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.
Senior Advisor, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
We've tried to provide the projections underlying the estimated economic impacts in annex 1 of budget 2009. This budget provided the end point of 189,000 jobs, and from the other assumptions on projected unemployment rates we've tried to back out the estimated levels of employment.
The lowest line reflects the actual job losses to date. If we assume there have been no impacts due to the stimulus at this time, this would exclude any impacts.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
That effectively means there are 16,900,000 jobs still left in the economy. Is that what it means?
Senior Advisor, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Yes. That's the level of employment in thousands.
If the world unfolded as was envisaged in the budget 2009 outlook, we probably would have stayed very close to that middle line--also assuming none of the stimulus impacts took effect that early on. But the world did not unfold that way, and there were significantly more job losses than had been forecasted. So the starting point of the economic challenge has shifted, and it's much more pessimistic than previously anticipated.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
It's quite dramatic when you chart it that way.
In your statement you say:
As a small open economy, Canada’s recovery depends not only on the actions policymakers are taking to provide accommodative fiscal and monetary policies, but also depends crucially on global economic and fiscal developments.
The monetary capacity has pretty well zeroed out at this point. You can play around with some credit stuff, which is fine. The fiscal is already under water. So if the government wanted to get back to even its original line, it would have to anticipate putting in a massive fiscal stimulus. Is that a reasonable conclusion?
Parliamentary Budget Officer, Library of Parliament
I think you've had the opportunity to speak to Mr. Carney about monetary policy and what the transmission mechanism looks like as he lowers interest rates or provides quantitative easing to banks--the time lags that are involved. It's fair to say the bank is still hoping that impact will play out.
Chris has said that the starting point is much worse right now. The policy challenge is that much bigger. There will be a choice down the road about whether more stimulus is required and what the impact of it will be, but the starting point is significantly worse.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
So you run out of monetary stimulus and you're pretty well at zero. Your credit...there may still be some gas in the tank and you can still buy up more paper. But if the government is serious about addressing the employment problem, they have to immediately come up with an enormous fiscal stimulus package. If they just stay with the so-called plan they currently have, reality has already overtaken them.
Is that fair?
Parliamentary Budget Officer, Library of Parliament
With the output numbers and the employment picture we've seen in the first few months of the fourth quarter, the reality is very serious; it's much more negative. Whether additional stimulus will be needed in future budgets is a down-the-road consideration. We haven't implemented the current budget yet.
Conservative
The Chair Conservative James Rajotte
Mr. Page, I want to thank you and your colleagues very much for coming out today, for your presentation and information, and for answering our questions.
Colleagues, we'll meet tomorrow at 9 a.m.
Thank you.
The meeting is adjourned.