Thank you, sir.
Mr. Chair, vice-chairs, and members of the committee, on behalf of Kevin Page and my colleagues at the new Institute of Fiscal Studies and Democracy at the University of Ottawa, I would like to thank you for the kind invitation to participate in this committee's pre-budget consultation process.
Mr. Page is sorry he could not be with you today. He had another engagement in his capacity as an expert at the Slovak Fiscal Council on the reform of European Union fiscal rules. He sends his greetings.
Budget 2017 is set up to launch an innovation agenda and new programs for long-term health care. It also has the opportunity to frame the government's plan on fiscal management and budgetary performance, and to deliver on campaign commitments for fiscal transparency and enhanced parliamentary fiscal scrutiny.
Our first message is that budget 2017 will have to address a sluggish economy. The Canadian economy is struggling. Growth remains weak, and we face relatively high unemployment for this stage of the business cycle. The goods sector is in recession, and we have not seen growth in real business investment in years.
Budget 2017 faces the dual challenge of stimulating short-term economic growth and laying the foundation for long-term sustainable growth.
While there may be consensus on the state of the Canadian economy and the need for fiscal measures to address these challenges, their success will depend on performance; that is, the ability of public institutions to perform effectively and transparently to meet desired policy outcomes. For instance, the government may wish to move forward on phase two of its public infrastructure program. Should that be the case, a framework that ties spending to performance will be critical. This will not only promote rigorous front-end due diligence to help ensure that investments with good multiplier effects are made but also require transparent reporting of results, rather than solely relying on ex post assessment of rules compliance.
If economic growth remains weak and incomes are stagnant, fiscal and political credibility will depend on budgetary performance and a reallocation of funds within a framework of overall fiscal discipline.
Our second message is that budget 2017 must lay out a fiscally sustainable budget. The government must have credible fiscal targets over the medium term supported by analysis that demonstrates fiscal sustainability over the longer term, for example, a stable debt-to-GDP ratio.
The medium-term plan should include presentation of complete profiles of major programs over a five-year period, along with a rigorous estimate of the costs of any proposed legislation, as was promised by the government in its campaign platform.
The transition period for the new government certainly has obstacles, in particular when its plan is ambitious and depends largely on the capacities of government institutions inherited from its predecessor.
Nonetheless, after a year in office, the government now owns the levers of its success. Budget 2017 offers an important opportunity to address the shortcomings of budget 2016, which included significant transparency gaps over the medium term, no fiscal targets, and no fiscal sustainability analysis.
Analyses by the Parliamentary Budget Office have helped to fill some of these gaps, but they do not replace proactive fiscal transparency on the part of the current government.
Our third message is that budget 2017 provides a historic opportunity to reform parliamentary fiscal scrutiny. Scrutiny of the estimates and the appropriation of public money is the most fundamental role of Parliament as the surveyor of the public purse.