Evidence of meeting #30 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was data.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Stephen S. Poloz  Governor, Bank of Canada
Tiff Macklem  Senior Deputy Governor, Bank of Canada
Jean-Denis Fréchette  Parliamentary Budget Officer, Library of Parliament
Mostafa Askari  Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament
Scott Cameron  Economic Advisor, Analyst, Economic and Fiscal Analysis, Library of Parliament
Randall Bartlett  Economic Advisor, Analyst, Economic and Fiscal Analysis, Library of Parliament

5:05 p.m.

Senior Deputy Governor, Bank of Canada

Tiff Macklem

Thank you.

5:05 p.m.

Conservative

The Chair Conservative James Rajotte

Colleagues, we'll suspend for a few minutes and bring the Parliamentary Budget Officer forward.

Thank you.

5:10 p.m.

Conservative

The Chair Conservative James Rajotte

I call this meeting back to order. Colleagues, I would ask you to find your seats, please.

Before we go to the Parliamentary Budget Officer, we will be dealing with the first report from the finance subcommittee, and you should all have a copy of the report in front of you. It deals with how the committee is going to proceed with Bill C-31, and also with our youth employment study dates, main estimates, and pre-budget consultations. You should also have a calendar in front of you. I am very hopeful that we can deal with this expeditiously.

Mr. Cullen will be first to speak to this.

5:10 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you very much, Mr. Chair.

I apologize to our guests. We're trying to cram in a little committee business before we get to you. I will speak as briefly as I can.

We've looked at this report in terms of the approach we are taking to the study of the recent Conservative omnibus bill. It will come as no surprise to my Conservative colleagues that, under this Conservative motion, the challenge the committee has is to divide the bill, in name only, so that committees around Parliament will then do a nominal study of various aspects, because the bill is so complex. However, none of those committees will be allowed to make amendments to the bill based on the witness testimony they hear. As you know, Mr. Chair, doing that is the job of parliamentarians, and we don't have the power to allow other committees to do that.

Under this process, they will then kick it back to this committee and, if history is any teacher, the committee will then take a rapid-fire approach to voting on amendments to a complicated bill when almost none of the voting committee members around this table will have seen the witnesses and heard the testimony. This is a bad way to do policy. This is a bad way for the government to conduct itself, and this has led to problems in the past. One would think that the best teacher is experience. The government has been through this before with these monstrous bills, and has taken this approach as a half measure due to the complexity and the massive non-financial elements of this particular piece of legislation.

Conservatives, I remember fondly, used to rail against this technique when in opposition and have since put the technique on steroids and made it common practice. It shouldn't be. It is an uncommon thing to act this way.

We have a massive tax treaty buried within this bill, the so-called FATCA, which may expose as many as one million Canadians. There are measures on temporary foreign workers. There are measures on reducing hospital fees.

There are measures within this legislation that deserve the respect we as parliamentarians can give them by doing our job. That's why people elect us and send us here.

With that, Mr. Chair, we argue that if a compromise can't be found on the way this legislation has been drawn up, the link between the work of committees and MPs will be broken. Committees were created in the first place to study legislation, hear witnesses, and affect legislation through amendments that we think are viable. The past has also taught us that on these omnibus bills—and I can't recall a single amendment from the opposition having been adopted by the government through hundreds and hundreds of pages of omnibus legislation—the government has refused virtually every single amendment based on expert witnesses. There is all of that as well as the experience that the government, in this omnibus bill, has had to fix measures from the last omnibus bill, which had in it measures to fix mistakes from the previous omnibus bill, so obviously the model has its shortcomings.

I'd implore the government to reconsider this approach. It doesn't work for them, and it doesn't work for the opposition, and it certainly doesn't work for the Canadian public we are meant to serve.

With that, in recognition of our guests being here, Mr. Chair, I, for my part at least, don't want to prolong this conversation. I don't know if other colleagues will have things to say, but this motion, as presented by my Conservative colleagues, does much of nothing other than provide confusion in a parliamentary process that's vital over a piece of legislation that is some 300 pages in length and that affects many aspects of Canadian law.

I suspect the next omnibus bill will have to fix mistakes that are in this one. What a way to run a country. It's no good, and I wish the Conservatives would hearken back to the position they held when they were in opposition and they had so much distaste for this type of technique.

I'll leave it at that, Mr. Chair.

5:15 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mr. Cullen.

I'll go to Mr. Brison next.

5:15 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

I share some of the concerns described by Mr. Cullen.

The legislation has a wide variety of unrelated measures that fall well outside the expertise of the finance committee. Some examples are compensation to veterans for previous clawbacks, which ought to be evaluated at the veterans committee. Rules on workplace hazardous chemicals ought to be dealt with by the health committee. Rules for suspended MPs ought to be dealt with at the procedure and House affairs committee. Titles and ranks in our military probably are for the national defence committee. For imported goods, I would suggest the public safety committee or whoever is responsible for the CBSA. Transfer of authority within the heritage portfolio should go to the heritage committee. Rules around setting food inspection fees would probably go to the agriculture committee. Transferring authorities connected to the temporary foreign workers from the immigration minister to the employment minister should be for the immigration committee or the human resources committee.

Ideally, the committee responsible for the study of the subject matter ought to also be the committee voting on that section of the bill. It is still better to refer these matters to those committees for their input than to exclude them completely from the process, but it is not even close to a half measure, so I would like to move an amendment. Would this be the appropriate time?

5:15 p.m.

Conservative

The Chair Conservative James Rajotte

This would be the appropriate time, yes.

5:15 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

That the report be amended by adding in paragraph (a)(i) after the words “175-192”, the words “clauses 206-209”; in paragraph (a) (iii), after the words “212-233” , the words “clauses 308-310”; and after paragraph (a) (iii), the following: “(iv) the Standing Committee on Veterans Affairs, clauses 102-107; (v) the Standing Committee on Health, clauses 110-162; (vi) the Standing Committee on Justice and Human Rights, clauses 164-165 and 376-482; (vii) the Standing Committee on Procedure and House Affairs, clauses 166-167; (viii) the Standing Committee on National Defence, clauses 168-171; (ix) the Standing Committee on Public Safety and National Security, clauses 172-174; (x) the Standing Committee on Canadian Heritage, clauses 193-205; (xi) the Standing Committee on Agriculture and Agri-Food, clauses 234-236 and 252-253; and (xii) the Standing Committee on Citizenship and Immigration, clauses 299-307”.

Mr. Chair, could I speak to this amendment.

5:15 p.m.

Conservative

The Chair Conservative James Rajotte

You can speak to the amendment, yes.

5:15 p.m.

Liberal

Scott Brison Liberal Kings—Hants, NS

This is consistent with the government's intent that we divide the bill for study at appropriate committees. It simply extends the study of more areas of the bill to the appropriate committee. It's entirely consistent with the government's intention in the main motion proposed by Mr. Saxton.

5:15 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mr. Brison.

I will proceed in this manner. I will take discussion on the amendment and I'll have a vote on the amendment, and then we'll take a discussion on the main motion and then vote on the main motion, amended or not.

Mr. Saxton.

5:15 p.m.

Conservative

Andrew Saxton Conservative North Vancouver, BC

Chair, I want to comment on some of the remarks made by my two colleagues on the other side of the table.

First of all, Mr. Cullen talked about compromise. I want to remind him that there was a significant amount of compromise on this. For example, we doubled the length of time that we're going to be studying FATCA. We extended the number of hours of the study of this report. We've increased the number of committees that will be studying the report along with our committee. There has been a significant amount of compromise. I hope he will see that.

With regard to the amendments, we don't think the amendments are worthy. We think the recommendation of the subcommittee is clear. The committees that it recommends should also study this bill are made clear and the number of hours of study are clear.

Therefore, we do not support the amendment.

5:20 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

Monsieur Caron, s'il vous plait.

5:20 p.m.

NDP

Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC

Thank you, Mr. Chair.

In fact, that is in line with the comment I wanted to make before the amendment was proposed.

Part 6 has 30 divisions. Without the amendment, the committee would probably consider 23 or 24 of them. Three groups of witnesses have been proposed. Considering the number of witnesses that the opposition parties might suggest, we are probably talking about five to eight witnesses for about 20 or 25 separate divisions that deal with very different topics.

For a committee that is supposed to oversee government spending, this approach is not responsible. There are circumstances where omnibus bills are appropriate, but if they are used systematically and if almost everything is buried in one single bill, this committee cannot do its job properly.

The opposition and the government want to hear from witnesses in order to ask them questions and to carefully examine the strengths and weaknesses of each of the proposed items. Given how much time we now have, there is no way we can do so properly.

I think the amendment brought forward by my colleague is a way to ensure better oversight of what the budget bill is proposing, but it is not enough to allow us to do the work that Canadians expect us to do.

5:20 p.m.

Conservative

The Chair Conservative James Rajotte

Okay, merci.

I would like to move to the votes, and I'd like to move to testimony as soon as possible.

Mr. Cullen.

5:20 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Again with apologies to our guests, because we have some important things to hear from you, yet I'm sure folks from the Parliamentary Budget Office also appreciate what we're trying to do here, which is to understand complex legislation.

To Andrew's point about compromise and time, I'm a bit confused only in the sense that I thought Scott's amendment was quite reasonable. It doesn't extend, it doesn't cause any harm to the Conservative government's agenda or timing of the pacing of votes. It simply allows the complex sections, as my friend Mr. Caron has said, to be studied by groups, to actually hear witnesses. As the Conservatives will find, when we prepare our witness list, if you have 30 individual sections but only one or two panels, obviously there are whole elements that we will not hear about. I don't argue this solely for the purpose of the opposition, Mr. Chair, but committee members on both sides will be looking at legislation, the impact of which we will not understand simply because we don't have the time as is outlined.

I appreciate that FATCA is going to get some attention. I would imagine that everybody will be interested in that attention because it's a major tax treaty with the United States, our major trading partner. One might argue it could be a stand-alone bill, but the fact of the matter remains—and I'll stop at this, Mr. Chair—that this entire process is of the Conservatives' own creation. To get at all frustrated or unwilling to do the best job possible is not understandable simply because it was choices that were made when designing a bill of this size. Those choices have consequences. We're trying to remedy those consequences as best we can so that we can understand the legislation that's in front of us. So if veterans affairs should see it, then veterans affairs should see it.

We will be supporting the amendment from Mr. Brison. I am a little surprised that the Conservatives will not be joining us on that.

5:20 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

I will call the vote on the amendment.

(Amendment negatived)

We'll call the vote on adoption of the first report of the subcommittee.

5:20 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

A recorded vote, please.

5:20 p.m.

Conservative

The Chair Conservative James Rajotte

Okay, it's a recorded vote.

(Motion agreed to: yeas 5; nays 4 [See Minutes of Proceedings])

The first report is adopted and the calendar will be updated, colleagues.

I want to quickly move to our next set of witnesses.

I thank you so much for your patience. We did have to deal with that. We were supposed to deal with it before the break, but we had a very unfortunate passing of a friend and colleague.

Pursuant to Standing Order 108(2), a study of the economic and fiscal outlook, we are very pleased to welcome the Parliamentary Budget Officer, Mr. Jean-Denis Fréchette, and a number of colleagues from the Library of Parliament.

Welcome to this committee.

Mr. Fréchette, you'll have an opening statement. Perhaps I could ask you to introduce your colleagues at that time. We will then have questions from all the members.

5:25 p.m.

Jean-Denis Fréchette Parliamentary Budget Officer, Library of Parliament

Thank you, Mr. Chair.

No apology is required. You know that I am very familiar with committee business. It's still music to my ears, and it's a very good introduction actually.

Thank you again for the invitation.

I am here with my colleagues: Mostafa Askari, who is the assistant PBO; Peter Weltman, who is the assistant PBO as well; and with the authors of this fabulous report, Scott, Randall, and Helen.

We are pleased to be here to present the PBO's economic and fiscal outlook, which we released yesterday. Since our last appearance before your committee, the PBO team has published 15 reports, and we continue to be very attentive to Parliament's needs that fall under our mandate.

Regarding the economic outlook, global economic activity picked up in the second half of 2013 and is expected to continue to improve in 2014 and 2015 as more modest fiscal tightening is complemented by still highly accommodative monetary policy in advanced economies. That said, downside risks remain with risk related to low inflation in advanced economies coming to the fore more recently.

In the United States, growth in the second half of 2013 was much stronger than expected in October 2013. Despite the stronger than expected growth, PBO has left its outlook for U.S. growth in 2014 unchanged at 2.7%, in large part due to weather-related weakness in the first quarter of the year. Growth over the remainder of the projection is broadly unchanged from the October 2013 economic and fiscal outlook update.

Based on the Bank of Canada's commodity price index, the PBO outlook for commodity prices is modestly stronger than the October 2013 update projection. That said, PBO's outlook for the price index remains higher over the projection than futures prices would suggest, but below the no-change projection assumed by the Bank of Canada in its April 2014 monetary policy report. These developments have led PBO to revise upwards the outlook for the Canadian economy relative to its October 2013 economic fiscal outlook.

Currently, PBO projects Canadian real GDP to grow by 2.1% this year, 2.7% next year, and 2.5% in 2016.

As the economy reaches its potential level of economic activity, PBO projects real GDP growth to be below 2% annually in 2017 and 2018. PBO's outlook incorporates both stimulative and restraint measures introduced beginning in budget 2012. PBO projects that the level of real GDP will be 0.5% lower in 2016 than would have been the case in the absence of these measures.

Further, this economic impact translates into about 46,000 fewer jobs being created by 2016. Just to be clear, it doesn't mean a decline of 46,000 jobs, but in the absence of these restraints, employment would have been higher by 46,000 jobs.

PBO's outlook for nominal GDP, the broadest measure of the government's tax base, is, on average, $17 billion lower than the projection based on average private sector forecasts. PBO judges that the balance of risk to the private sector outlook for nominal GDP is tilted to the downside, likely reflecting larger impacts from government spending reduction, as well as differences in views on commodity prices and their impacts on real GDP growth and GDP inflation.

However, based on its projection of nominal GDP, PBO judges that the downside risk to the private sector outlook for nominal GDP is broadly in line with the government's $20 billion annual adjustment for risk.

I will continue in French.

I will now talk about the fiscal outlook.

Prospects for budgetary surpluses are higher over the outlook than in PBO's October 2013 update, due to a combination of an improved economic outlook and measures in the Update of Economic and Fiscal Projections 2014 and budget 2014, in particular further planned restraint in direct program expenses.

PBO estimates that the deficit will be $11.6 billion (0.6% of GDP) in 2013-14 and will return to a surplus in 2015-16 ($7.8 billion), maintaining a surplus of $8.6 billion (0.4% of GDP on average) over the remainder of the outlook.

PBO estimates that the likelihood of achieving a budgetary balance or better is approximately 50% in 2014-15, 70% in 2015-16, 60% in 2017-18 and 65% in 2018-19.

While PBO projects budget surpluses over the medium term, these are primarily attributable to the economy growing faster than trend, rather than revenues being structurally higher than expenses. Therefore, there is limited room to implement new policies that reduce tax revenues or increase spending without re-introducing structural deficits. That said, PBO has identified several risks to the fiscal outlook.

First, the PBO projection of the commodity price index assumes that, after two years, real commodity prices will remain broadly unchanged. In contrast, the projection using energy and non-energy futures prices suggests that the commodity price index will decline over the projection. Were this to occur, the level of nominal GDP would be $26 billion below PBO's baseline projection in 2018.

Second, the discretion granted to the Governor in Council for setting employment insurance rates introduces considerable uncertainty in the outlook for revenues. Were the government to set rates to balance revenues with forecast expenditures, it could decrease the revenue outlook and the budget surplus by $2.2 billion in 2015-16 and $2.8 billion in 2016-17.

Third, PBO currently takes Finance Canada's projection for direct program expenses as given, as the government has refused to release the data required to assess if the current restraint is sustainable and to allow PBO to do its own projection of direct program expenses.

Such a prolonged period of suppressed direct program expenses growth has never occurred in the history of the modern public accounts. Historically, a year of reductions is typically followed by a year of increases in direct program expenses of around 6.4%. As a result, direct program expenses may face significant pressures following the 2014-15 cuts, as the most significant year-over-year reduction in direct program expenses is set for 2014-15. Were the typical rebound from a period of direct program expenses reductions to occur in 2014-15 or 2015-16, it would eliminate the projected surplus in 2015-16.

I and my colleagues will be happy to respond to questions you may have regarding our economic and fiscal outlook or any other relevant matter.

Thank you, Mr. Chair.

5:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much for your presentation.

We will start with Mr. Cullen. You have seven minutes.

5:35 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Thank you for being here, Mr. Fréchette, with your excellent authors, as you called them, accompanying you today. Thank you for your report as well. It's interesting.

What work has your office done on the temporary foreign workers program and its impact on the Canadian economy to this point?

5:35 p.m.

Parliamentary Budget Officer, Library of Parliament

Jean-Denis Fréchette

Thank you for the question. It's clearly an interesting issue which is really

a hot topic these days

if I can say that. We did a report a couple of weeks ago on the labour market assessment. If you want to discuss the temporary foreign workers program a little bit more, I will ask Mostafa to discuss that issue.

5:35 p.m.

Mostafa Askari Assistant Parliamentary Budget Officer, Economic and Fiscal Analysis, Library of Parliament

We did a report on the labour market, with the intention of providing the status of the current labour market. We also looked at the issue of labour shortages and skills mismatch.

In that report, based on the data that we received from the Conference Board of Canada on the vacancies that exist in Canada, we could not really find any strong evidence of any kind of a labour shortage widespread in Canada, or even at the regional level at the professional level.

The only place that has any indication of a labour shortage was Saskatchewan. To find other evidence for that, we also looked at the wage growth for various professions in different regions, and we did not see any indication of abnormal wage increases, which you would normally expect if there was a shortage of labour.

Overall, our conclusion was that we could not find any evidence of a shortage of labour. Now we did not link that to the TFW, the temporary foreign workers. We haven't really done any kind of work on that, and I think the only way you can actually do credible work on temporary foreign workers is to have very credible data on the shortage of labour in Canada, which we do not have at the moment. That would be the first step. We would like to do that.

5:35 p.m.

NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

That's confusing to me because I've heard the government, I've heard the Prime Minister, various ministers say that we have a labour shortage in Canada, and you're telling me that we don't have the data to support whether we do or we don't. You said that the evidence you looked at found no evidence at a national or regional level?