Finance Committee on Nov. 3rd, 2009

[Kevin Page]

Sir, we know there is an electronic format. We're trying to get the electronic format. We've also--

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So what is...? How is that possible in this day and age? There has to be somebody hiding something. There's somebody who's responsible in that department for not providing you the information. So again, under the responsibilities act, should we call forward the deputy minister or minister? Again, what is your advice on getting that information?

[Kevin Page]

I was on the phone with the deputy minister this morning asking for that information in electronic form. If we don't get it in electronic form, we've also been working the last couple of days to see if we can machine-read that information from paper.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But why do you have to machine-read it? All you have to do is get the electronic version of that information.

[Kevin Page]

I agree. We're hoping that we will get it, sir.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But why do you have to negotiate?

[Kevin Page]

I don't--

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Why do you need to have discussions? We are here to help you, so help me to help you. Tell me what you need, because this can't go on. This is not acceptable. You cannot, in this day and age, receive 4,000 to 6,000 pages in boxes. I don't even know what you received. I'm hearing different reports from different people. You have to tell me.

[Kevin Page]

Well, I think that whatever this committee could do in terms of strengthening or allowing me to get that information, increasing my chances of getting it, would be much appreciated. But yes, I think--

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Is it your feeling that there's something to hide there?

[Kevin Page]

Well, sir, we don't.... I mean—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

This is your money just like it's my money. It's our money.

[Kevin Page]

Yes, and if we have to incur additional costs in order to machine-read that information, it is the taxpayers' money as well.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

We'll go to Mr. Kramp, please.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Chair.

Good morning, all.

The reality, of course, is that we don't live in isolation on this globe. You would be only too familiar with the economic and fiscal relationship with our trading partner to the south. Quite frankly, if they don't have a sustained recovery to some extent in the U.S., it presents challenging times for us.

I'm just wondering what observations you might have with regard to some of the key information that obviously is available to you to assess their circumstances? Can you give me an idea of your long-term prognosis for the American economy?

Mr. Askari, you would probably be dealing with that.

[Mostafa Askari, Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament]

Well, sir, we don't study the American economy in detail, but obviously in doing our own forecast there are assumptions made. The general view of the U.S. economy is that the recovery is going to start in the second half and is going to continue in 2010. Based on IMF projections, they have an output gap that is very similar to the one we have right now in Canada, and there is an expectation that our output gap is not going to be closed until 2014.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Obviously you don't have it in your mandate, and you don't even have resources to research their circumstances, but it is crucial because it impacts so dramatically on us. Although you might not research it, what measures would you use to monitor what they have and what's going on there?

[Mostafa Askari]

In doing our forecast, as we mentioned earlier, we use a private sector survey forecast. Those numbers from the private sector reflect an assumption for the U.S. economy.

Also, the model we use to calibrate those forecasts, to do further work, and to do our fiscal projection has an underlying assumption for the U.S. forecast. To do our own work, we rely on that private sector forecast for the U.S. economy.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Okay.

Well, obviously we all recognize as well the crucial importance of stimulus around the world. It is globally accepted as absolutely necessary and meaningful. Do you have any assessment at all about the effectiveness of the U.S. stimulus? Do you have any indications or data on that? Because it does relate directly to our manufacturing and export capacity.

[Kevin Page]

Sir, just to follow up on our tracking of the U.S. situation, Mostafa is absolutely right. Our private sector surveys implicitly have an outlook built in for the U.S., but in addition to that, there's a lot of information available in terms of projections going forward and risks. They have a 50 blue chip sector forecast, and it's very easy to monitor the range of forecasting and some of the uncertainty around that.

As for the stimulus package in the U.S. and their deficit situation, again, they're talking about a problem that is much more severe than ours. We're talking about a deficit in Canada today, sir, at the federal level, of about 3.6 percentage points of GDP. Again, this is smaller than we experienced in Canada in the early nineties and early eighties. We're talking about something three times larger in the United States. As a result, debt there will build up at a much faster rate. There is also a significant structural problem in the U.S.

They have a stimulus package of about $800 billion in the United States, which has an economy of roughly $15 trillion. There again, through their monitoring as well, we do track that. We looked at benchmarks for reporting. We could see how much money is going out the door there. Their last quarterly report stated that roughly $150 billion of that close to $800 billion has gone out the door so far. So a lot of that stimulus still hasn't really had an impact.

GDP in the United States grew at 3.5% in the third quarter, at an annual rate. This is probably higher than what a lot of private sector forecasts are assuming for Canada in our third quarter. We're probably looking at something that is more in the 1% range, even with those low basic price data that we've recently received.

The U.S. actually shrank at a slower pace that we did in the second quarter, so we're looking at all kinds of stimulus measures with whatever data is available in order to look at relative performance in the second and third quarters, and potentially the fourth quarter as well.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Right.

Now, on serviceability, obviously the world is concerned with the U.S. debt, but comparing our debt and/or GDP ratio to debt, and the debt-to-equity or debt-to-GDP ratios around the world among G-7 countries--

[The Chair, Conservative, James Rajotte]

Your question, please.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

--where would Canada be relative to the U.S. and the rest of the G-7?

[Kevin Page]

Sir, thanks to the progress we've made since the mid-1990s and in recent years, our deficit and our debt-to-GDP relative to the economy is far superior to others'. I think we have benefited by that. As a result, we were able to put forward a stimulus package that was substantive, to support the Canadian economy and the weak output gap.