Evidence of meeting #118 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was measures.
A recording is available from Parliament.
Interim Parliamentary Budget Officer, Library of Parliament
I'm not commenting on the previous holder of the office. What I'm looking for, obviously, is somebody who can look at the economic matters as mandated in the legislation and can communicate them, as well, in simple terms to parliamentarians. That's what I'm looking for.
Liberal
Scott Brison Liberal Kings—Hants, NS
That's particularly important, I'd say.
I'd like to start with the comparison to the EAP 2013 fiscal outlook. If you look at annex G, which compares PBO's April 2013 fiscal outlook to the EAP 2013 fiscal outlook, we can see that relative to the PBO, the government consistently projects lower revenues from personal income tax, as well as consistently higher revenues from corporate income tax over the next five years. What might account for that disparity in revenue projections?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
As I said in response to previous questions, the revenue forecast depends on the level of GDP that we forecast, and then also on the composition of that GDP, how much of that is personal income, how much is corporate profits. We know what we have in terms of the composition of the GDP that we are forecasting, and that determines our projection of the income tax revenues and corporate tax revenues.
In terms of the government budget projections, we know the level of GDP that they have projected, and we know that's below what we have projected, so that explains partly the lower tax revenues that they have in their projection. Beyond that, we don't have access to the composition of their projection of normal GDP that they have in their forecast, so we cannot really say what has caused that part.
Liberal
Scott Brison Liberal Kings—Hants, NS
Is there more information that, if you were provided it by the government, would better able you to answer that question?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Certainly if we had access to the composition details of the projection of nominal GDP by the government, we would be able to determine how the difference between the two projections can be explained.
Liberal
Scott Brison Liberal Kings—Hants, NS
On page two of your report, summary table two, you show that the government's budget 2012-13 will actually have a negative impact on Canada's job market. According to your report the Canadian economy will have 12,000 fewer jobs this year, 33,000 fewer jobs next year, and 67,000 fewer jobs by 2017 as a result of the government's last two budgets.
Would you explain to the committee why the government's so-called action plan is expected to have a negative impact on job creation?
Conservative
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Sure. In budget 2013 there are stimulative measures and there are also measures for savings. The net impact of those that we have put together, and it is in our report, is a negative, a reduction. Any kind of compression of spending or raising of taxes would have a negative impact on GDP. It's just the way the economy functions.
Conservative
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Thank you, Mr. Chair.
I want to pursue the line of questioning in relation to the $9.1 billion cut. I'm not going to argue with your figures. I'm not certain; I haven't checked them out, but a $9.1 billion cut with 67,000 jobs lost over a five-year period—is that correct? I didn't really understand that.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Actually the 67,000 jobs is a result of the measures taken in budget 2012.
Conservative
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
The $9.1 billion is only for budget 2013. With budget 2012 and the update of 2012 and budget 2013, together we are looking at total measures of about $38 billion for the two budgets and the update. The impact of all of those together will be 67,000 jobs lost.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
So it's $38 billion saved or cut. Let's face facts. Government is about allocating funds in the best place they think possible, right? Is that correct? Is it fair to say that government's job is to allocate moneys the best way possible, based upon their policies and what they expect the public, who pay taxes, to want?
I'm curious because if you look at the amount of jobs lost—67,000—and $38 billion cut, we have invested.... You're familiar with the economic action plan, the $45 billion, the $33 billion in record infrastructure that is the most any government's ever done in the history of Canada in dollar terms. We've created 900,000 jobs.
To me it seems if we're cutting $38 billion and we're only losing 67,000 jobs, if we take your figures, and yet we're creating 900,000 jobs, which we've done, with $33 billion, in fact, we've only invested about $27 billion by all calculations. It seems to me that we've created a lot more jobs through infrastructure investment by far. I don't know the figures in front of me, because the figures I did my calculations on were the previous ones, which were astonishing. This is even more astonishing. It sounds like very good fiscal management by the government because for $27 billion we've created 900,000 jobs. Wouldn't you say that's a very good investment compared to the $38 billion that we're saving and we're only losing 67,000 jobs? Doesn't that seem like a very good management scenario to you?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
I wouldn't comment on the management aspect of this. The stimulus package that was introduced in 2009, based on the government's own estimate—
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
The 2008-09 budget.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
With respect, Mostafa, I'm not talking about projections. I'm talking about what actually has taken place.
Even if we take your projections, which seem to be doom and gloom on the face of it, it's only 13,000 jobs per year. Nobody wants to lose any jobs, but it's $1.8 billion saved per year as well. It seems to me that based upon economic action plan 2008, based upon what we've done in 2009, 2010, we've created 900,000 jobs. Those aren't estimates; those are actuals. We've got a very good return on investment for Canadian taxpayers on the basis of what we've saved compared to what we've invested. Of course we're creating jobs in different areas.
If you look at some of the research on the web, especially the studies done by the American government, which wanted to have great stimulus but seemed to fail on their stimulus program, we've done even better than all those estimates have been, per dollar spent and the return on investments. What do you attribute that to, besides the good management style of our government?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
If I can go back, the actions that were taken in the 2008-09 budget, based on the government's own estimates, were supposed to create about 220,000 jobs at the time.
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Certainly the economy has created about 900,000 jobs over that period, but not all of that is attributed to the stimulus package, only part of that.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Of course, but would you not agree that stimulus, with the private sector's contribution—they've been part of that stimulus—continues to escalate? It's like a rock rolling down a hill; it just gets faster and faster and carries more things with it as it goes down and creates an avalanche. In fact, that's the idea of stimulus: it's supposed to be a shot in the arm that gets the whole body up and moving. Wouldn't you agree with that?
Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Of course, pump priming is the idea, to shock the economy.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
You can say the economy's created the jobs, but the stimulus and the management action created the jobs. Ultimately, that's what's taken place. Bad management takes away jobs, and good management creates jobs. In the private sector that's how it works, and I would suggest it works that way in government as well. It seems to, anyway.
