Government Operations Committee on Jan. 27th, 2026

[The Chair, Conservative, Kelly McCauley]

Good afternoon, everyone. We are in session.

Welcome to meeting number 23 of the House of Commons Standing Committee on Government Operations and Estimates, known everywhere as the mighty OGGO, the only committee, of course, that matters. I extend a special hello and happy new year to everyone.

We are starting the year off strong with our friends from the parliamentary budget office.

Welcome back, Mr. Jacques and crew. I understand that you have an opening statement.

Before we get to that, I'll just mention that we have to approve our budget. We'll do that at the end, and then I'll go over the next couple of weeks' schedule and a subcommittee date that will take us to our Family Day break.

Mr. Jacques, we'll turn the floor over to you. Go ahead, please.

[Jason Jacques, Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you, Mr. Chair and members of the committee, for the invitation to appear today. I am pleased to present our recent analysis to Parliament and to provide you with a brief administrative update.

I am joined by colleagues who contributed to this work.

Since my last appearance before this committee, the Office of the Parliamentary Budget Officer has continued to deliver on its mandate to support Parliament by providing independent, non-partisan analysis of the government's spending plans and fiscal outlook. We have published eight reports directly related to budget 2025 and matters under consideration by Parliament. This includes an initial assessment of the government's planned spending reductions as part of the comprehensive expenditure review and of the $1‑trillion investment commitment in budget 2025.

Before turning to your questions on these reports, I wanted to first provide an administrative update and follow up on our budget 2025 issues report.

In the coming weeks, the OECD will publish its first external review of Canada's parliamentary budget office. I commissioned this review last September. The review assessed our institutional framework, operational practices and alignment with the OECD principles for independent fiscal institutions. While the external review is yet to be published, I am encouraged by recent public comments from the head of the OECD's public management and budgeting division, who succinctly concluded, “I think Canada is very lucky to have the PBO, and to have a body that has respect from seemingly all stakeholders that we talked to.”

In the interest of transparency and accountability, I would also like to draw your attention to our new policy on report revisions that was published last week. This policy formalizes our approach when reports are revised and how those revisions are communicated to parliamentarians and stakeholders. Next week, we will also publish our very first communications strategy and policy, which will explicitly codify our “parliamentarians first” approach.

I also want to follow up on previous testimony regarding our “Budget 2025: Issues for Parliamentarians” report. Members will recall that we highlighted concerns regarding the government's decision to abandon its debt-to-GDP fiscal anchor and its overly broad definition of “capital” as part of the new operating budget fiscal anchor.

Last week, the International Monetary Fund published its article IV consultation report on Canada. The IMF also concluded that “a clear debt-to-GDP anchor should remain central to the fiscal framework, extending Canada’s strong tradition of fiscal prudence.” In addition, it noted that the government's new “definition of capital...remains broad” and would benefit from closer alignment with existing standards used by Statistics Canada and other countries. We encourage parliamentarians to follow the progress made by the government in implementing the International Monetary Fund's recommendations.

In closing, I want to say that my office remains committed to providing Parliament with clear, timely and non-partisan analysis to support your scrutiny of federal spending and fiscal policy.

We appreciate the constructive engagement of the committee in advancing transparency and accountability in the federal budget process.

My colleagues and I are pleased to answer your questions.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Jacques. I appreciate that and look forward to the OECD report.

I participated in interviews for it, so I'll look forward to seeing it. Perhaps when it does come out, we can invite you back with your team to discuss it.

Before we start, I want to offer a warm welcome to Mr. Osborne, who's joining us for a while. He sat previously with us for one meeting, I think, but now we'll see him back more often.

Welcome back to OGGO, and I look forward to seeing you on public accounts as well. I hope you're still there.

We'll turn things over to Mr. Chambers to start for six minutes, please.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Mr. Jacques, welcome back. Along with your team it's always a pleasure to have you here. You teased the OECD report, and I look forward to reading their findings. It sounds like they're in support of the institution. I can speak on behalf of myself as a parliamentarian that the work that you do supports us very well, and I thank your office for that. I also note that the CBO in the U.S. has a much larger budget. Anyway, I'll just leave that there.

On the recent work in your report on the investments, can I just ask a very basic question on the definition of capital and spending, which I think supports your research here? The government provided a table in the budget on page 283 that showed a comparison of what other countries do when they call something a capital investment.

The government offered no comparable country that treated corporate income tax credits as an investment in capital.

Do you have a view on that? I don't believe they've offered any other country that does that. I'm not sure that is in alignment with other countries that split capital and operating....

[Jason Jacques]

I would go back to the comments that we provided to the committee previously that we highlighted in our budget 2025 issues note. It is a very broad definition. We are unaware of any advanced jurisdictions that would define capital in that way, including corporate income tax credits that are being provided. There are other measures as well, including operating subsidies provided to companies that are potentially related to capital investments that the Government of Canada also includes, which is not really seen in other jurisdictions.

In reading through the report and the commentary from the International Monetary Fund, it's evident that the IMF also shares those concerns. This is why the International Monetary Fund, similar to us—as we had highlighted this in October and November—several months later highlighted the same issue, that it would potentially be worthwhile to learn from other jurisdictions and use a consistent definition that other people use.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you. That's very helpful.

I was surprised that the government didn't offer any other combination, especially when they provided a table to the public that showed other countries that were aligned with them. However, on this one, they had no comparison.

On the report about the $1 trillion in total investment, my understanding is that this is not a net new number of investment. Is that correct?

[Diarra Sourang, Director, Economic Analysis, Office of the Parliamentary Budget Officer]

That is correct, yes.

Basically, what we tried to do in this report is understand where the $1-trillion figure is coming from. Starting from the federal government commitment to support the industries and investors to the tune of $280 billion, we found that of that $280 billion, one finding was actually $285 billion. The $280 billion is a rounding. You will see me mentioning the $285 billion, but it's really a rounding. Of the $285 billion, approximately $41 billion is associated with new measures from budget 2025, and the remaining amount is related to measures that were in place prior to the publication of the budget.

[Adam Chambers, Conservative, Simcoe North, ON]

When the government says that the budget is generating $1 trillion or will generate $1 trillion in new investment, what I'm hearing from you is that a lot of those investments were already being made. Is that a fair characterization?

[Diarra Sourang]

It is a fair assessment, yes.

[Adam Chambers, Conservative, Simcoe North, ON]

I also note an interesting parallel between the way the government has communicated the $1 trillion, along with a whole chapter in the budget on the superdeduction that they say will have a monumental impact on encouraging investments in this country. If you look at the table that they provide about the cost of the superdeduction, almost all of the superdeduction is already in place today. The only new measure in the budget is about maybe $300 million a year in what I'll call stimulus.

There seems to be consistent messaging from the government saying that they're delivering this big number, but the net benefit of what they're delivering isn't as big as the headline.

Is that fair? You don't have to comment on whether you agree with it or not.

They come out with a big headline, but when you dig down, most of its measures were already happening anyway.

[Diarra Sourang]

That's what we found after our analysis. Almost 71%, pretty much, of the $1 trillion is related to investments or stimulus, whether it's government investment or business investment, that were already in place prior to the budget.

[Adam Chambers, Conservative, Simcoe North, ON]

What is the number then that would be net new?

Is that a fair question, or should we follow up on that after?

[Diarra Sourang]

It is a fair question.

There are two numbers, I think, that are important to keep in mind.

The first one is the net new investment from budget 2025 from the federal government. That would be $41.3 billion.

How much more total investment is expected to be generated by that additional investment? We estimate that amount to be $126 billion.

[The Chair, Conservative, Kelly McCauley]

Thanks very much. We're past our time.

Mr. Gasparro, please go ahead.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you.

Happy new year, everyone. It's great to see you again.

I'm glad you led off the conversation with the International Monetary Fund's 2025 article IV report.

I want to quote something from the report. I'm going to paraphrase the first part and then I'll give a direct quote. The IMF's 2025 article IV report on Canada paints a picture of an economy weathering external trade shocks better than expected thanks to policy responses and strong fundamentals.

Would you agree with that analysis?

[Jason Jacques]

I take the International Monetary Fund's analysis, of course, very seriously. They're very good economists, much better than me.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

We don't want to diminish your—

[Jason Jacques]

No, I take it very seriously.

I would say—it's something we were discussing prior to committee—that the International Monetary Fund, throughout the 60-page report, highlights the downside risk to the Canadian economy and the significant levels of uncertainty.

In addition to that, while the International Monetary Fund, in their charts, highlights that certainly at the federal level, Canada's net debt-to-GDP ratio is the lowest in the G7. They also highlight that Canada's household debt level is the highest in the G7. Canadian households are also paying the highest share of interest payments on that debt across the G7. Canadian corporations have the second-highest level of debt across the G7.

I think it's important, when drawing from a report, to always look at the overall context. It's a big report, and it definitely is a nuanced story.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

I agree that we need to look at it in its totality, but the fundamental headwinds that the IMF outlines are external in nature. They are, in particular, trade related, which we don't have full control over. I think what you're hearing from the government is that we are focusing on the areas that can be controlled on domestic front.

On that point, in your report that is presented, would you say that it represents one of the largest projected federal investment support efforts examined by your office in recent budgets?

[Jason Jacques]

Is that with respect to the capital investments related to the $1 trillion?

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Yes, that's correct.

[Jason Jacques]

I don't know if that necessarily would be the case given that 85% of the total $1 trillion figure and the total capital investments were actually announced prior to budget 2025.

I would have to go back and analyze it in detail, but simply at face value, 15% of the total $1 trillion figure is based upon the document that was tabled in Parliament on November 4 and 85% relates to everything prior to that.

I don't know if that's the case, but if there's a motion from the committee, it's certainly something we can look at.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

I would love for you to take a look at it, please.

When looking at the $285 billion, I noticed there was a slight discrepancy between what the government's saying in terms of the $1 trillion or the $896 billion, but that multiplier effect is still significant.

Would you agree that the capital investments being made, the focus on major projects, for example—and we can touch on that in a moment—and those infrastructure investments are critical for the future growth of our country?

[Jason Jacques]

Yes.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

The investment projects totalling almost $115 billion have been referred to the Major Projects Office. How do you foresee the Major Projects Office impacting new investment moving forward?