Evidence of meeting #25 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was analysis.
A recording is available from Parliament.
4:35 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
The NDP are basically questioning the ability or the honesty of the Comptroller General in terms of his preparation and presentation of public accounts. It's totally inappropriate to be doing that Is that correct?
4:35 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Sir, there are always potential improvements in hand-offs between one agency and another. When we were quoted, it was treated as an issue that was probably different from the actual issue, which was rather technical in nature.
4:35 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
I don't know if you'll answer this, but I guess it comes back to the opposition party trying to pretend they're the government in waiting. Of course, for any government in waiting, you'd think you'd want to spend some time and effort in making sure the facts you receive or the facts you present are actually accurate.
I guess I'm just wondering, would you have any suggestions for the opposition members that maybe they do a better job in their fact-checking before they start smearing the good names of both professional civil servants and a world-class Canadian research institute?
4:40 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
One of the things we do—not only do we provide this integrated monitor and database for parliamentarians, but on a quarterly basis we provide an expenditure monitor that provides reporting of major variances in items. That report provides an opportunity for us to scrub some of those things. Sometimes in an interim reporting context there can be coding errors. These can be easily identified, particularly large ones. We've had good experience working with departments to resolve these.
Certainly, members are free to contact our office if they ever do find something that looks like an anomaly. We're more than happy to go through it, to actually investigate it, and to work with government officials to see if there is in fact an issue that merits further scrutiny or if it's something that just needs to be resolved, and in the fullness of time, through public accounts, will get resolved.
4:40 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
That's actually good advice to the opposition members. If they see something that looks totally crazy, why not second-guess here? Check your data to make sure you're right before you go out and smear somebody's good name. I think that's good advice, not just for the opposition but for all members of Parliament.
I'll go back to stimulus, deficit reduction, and the action plan, Mr. Page. You've been pretty clear about the need for balanced budgets, and I think that goes back to your economic background on the role of balanced budgets. What will be the impact if we haven't balanced our budget by 2014-15 or 2016-17? Have we decided that we'll let it slide until 2020? How do you see that affecting our kids and our grandkids and the future of Canada in the long term?
4:40 p.m.
Parliamentary Budget Officer, Library of Parliament
Again, that speaks to why we do fiscal sustainability analysis that looks at what actions you need to take to stabilize that. I think we've experienced it in Canada. We know what it feels like to have rapidly rising debt relative to the size of the economy. We saw that in 1990s. I witnessed it when I worked at both the Department of Finance and the Privy Council Office at that time.
Your debt rises and the carrying cost of that debt rises. We saw our debt at the federal level peak at 68% relative to GDP in the mid-1990s. The carrying cost in terms of budgetary revenues peaked when roughly 37¢ of every revenue dollar went to public debt interest charges.
In 2007-08 we brought those numbers down to a 29% debt-to-GDP ratio, and our carrying cost was down to 13¢ on every budget revenue dollar. If you can maintain those healthy fiscal balances, avoid those structural deficits, and deal with these issues ahead of time, before they get out of control, you'll have the kind of position we had going into this recession in 2008-09. There's much more flexibility to deal with the issue, as well as some of the investment issues we need to deal with.
4:40 p.m.
Conservative
The Chair Conservative James Rajotte
Okay. Thank you.
Thank you, Mr. Hoback.
We'll go to Mr. Julian, please.
4:40 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you very much, Mr. Chair. I couldn't agree more with Mr. Hoback on the issue of financial sustainability.
As our guests know, for the last 20 years the federal Department of Finance has been tracking the actual fiscal period returns—the actual end results--of NDP governments, Conservative governments, and Liberal governments. As Mr. Hoback I'm sure knows, NDP governments have come out at number one every single time. They balanced the budget and paid down debt. Mr. Hoback would be well-inclined to follow the NDP example.
I'm also very much in agreement with Mr. Hoback on the issue of wild and crazy financial expenditures. Mr. Page has certainly raised a concern with all of us that the government is going ahead with its massive billion-dollar prison scheme at a time when crime rates are falling, without any sort of economic or budgetary analysis on how much all this will cost. I would like to praise Mr. Page for having exposed the huge cost overruns in the F-35 fighter jets. I believe it's now at $29 billion and counting. Those are two examples of pretty crazy budgeting on behalf of this government.
I'd like to come to the question of the EI fund, because we have a situation here where you've flagged 100,000 Canadian families who are going to lose breadwinners over the next few months. Looking at your revenue and expenditure projections around the employment insurance fund, I would like you to confirm this. It seems to me that the changes being brought into employment insurance will result in surpluses starting the year after next of $1.5 billion, $4 billion, and then $6 billion. We're talking about a $12 billion surplus in EI. Benefits are going up, of course. The moneys coming into the Conservative government are skyrocketing.
This brings us back to the time when the former Liberal government did the same thing. They took from unemployed workers and their families about $50 billion from an accumulated EI fund.
Can you confirm those figures? It looks to me from your analysis that it will be $12 billion up until the next election and $20 billion up to 2016-17.
Is that an accurate estimation of the accumulated surplus?
4:45 p.m.
Parliamentary Budget Officer, Library of Parliament
It looks like our EI accountant is going to handle that question.
November 2nd, 2011 / 4:45 p.m.
Jeff Danforth Economic Advisor-Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
My name is Jeff Danforth.
The question was regarding what the balance in the EI account would be.
I think you're looking at the difference between the expenditures and revenues. You have to be careful, because administration costs aren't included in those two differences. The administrative costs for EI show up somewhere else.
The EI account won't be in an annual surplus until 2014-15. It won't be in an accumulative surplus until 2016-17, according to our projections.
4:45 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you for that. That's different from the projections I see here. But what would be the accumulated surplus up until 2016-17?
4:45 p.m.
Economic Advisor-Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
There wouldn't be any surplus until 2016-17.
4:45 p.m.
Economic Advisor-Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
It's zero. It's in balance. It's in deficit up until that point.
4:45 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
I want to come back to your jobs projections, the 100,000 additional families that will lose a breadwinner over the course of the next few months. You've been tracking job figures since May 2008. When you go back to May 2008 through to the present day, what would be the overall number of full-time jobs created? If you don't have those figures handy, perhaps that's something you could bring back to the committee.
4:45 p.m.
Parliamentary Budget Officer, Library of Parliament
Sorry, I don't have those figures in front of me.
4:45 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
What was the overall growth in the labour force over that same period, from May 2008 till now?
4:45 p.m.
Parliamentary Budget Officer, Library of Parliament
As soon as we get back to our office, we could provide you with that.
4:45 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Julian.
I forget the gentleman's name who came to the table, but it might be helpful to have more information on that issue. It is a topic that is quite often discussed in Parliament. We'd appreciate that.
We'll go to Ms. Glover now.
4:45 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Thank you, Mr. Chair, and my thanks to Mr. Page and his team for being here.
With regard to the truth in sentencing legislation, hindsight is 20/20. Projections were made that inmates would increase to 6,200 from 4,000. That was a projection for September 2011. Hindsight is 20/20, so we can look back. You know what the actual numbers show? They show 800. It went from 4,000 to 4,800, not 6,200, as was projected. It's not even close.
I'd like the members of the opposition to double-check and look at the past to see where the numbers actually fell, because projections are only projections. We try as much as possible to trust the folks who are trying to provide those numbers.
In your submission, you say:
Parliamentarians may wish to consider whether the recently updated average private sector forecast represents a realistic view or they may recommend that the Department of Finance provide an independent economic outlook.
You were with the finance department in the era when there were questions about whether or not their projections and their economic outlook were independent. What you are asking is to maybe return to those days when they were being questioned on their independence, which is exactly why we moved to trusting independent, private sector economists. Fifteen of them are polled every single time, and you are suggesting, sir, that we look to others.
You've also mentioned the IMF, the OECD, the Bank of Canada. We've talked about their projections, which are much closer to the government's private-sector-based projections and much further from yours. Are you also suggesting, sir, that the IMF, the OECD, and the Bank of Canada have unrealistic projections and ought to do their work again?
4:50 p.m.
Parliamentary Budget Officer, Library of Parliament
No. I think anybody who spends many years in forecasting, as some of us at the front of the table have done, knows that we're all going to be wrong. I think we learned our lessons in the 1980s and 1990s. A lot of economists learned lessons in the last five years about projections, and we're seeing significant changes in the forecasts of all these agencies. All the private sector forecasts—IMF, OECD, even the Bank of Canada—are significantly lowering their forecasts.
4:50 p.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
That's what I want to get at. You said clearly that you're all trying to do the job of providing us with information, but I think we should stop there and not try to tell people they should do theirs better, because we know mistakes are going to be made. You've made mistakes too, right?