Evidence of meeting #48 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was impact.
A video is available from Parliament.
5:15 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay. Do you still stand by the original projection that it's 60,000 versus 100,000?
5:15 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
That's based on our projections and model, yes.
5:15 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
You said that right now there's flexibility within the current framework. The question we asked the Governor of the Bank of Canada was on the larger picture. You pointed out in your recent fiscal sustainability report that new spending by the Liberal government had actually put us on a path of being financially unsustainable when you look from the lens of a federal-provincial fiscal policy. Is that still the case?
5:15 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Well, we have not updated our latest FSR yet. I think that stays valid, as far as we are concerned, until the policy is changed. Based on that report, the federal government actually was in a position of having room to spend or reduce taxes further based on the long-term sustainability criteria.
The provincial governments have some challenges. If things don't change, the debt-to-GDP ratio at the federal level will continue to decline, whereas with the provincial level we see the opposite, and that's the situation.
5:15 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Many people at home might be interested to learn that right now at the federal level, we actually spend more on debt servicing than we do for health care transfers or even the military, so it is a sizeable amount. What you're saying is that currently, within the government's own fiscal framework, we are sustainable. However, given the fact that there's no provision in our Constitution for how we handle provincial debt, if there was a default, then I think people would expect the federal government to take that up.
I see we have members from all across the country. Is that something as parliamentarians you believe we should be keeping an eye on even as we speculate on the short-term run of the economy?
5:15 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Certainly, it's important to watch the overall financial situation of the country as a whole. That's why we do the fiscal sustainability report and we provide a nationwide assessment of that, the total CPP, QPP, and the provincial, local, and federal government.
5:15 p.m.
Conservative
5:15 p.m.
Parliamentary Budget Officer, Library of Parliament
To add something to that, I think there was a question with the governor about the federal-provincial fiscal sustainability report that we're doing. It is an aggregate measure of all the provinces, and I can tell you that in the past three years, we've had several requests from various members asking us to do it on a provincial basis. We don't do it because we don't have the capacity for now. It's a huge task to do, but it would be certainly an interesting task, an analysis that the PBO team would like to do.
Thank you.
5:20 p.m.
Liberal
The Chair Liberal Wayne Easter
Are you saying that if the government gave the PBO more money, you'd be able to do more things? Is that what I'm hearing, JD?
5:20 p.m.
Parliamentary Budget Officer, Library of Parliament
That's what I'm not doing, including a federal-provincial sustainability report.
5:20 p.m.
Liberal
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
That was an intervention by the chair that I do appreciate, Mr. Chair. They don't happen often, so feel free to do more like that.
You've said that there will be larger deficits in the short term. Eventually, there will be additional revenues that will come in, I think you said around 2020-21 or 2020-22. Why is the government showing that it...? What's the difference between what the government is projecting and the smaller deficits that you're projecting? They're projecting quite a bit more this year and for the next few years. Your office is saying there's less. Would they be under-reporting their revenues or anticipating?
5:20 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
I think it's two things. In the very short term, our projection is more up to date. For the government, we have to wait until next week when they provide their update and see exactly where they are in the very short term.
On average, over the five years, when we look at their projection of the deficit and our projection, the difference can be accounted for by the difference in the nominal GDP. They have made an assumption to reduce the nominal GDP from the private sector projection as a prudence factor, and we do not take that into account, so that is really the difference between our projection and theirs.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay, so the prudence factor is the main difference between the two.
5:20 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
Last, there are many parliamentarians who do not get the benefit of hearing from all of you today. If there is one thing that sticks out in the parliamentary budget office, what is the one thing you think parliamentarians should be focusing on as we look toward the November 1 economic update?
5:20 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
An update really has to be very similar to the kind of report that we provide—the economic situation projection for five years, the fiscal projection, and any other news, and the government sometimes includes those in the update. It would be hard for us to tell you exactly what you have to look for. The deficit profile is obviously—
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Is there something that parliamentarians who don't have the ability to come to the finance committee to ask you should be looking at?
5:20 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Until we see the update, it would be difficult for us to say exactly what you have to look for.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Fair enough, and I do appreciate your answers today.
Thank you.
5:20 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you, Mr. Chair.
I would like to thank the witnesses for being with us today.
Not to insult anyone, but I notice that Ms. Cadieux, our clerk, has the dubious honour of being the only woman among the 20 people around the committee table. That is something I think we will eventually have to think about.
