Finance Committee on April 28th, 2015

[Mostafa Askari]

That's correct, but again, that's compared with what the current tax law is. The cost to the treasury is relative to what the current tax law is. The current tax law is that you pay the taxes according to your income, but under the family tax cut, you can have that exemption or the tax savings by making that allocation. Whatever you do would be a cost to treasury relative to the amount of money the treasury would have gained from that income.

[Mark Adler, Conservative, York Centre, ON]

Okay. Thank you.

Now, when we introduced the transfer payment to parents with children, there was some discussion about whether this was good public policy. We believe, on this side, that mom and dad are the best arbiters of how to spend that money and how to raise their kids. We are unlike the Liberals, who said at the time that this money would just be spent on beer and popcorn.

Can you clarify for the committee that when dollars remain with the people who earn them, the taxpayers, the money is spent on worthwhile endeavours, with particular regard to the universal child care benefit?

[Mostafa Askari]

I have to be very careful how I answer that question, sir. I could get into all kinds of trouble.

In the study we did on the universal child care benefit, we looked at which groups of families would receive the benefits from that, and that was the result. The way the program is structured, certainly a large part of the new money added to that program will go to families who typically don't have any paid child care expenses. Now, the money could be used for other things related to children, but in terms of the paid child care expenses, a very large portion of the new program, actually, will benefit families who do not have paid child care expenses.

[Mark Adler, Conservative, York Centre, ON]

I have a study here that was just put out by the Rotman School of Management at the University of Toronto, hardly a right-wing bastion. I have a quote from it. This is on the universal child care benefit:

Over all, we’re starting to get a full picture of the effects of Canada’s National Child Benefit. It improves the lives of children, an effect that we can actually measure in terms of better school performance and improved health. It is being spent wisely by parents on both necessities for living and direct investments in education.

Do you want to comment on that?

[The Chair, Conservative, James Rajotte]

We're over time again, but you can make a brief comment if you want to, Mr. Askari.

[Mostafa Askari]

Again, sir, in these studies that we do, we don't really judge the validity of the policy. We just provide the consequences of these policies. I'm not going to comment on whether it's a good policy or a bad policy.

[The Chair, Conservative, James Rajotte]

Thank you.

Colleagues, we have time for four short rounds.

I'll go to Mr. Cullen first, please.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair.

The Prime Minister famously said at the UN once that if you don't measure, you can't manage. That was a fair comment, and hopefully true. Yet we have the Auditor General's report here that says not only is the government not measuring the impact of their tax expenditures, but they are not providing information to parliamentarians to actually understand what the impact has been. Let's look at some of these right now...so flying blind and playing politics.

The TD Bank pointed out that the investment per $1 in early childhood education, child care, earns back to the Canadian economy anywhere between $1.50 and $2.78. By any economist's or banker's definition, that's a good investment and a good return on money.

You cited in the government's changes to childhood benefits to Canadians that there would be negligible impact on the creation of child care spaces and early childhood education. Is that true?

[Mostafa Askari]

I'm sorry, I don't—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

You said that you considered whether the UCCB and the CCED increases would increase the usage of child care services, and you found a negligible impact.

[Mostafa Askari]

Yes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Fréchette?

[Jean-Denis Fréchette]

Yes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Okay: so we're not getting return back if we're not creating those child care choices for Canadian parents.

I want to go to Mr. Cameron or to Mr. Matier for a moment on oil prices.

Back in November, the finance department released a report and did estimates out into the future. It assumed what price for a barrel of oil for Canada going out one, two, and three years in the future?

[Chris Matier]

I believe that was $81 for WTI.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Back in November.

[Chris Matier]

Yes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Now, getting that wrong has an impact on what the health of the books will look like. Is that true? If oil were to stay at the level it is now between $50 and $60, what kind of negative impact would that overly optimistic assumption have on Canada's revenues?

[Chris Matier]

If you look at the current assumption for oil prices in the budget, it goes back to $78 per barrel. That's pretty close to the $81 the government had assumed in November.

You can compare that with the difference between our budget balances or our nominal GDP. That would be probably about $20 billion for the level of nominal GDP. As Mostafa mentioned, that would translate into probably about between $3 billion and $4 billion on federal revenues.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

So that's a $3 billion or $4 billion hole in the government's plan if oil prices don't elevate to the $80 they're hoping for.

[Chris Matier]

Yes, approximately. It's just a rough calculation.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

With no rainy day fund in place and $2 billion taken out of the contingency fund, let's hope there are no natural disasters within the next couple of years.

[Chris Matier]

That estimate actually takes into account, so they would have to...that level of nominal GDP accounts for the risk adjustment.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Okay.

The last 30 seconds go to Mr. Caron.

[The Chair, Conservative, James Rajotte]

Mr. Caron, you have 30 seconds.