Evidence of meeting #16 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was stimulus.
A recording is available from Parliament.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you, Mr. Chairman.
I would like to ask Mr. Page, in the wake of the previous conversation, whether he can tell us how many permanent employees there currently are in his structure.
How many permanent employees have you been able to hire since you came on board?
Parliamentary Budget Officer, Library of Parliament
At the PBO right now, we have eight permanent employees. We have a number of employees who are on secondment, including Chris Matier. His secondment is over this year. It's very important that we're able to put him on a permanent basis so that we could assure that, next year, when we're in front of you at this time--
NDP
Thomas Mulcair NDP Outremont, QC
We too want him on a permanent basis. That's why I'm asking the question.
How many other requests have you made to...? I'm sorry, I don't know the jargon of the civil service in English well enough.
How many requests for permanent employee status have you in hand?
Parliamentary Budget Officer, Library of Parliament
Again, if we get the budget we're....
We think money has been set aside in the fiscal framework for a budget for our office of $2.7 million to $2.75 million per year. Those moneys are there in the fiscal framework. We were planning on a staff of about 17 or 18 people to provide service to you. We have eight permanent employees now. We have five on secondment. We would like to have on a permanent basis at least those five who are on secondment.
Again, I was planning on a budget of $2.7 million to $2.8 million a year. It's very important that we confirm that budget as soon as possible so that we don't have to let these people go.
NDP
Thomas Mulcair NDP Outremont, QC
I can assure you that you can count on unanimity in that matter.
I'd like to return to a question raised earlier by Mr. Kramp. The International Monetary Fund will be issuing a performance report card for all players. We'll especially be able to see whether people have spent the 2%. The fund's look was what was read by Mr. Kramp. It's as though it was agreed that everyone would bring something to the family get-together, but that Canada was behaving like the brother-in-law who tries to eat off everyone's plates without bringing anything.
The example cited by Ms. Hall Findlay is appropriate. She showed that, when it comes to asset sales, this is pure fiction. When it comes to so-called spending cuts and reductions, there's a paradoxical attitude among the Conservatives, who boast of being good public administrators. And yet, long before the present crisis, in the two and a half years of their government, they have raised the government's program spending in a stunning manner, without achieving any results.
You cited the example of incredible unacknowledged expenditures for the war in Afghanistan, and there were a number of others. They spent endlessly, without results. Now that we need that money, we're told we'll have to sell assets and proceed with previously unheard of cuts.
In light of all we've seen to date, will Canada achieve the 2% target? He intends to say that he will instead suggest 4% at the outcoming London summit. In your view, can measures such as the sale of assets or a so-called reduction in the size of government stimulate the economy? Isn't it necessary instead to take more direct measures such as improving employment insurance?
Parliamentary Budget Officer, Library of Parliament
Mr. Mulcair, with regard to the International Monetary Fund report, first of all it was a very glowing report on Canada. I think they think our situation is.... We did meet with them individually when they were here doing their review. They met with the parliamentary budget office. They think we're on the right policy track. I think they think that, for the most part, the Canadian economy is better positioned going into this recession than many other economies are.
Having said that, in terms of the level of stimulus, they took the government's numbers and they compared them, pretty much holus-bolus, with those of other countries. They looked at the full $40-billion stimulus. They did not make changes.
In a previous analysis, we talked about the terms of gross and net, about the issues around potentially contractionary-style impacts around strategic reviews, asset sales, leverage-related issues, and the freezing of the premium rate. They didn't do that gross or net. They didn't do that for other countries as well, too, so....
NDP
Thomas Mulcair NDP Outremont, QC
They're taking it at face value.
Does Mr. Page believe that setting the spending of a similar amount by the provinces or municipalities as a precondition will make it so the amount can legitimately count?
Parliamentary Budget Officer, Library of Parliament
I'm not sure I can really comment on that.
Conservative
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Thank you, Mr. Chair.
I think we should sell off the eternal flame. We could securitize the cashflow, get AIG to insure it, and then do some derivatives on that. It would help out the government's projections.
And yes, the gas will come from Alberta. It will help out there.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Yes. It's a good deal.
I'm looking at page 21 of your presentation here. You show the effect of a stimulus in the budget as being a 1.9% increase in GDP. Yet you show the last quarter of 2008, first quarter of 2009, as being dramatically below the budgetary estimates, both with and without stimulus.
Do you hold to the 1.9% of a stimulus effect when your projections are going so much more dramatically below the budgetary projections?
Parliamentary Budget Officer, Library of Parliament
I think the purpose of this graph is to actually use the government's numbers to show what it's assuming. We actually applaud the government for the level of transparency that it had, particularly in its annex in the budget, which highlighted the multipliers for all the different programs.
Sir, I believe you raised questions about the multipliers last time we were here.
What this graph on page 21 actually shows is what we know now about the first quarter of 2009. It's dramatically worse. We lost 200,000 jobs in January and February alone. A lot of private sector forecasters are saying that March is probably going to be another kind of unfortunate month as well, with other significant job losses.
That 1.9% real GDP impact actually translated into employment numbers--which I believe is on the next slide--of about 190,000 over that period of time. We lost those jobs already, in January and February, so we're just highlighting that in this graph. The starting point to equal zero is much worse based on the information that Mr. Flaherty and the government had in January 2009.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
The question becomes, though, is it really go big or go home? If you're putting in the same amount of stimulus that the government projected in its budget, and now you're applying it to the projection that you now have, based on those two quarters, arguably you're just wasting your money at this level. Is that a fair observation?
Parliamentary Budget Officer, Library of Parliament
We're not saying that the stimulus has really had.... I think this is Mr. Wallace's question. The money has not flowed out the door, at this point in time, so we haven't had that impact. But I think what we are seeing is that the gap that exists between where the economy should be going, where we expect it to go at trend value, and where it's projected to go is getting much wider. The policy challenge faced by all Canadians and by parliamentarians is much more significant because of what we've seen already in the first quarter of 2009 and what private sector forecasters are saying, which is consistent with the International Monetary Fund, going forward. The policy challenge is much bigger.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Wayne Gretzky was a brilliant hockey player because he knew where the puck was going, not where the puck was. And if you follow a reasonable projection of your chart, it would lead one to the conclusion that the government's stimulus package, no matter how dressed up it is, as stated in the government's terms, without any skepticism whatsoever, is clearly inadequate to do the job of ameliorating the effects of this economic drop. Is that a fair or reasonable observation?
Parliamentary Budget Officer, Library of Parliament
Again, I think what we're saying is that the challenge we face now, because of the weakness in the economy, is much bigger.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you, Mr. Chairman.
Mr. Page, everyone has in a way agreed to congratulate you on your excellent work, and even the government party is taking credit for creating this position, on the ground that it proposed it. Since you are doing such a good job, I would like you to answer the following question.
If the parliamentary budget officer, your office, did not receive the $1.8 to $2.7 million increase originally budgeted, would you be able to provide us with as much documentation, as much analysis, and would it be of equal quality? Is it possible to improve the quality further because we can also expect that additional items could have been delivered to us but were not because you didn't have the necessary staff to do so?
We may also consider it highly likely, since we are in a recession, that the everyday question is the financial question. We can expect that there will be increasing numbers of very legitimate requests forwarded to your office. If you did not have that documentation, would you be able to respond to us as well as you have from the start?
Parliamentary Budget Officer, Library of Parliament
Thank you for your question, Mr. Laforest.
The quality of our work depends on the people who work with us, people like Mr. Matier, Mr. Askari and Mr. Khan, as well as other people who are here. All of these people have held positions in the past. They have a lot of experience, which is important when it comes to giving you good analyses.
In an environment such as this, during an economic crisis, it is absolutely necessary to have the right expertise and to provide good analysis, such as this.
If we don't get our budget, I'm not sure, we'll have to.... We can't do our mandate. When I was given the contract, I was told our budget would be $2.7 million to $2.8 million. So I hired on that basis. It was probably too small a budget, based on the width of our mandate, which includes analysis of the economy, analysis of the nation's finances, and costing of the war in Afghanistan; and we were going to release a report within a month on aboriginal educational infrastructure, with costing of projects; and we were to scrutinize the estimates. We'll have to decide what elements of our mandate we do not do. So we will not provide services.
If I'm here a year from today and don't have the benefit of somebody like Chris or Mostafa, we won't be providing analysis of the economic projections. You need people who are familiar with econometric models. You can work with people like Don Drummond and Mr. McCallum on a regular basis, and look at their projections and compare numbers.
You are good analysts. That's [Inaudible - Editor] for me.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
That's a very good answer to the question I was asking you. Ultimately, what you're telling us is that you have planned and organized your work and mandate based on the estimates that were originally $2.7 million for the second year. That's clear.
In response to a question asked earlier by Mr. Menzies, you said that two of your colleagues had previously been at the Department of Finance. With respect to the documents you would need in order to write your first report—I'm not sure I understood correctly—have you obtained all the documents you were expecting in order to do your analytical work for the government's first report?
Parliamentary Budget Officer, Library of Parliament
We have not received any information from the Department of Finance that we've asked for dealing with economic projections. So even in regard to the slides Mr. Wallace talked about—or perhaps it was Mr. McKay—we actually had to do some very difficult arithmetic to create those slides, because we're not given quarterly profiles. We have to work with what we have in the budget to actually back some of this information up.
As Chris said earlier, when you're looking at calculations, the economic impacts on deficits, you need to have the composition of GNP, profits, wages, etc. We've asked for that information. That information in the past was made available and was actually published in past documents and made available to private sector firms. We need that information.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Mr. Menzies said that there was only one cabinet document that you had not received, but you say there are more than that.
