted by a partisan agenda. And I think the intent of establishing your office was to be able to expose that and also to be able to provide independent analysis. How would you get at that?

If you're getting your analytics from the finance department, how are you going to be able to challenge what they're putting forward and be able to see behind the curtain, if you will—not so much in terms of collecting the other information that's out there, but really to see behind that curtain to see whether or not we're getting the straight goods as to the status of the nation's finances and what our fiscal position is? How do you see that working under the umbrella of the Library of Parliament, which traditionally hasn't taken on that challenge role?

[Kevin Page]

That's a very good question, sir. How can we see behind the curtain? I and certainly the two directors I've hired have had experience in sort of being behind the curtain, so we have some experience with how some of these numbers add up.

In terms of your reference to the Ontario situation, and just basically the public accounts themselves, we'll work with the Auditor General, just as we've worked in the past with the Auditor General and the Comptroller General's offices, to make sure that the public accounts of Canada are well represented. I think, for the most part, even in recent years with respect to our own public accounts, they've had a fairly clean audit. So we will work with the Auditor General in that kind of capacity.

In terms of the work that we will provide as a parliamentary budget office, which is more of a forward-looking capacity, when we look at the fiscal books, we will ask if the projections of budget balances are adequate. We will have expertise on our staff to look at how the economy will influence those fiscal projections. We'll have analysts in our shop who will understand the relationship between income and tax collections to see whether or not the elasticities make sense. And we will also have analysts in our shop, sir, who will be able to help provide you information on whether or not the fiscal plan that has been set out and the fiscal targets make sense, so that we have a good fiscal plan for the Government of Canada based on aging demographics and other factors.

[The Chair, Liberal, Diane Marleau]

Thank you very much, Mr. Holland.

Madame Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Madam Chair.

Good morning, Mr. Sabourin.

Mr. Page, congratulations on your appointment to this position. I read your résumé. Your experience is quite impressive. I see that you have substantial experience in the area of planning, something of great interest to me.

I will repeat my colleague's question. On page 3 of your statement, you say « Building the capacity to support the mandate of the Parliamentary Budget Officer will take time. »

I would like to know why this will take time. In fact, as Mr. Jacques Sabourin stated, there are many people willing to give you a helping hand.

[Jacques Sabourin]

When it comes to staffing, things are always a bit complicated. We know that within the public service, and within our sector, which is part of the public service, things happen slowly. Mr. Page has a clean slate, and I believe that he wants to build the right team in a deliberate manner. We say this will take time, but that does not necessarily mean a year. I think that by the end of the fall, the majority of the team will have been constituted.

I will ask him to make a few additional comments, if he wishes.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

It is just that we have many questions to ask.

[Kevin Page]

As I said to Mr. Holland, I am not really in a position to talk about the reasons why the process is long. Nonetheless, I do believe that a period of three to six months is necessary and appropriate to form a team, find good candidates, and organize external competitions. We need this time to do our planning.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

You also state an intention to consult parliamentarians in an effort to determine their needs. Could this process not unfold at the same time? Each year, the federal government records surpluses in the millions, if not billions of dollars; a source of great irritation for provinces and parliamentarians alike. I feel the situation is urgent. Parliamentarians must be in a position to analyze this budget and decide whether or not the funds invested in programs are yielding the appropriate return.

[Kevin Page]

As I said, today is an important opportunity. The goal is to determine what the priorities are for various committees. You now have the opportunity of telling me what your committee's most important priorities are.

I know that the time is short, particularly with this session; we're probably looking at another month and a half in terms of working with parliamentarians on the establishment of those priorities, and at the same time doing some hiring. Over that period of time, I'm hoping to follow up on the work we're doing with committees, to work individually with a number of senators and members of the House to talk about priorities, but also to bring forward in front of them what we think the business model for the parliamentary budget officer should be, explain how we will work with the Library of Parliament, because I think our role is a bit different, and explain some of the products and services we hope to bring forward as early as the fall. Some of these products and services will be periodic reports on the economy and the fiscal situation, and some will be a research agenda.

We know the time is short. We're not planning to take long holidays in the summer. We hope to use our time efficiently.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

On page 3 of your statement, you mentioned important longer-term debates about raising the standard of living in Canada.

As a planning expert, do you not believe that it would be important for Canada to adopt policies in areas such as foreign affairs and defence, so that parliamentarians understand why expenditures are being made? Is that a type of recommendation you could make to the government?

[Kevin Page]

We will not be experts on the full range of priorities and policies that would be brought forward, including defence policy, foreign policy. What we will make sure we are experts in is the area of fiscal planning and financial analysis. So if there are questions around financial analysis or questions around the national defence budget, the relationship between operational expenditures and capital expenditures, some of the issues this committee has looked at around accrual-related issues, the capital planning, we would make sure we have appropriate capacity to respond in that domain.

For the most part, in terms of the broad policy questions on national defence policy, I think we will leave it to others to determine the appropriate policies.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I am having some trouble understanding this. To my mind, when funds are spent, it is because the expenditure was planned in advance. One has an idea of the direction one wants a department to go in. An expenditure results from planning.

As a planning expert, don't you feel that you cannot avoid making a plan, and that it will be impossible to specify or analyze an expenditure if it has not been planned beforehand? Planning is usually based on policy.

[Kevin Page]

Thank you. I believe that I understood your question.

We certainly will have capacity within the parliamentary budget office to look at the reports on plans and priorities, which are those longer-term plans for various departments. We will have the capacity with people who have experience in also preparing and analyzing and challenging departmental performance reports in that capacity.

As we look to support the work of the review of the estimates, we will be looking hard at those reports on plans and priorities and departmental performance reports. We may have questions to offer where there are weaknesses with respect to the planning, but I think our focus will primarily be on fiscal and financial analysis issues with respect to their capacity, those departments that deliver on those longer-term plans.

Does that answer your question?

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I do not think so, Mr. Page. We will not agree.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Page and Ms. Bourgeois.

The floor now belongs to Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Madam Chair.

Thank you, gentlemen, for your presentation here today.

There are a couple of things I wanted to pick up on where Mr. Holland left off. He asked you a couple of questions pertaining to how you will challenge the government, how you will see behind the curtain. It sounds as if we're looking for a forensic investigation of the finances. Do you see that as your role?

I serve on the Standing Committee on Finance. One of the things we really struggle with sometimes is we have a lot of presentations in pre-budget. Most of them are un-costed, or the costs have been determined by means...we're not how they've arrived at the costs. The Department of Finance is obviously going through a very busy time because they're working on their own issues of costing the budget, putting the budget together, and the fall fiscal update.

One of the things I envision as your role is supporting some of the applications we see coming forward and providing independent cost analysis on some of the proposals we're seeing before finance. Is that how you see your role, or do you see it as being in opposition to the government of the day, whatever stripe that may be?