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.
5:55 p.m.
Conservative
5:55 p.m.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Thank you, Chair.
Thank you to the PBO office.
I don't get the chance to be in this committee often, so I'll take advantage of it.
I have a riding that is a “Main Street” type of riding. It's a growing economy—Surrey Centre. We have high levels of immigration. In the just over two years that I've been the member, I've yet to have anybody come to me to say they can't find a job. It's usually been the opposite. I get employers who are asking, “How do I get more workers? I'm not getting enough.” We've noticed an increase in immigration levels, and I want to know whether that increase has had a positive impact on the economy, particularly the employment rate, as it does not appear to have any adverse effect. I want to know if there has been any analysis on the impacts of increased immigration on our economy as a whole.
5:55 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, we haven't done any studies specifically on that.
5:55 p.m.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Do you plan on doing any of that? It's always something that you have to be cognizant of when a government does immigration planning. Government needs to know the impact on the economy, particularly on unemployment rates, before an argument goes in the reverse direction to the effect that immigrants are taking jobs away from Canadians, which clearly, in my assessment, is not the case. Do you have any plans to study that?
5:55 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We have no plans to do that at the moment.
5:55 p.m.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Okay.
Second, have you factored in the effects of NAFTA, or the uncertainty around NAFTA, as well as the ongoing American trade war with China, and the economic impact of that on the Canadian economy?
5:55 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, we have looked at this in detail, but it looks like, given what has happened over the past couple of months, that there is more optimism that there will be an agreement. On that basis, what we are assuming in our projection is that there will be a slight negative impact from the new agreement, but that slight negative impact will essentially be offset by the positive impact that we are getting from the higher growth in the United States. Those two will offset each other.
We also looked at a scenario where an agreement could not be reached, and the impact on the Canadian economy of that. I believe we reached a point of about 0.7% on Canadian GDP.
5:55 p.m.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Thank you.
Again, my questions are maybe in a different pattern. To what has the PBO attributed the strong growth and employment numbers in GDP? Has it been infrastructure spending? Has it been increased immigration? I think you haven't looked at that particularly. What are the particular reasons for the strong growth in the last two to two and a half years?
5:55 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We haven't really looked at it in that fashion. I think we are going to release a report on the labour market in the fall, which may look at some of these aspects, but overall, the Canadian economy is operating very close to its potential level. In that sense, you would expect that employment would do well in those conditions, but we haven't really looked in detail as to why exactly employment is doing that well and why the unemployment rate has gone down that much. It's part of our overall assessment of the Canadian economy.
5:55 p.m.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Lastly, do you watch international economies and how they monitor themselves, as the you the PBO do here. If so, are there any suggestions on what we could do better? I consider the PBO a kind of sober second thought to some of the policies, just as the Senate is the sober second thought to legislation. Are there ways that we can make it a better tool to monitor that and be a second check or a second set of eyes the public can rely on?
5:55 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Well, we are a sort of second eye, in the sense that we are providing this service to Parliament and to Canadians by using our expertise to look at the economy and the fiscal situation. This is as much as we can do.
I don't know whether there is anything else I can add to that.
6 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you, Mr. Chair.
I want to go back to an earlier point that Mr. Kmiec raised in regard to the fiscal framework of the government. At some point, the PBO will be asked to look at electoral platforms, etc., and I want to put it on the record one more time.
You don't have to say anything in regard to this, but we know from the last election that the government had a costed framework wherein it was going to apparently invest in infrastructure, $10 billion a year, and run for the first two years a deficit, and then a return back to balance. This, I am sure, will be the challenge. If someone doesn't honour that, then what is the point of having you investigate this in the first place and approve that those fiscal frameworks are there? That's a bit of a side note.
On page 17, you stated that “Our downward revision mainly reflects a lower estimate for direct program expenses, due in part to infrastructure spending delays, that more than offset $4.0 billion in new policy actions in 2017-18.”
Could you go through the explanation of that? I know you had a report recently that talked about the rationale for some infrastructure not being funded. Could you please give the explanation of what exactly you meant in this paragraph?
6 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Well what it means is that there are obviously some gaps in what the government planned to spend on infrastructure and what has actually happened over the past two years. That in itself means there will be less spending by the government, where it will help the bottom line in that sense, for that period of time. Obviously, based on what we know, the government plans to spend that money over time. Again, it's a shift of the expenses from that period to future years.
6 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
The fiscal framework presented here—I believe there are a few different charts—doesn't take into account the purchase of any interim fleet for any kinds of fighters. There was some talk about a purchase from Australia, or even the Super Hornets. None of those are in the fiscal framework presented here.
6 p.m.
Economic Advisor, Analyst, Office of the Parliamentary Budget Officer
What's included in our baseline forecast is all of the announced policies up to and including budget 2018.
6 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay, so because there was no mention of them, that's not in there either. That's helpful.
Mr. Kmiec, did you have anything? I was going to talk about the WTI.
6 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Again, I am not from Alberta, but am very supportive of it. On page 10, you say, “we project [West Texas Intermediate] oil prices to fall from current levels of US $64 per barrel to around US $56 per barrel by the end of 2022.” At another point you say, “The spread between WTI and Western Canada Select...has widened from US $12 in October to US $20 in April, as supply outstripped existing pipeline capacity.”
This says to me that there's a current gap that can be closed with pipeline projects, whether they be the Trans Mountain pipeline or the Keystone XL, but this problem will only get aggravated as we go further.
Is that the case? Is that the point that's being raised here?
6 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Well, certainly what we are saying is that one of the issues here is that the capacity to get that oil to market is limited now because of the lack of pipeline, and that certainly affects the price.
6 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
This metric is important enough to our economy that you've included it in here. Again, when politicians such as the Prime Minister and the Leader of the Official Opposition state that this project is in the national interest and has considerable revenues, that is a factual statement of the deep economic impacts if those pipelines do not proceed.
Is that correct?
6 p.m.
Deputy Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
What I said was that it has an impact because of the lack of capacity to get that oil to the market, so it certainly affects the price of that oil.
6:05 p.m.
Conservative
6:05 p.m.
Conservative
The Vice-Chair Conservative Pierre Poilievre
Has the PBO calculated the total cost of the discount that Canadians suffer on the portion of our petroleum that goes at the Western Canada Select price rather than at the price for WTI?
