Evidence of meeting #144 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Stephen S. Poloz  Governor, Bank of Canada
Carolyn A. Wilkins  Senior Deputy Governor, Bank of Canada
Mostafa Askari  Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Tim Scholz  Economic Advisor, Analyst, Office of the Parliamentary Budget Officer
Trevor Shaw  Economic Advisor, Analyst, Office of the Parliamentary Budget Officer
Carleigh Malanik  Financial Analyst, Office of the Parliamentary Budget Officer
Chris Matier  Senior Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer

6:05 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

We have not done that, no.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

Your bureau says there's a $20 difference, or there will be, between Western Canada Select and WTI. I think you also said that roughly half of Canadian oil goes for Western Canada Select prices because it's a heavy crude. I think we produce something like 3.5 million barrels a day, so if we multiply $20 times 1.7 million barrels, we're talking about tens of millions of dollars that the Canadian economy loses every single day. I'm not asking you to do instant math, but is that a generally fair statement?

6:05 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

With regard to the $20 difference between the Canadian price and the international price, not all of it can really be reduced by having the pipeline. Historically, there's something like a $10 or $12 difference between those two, so the additional amount, maybe the $8 to $10, is due to the problem with the pipeline and the lack of capacity to get that oil to the market.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

Brent is typically but not always higher than WTI. Right now I understand that the gap between Brent and WTI is very small. Three years ago it was quite large. It was, I want to say, $8 or $9, which is significant on a $50 barrel. Is Brent not typically higher than WTI?

6:05 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

I assume so, yes.

6:05 p.m.

Economic Advisor, Analyst, Office of the Parliamentary Budget Officer

Tim Scholz

Throughout our projections, which are based on energy futures, it looks as though—and I'm just looking at the table—on average it's about $5 per barrel higher in U.S. dollars.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

Right.

6:05 p.m.

Economic Advisor, Analyst, Office of the Parliamentary Budget Officer

Tim Scholz

That's a projection. I can't comment on the historical behaviour. I don't have it.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

But presumably we'd be able to get Brent if we could get to markets other than the United States.

6:05 p.m.

Economic Advisor, Analyst, Office of the Parliamentary Budget Officer

Tim Scholz

We haven't done that analysis.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

I have a question about the main estimates, which are linked directly to the budget. I don't know whether you or your representatives will be back here before the main estimates are considered by this committee. Your office has raised some concerns about vote 40, which is a central vote allocation of $7 billion, and the ability to enforce parliamentary will on limitations with regard to how that money is spent. Does the PBO have a view on whether the wording in the main estimates bill binds the government legally to spend dollars on the purposes laid out in the budget, and only in the amounts laid out in that budget?

6:05 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

We are actually working on a report on the main estimates that should be out probably in about 10 days. We are looking at that. The way we understand it is done, there isn't a lot of constraint on the government in terms of how they use that $7 billion. The language that is used will give the government significant amounts of leeway in terms of how they're going to use that.

At the same time, the government is saying that they are going to report on a monthly basis on how that $7 billion is going to be used. We'll have to see how that reporting is going to be done, and then we'll make a judgment on that basis. For the time being, what is in the main estimates does not really provide a huge amount of constraint on the government's intent with regard to how they're going to use that $7 billion.

6:05 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

Will your report contain any conclusions as to whether you think the wording in the main estimates binds the government to the amounts and the purposes laid out in budget table A2.11?

6:10 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

Well, I guess it will bind the government to the total amount. It's not clear that they will have restrictions on the specific components of that.

6:10 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

Madam Dzerowicz.

6:10 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

Thank you, Mr. Chair.

Thank you so much, Mr. Askari and your team, for being here today.

I want to start by talking a little bit about labour force participation. On page 6 you say, “The unemployment rate has continued to trend lower”. It's at 5.8%. Then you say, “This decrease, however, largely reflects a decline in labour force participation.”

When you are talking about labour force participation, is this due to the natural birth rate falling fairly rapidly, as well as our retirement rate?

6:10 p.m.

Senior Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer

Chris Matier

We haven't decomposed where that decline is coming from, so we would have to look more closely at the different age groups, gender groups, and sectoral composition. We really haven't looked at it. We just looked at a higher level, the aggregate level, and accounted for that decline.

I would just add that we shouldn't be too surprised that the labour force participation rate has been declining, just given the aging of the population. That trend is going to continue through time. As my colleague said, looking at a period of six months, there could be more cyclical fluctuations that would have influenced those, but that trend decline there would largely reflect a lot of the aging—let's say, baby boomers exiting the labour force and retiring, which is not being offset by younger entrants.

6:10 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

Do you look at the impact of labour shortages on the economy? For example, previous to you, our Bank of Canada governor indicated that there are 470,000 vacancies. People like me hear quite a bit from employers that they are looking for skilled workers. In my case it's mostly skilled trades workers. That seems to be a huge need. Do you look at any of that in terms of impact on the economy?

6:10 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

We haven't much recently but—as my colleague mentioned—we are working on a labour market report for the fall, and those are some of the things we may be looking at.

6:10 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

I think it's very important to do that labour market assessment, because I know that my colleagues and I talk quite a bit about this. What are the right numbers? We have increased our immigration numbers in an attempt to deal with the fact that we do know there's an increase in retirement. Our natural birth rate is decreasing. Then I think there's always a worry about the disconnect between the skills we have and the jobs that need to be filled with specific types of skills. I think it is very important.

You have a section on policy actions and implications around budget and economy. When Christine Lagarde came here from the IMF, she said that a low-hanging fruit for us here in Canada was to increase women's participation in the workforce. That would result in a 4% difference to our GDP and have a $150 billion impact.

I know that our Minister of Finance, our government, has made a huge effort to put in some gender equity measures. Is the positive impact of that on the economy moving forward reflected anywhere in this report?

6:10 p.m.

Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer

Mostafa Askari

We have not taken that specifically into account. We haven't really done that kind of a disaggregated labour market assessment for this projection.

6:10 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

Do you just pick some policy actions versus all the policy actions we have in the budget? How did you select these ones? You have tobacco taxation, the cannabis taxation, child benefits, and the clean energy. Is it just that you pick some of them versus all of them? Can you explain that?

6:10 p.m.

Financial Analyst, Office of the Parliamentary Budget Officer

Carleigh Malanik

I think what you're referring to is our costing exercise. We looked at the equal parenting employment insurance measure. In general—just to walk you through it—in preparation for the electoral platform costing where we will have to cost various requests from political parties, we took budget 2018 as an opportunity to undertake an exercise. We went through the budget and identified roughly 160 new measures. Then we classified these into two types. One is where the government is just saying they are going to increase spending on something or to commit dollars to a specific organization, and we determined that a cost estimate would not be required by the PBO. The other is these measures where stakeholders would be affected, some benefits going out, and things like. That's where we would need to do a cost estimate. We identified 17, and we had the capacity to undertake cost estimates of 10 of those. That's how we got down to this list of 10 budget measures that we actually included.

With respect to the labour force participation rate of women, there was a budget measure, the equal parenting employment insurance measure, where the other spouse—and the literature and information tells us this is typically the fathers—does not necessarily partake in employment insurance or share parental leave with their spouse. With this measure, because it was one that we identified, we could include it and provide a cost estimate. We did include it in the EFO, but, more generally, we don't include this gender aspect in the underlying labour force impact on the economy.

I hope that answers your question.

6:15 p.m.

Liberal

Julie Dzerowicz Liberal Davenport, ON

Okay.

6:15 p.m.

Conservative

The Vice-Chair Conservative Pierre Poilievre

It is time on that.

We're off to Mr. Julian.