Finance Committee on April 30th, 2013

[Sonia L'Heureux]

At this point what we need to focus on is what the legislation is giving us as a mandate, and we do have a mandate to answer the question posed to us. At the moment I'm taking the request for information to our colleagues in the public service and the executive so that we can fulfill our mandate.

[Murray Rankin, NDP, Victoria, BC]

Right. I think you indicated that if the government refused to provide the requested information, you'd ask the relevant government departments to give you the budget analysis information that you have requested. Can you give us an update on that work? How valuable would that information be on the PBO to do its work?

[Sonia L'Heureux]

We do need the information to do our work. You may know that we've given departments two weeks to assemble the information we need.

In terms of an update, it's a little difficult at this point to give you an update because they're still compiling the information we requested.

[Murray Rankin, NDP, Victoria, BC]

It's a hypothetical question perhaps, but if the government does not hand over the information that you need to do your work, will you use the courts to obtain the information?

[Sonia L'Heureux]

You're right, it's hypothetical. All we have is the court said that they would be available.

[Murray Rankin, NDP, Victoria, BC]

They would be available and you're aware of that.

Yesterday the House of Commons debated a private member's bill, Bill C-476, to establish the Parliamentary Budget Officer as an independent officer of Parliament, like the Auditor General, the Privacy Commissioner, and the like.

Many experts and pundits have spoken out in support of the PBO becoming an independent officer of Parliament.

Do you agree that strengthening the mandate of the PBO in that way would be beneficial for your work and ultimately for government accountability?

[Sonia L'Heureux]

My job is not to agree or disagree with legislation; it's to meet legislative requirements. I will not comment on whether it's good or bad.

[Murray Rankin, NDP, Victoria, BC]

You're not in a position to comment on whether that level of independence and the additional powers would provide more....

[Sonia L'Heureux]

I believe it's for the parliamentarians to debate that, what they feel they need for us to do the work they wish us to do.

[Murray Rankin, NDP, Victoria, BC]

Maybe this is in the same vein, and if it is, don't answer. The point of this bill or any such bill would be to clarify the mandate, to have more precision in the language in which you do your work, the kind of analysis you can do, the kind of independence that you require, the rights in the statute to access information. Wouldn't that clarification in the mandate be of obvious assistance to your work?

[Sonia L'Heureux]

I think we've had some clarification with the court case you referred to earlier.

[Murray Rankin, NDP, Victoria, BC]

Right. And in your view, is that sufficient?

[Sonia L'Heureux]

I don't know. We'll see.

[Murray Rankin, NDP, Victoria, BC]

Okay.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Rankin.

I'm going to take the next round as the chair.

I want to provide some context and get some clarification from you. In the past, the Parliamentary Budget Office has raised a couple of serious points, one with respect to what they called a structural deficit that the government was facing, and also, that the government in its budgets was underestimating risk. Those were two very serious points made by the office, in my view, and I think partly in your view the government has responded to both in terms of those concerns. It has in its budgets moved in fact to elevate the amount of risk that it is foreseeing.

In your fiscal sustainability report in 2012, you talked about three items that are going to lead to the government moving to balance over the medium term. You talked about the Canada health transfer changes post 2017, the OAS changes post 2024, and the program expense reductions. Those are three items over the medium term.

If I heard you correctly, Mr. Askari, you said in a response to a question that the government could return to a balanced budget without program reductions. Explain to me how the government can move to a balanced budget without program reductions when the other two items in your 2012 fiscal sustainability report do not even start to take effect until 2017 on the CHT, and 2024 with respect to the OAS.

The only thing remaining to move the budget to balance is program expense reductions, yet what I heard you say was that you could take those out, and then the government could balance its budget. I hope this would be true, but I just don't see how this could be true.

[Mostafa Askari]

I'll start this and then ask Mr. Matier to follow up.

What we have said in the report is that on the savings that were introduced in budget 2013, if we remove those savings—which means higher spending by the government—the structural budget deficit in 2017 will still be positive. That's the only thing we have focused on, just a measure in budget 2013.

[The Chair, Conservative, James Rajotte]

So keep the measures in 2012 but not the measures in 2013—

[Mostafa Askari]

That's right.

[The Chair, Conservative, James Rajotte]

—and that leads to a balanced budget.

[Mostafa Askari]

The budget still will be in the positive, about a $2 billion structural budget balance in 2017.

Chris, do you want to add something?

[The Chair, Conservative, James Rajotte]

In terms of risk, it seems to have flipped on the other side, which is saying that now the government is overestimating risk. Is that correct?

[Mostafa Askari]

That point really has nothing to do with the risk. This is just a factual matter that the impact of those measures on the structural budget balance essentially is to bring them down from about—

[The Chair, Conservative, James Rajotte]

I am asking a specific question. In the past, you've said that the government has underestimated risk. It seems you've now flipped and are saying that they're overestimating risk. Is that correct, Monsieur Matier?

[Chris Matier]

I would just say that the difference between our projection for nominal GDP and the government's risk adjusted is minimal. This is $8 billion on average, or 0.4%. We would consider that to be broadly in line. What's changed really, if I just point you to figure 2-13, is that the private sector outlook has been revised down significantly. What's happening is that private sector forecasters are starting maybe to take a closer look at the impacts of fiscal consolidation.

[The Chair, Conservative, James Rajotte]

Some commentators responded to our budget by saying that the government is putting too much in terms of future revenues, is overestimating future revenues, and therefore it's going to balance the budget. Some commentators said that they don't think the government will balance the budget because it's overestimating revenues. In fact, you're going beyond where the government is and even estimating those revenues to be much higher.

How do you respond to those commentators?