Evidence of meeting #54 for Finance in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was report.
A recording is available from Parliament.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
Would you say that Old Age Security is unsustainable in the long term?
Parliamentary Budget Officer, Library of Parliament
Like economists and people working in legislative offices, I think that it is more important to look at the overall structure. When we're talking about a program that is part of the spending structure, it is more important for us to examine the overall structure. We look into different things, such as Old Age Security. That is a completely different issue.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
Have you seen any analyses or studies that predict the potential consequences of an increase in the age of eligibility for the Old Age Security Program? Have you seen any documents regarding that?
Parliamentary Budget Officer, Library of Parliament
I have no knowledge of any such documents. Budget 2012 certainly provides some information, but it does not talk about the potential consequences.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
Can economic consequences be predicted? For instance, can we predict how an increase in the age of eligibility for the Old Age Security Program will affect poverty among seniors?
Parliamentary Budget Officer, Library of Parliament
No, we have not conducted any such analyses.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
I may be missing some information. What are your general thoughts on Old Age Security and the increase of the age eligibility for that program?
Parliamentary Budget Officer, Library of Parliament
I think it's a good thing the government decided to make such an important decision to change the indexing factors for the Canada Health Transfer and to modify the Old Age Security Program. I think it's important to have basic information and some analyses in support of the decision. However, as I said today, no such analyses are available. Of course, analyses can be carried out. Our office has conducted similar general analyses.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
If my understanding is correct, you are telling me there is insufficient information to support the decision to increase the age of eligibility.
Parliamentary Budget Officer, Library of Parliament
The government can say that providing such analyses is unnecessary. It may be more important to focus on the fiscal impact. I think that more information and transparency is better for the general debate in Parliament.
NDP
Lysane Blanchette-Lamothe NDP Pierrefonds—Dollard, QC
Could you tell us what specific information would help us have a better debate on this issue?
Senior Director, Economic and Fiscal Analysis and Forecasting, Office of the Parliamentary Budget Officer, Library of Parliament
What's really lacking is the government's report on fiscal sustainability and intergenerational equity that they promised to release, I believe, in 2008. It would help the situation to have long-term economic, fiscal, and demographic projections, looking at the entire fiscal structure of the federal and provincial or territorial governments. That type of analysis would be extremely helpful.
Conservative
The Chair Conservative James Rajotte
Thank you.
We'll go to Ms. Brown, please, for a five-minute round.
Conservative
Lois Brown Conservative Newmarket—Aurora, ON
Thank you very much, Mr. Chair.
Thank you for your presentation. I'm a visitor to the finance committee, so I haven't had the opportunity to hear any of your previous presentations, but thank you very much.
I know you're all economists. I think it was President Roosevelt who said he'd like to find a one-armed economist, because economists always say, well, on one hand, and on the other hand. So there's always a great dispute. Economics can be a science and it can be a social study. I guess it's because we have normative, then we have positive.... People come at these things from different perspectives, do they not?
I listened to the presentation and heard what you've had to say today, and yet we have economists from all across this country.... Patricia Croft is saying, regarding budget 2012, “...I think Canada is in a fabulous position.”
Avery Shenfeld, from CIBC, said that budget 2012:
...makes sense in a world economy that is still not what we would like it to be. [...] Relative to what anybody else is doing, we still come out with flying colours.
Craig Alexander, from TD Economics, talks about budget 2012 being
...a prudent budget...the government provided support to the economy when it needed it. They boosted spending. They increased stimulus and now that we're on the other side of the valley, it's time to rebalance.
Doug Porter.... And it goes on. There's a whole list of economists here who have quite a different take on some of the things you've presented today.
One of the things I would like to point out, just being a visitor to this committee, is that the government has created 700,000 net new jobs since the beginning of the recession. So we are coming out on the other side. Every one of those jobs in the private sector is a new taxpayer who is contributing to the economy. I always look at government jobs as ones that are being paid on recycled dollars, so when we have real jobs taking place in the real economy, and the private sector is starting to provide that opportunity, we are on a positive trajectory.
I'm not an economist, but at least I look at that and say I think there are some very positive things happening here.
Where I really want to focus my question, though, if I may, is on issues where you're talking about cuts in spending and cuts in transfers. You said that's going to have a really negative impact on health care across Canada. I wonder if you could provide to the committee some of the costs the provinces are projecting as increases in their spending.
I come from the province of Ontario; I represent an Ontario riding. I know that Mr. McGuinty, in his most recent budget, said that increases for the province of Ontario are going to be kept to an average of 2.1% growth annually. Yet we've been transferring 6% year over year into the province of Ontario for health transfers. I don't get how this jibes. I just don't get how this matches with what you're saying, that health care is going to be impacted so negatively.
I wonder if you could speak to that and if you could provide to the committee those numbers as far as increases from the provinces are concerned. Are they looking at spending more than that 6%?
Parliamentary Budget Officer, Library of Parliament
Thank you very much. Welcome to the committee, obviously.
Briefly, on this take that somehow we're very negative, just to highlight that, we actually have pretty much the same deficit track as the government. And again, the budget is full of information that provides international comparisons of where Canada is with respect to the G-7. We have low deficits relative to GDP. We have a low net-debt-to-GDP ratio. We've had strong growth in our labour market, so that we didn't have quite as deep a recession as some other countries when you even look at these output kinds of analyses.
We like the fact that we're talking about a deficit here today of $24 billion compared to a deficit of a year ago that was considerably higher. And just a few years ago it was $56 billion. These are really good trends. This is very positive. And March data are pointing to a strong number.
Parliamentary Budget Officer, Library of Parliament
In respect of fiscal impacts, on the Canada health transfer, we look at it pretty much as legislated, but we just look at the fiscal numbers. When we did this analysis, for example, on sustainability, we looked at trends and made projections based on those trends. We can tell what average growth is by provinces in terms of health care spending over the past ten years. It's roughly 7%. We can give you the averages over the past 30 or 40 years. Now we have governments that are saying they want to constrain spending to even lower levels. If we see a lower growth—
Conservative
The Chair Conservative James Rajotte
I'm sorry, Ms. Brown. We're well over our time.
I apologize for that. If there's anything further on that question, Mr. Page, you can come back to it in another round or you can supply it to the committee.
We'll go to Mr. Jean.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Thank you, Mr. Chair.
My thanks to Mr. Page for coming today. I do appreciate it.
On page 4 of your report you indicate that the elderly benefits are projected to rise relative to the size of the economy from 2.2% of GDP, which is $36 billion in 2010-11, to 3% of GDP, which is $110 billion. That's a significant rise by 2031 in elderly benefits. That's fair to say. It's three times more in real money terms.
Parliamentary Budget Officer, Library of Parliament
As a percentage of the economy, I think the numbers are there in front of you.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
But that's significant—from $36 billion to $110 billion in less than 20 years. That's on page 4 of the report.
First of all, since we've been in power this government has cut debt so we have lower payments. I think you can agree with that. The second thing we did was the economic action plan, which is $45 billion, a huge amount of money, the most ever spent on infrastructure in the country, a stimulus shot in the arm. Third, I look at this budget as not so much an austerity budget as an efficiency and productivity budget. You mentioned on page 25 that the manufacturing sector is actually much more productive in Canada today than it was a few years ago. We're getting more output. I was also glad to hear that you believe the lowest possible tax rates produce the strongest economy.
But my interest is really in jobs. My difficulty is what you project in relation to job losses. I think the efficiency and productivity of the budget, specifically in some areas, would produce a much more efficient and robust economy. Is that fair to say?
Parliamentary Budget Officer, Library of Parliament
I'm sorry, I'm just waiting.... There's a question?
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
Oh, there are lots of them.
What is the natural rate of unemployment? What do most economists consider to be the natural rate of unemployment?