Finance Committee on Oct. 24th, 2016

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My first question is the following. At the outset, you said that the projections you had published did not include data related to measures taken by the finance minister with regard to the real estate market or to the approach to carbon pricing.

Without a precise calculation, can you give me an idea of the impact they will have on the economy, in your opinion? Would that be possible?

[Jean-Denis Fréchette]

We do not really have an idea, either for the carbon market or the housing market.

For the carbon market, as you know, a few months ago we released a report essentially outlining the impact it might have on economic growth, but not necessarily on revenues. That is something we have not yet examined.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Very well.

Your document does, however, reflect the changes made to the Canada child benefit. Yet the indexing for 2020-2021 that Mr. Duclos mentioned was not included.

[Jean-Denis Fréchette]

Since the announcement was made on Friday, as far as I know, we did not include it in our calculation.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

When you did the financial analysis of federal child benefits in early September, you said that fewer and fewer families will benefit from the program because it is not indexed. You probably received information from the finance department or from families, children and social development that enabled you to determine the impact of this measure. At any time before your study was published, did the government tell you that the benefit would indeed be indexed or were you not given that information?

[Jean-Denis Fréchette]

We were not informed of it but I believe we were told within an hour of the publication of our report. The minister said he was considering indexing the benefit, but he did not say when that would be. On Friday, he provided that information.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

For the time being then, you do not know and you cannot really assume the impact that indexing will have as of 2020-2021.

[Jean-Denis Fréchette]

We have not done that yet but we will take the time to do it.

Mr. Jacques, would you like to add something please?

[Jason Jacques, Director, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer, Library of Parliament]

If you go back to the annex in our report of September 1, we presented this scenario with respect to indexation. Using the growth rates that were presented within that report, we'd be looking at roughly $1 billion within the first year, on July 1, 2020, when indexation takes effect, consistent with the proposal tabled on Friday, and then growing over time.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Okay.

I asked you the following question in April, but there were a few developments over the summer. The government put forward the idea of giving the Office of the Parliamentary Budget Officer greater independence and more resources. There was some confusion as to the extent of this. It seems that a bill was prepared, but we have not received any information about it yet.

Do you have any information about it?

[Jean-Denis Fréchette]

I do not have any whatsoever.

We did prepare the two documents you mentioned that were published this summer, one of which was leaked to the press. So is not a bill. The Prime Minister's Office had asked us, at a meeting, to prepare a legislative scenario, applying the measures announced during the election campaign. It was indeed about increasing the PBO's independence and budget, but primarily about calculating the election platforms.

So we developed something close to a bill. It is like a bill, but it is not one. Since we drafted it, a good many measures were not included in it, such as bilingualism and so forth. We gave the document to the PMO in May. We were then asked to do a business case analysis in order to assess the costs. We provided the cost to the PMO in June and have not heard anything further since then.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You have not received any information whatsoever?

[Jean-Denis Fréchette]

We have not received so much as an email, a request for information or a call, and we have not attended any meetings.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

These measures must eventually be adopted and implemented. A certain amount of time will be needed to assess and provide the financial resources. The Office of the Parliamentary Budget Officer will also need a certain amount of time to adjust to the new reality.

[Jean-Denis Fréchette]

The measures for the financial resources are really the easiest, given that they aren't legislation. Changing the legislation involves opening up the Parliament of Canada Act, which I think is more difficult to do. That's at least how I see things now.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I want to go back to your economic and fiscal assessment. You focused on the employment issue. The current trend is a concern. The unemployment rate is more or less stable, despite some slight variations. However, precarious jobs—part-time rather than full-time work—are the current trend.

Have you observed this trend and can you confirm it?

What will be the short- and medium-term impact of the trend on the Canadian economy?

Have you already started this type of study or do you plan to do so?

Do you already have the answer?

[Jean-Denis Fréchette]

We do indeed have a report on the labour market update, but to avoid stealing his chance to make the announcement, I'll let Mr. Scholz answer your question.

[Tim Scholz, Economic Advisor, Analyst, Office of the Parliamentary Budget Officer, Library of Parliament]

I'm glad you asked. We actually are releasing our report on our labour market assessment, hopefully, on Thursday.

One of the key things we found when we looked at all the labour market indicators relative to trend, the thing that really stood out is hours worked. If you look at a number of indicators on employment, they're pretty close to their trend levels as suggested by demographics, but hours worked is below trend.

If you think about labour's input into the economy, it's really hours worked that's dragging this below trend. That includes the fact that we've seen a lot of growth in part-time work relative to full-time work.

We actually have divided this. We looked at different age groups and found, particularly for prime-age males, that hours are way down. Even for some older age groups and younger females, hours are up. That's definitely something we're looking at. On Thursday we'll probably have some more hard figures for you.

[The Chair, Liberal, Wayne Easter]

I am sorry, Guy, you're well over time, but just on that question, did I catch it right? Did you say part-time work is going to full-time work?

[Tim Scholz]

Yes, sorry—

[The Chair, Liberal, Wayne Easter]

I was under the assumption there was less full-time work and more part-time work.

[Tim Scholz]

That's exactly what I meant to say. If you look at the last 12 months for which we have data, from the third quarter of this year to the third quarter of last year, all of the net jobs created in the economy were part-time, and there was actually a small contraction in full-time employment.

[The Chair, Liberal, Wayne Easter]

Either I heard you wrong or you said it wrong, it doesn't matter. We have cleared it up.

I have one other question in that area, though. We're doing pre-budget consultations across the country. I don't know whether your report has touched on this in any way, but what we're hearing about in the meetings is the mismatch of skills to jobs. Have you done anything in that particular area?

[Jean-Denis Fréchette]

Tim.

[Tim Scholz]

We haven't looked at that in the report this year. One thing we have looked at is the regional outcomes. Outcomes for employment are very different across provinces, particularly between oil-producing ones and places like B.C. and Ontario, where the employment outcomes tend to be stronger, and even among industries over the past year. We've seen that in the service sector employment growth has been quite strong, whereas in goods and mining, oil and gas, it's contracted. It's not specifically a skills mismatch, but you do see definitely different outcomes when you look at different industries and provinces.