Finance Committee on April 10th, 2017

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Okay.

[The Chair, Liberal, Wayne Easter]

You have time for one quick question.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

This is the last technical question.

As we all know, the minister of Finance published it on December 23, a few hours before Christmas. Is that the way to do so usually?

[Brad Recker]

It's typically in the fall and after the fall update. We've only been publishing it for three years, I think.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Okay.

[The Chair, Liberal, Wayne Easter]

I was told, Gérard, that the official critic for the official opposition wanted some reading for Christmas Eve.

Pierre, the floor is yours.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

My thanks to all the witnesses for being here today.

I would first like to talk about the statutory items. We will not be asked to vote on them, but they are still included in the main estimates for information purposes.

In your introduction, you said that you were expecting a decrease of $734 million in interest on unmatured debt, due to a downward revision of interest rates. Thanks to the documents from the Library of Parliament—whose employees I thank—we see that the projected amount of interest on unmatured debt for 2017-18 is $14.924 billion. Could you elaborate on that for the benefit of Canadians? An amount of $15 billion will be spent over this fiscal year that just started. Who will receive those amounts? That's interest. So we are talking about institutions that lend the money to Canada. Interest is paid to them, but is there a way for Canadians to find out who actually gets that money, the $15 billion per year for the interest on the debt?

[Christopher Meyers]

If I understood your question the right way, you were asking who would be the recipients of these interest payments that are presented in the main estimate documents.

The line item for interest on mature debt, which, as you point out, is approximately $15 billion, is a reflection of interest we will pay out on un-matured debt. That would be Government of Canada bonds, treasury bills, real return bonds, and other market-based instruments. The ultimate recipients of those interest payments would be holders of those instruments and securities.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

So it's the holders of securities, if I understand correctly. Are Canadian financial institutions among those security holders?

[Christopher Meyers]

In the context of this particular line item that shows disbursements related to unmatured debt, I would imagine that, if financial institutions are holding some of those securities on their balance sheets, they would be a recipient of these interest payments as well.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you for your answer.

I'll move on to another question. Mr. Jovanovic, a little earlier, I talked to the Minister of Finance about reviewing the Income Tax Act. The minister had repeatedly said that he wanted to review that act. Over the past year, we have reviewed the tax expenditures, which has led, by my count, to nine promises to amend the Income Tax Act in the budget implementation bill.

However, aside from the tax expenditures, what work is being done on the Income Tax Act? Are there amounts in the main estimates for the review of the tax code in order to simplify it, as reiterated by the Minister of Finance and the Prime Minister, who think the act is too complex?

[Miodrag Jovanovic, General Director, Tax Policy Branch, Department of Finance]

In order to answer that question, perhaps I can briefly turn to last year's review of the tax expenditures.

That was basically done within the Department of Finance. It is part of the Department of Finance's routine work. The expenditures for that are therefore part of the Department of Finance's normal budget, because it's our job to address those issues.

In 2016, the government looked at all the tax expenditures. We looked at all the tax bases, the corporate tax, the personal income tax and the sales taxes.

We also called on a group of experts. Seven experts laid out a particular vision so that we can see the big picture for those issues.

That's basically part of the department's routine work. So they are our department's funds.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay.

I also have a question about the numbers, which seem quite surprising to me.

In the main estimates, we see that we spent $1 billion in 2015-16. In terms of the voted appropriations, we spent $98 million in 2016-17, and we expect to spend $89.3 million in 2017-18.

Mr. Meyers, could you tell me why the voted appropriations have decreased over the years?

[Christopher Meyers]

Thank you for the question. I'll answer in English.

First, I'll start with the figure for the estimates to date figure. That's the $98 million, compared to the request in the 2017-18 main estimates of $89.2 million.

The decline that you see there is a function of a number of different items. The first is related to the items I mentioned in my opening remarks. There were two initiatives coming out of budget 2015 totalling $1 million. These were time-limited funding items that are falling off in 2017-18.

Also, in the prior year, we had a funding program with respect to Harbourfront Centre, totalling $4 million, and since last year's estimates, that program has been transferred to the Department of Canadian Heritage. That expenditure does not need to appear in our 2017-18 main estimates, nor should it.

We also had $1.5 million in government advertising that was a component of total estimates to date in 2016-17. Combined, I would say that those are the major factors leading to the decline year over year from estimates to date of $98 million for last year compared to the opening figures for 2017-18.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

If I understood correctly, you have reduced the advertising budgets.

Is that correct?

[Christopher Meyers]

The main estimates for 2017-18 as you see them here do not include any amounts for advertising. That is not unusual. To the extent that they are decided on, those amounts typically come through later in the expenditure cycle, in supplementary estimates (B) or (C), so that would be something that you might be looking at down the road.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay. Thank you.

[The Chair, Liberal, Wayne Easter]

I thank you both.

If we can get away with one question from the government side and one from the official opposition, we can then let the officials go. Then we'll come back to vote on the Department of Finance's main estimates, and then deal with a couple of items of committee business.

Are we okay with that?

If you're not, just say so, and we will hold the officials here. Does anybody have a question?

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

On the calculation of interest expenses, you have two points. There is a decrease of $528 million under other interest costs, and a decrease of $764 million in interest on unmatured debt. Those are based on the assumptions in the fall 2016 economic statement.

[Christopher Meyers]

That's right.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Obviously, we're not involving [Inaudible—Editor].

[Christopher Meyers]

Right. I think it may be important to understand how this document gets put together and when, vis-à-vis budget 2017 or the annual budget.

The main estimates are produced prior to the tabling of the annual budget. We have to draw a line in the sand in terms of what projections and inputs we're using. Given production deadlines on the mains, the previous public fiscal projection at that time was the 2016 fall economic update. Subsequent adjustments to reflect assumptions that were made in budget 2017 will be seen in supplementary estimates (B), for example, which are typically the first supplementaries of the Department of Finance.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

But not until November, according to the calendar.

[Christopher Meyers]

That would be correct.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Okay. I'll stop there.