Government Operations Committee on Dec. 8th, 2009

[Pat Martin, NDP, Winnipeg Centre, MB]

Oh. I thought I saw somewhere that one of the quickest and easiest ways to get money circulating and multiplying was to have a person spend it in the local community.

[Paul Rochon]

Well, you're right that it is one of the quickest ways to get money out there--

[Pat Martin, NDP, Winnipeg Centre, MB]

You give people some money.

[Paul Rochon]

You can give people some money. It's similar in some ways to a tax cut in the current circumstances, and it affects the economy right away. However, I guess the ultimate impact on the economy is going to depend on how much you think that person is going to save. Perhaps in a recession they'd save less. Perhaps they'd save more, however, because they're worried about the uncertainty of the future.

[Pat Martin, NDP, Winnipeg Centre, MB]

The difference between the personal income tax cut and the income maintenance is that in income maintenance, they probably will spend it all. With a personal income tax cut, they might be in a position to have something to save.

[Paul Rochon]

Yes, and that is why the multiplier is lower for the personal income tax cut.

[Pat Martin, NDP, Winnipeg Centre, MB]

I know we've primed the pump, but it would all be very interesting to us to know whether, if we could have simply ridden on the coattails of our major trading partners, we really needed to dive into this level of structural deficit again. I know it was an agreement amongst developed nations that we would all take part in this, but to me it seems such an irresponsibly scattergun approach to spending money.

Again, I'm not an economist, but the money was flying out the door. My whole political career has been spent in a period of belt-tightening and cutbacks and prudence and probity and pencil-sharpening. All of a sudden, all of that is out the window, and the conventional wisdom is the hell with balanced budgets; we were only kidding about that. We don't need balanced budget legislation, because clearly what you do when you get into trouble is spend as much money as you can.

[The Chair, Liberal, Yasmin Ratansi]

Mr. Martin, please wrap up.

[Pat Martin, NDP, Winnipeg Centre, MB]

I'm done. I'm just killing time.

[Some hon. members]

Oh, oh!

[Pat Martin, NDP, Winnipeg Centre, MB]

Couldn't you tell?

[The Chair, Liberal, Yasmin Ratansi]

Thank you very much. You had to make a statement, and you did it.

We now go to the second round for five minutes.

Madam Foote.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

I want to pick up where Mr. Martin left off, actually—not the wrap-up bit, but trying to get a handle on job creation.

I've been reading the evidence from the Standing Committee on Industry, Science and Technology of witnesses who appeared before that committee on November 30. You had witnesses from Western Economic Diversification, from the Atlantic Canada Opportunities Agency, and from the Economic Development Agency of Canada for the Regions of Quebec. They were very specific about jobs created.

I will just give you one example. This was under the recreational funding. It says here:

The City of Mount Pearl, in Newfoundland and Labrador, received $600,000 in RInC funding for a $1.8 million upgrade to its main soccer facility, a project that created 33 short-term jobs.

When we talk about the stimulus funding and about the rationale for it being to create 220,000 jobs and to deal with the ailing infrastructure throughout the country, I have to ask, Madam Baltacioglu, when you say you haven't asked for job numbers, and part of the rationale for having the stimulus funding is to create 220,000 jobs, and it would appear that at least in some cases there are numbers available to you, why haven't you asked for those numbers?

How can you explain that, yes, you're going to create 220,000 jobs, but you're not asking for the numbers, so you really don't know how many jobs have been created?

[Yaprak Baltacioglu]

There are a number of issues, I think.

First, our regional development agency colleagues, I believe, are appearing in front of this committee or... You might want to ask them what they really collect.

From what I understand, they collect job information, because they work directly with the proponents, unlike us. We went into agreements mainly with the provinces. They work with a specific municipality, a specific proponent, and so on.

They asked for the job numbers, and apparently, because they're in the economic development business, they have been asking for this kind of data for a while.

I do not want to talk about who--

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

No, I understand that. That's perfectly understandable.

[Yaprak Baltacioglu]

When it comes to infrastructure stimulus funds, the government has decided to ask for project progress data. How much money has been spent? What is the starting date? What is the end date? Have tenders been done? We covered that before.

The reason we did not ask for specific job information was that at the time, the reliability of the data was in question. I wasn't there, but these folks all were there, and they can explain it to you in further detail. When you collect information over many, many thousands of projects, through the proponents... It's the same problem the U.S. is having right now--i.e., that $980 worth of boots are creating nine jobs and so on. The reporting becomes inaccurate. The proponents sometimes give, I guess, exaggerated numbers or incomplete numbers. Comparisons between part-time, short-term, and long-term data become a problem. If a carpenter works, for example, on one bridge project and goes and works on something else, how do you account for those two things?

So there was a decision made that we wouldn't collect that kind of data, because of the reliability.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

I appreciate everything you're saying. This is my question, then. Was the 220,000 jobs figure put out there, as one of the criteria under this stimulus funding, really a number just thrown out there, when in reality there was really no way of counting the number of jobs created?

[Yaprak Baltacioglu]

No.

I'll turn to my colleague from Finance.

[Paul Rochon]

No, the 220,000 jobs figure was estimated by the department. We've published an annex in budget 2009 that goes over the details of the calculations.

In putting together the estimate, we asked two independent forecasting organizations to verify our assumptions—the Conference Board and the University of Toronto—on these multipliers we used. Generally speaking, they came in with multipliers that were higher than ours. We compared our estimates to the work that both the CBO and the U.S. Council of Economic Advisers put out, and again, in all respects, our estimates, we thought, were prudent, particularly in regard to the inducement to employment, for which our estimate was quite a bit lower than theirs.

[The Chair, Liberal, Yasmin Ratansi]

Could you wrap up, Mr. Rochon, please?

[Paul Rochon]

I submit to you that it was fairly comprehensive work that was done, with verification from outside experts, on what one could reasonably expect from this kind of program.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

We'll go to Monsieur Cardin or Madame Bourgeois.

Monsieur Cardin, pour cinq minutes, s'il vous plaît.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you very much, Madam Chair.

Good day, Madam, gentlemen.

I'd like to come back to page 2, “Output Multipliers”. As we well know, in the business world, project promoters always sing the praises of a project's economic spinoffs. We often see that happen in connection with major events. We're told that if we invest in a particular project, we will reap the economic benefits. So then, there is always a certain degree of economic recovery.

Regarding output multipliers, you have broken down the data in dollar increments to demonstrate the impact of a permanent one dollar increase. You also referred to the 220,000 jobs created as well as to $27 billion in investments associated with the action plan.

Have all of the $27 billion really been invested? Has the money been paid out? Are all of the projects that received funding now under way?

[Paul Rochon]

The $27 billion figure corresponds to the total value of the federal government's stimulus package in 2009.

[Serge Cardin, Bloc, Sherbrooke, QC]

This is money that has already been paid out.