Finance Committee on May 10th, 2017

[The Chair, Liberal, Wayne Easter]

For the record, we're dealing with the order of reference now—rather than the pre-study—of Tuesday, May 9, 2017, Bill C-44, an act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.

This afternoon we're fortunate to have, from the Institute of Fiscal Studies and Democracy, Kevin Page, who is the president and chief executive officer, and Mr. Khan, who is the executive vice-president. He will be a little late getting here, as I believe he's before the Senate committee at the moment.

I might mention as well that there may be a vote. I think it's scheduled for some time around 4:15, so that will disrupt the hearing for a little while and we may have to suspend.

Mr. Reid.

[Scott Reid, Conservative, Lanark—Frontenac—Kingston, ON]

On a point of order, I was just thinking that suspending.... Perhaps what we could do is agree in advance by unanimous consent that we could use some of the time before that vote. It's typically a 30-minute bell, but we could use, say, 20 of those minutes to continue our proceedings, sir.

[The Chair, Liberal, Wayne Easter]

We normally do in this committee, Scott. We'll go to probably within five minutes of the vote. We usually do, as we're just next door.

[Scott Reid, Conservative, Lanark—Frontenac—Kingston, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Usually we get agreement, but we're a pretty agreeable committee here, except when it comes to voting on issues.

Thank you, all.

Mr. Page, the floor is yours. I understand you have a presentation, and then we'll go to questions.

[Kevin Page, President and Chief Executive Officer, Institute of Fiscal Studies and Democracy]

Thank you, Mr. Chair. It's nice to hear that the finance committee is an agreeable committee.

Thank you, Chair, Vice-Chairs, members of the House of Commons Standing Committee on Finance. It is an honour to be with you today.

I will be making brief remarks on Bill C-44, particularly on the position of the parliamentary budget officer.

These remarks reflect analysis publicly released by the Institute of Fiscal Studies and Democracy, or IFSD, at the University of Ottawa. They include both favourable and unfavourable observations. The bottom line is that amendments are necessary. I am heartened to hear that the government is open to changes.

My perspective is premised on the basic need for senators and members of Parliament to have financial analysis when they vote on spending and tax legislation. Given the uncertainty around projections and cost analysis, we want additional data backed by analysis for parliamentarians. Canada's Parliament needs a strong and independent budget office.

I congratulate the Government of Canada for having introduced a bill that will strengthen the Parliamentary Budget Office.

From this vantage point, a number of proposed changes are favourable. The position will be an officer of Parliament. Parliament will have a role in the selection of the officer. The officer can now be dismissed for cause, as opposed to working at the pleasure of the Prime Minister.

The mandate is being expanded to help political parties cost election platforms. Political parties struggle to find technical expertise to help them cost initiatives in their election platforms. Who better to do this in a non-partisan way than the PBO? It will not be easy to set up the protocols with the public service on information sharing, and with parties on the release and use of PBO analysis, but the benefits of a good process should be significant for parties and voters. This is a complicated endeavour that merits the careful consideration of parliamentarians.

When I took the position as parliamentary budget officer, few people with the requisite experience and skills wanted to be the PBO. During my mandate, there was confusion and tension around responsibilities and accountabilities. The officer position was situated in the Library of Parliament, so there were administrative accountabilities to the chief librarian and mandate accountabilities to Parliament.

The amendments proposed by the government will ensure the accountability of the parliamentary budget officer to Parliament, and may also encourage more people to apply for that position.

I have some less favourable—even unfavourable—observations related to the proposed legislation. I argue that it is essential that four provisions of the proposed legislation be amended to better serve parliamentarians. They deal with purpose, mandate, independence, and access to information.

Without these amendments, the Parliamentary Budget Office could be weakened and less independent than it is currently.

With regard to purpose, the purpose of the PBO must align directly with the core mandate of Parliament. According to Robert Marleau and Camille Monpetit, two Canadian experts on parliamentary procedure, the direct control of national finance is the “great task of modern parliamentary government”. The House of Commons is given the power of the purse, and the PBO plays an indispensable role by providing decision support in the form of economic and fiscal analysis to improve the quality of debate and outcomes for Canadians. The legislation should reflect this type of language. It should be strengthened with this purpose at its core.

The mandate in the proposed legislation is less clear and more restrictive than in the current legislation. It should be clarified. Do senators and MPs want independent economic and fiscal forecasts and related analysis? Do MPs want help with costing and scrutiny of spending and tax legislation? What the PBO will do to serve Parliament should be spelled out in the law very clearly.

For instance, the proposed legislation would no longer allow individual MPs to request costing analysis of government bills or procurement. Their requests would be limited to support on private members' bills. During my time as the PBO—the parliamentary budget officer—we received important requests from MPs to cost wars, fighter planes, and crime bills, among many other things. There is no good reason to restrict this important function of the parliamentary budget officer.

With respect to independence, independence for the parliamentary budget office means being free from political and bureaucratic influence in its work and reporting. An independent parliamentary budget officer should determine the work plan and undertake analysis within the mandate he or she deems important, in the same way that the Auditor General must undertake work in the audit of the public accounts. There should be no requirement to have work plans approved by Speakers of the Senate and/or the House of Commons. This does not exist for the Auditor General.

Given the frequency and volatility of economic information, it is also essential that the parliamentary budget officer publicly release timely reports, even if this means doing so when Parliament is not sitting. The proposed legislation would restrict reporting to only when Parliament is sitting.

With respect to access to information, in my experience, governments and the public service do not like to provide information that will be used to strengthen accountability. You must ask yourselves whether you want to strengthen the information provisions of the parliamentary budget officer. What if the government and public service refuse to provide essential information that the budget officer requires to serve you in your capacity to undertake financial due diligence? Should there be sanctions? Should the PBO have recourse to a federal court?

In closing, I want to make a plea for this Parliament to see the strengthening of the parliamentary budget officer and office as a beginning and not an end. Our estimates system is badly broken.

There is too little analysis on the thousands of dollars of expenditures approved through laws and appropriations. Our financial system needs a better alignment between expenses and the budget.

We need better control gates for accountability of spending and performance.

It is a privilege to be here and a privilege to take your questions. Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Page.

We'll turn to five-minute questioning, because we'll be operating on limited time.

Mr. Ouellette is first up.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you, Mr. Page, for being here.

I want to talk about accountability for a little bit. Under the Westminster model, accountability is very important. I believe the parliamentary budget office should be a tool not only of Parliament and in consequence of parliamentarians, but also in consequence, following that, of Canadians.

You just said that what the PBO will do to serve Parliament should be spelled out in law. How can you be accountable in any proposed legislation to actual parliamentarians? How do you, then, actually respond to the needs of parliamentarians? That's my most important category—not to government but to parliamentarians. How can you respond to what I ask of you and the work that I need to see happen so that I can hold the government to account?

I don't believe the PBO is here to replace parliamentarians in their role. You're here to assist me so that I can hold—or the opposition, in this case, can hold—government to account.

[Kevin Page]

An excellent question. I think you're absolutely right. The parliamentary budget officer has no accountability, per se, to Canadians. That accountability of holding the executive to account rests solely with individual MPs, and this committee plays a very important role. How they operate, how the requests are provided to the parliamentary budget office, how they are prioritized... Are they prioritized on materiality? Are they prioritized on risk?

Really, it's how that function is played out. A lot of this operating model exists outside legislation, but I think the mandate plays a very critical role. What is the scope of duties that the parliamentary budget officer and office will provide to you? Again, it should be clearly laid out in terms of those specific products. I think, as well, the individual relationships to committees should be spelled out in legislation, and the role of the parliamentary budget officer to individual MPs, as well.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

You also said an independent parliamentary budget officer should determine their work plan and undertake analysis within the mandate he or she deems important. How can you be accountable if already the basis point is what you deem to be important? I guess my question is, what would you actually like to see, or what changes would you make to the legislation so that you can actually be accountable to parliamentarians and empower the individual MPs to hold the government to account?

[Kevin Page]

Obviously, a parliamentary budget officer, the Auditor General, any officer of Parliament, is going to prepare a work plan. It will be forward-looking, and as the sessions progress, initiatives will be brought forward. The parliamentary budget officer will make decisions, just like the Auditor General makes decisions on what to audit this year, next year, and in future years. It's a decision. I think you want the parliamentary budget officer to be a regular feature here. I was a regular feature at this committee, the Senate committee, public accounts, and the operations and estimates committee. We will bring the work here. The parliamentary budget office will bring the work here. I think you want to make sure that you have that opportunity to talk. Is this work authoritative? Is it high-quality work? You make the decision whether you use the work or not. In the same way, we ask the Auditor General, and we hold the Office of the Auditor General accountable over the quality of their work. We would do the same.

I think one feature that is not in the legislation that does exist in other legislations is a review function of the parliamentary budget officer and office. I was asked to review the Office for Budget Responsibility in the U.K. It is actually built into legislation. Having something like a five-year process where we build into the review, or maybe seven years in the case of the change in the tenure of this office, would be a good addition, as well.

Again, the work that was done during my tenure, and the work done by Mr. Fréchette, the current parliamentary budget officer, all that work, is made available to Canadians. There is complete transparency.

[The Chair, Liberal, Wayne Easter]

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I have a bit of a different view from my colleague across the way. I'd like your opinion on whether you feel the parliamentary budget office works on behalf of us, as members of Parliament, or on behalf of Canadian taxpayers.

[Kevin Page]

That was a question we debated significantly in the early months. I think, ultimately, Parliament works for Canadians. When we actually do our work, and the way we release the work, we want to feel that we're also working for Canadians, but we work through you.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Yes, but we have seen, in many cases, where Parliament doesn't actually work on behalf of Canadians, and I think that's why we have roles like yours, like the Auditor General, and others, that are independent. Whoever the government is, and however they choose to work with opposition and other members of Parliament, you're that independent....

That leads me to another question. I'd like your view on this. You're here as part of this legislation. Do you feel you should be here testifying as part of the consideration of the budget implementation act, or do you feel that with your experiences as a parliamentary budget officer, you should be here maybe testifying before a special committee to look at the role of the parliamentary budget officer, and not get buried within the implementation act?

[Kevin Page]

We have this discussion around whether this is an omnibus bill, whether there are parts here that don't flow directly from the budget, that don't have policy cover from the budget. Would there be a better, longer, more fulsome discussion so all political parties would be more comfortable with the legislation if we pulled the section out that deals with the parliamentary budget office? I think that's a fair question. I would be supportive of that if people around this table thought, yes, we would benefit from a fuller conversation.

Going back to your earlier question, sir, independence does not mean that the parliamentary budget officer or office usurps the role of parliamentarians. It works through parliamentarians.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I understand that.

If we were to propose that we look at this in a separate committee, I'd be interested to know from your experience whom we could call as witnesses who would have a good sense of what the parliamentary budget office could do differently, how we could strengthen it—those sorts of things. I know you work with the civil service, but in your time, what other entities would you find yourself working with that were helpful in coming up with your reports?

[Kevin Page]

There has been a significant development in the international community around building legislative budget offices or international independent fiscal institutions. The OECD has led the way. The report we provided to you talks about principles for establishing these types of offices.

They would include having some witnesses who could speak from the OECD experience. Almost every country in the OECD now has one of these offices. They could provide, I think, a very useful service to this committee or another committee. The International Monetary Fund has been very supportive of the development of these independent fiscal institutions. They have done macro-type analyses on the benefits of these things. They can share their work. The World Bank is actively playing in amongst a number of communities: African communities, Caribbean communities, and southeast Asian communities. I'm part of that development.

If there were a willingness to reach out to the international communities, I'm sure they would love to be here.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Good. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Liepert and Mr. Page.

Mr. Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Mr. Chair.

First of all, I want to say that it seems very unfortunate that we have to study changes to the mandate of the parliamentary budget officer in the context of a bill on the implementation of the budget. Aside from the word “budget”, there is no relationship between the two.

That said, I want to thank you, Mr. Page, for all the work you did in the past as parliamentary budget officer. I think your work was greatly appreciated by all Canadian citizens.

There are some unprecedented changes being proposed by the current government. Among others is the fact that the parliamentary budget officer will be required to submit an annual plan. I understand that it is normal to plan and forecast one's work and research. However, do you think that this plan may restrict the ability of the parliamentary budget officer to launch investigations that might come up during the year, investigations that had not been planned initially?

[Kevin Page]

It's an excellent question.

First of all, I think it's just a good practice. I would expect that an independent officer of Parliament would be preparing work plans. As I've noted, I don't think these things should be approved by the Speakers. I could easily envision cases, even in the current environment, in which the PBO may decide to do investigations on sensitive files leading up to an election. I could see that a Speaker—certainly the Speaker of the House is a political person—might decide that this should not be part of the work plan and would not approve it.

I am also quite aware that some of my colleagues in the Department of Finance don't like the fact that the parliamentary budget officer produces independent economic and fiscal projections, and they could put pressure on the Speakers to take this out of the work plan. You could already see in the language of the legislation that there seems to be a willingness not to want the parliamentary budget officer to do proactive work. I think you want a parliamentary budget officer to do this type of work, not wait for MPs to say, “We need to look at this” in order to provide this analysis to MPs and to Canadians.

I think, then, it would be potentially very restrictive, if the Speaker were responsible for signing off.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much for your answer. I see that you fear the politicization of the work of the parliamentary budget officer because of the changes the government wants to make.

I will ask a hypothetical question. It's as though we were facing a black hole, and I'd like to know your opinion.

If the parliamentary budget officer has to submit his annual plan to the Speaker of the House of Commons and to the Speaker of the Senate, what will happen, in your opinion, if they refuse it?

[Kevin Page]

What would happen if the Speaker said no to a work plan, to the parliamentary budget officer's taking an initiative? I could answer what I would do. I'm not sure I could answer what the future parliamentary budget officer would do. It would create a lot of tension, create some controversy, and I think there would be unnecessary.... Quite frankly, I'm not even sure the current Speaker would want to be the proverbial meat in the middle of the sandwich.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

What do you think of the fact that we are eliminating the possibility for parliamentarians—and curtailing their right— to ask questions of the parliamentary budget officer, unless they are related to a motion or a bill a member has personally tabled or is about to table?

This places enormous restrictions on the scope of the relationship between parliamentarians and the Parliamentary Budget Office, does it not?