Evidence of meeting #44 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
A recording is available from Parliament.
5:05 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
But you can't tell where their breakdown is versus your breakdown.
5:05 p.m.
Parliamentary Budget Officer, Library of Parliament
Well, sir, they're not providing estimates right now on what's cyclical and what's structural. They're not providing calculations on fiscal sustainability, and we think they could do that.
5:05 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Burleton, could I ask you quickly, when you have your numbers on your sheet here, $45 billion for 2010-11, are you separating between structural and cyclical?
5:05 p.m.
Deputy Chief Economist, TD Bank Financial Group
Yes, we're taking into account both structural and cyclical components. The cycle--
5:05 p.m.
Deputy Chief Economist, TD Bank Financial Group
No, we haven't broken it down in this analysis. In the near term the cycle dominates, but stretching out, say, beyond 2013-14, the structural influences are more important.
5:05 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Okay, and that's what you were talking about as well with the household debt--
5:05 p.m.
Deputy Chief Economist, TD Bank Financial Group
Yes, in our view, the household debt is consistent with only very modest consumer spending growth, and we have that factored into our more--
5:10 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
In demographics and everything, and that would be in your structural estimates. But would that be made public when you actually publicize your calculations?
5:10 p.m.
Deputy Chief Economist, TD Bank Financial Group
Our view on structural growth, sort of five to ten years out, is something around 2%, and consumer spending would be about 2%.
5:10 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Finance should be able to make those available to the Parliamentary Budget Officer, in your opinion. Is that correct--
5:10 p.m.
Deputy Chief Economist, TD Bank Financial Group
I've always thought more information--
5:10 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
--unless they have something to hide?
Okay.
Mr. Page, again in your opening statement you said Canadian economic activity still remains well below its level of capacity. How did you come up with a statement like that? Who decides what “below” is? How do you compare it?
5:10 p.m.
Parliamentary Budget Officer, Library of Parliament
The Department of Finance does produce estimates of Canada's potential output level and its growth rate. They do it historically. They are not publishing this information on a projected basis. We published a paper early this year, led by Mostafa Askari and Chris Matier, that shows how we calculate potential output, what are our assumptions. From that we calculate, just to link to the other conversation, what is the output gap. We use the private sector forecast to see where the economy is projected to be vis-à-vis this potential. We estimate what that output gap is.
5:10 p.m.
Liberal
5:10 p.m.
Parliamentary Budget Officer, Library of Parliament
All the reports are available on our website.
5:10 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
No, but the one with below its level of full capacity. I don't remember seeing that one.
5:10 p.m.
Parliamentary Budget Officer, Library of Parliament
We could probably find out before the end of the meeting, sir, and we'll tell you which specific report, which month it was published. It would be an April timeframe.
5:10 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Is it comparable to what other countries are doing?
5:10 p.m.
Parliamentary Budget Officer, Library of Parliament
Yes, most countries, and even the Department of Finance, but they do it on a historical basis to calculate these estimates for their countries.
5:10 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Pacetti.
I'll go to Mr. Généreux, but I'm going to take a Conservative round. I'm going to allow Ms. Webb to answer.
Every time we go down the line you're always cut off, so I'll give you about 30 seconds to let you respond.
5:10 p.m.
Senior Economist and Manager, Scotiabank Group
Thank you very much.
My reference to the households was not in terms of this being a situation anywhere akin to what's happened to the U.S. Our whole banking and mortgage system is entirely different and has a much more solid underpinning. It was more that as we look out over the next five years, why would our growth be in the 2% range and not 2.5% to 3%? It would be much better, as governments try to balance their books, if it were at 3% and if we were closing the output gap more quickly.
The answer is that with the surge in consumer borrowing immediately after the recession, they've used up some of the spending room that might have otherwise been available down the road. This is important for your committee, simply because as we look forward, we're relying an awful lot on export growth and business investment to power the economy in terms of private sector demand and as the public sector pulls back.
5:10 p.m.
Conservative
5:10 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you, Mr. Chairman.
Welcome to all of you. My question is for Ms. Webb.
According to what I understood earlier, you have studied certain issues that are of interest to me. Canada is an important exporting country. I'd like to hear what you have to say about the parity of the Canadian dollar with the American dollar and the hypothesis that we might see the Canadian dollar go higher than the American dollar. You stated earlier that you had done a study in 1997 in which it was said that Canada would not be able to function with a dollar whose value climbed from 67¢ to 88¢. What is your opinion on that? I am giving you all of my time to allow you to answer that question.