Evidence of meeting #24 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was estimate.
A recording is available from Parliament.
3:40 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I see.
Again I'm trying to work with the intention here. Can this be remedied with specific language, in your view? I'm assuming my friends in the Bloc want the lower interpretation, not the $11 billion interpretation. Is there language that could tighten the triggering event?
3:40 p.m.
Parliamentary Budget Officer, Library of Parliament
We're not lawyers and we don't have the capacity, actually, to draft this type of legislation, but we don't see any reason that it couldn't be refined, and we could provide better cost estimates for you as a result.
3:40 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Yes.
That's all I have for the time being, Chair. Thank you.
3:40 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you very much, Mr. McKay.
Mr. Bellavance, you have the floor for seven minutes.
3:40 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Thank you, Mr. Chair.
This is exactly what we have always said when drafting this bill. Mr. Page, I am the sponsor of the bill. We also are not experts in legislative drafting. We are legislators but we do not draft bills. This is done by people who work for us in Parliament drafting bills. As legislators, our intention is very clear: we want the bill to apply to corporations. We wanted it to apply only to the workers of a firm that closed or went bankrupt when these workers lose a part of their pension plan as a result. This is what we asked for and this is the result. You also have to understand that the bill as introduced is still a work in progress. Refining bills is precisely what we do here in committee. And after that, there is also the regulatory process. As you well know, after the bill is passed, the government still has to introduce regulations explaining the provisions of the bill and restricting their scope. This cannot be done beforehand but that was always our intention.
There is something that seems odd to me. We do not mind the fact that the Conservatives asked you to assess the cost of this bill because we think it is important to have as much transparency as possible. However, it is somewhat ironic coming from this government. When the Finance Minister makes his estimates and you present your own estimates contradicting his, he criticizes you and says that your work is worthless and that your figures do not reflect reality. Now, when you assess the conservative scenario and say that the cost could run up to $10 billion, they are happy. So this is ironic.
However, concerning this specific part of your assessment, I understand that you have analyzed the conservative scenario which is based on all Canadian pension funds being bankrupt and all pensioners getting 0% of their pension. Under this scenario, the cost would be $10 billion a year. But this is only a scenario. When analyzing it, your role is not to pass any kind of judgment. You look at it and say that if this scenario materializes, the cost may reach $10 billion. Then you look at our scenario and determine that if two firms go bankrupt according to certain assessments—we always recognized there may be more than two but these were the only ones we found—you say it is possible the cost could go up to $53 million. This is the work you have done: you assessed the two scenarios without making any choice or passing any judgment. I would like you to give us a brief description of the process you followed.
3:45 p.m.
Parliamentary Budget Officer, Library of Parliament
Yes. It is not up to me, as Parliamentary Budget Officer, to recommend an option over another. My role is rather to make an adequate interpretation and analysis of the legislation. When we made our analysis, we determined that the Bloc Québecois policy intentions may cost $50 million a year. This is higher than the Bloc's first estimate but it is different from the government estimate.
3:45 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
You said the maximum is $53 million. Your estimate is anywhere between $9 million and $53 million.
3:45 p.m.
Parliamentary Budget Officer, Library of Parliament
Yes, but as I said, when we do a good analysis, we examine— There are three steps to our analysis. The first is to draft terms of reference. We did that. We made some minor financial comments when examining both scenarios but we are now in the second step. Right now, according to our calculations, there is generally a financial impact of about $50 million a year.
3:45 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Mr. Page, I simply want a specific answer. You nodded but I want your answer to appear in the record. I said that you were provided with two scenarios and that you role is simply to assess them, period. You do not have to pass judgment on the validity of any scenario per se.
3:45 p.m.
Parliamentary Budget Officer, Library of Parliament
No, I do not pass any judgment.
3:45 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
Therefore you assessed the scenario we presented to you because you cannot change this scenario.
3:45 p.m.
Parliamentary Budget Officer, Library of Parliament
Mr. Khan, can you answer please?
3:45 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Mr. Bellavance, I just want to add that, as analysts, we need at least four things in order to assess costs. We have to determine who is entitled to claim this credit, whether it is transferable, who will benefit and whether or not it is refundable. This is the minimum we have to ascertain from the bill. The way the bill is drafted allows at least two interpretations, maybe three or four. There are other interpretations. For us, it is not about passing judgment on the policy intention. We only want to identify these four things in order to assess costs and give you a relatively accurate estimate. These are the only things we need. We do not pass judgment on the policy intention.
3:45 p.m.
Conservative
3:45 p.m.
Bloc
André Bellavance Bloc Richmond—Arthabaska, QC
When we introduce such a bill, we try to be as specific as possible. The Conservatives say there is a cost of $10 billion a year. In fact, this is about the cost of their decision to cut the GST by two percentage points which deprived the public purse of $12 billion or $13 billion a year.
In the case of our bill, we were wondering where this was coming from. We asked the Parliamentary Information and Research Service of the Library of Parliament to prepare several scenarios. Here is what the Library of Parliament paper, drafted by an economist, said about the $10 billion a year scenario:
As determined in the light of the provided scenarios, it would take a complete breakdown of pension funds for the proposed legislation to cost more than $10 billion a year.
Would you agree with this statement? For the cost to reach $10 billion, it would take a complete breakdown of all pension funds.
3:50 p.m.
Parliamentary Budget Officer, Library of Parliament
Well, again, without making any policy distinctions, if we open up this program to provide a refundable tax credit to all eligible people, you would be looking at costs of $10 billion, $11 billion, or $12 billion annually. We don't go further than that.
3:50 p.m.
Conservative
3:50 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Chair.
I want to thank the budget officer's office for their efforts on this.
I moved a motion to send this piece through. I think all private members' bills should go to your office to be evaluated based on the estimates that are floating around, so that we at least have an idea.
If we need further information, Mr. Page, I think you've indicated that there are more detailed opportunities, and instead of trying to rush these things through, maybe we should be looking at them. I would encourage movers of private members' bills to get these things costed instead of guesstimating, which is what they're doing.
Just to be clear, in the report you gave us, after step one, based on the information you got from the government and from the Bloc—I don't think I heard any disagreement from the Bloc today—there is a potential, based on the reading of its refundability and who it applies to, of up to $10 billion.... And the government's estimates are reasonable. You say that in your report. Is that accurate?
3:50 p.m.
Parliamentary Budget Officer, Library of Parliament
If this were made available to all pensioners, yes, it is.
3:50 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
I've been reading this bill over and over. You said “reduced as a result of financial distress by the sponsoring firm” in your opening statement. Does the two-page bill talk anywhere in its actual wording about distressed financial firms? Does it actually mention refundability? We talked on Tuesday about bankruptcy; I don't see it mentioning bankruptcy. So first, then, did you see any wording that leads you there?
Second, based on your analysis—I know you're not lawyers—would you agree that the wording is such that it is open to the interpretation you just gave, that it applies a lot more broadly than to the two firms they're claiming, and that in actual fact, based on the wording that's here now, the likelihood of its applying to just the two firms is pretty slim?
3:50 p.m.
Parliamentary Budget Officer, Library of Parliament
Well, our reading is that it's open to multiple interpretations.
Just to pick up on some of your points, Mr. Wallace, certainly you can find the words you mentioned; you can find words such as refundable tax credit. But as Mr. Khan said earlier, we're financial analysts. We're effectively bean-counters. There are four things that we need, as Mr. Khan suggested.
We need to be able to pull out who the eligible people are. Are there transferability issues? What are the magnitudes of the benefits? Those are the only things we look for, sir. The rest of it is beyond our capacity as financial analysts.
3:50 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
Right.
So let's be frank. Some of your reports have talked about our estimates compared to yours in terms of future budget deficits and an ability to get back to a balanced budget. Is it not irresponsible to have that kind of flexibility on private members' bills when we don't know what the financial cost is for Parliament to move forward? Would that not affect your future predictions?
3:50 p.m.
Parliamentary Budget Officer, Library of Parliament
We do our predictions, as you know, sir, based on what is law at the time. We're happy to provide these types of estimates on private members' bills, as you suggested, so if this were to become law, we would have to build it into our projections. I think, as you noted, that over the next five years there aren't fundamental differences in the magnitudes of our fiscal projections and those of the Department of Finance. There are some differences on interpretations.