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.
Conservative
Parliamentary Budget Officer, Library of Parliament
It's a macroeconomic estimate.
Conservative
Shelly Glover Conservative Saint Boniface, MB
So they're hypothetical jobs. Is that correct? Because we've talked about 19,200 actual positions and talked about where they're going to be, etc. Yours are hypothetical then is what you're saying.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Is that a yes or a no? Because I have two other questions for you, Mr. Page. I don't want to dance around the issues.
Parliamentary Budget Officer, Library of Parliament
With all due respect, I think we're comparing apples and oranges. I think we're comparing your estimate of.... I think perhaps 19,200 jobs relates to the strategic operating review cuts, which total roughly about $20 billion. Those are public service jobs. Our estimate of 100,000 includes both public service and private sector jobs. It's the same with the techniques that we used—
Conservative
Shelly Glover Conservative Saint Boniface, MB
So they're hypothetical, though. They're hypothetical? They're not actual jobs. I'm asking you for departments and you're not giving them to me, so they're hypothetical.
Parliamentary Budget Officer, Library of Parliament
Then I guess I could ask you: Is 19,200 a hypothetical number?
Conservative
Shelly Glover Conservative Saint Boniface, MB
No, those are actual positions. We were very clear about that, actual positions, leading to 12,000.
Anyway, I'll move to the next question, since you don't have the answer.
It's unfortunate he wasn't able to answer the question in all those four minutes.
I want to ask about the fact that you've talked at great length about how the restraint measures may lead to some unemployment, but you didn't talk about any of the positive measures in the budget. For example, there's the Canada Foundation for Innovation to support new competitions. There's $400 million to support the creation of venture capital funds. There's money for the industrial research assistance program. Those we believe will create jobs. Yet you mentioned nothing in your report about how many jobs will be created. So I would like you to send me in writing an analysis of all those measures for job creation that are put in the budget. I would like you to include that, since you neglected to do so and only focused on the negative and you can't explain how you got there. I would like you to send that to the committee in writing, if you wouldn't mind.
Thank you.
Parliamentary Budget Officer, Library of Parliament
We would be happy to send a detailed analysis of this, Ms. Glover. I think you'll find we did the same analysis that the government did in the first stimulus.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, Ms. Glover.
We'll go to Mr. Brison, please.
Liberal
Scott Brison Liberal Kings—Hants, NS
I suggest you keep the analysis fairly simple when you do that.
Earlier today Minister Flaherty compared you to Paul on the road to Damascus, saying you had flip-flopped about your assessment of the government's structural deficit, effectively saying you were wrong. You had a different explanation earlier.
Did the government's decision to massively and unilaterally reduce the projected health care transfers have a significant effect on your change of view in terms of projected deficit?
Parliamentary Budget Officer, Library of Parliament
Thank you for your question, Mr. Brison.
In my office we've done two major fiscal sustainability studies, the first one in 2010, the second in the fall of 2011. We updated our study after the decision by the government to change the escalator to the Canada health transfer. All the reports, these fiscal sustainability studies, are on our websites. I think if you follow the sequence of these reports, you'd see that we were saying in September of 2011 that the government had a fiscal gap, that actions needed to be reduced in the neighbourhood of 1.5% to stabilize the debt-to-GDP ratio over the long term, which we take as 75 years.
We also noted almost a similar gap at the provincial level. We highlighted a significant change in the Canada health transfer; effectively it takes some of this fiscal gap and moves it over to the provinces. We highlighted that in an announcement we released in January. So that put the government on fiscally sustainable terms in terms of roughly balanced.
Liberal
Scott Brison Liberal Kings—Hants, NS
So there was a change in material information that led to you changing your view. That's helpful.
Budget 2012 includes a cut of 19,200 federal public service jobs. Minister Flaherty's spokesman is quoted in the media as saying:
We were clear in our budget document we were eliminating 12,000 positions--not the number Kevin Page has created.
Can you clarify this discrepancy between Minister Flaherty's office and the numbers that you are citing?
Parliamentary Budget Officer, Library of Parliament
I think this goes to the question Mrs. Glover was posing just minutes ago.
Our estimate of 100,000 jobs relates to the overall aggregate impact of taking out from the government's fiscal framework something in the neighbourhood of $60 billion. There are offsets between some of the additional revenues to be created from closing some of the tax loopholes and some of the additional spending that's highlighted by Mrs. Glover with respect to the Canada Foundation for Innovation, etc.
Parliamentary Budget Officer, Library of Parliament
Yes. It's a full effect.
As I understand it, the number from Minister Flaherty's office refers to 12,000 cuts. I think it removes the impact for attrition, but again, they're talking just about the federal public service and they're talking specifically about cuts related to the strategic operating review.
Liberal
Scott Brison Liberal Kings—Hants, NS
Is the elimination of the 19,200 positions simply the result of the 2011 strategic review, or is it connected to the strategic reviews of 2007 to 2010?
Parliamentary Budget Officer, Library of Parliament
We hope we'll get more clarity from the templates that we're sending out to departments. Our understanding, from reading budget documents and just looking at the rough aggregates, in trying to achieve ongoing savings somewhere in the neighbourhood of $5 billion per year, is that the government is looking to eliminate roughly 19,200 positions to achieve savings of roughly $5 billion or $5.2 billion ongoing.
In addition to that and just from a public sector perspective, I think to achieve savings related to the operational freeze announced in budget 2010 and the 2011 strategic review, additional job losses will be required.
Liberal
Scott Brison Liberal Kings—Hants, NS
Are they from the 2011 strategic review, or are they connected to the strategic reviews of 2007 to 2010?
Parliamentary Budget Officer, Library of Parliament
We think they're distinct, so we're actually talking about cuts on top of cuts.
Liberal
Scott Brison Liberal Kings—Hants, NS
Okay.
The Canadian Centre for Policy Alternatives believes that the 19,200 figure is connected just to the 2011 strategic review, and that there are a further 6,300 job cuts as a result of the 2007 to 2010 strategic reviews, and 9,000 job cuts as a result of the 2010 budget operating freeze, for a total of 34,500 federal public service jobs, if you combine those decisions.
Do you believe those numbers are credible if you combine all of them?
Parliamentary Budget Officer, Library of Parliament
Sir, we don't really have an opinion whether those numbers are credible. We think at this point the best option for us is to go to departments and make it clear that we're looking at restraint over a period of time going back to the 2010 budget and coming up with a total number, again in the context of cuts on top of cuts, or reductions on top of reductions.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, Mr. Brison.
We'll go to Mr. Hoback, please.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Mr. Page, and your staff for being here today. It's enlightening to listen to what you have to say.
Where I'm going to go, Mr. Page, is on the structural deficits, looking at the costs of our inaction or if we take action, and what the impact would be.
It wasn't that long ago you came before this committee with a stark warning about the need for deficit reduction. In fact, you were sitting right in that chair saying that it's very important. Last fall you were quoted as saying:
We can't be that shortsighted. We have our own fiscal sustainability issues.... The problem doesn't go away.... The only way you address a major sustainability problem is with permanent-type action.
Yet today you talked about the $14.3 billion structural surplus that we're going to have in 2016-17. You can actually see the direct results of reduction in program expenses and what the impact is.
Again last year you were quoted as saying “significant delay in implementing fiscal actions substantially increases the required amount of corrective measures”.
Could you explain to the committee, if we had not taken action to eliminate the deficit in the medium term, what would have been the impact? What would that look like if we were to ignore that action and keep on going the way we're going?