Evidence of meeting #10 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was spending.
A recording is available from Parliament.
12:45 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
You agree. Thank you.
I have another quick question. To be clear, some in the opposition have suggested strongly that Canada's economy will shrink this year and next. Is anyone here projecting negative growth this year or next?
Monsieur Leitao.
12:45 p.m.
Chief Economist, Laurentian Bank Securities
For this year, I am not. Anything is possible, but I don't think so.
Next year, 2012, there's a risk that if the global economy--particularly the United States, which for us in terms of direct links is much more important than Europe is--did slide into recession, Canada would follow.
12:45 p.m.
Chief Economist, Laurentian Bank Securities
If the U.S. doesn't slide, then we'll stay with economic growth in the 1.5% to 2% range.
12:45 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
We're forecasting growth of just over 2% this year, and about 2.5% next year, but within a very wide band because of the extraordinary risks we're facing in the global economy.
12:45 p.m.
Deputy Chief Economist, BMO Capital Markets
We're forecasting growth of just a little above 2% this year and a little bit below 2% next year. We're attaching risks of a recession at about 35% over the next year, which is higher than normal, no doubt about it.
12:45 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
I know I'm running out of time, so I'm going to go to the third question.
We're actually looking at inefficient programs in part of our review. I've heard some talk about the need for government to maybe be flexible and cut spending. Is there a good way to cut spending or is there a bad way to cut spending? I don't understand why we would keep inefficient programs that don't stimulate the economy and not use that money for something else. So the question tied to that is how inefficient programs support the economy.
Mr. Leitao.
12:45 p.m.
Chief Economist, Laurentian Bank Securities
By definition, if a program is inefficient, it is not going to support anything. This is kind of micromanaging our government spending, and I don't have the expertise to do that, luckily, but I would just add one thing. When we talk about being flexible, we mean that the government should be prepared to accept a larger deficit if indeed we go into a recession.
I think something that was mentioned here is very important. If indeed we go into recession, government spending will automatically increase, and at that time I don't think it will be at all appropriate for the government not to loosen up the employment insurance program. That will be a very important program if the economy does slide into recession. The deficit will go up, and it shouldn't be fought. It should be allowed to go up.
12:50 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Right. But getting back to the issue of programs, we believe there are programs that are not giving value for the taxpayer dollar. It would be irresponsible for a government--and I'm asking whether you agree with this--not to review those programs and cut them if in fact they are not providing value for dollar, particularly in this tough economic time. Would you agree with that statement?
12:50 p.m.
Chief Economist, Laurentian Bank Securities
As a taxpayer, I do. I think that should be a permanent feature of government. You should always be reviewing programs. And if something doesn't make sense now, then it should be stopped.
12:50 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Thank you.
Mr. Hodgson, can you comment on the same issue?
12:50 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
As a first principle, I agree with Carlos, but I would add tax expenditures to the agenda, because that's a net loss of $100 billion of revenue for government, and value for money applies on the tax expenditure side as much as on the spending side. But as a first principle, a well-managed government should be regularly reviewing all of its spending to optimize value for money.
12:50 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Thank you.
And are you talking about cutting where it's inefficient?
12:50 p.m.
Senior Vice-President and Chief Economist, Conference Board of Canada
There should be cutting where it's inefficient, but we should also be mindful of the macroeconomic impact of the cuts. So when you do it is as important as what you do.
12:50 p.m.
Deputy Chief Economist, BMO Capital Markets
I would unequivocally agree with you.
12:50 p.m.
Full Professor, Department of Economics, University of Ottawa, As an Individual
Well, I would say the first inefficient program that should be cut is the reduction of corporate income taxes.
September 27th, 2011 / 12:50 p.m.
Senior Economist, Social and Economic Policy Department, Canadian Labour Congress
Briefly, I would reiterate that finding efficiencies in government is part of managing the government well, but finding efficiencies in order to balance the books as quickly as possible and then expanding TFSAs and income splitting as an outcome two or three years down the road is not necessarily the best or the most economically sound decision.
12:50 p.m.
Conservative
