Government Operations Committee on Dec. 8th, 2009

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

That observation really does shed a new light on the discussions that we have been having for some time now. To our way of thinking, a job created is one that is added to the existing pool of jobs. You seem to have a totally different perspective on the situation.

[Paul Rochon]

In a recession, employment shrinks. It is unrealistic to think the government can bring in a program that will...

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

A program that will create 220,000 jobs over and above existing jobs.

[Paul Rochon]

That's correct. However, if we take a look at the situation in the United States, we will see that seven million jobs have disappeared. The US government has brought in a program to save three million jobs.

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

Excellent. What you have just told us is very enlightening. I have one final comment. On page 5 of your submission, you focus on real residential investment and renovation growth.

[The Chair, Liberal, Yasmin Ratansi]

Madam Bourgeois—

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

If memory serves me well, regarding home renovation, people needed to spend a minimum of $10,000 to qualify for a tax credit of about $1,300.

First of all, can you tell me if this program has had a significant impact and if it has led to a surge in the demand for home renovations?

Secondly, could we have a breakdown of the figures by province, to see how many people actually took advantage of this program? In order to claim the $1,350 tax credit, people had to have $10,000 to spend.

[The Chair, Liberal, Yasmin Ratansi]

Madame Bourgeois, you have to finish.

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

Thank you.

[Paul Rochon]

We do not have any specific data at this time. We will once people have filed their tax returns. We do know, however, that approximately two million people made enquiries, and stores selling renovation and construction materials have told us that the credit has had an impact on business.

[The Chair, Liberal, Yasmin Ratansi]

Merci.

Mr. Martin, you have five minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Actually, Madam Chair, I don't have any further questions. Perhaps you might like to take some time for yourself?

[The Chair, Liberal, Yasmin Ratansi]

With the committee's consent, can I take Mr. Martin's time?

[Some hon. members]

Agreed.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

I have a couple of questions and they relate to what Mr. Cardin asked you. We were talking about economic models, simulation, etc., and Mr. Cardin as an accountant asked you a question about an increase in 1% of GDP, which is equal well into $16 billion, resulting in an increase of 0.6% in employment. That 0.6% translates into 96,000 jobs—accountants calculate pretty fast—so $4 billion would create 28 million jobs.

I am just a little confused as to whether the 220,000 is not really job creation but it is trying to keep the jobs from disappearing as well as creating new ones. If that's the case, then we probably get our answers and then we know where we're going with this.

[Benoit Robidoux]

No, there is nothing to do between the numbers and jobs maintained or created. The estimate we have is for the two together. We couldn't make the difference between how much will be created and how much will be maintained. So it's not the source of your puzzle.

There are two sources for your interrogation. One is that we are saying we will create 220,000 jobs by the end of 2010. The idea is to make sure we create some jobs and we keep that level up to the end of 2010. In some sense, we're talking about $100,000 to create or maintain a job. If you use that as a scaler, you need that amount in 2009 and in 2010. You need to create that job and keep that job maintained or created. You need to divide the package by two to start with. The government has a package of 4% of GDP; you need to divide it by two to apply these rules.

It's easy to create a job or maintain a job, but they could disappear very quickly if the money is withdrawn quickly.

[The Chair, Liberal, Yasmin Ratansi]

In your simulation model, would you say the jobs created are permanent jobs, or would it be hourly jobs?

[Benoit Robidoux]

There are jobs that will be maintained or created by the end of 2010. This is using what was assumed to be spent in 2009-10. We came to the conclusion that we would have 220,000 more jobs at the end of 2010 than otherwise.

Are they created? Are they maintained? In some cases they are created, so they are really new jobs that wouldn't have existed otherwise. In some cases, they are jobs that people are not laid off from and they would have been laid off. So it's both of them.

[The Chair, Liberal, Yasmin Ratansi]

Fair enough.

There was a question posed that, as Finance, you project issues, and that's your job; you have to project the future. When you do the budget, you have to project how much investment we need, how to get out of a recession, what the urgency is, and how much deficit will be created. However, as a committee and because we are the government operations committee, we need to ensure that we are the sober thought. That's why we have been repeating the question: if you made these assumptions, are your assumptions correct?

Give us a backup to your assumptions and help us understand whether you are really creating jobs and will therefore get us out of the $56 billion deficit, because Canadians look at it and say, “Okay, I am willing to take on the deficit if I can see a way out of it.” In your projections, can you see a way out of the deficit through this job creation?

Finally, between your third report and your fourth, infrastructure funding has gone down by $1 billion. How will that affect your simulation model?

[Paul Rochon]

To answer your questions, a big part of the government's plan to wind down the deficit is to ensure that the plan is temporary and winds down as planned. Just doing that reduces the deficit from $56 billion to something like $27 billion.

[The Chair, Liberal, Yasmin Ratansi]

It doesn't if the economy doesn't recover, but there is a logic behind it.

[Paul Rochon]

That's based on--

[The Chair, Liberal, Yasmin Ratansi]

Can you answer my $1 billion question, please? It was the question about how reducing the infrastructure funding by $1 billion--

[Paul Rochon]

The $1 billion has been transferred from 2009-10 to 2010-11, so it will not have a material impact on the number.

[The Chair, Liberal, Yasmin Ratansi]

Fair enough. Thank you.

Go ahead, Mr. Holder, please, for five minutes.