Finance Committee on Feb. 23rd, 2016

[Lisa Raitt, Conservative, Milton, ON]

Yes. It's the minister's mandate letter. He's been told to implement the entire platform. Have you costed it out?

[Nicholas Leswick]

We're working through the budget process right now and to review proposals submitted by the cabinet ministers, who have brought forward proposals in the budget process. We're in the midst of costing those proposals for consideration by the Minister of Finance for ultimate budget consideration and budget funding.

[Lisa Raitt, Conservative, Milton, ON]

Okay, because he had some specific ones in there that actually are in your department: GST rebate, increased northern residents deduction, reduced waiting period for EI, labour-sponsored venture capital corporation tax credit, teacher tax benefit. Do those numbers match up with what was in the Liberal platform promises that your minister actually put together in August?

[Nicholas Leswick]

Andrew, do you want to touch on the tax stuff?

[Andrew Marsland]

Well, I guess we're in the process of costing those items. I'm not sure I can comment on the specifics.

[The Chair, Liberal, Wayne Easter]

I think, Ms. Raitt, you're well aware that the departmental officials have some limitations on what they can answer relative to some of the political decisions that the minister or the government may make.

[Lisa Raitt, Conservative, Milton, ON]

I'm very aware, Mr. Chair, that sometimes departments do memos based on a minister's mandate letter. In fact, I used to receive a couple of those memos. I'm just wondering if they have any, and we'll be sure to use ATIP to find out for sure.

I have a second question. When growth is projected at 4.6% in 2017, why are you still matching with a forecast adjustment of $40 billion in 2017, the same forecast adjustment that you gave for a GDP of a much lesser value in 2016?

[Nicholas Leswick]

It has to do with level terms, so the growth in that year is consistent with the growth in the private sector survey that was conducted in November. But the fact of the matter is that adjustment of $40 billion is on level terms and we feel that the size of the economy in nominal GDP in terms of roughly $2.1 billion will be lower in level terms by that period.

[Lisa Raitt, Conservative, Milton, ON]

What does “level terms” mean, so we can understand it, and for the people watching?

[Nicholas Leswick]

If you look at the same table you're referencing, nominal GDP is effectively the size, in nominal value, of the Canadian economy. We believe that the size of the Canadian economy for 2015 will be roughly $1.988 trillion, so in level terms, which is.... Nominal GDP is the broadest measure of the tax base. We tax based on consumption. We tax based on nominal level of income. When we look at nominal GDP, from a fiscal policy and tax policy perspective, that's the number we zero in on.

Indeed, growth rates may be consistent or may change over the time, but the target we're always keeping our eye on is the level of nominal GDP, which is representative, ultimately, of the tax base and what is consequential to tax collection.

[Lisa Raitt, Conservative, Milton, ON]

Right. Nominal GDP is a combination of the real GDP forecast plus inflation. If you go back to the real GDP growth that's being projected, it's 1.4% in 2016 and 2.4% in 2017, yet you still have the same forecast to take care of things that you don't anticipate at the same level.

[Nicholas Leswick]

Right, I understand, and thank you for the question because there is a complexity here.

The level in growth terms—we're not anticipating any change in growth—but because you're effectively growing more slowly in 2016, you're going to have a lower level in 2017. Even though you're growing consistently in 2017, because you grew slower in 2016, your level terms in 2017 just carry forward. It is that level shift, from a fiscal and tax policy perspective, that is most consequential when we ultimately calculate the fiscal balance.

I hope that was clear.

[Lisa Raitt, Conservative, Milton, ON]

Yes, it's very helpful.

The advisory council was announced as well. The minister mentioned it this morning. Are the members of this council going to be compensated?

[Nicholas Leswick]

I believe the minister in his announcement yesterday said that the advisory council would be compensated with a nominal $1, and that all their expenses would be compensated as well.

[Lisa Raitt, Conservative, Milton, ON]

Is there going to be a separate secretariat set up within the Department of Finance to support this committee?

[Nicholas Leswick]

No, it will be funded within existing reference levels in my branch.

[Lisa Raitt, Conservative, Milton, ON]

Will all the members of this advisory council sign a confidentiality agreement—

[Nicholas Leswick]

That's a good question. I can get back to the member on that.

[Lisa Raitt, Conservative, Milton, ON]

—and provide that their companies will not bid on any work associated with the findings of the advisory council?

[Nicholas Leswick]

That's a good question. I'm sorry, I don't have an answer for you today.

[Lisa Raitt, Conservative, Milton, ON]

Okay. Thank you very much.

I'd like to take you back as well. I'm not going to ask you about the “Fiscal Monitor” because we've already made our point that we feel we left in a surplus. I am going to ask you, with respect to the—

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Chair, on a point of order, I don't think the member can ask that.

[Lisa Raitt, Conservative, Milton, ON]

I don't think that's a point of order.

[Steven MacKinnon, Liberal, Gatineau, QC]

I don't think you can say what question you're not going to ask and then not ask it.

[Lisa Raitt, Conservative, Milton, ON]

I'm pretty sure I can say whatever I want, Mr. MacKinnon.