Evidence of meeting #9 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A video is available from Parliament.
1:15 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
It's largely due to the commodities sector.
1:15 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Do you do any modelling as to how a $10 increase in the price of oil would be reflected in the revenue of the federal government?
1:15 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
We're starting to frame rules of thumb like that, but I have nothing at my fingertips right now.
1:15 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Can you give me a rough estimate? Would it be $1 billion for every $1 increase?
If we could get our product to tidewater—and I'll put in a good punch here for the energy east or Trans Mountain pipeline—and remove that differential that Canadians currently receive on oil, that would obviously have a positive impact on what is not a spending problem but a revenue problem, according to government.
1:15 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
If we can sell more products and avail more receipts from the sale of our commodities, then sure, it brings more income into the economy.
1:15 p.m.
Liberal
1:15 p.m.
Conservative
1:15 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
I want to confirm that every $1 invested in infrastructure generates $1.50 in benefits for the economy. Is that the number the department has estimated?
1:15 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
This goes back to Mr. Caron's question about fiscal multipliers. The economic theory of it is that if you invest $1 in infrastructure, after eight quarters it has a multiplicative effect in supporting consumption investment in other parts of the economy.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Investments in infrastructure, in my view, would create the conditions for long-term economic growth and improvements in productivity, which would help us maintain our standard of living.
1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
That's the logic.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
As an individual who used to cover a number of companies and read their financial statements, the year end would be the most important. My understanding is that the fiscal year end for the government is March 31, correct?
1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Correct.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
And there is seasonality in spending and expenses, correct?
February 23rd, 2016 / 1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Correct.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
My understanding is, and I'd like your confirmation, that a number of swings happen during the year. In this last quarter, there usually are a number of large swings in terms of the expense side. Has that not historically been the case?
1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Both expense and revenue to some extent, yes.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
It would be prudent to look at a full-year financial statement, in this case the government's financial statement for the full year, not just look at an individual month or an individual quarter to get a sense of where our government trajectory in revenue and spending is going.
1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
As part of my job, we're looking at both the monthly income statement and the ultimate annual projection. But yes, we plan on both those bases: our cash requirements on a monthly basis and our ultimate budgetary surplus or deficit on an annual basis.
1:20 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Regarding the GDP deflator or GDP inflation rate, do you take an average of that?
1:20 p.m.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Correct. GDP inflation is a construct of both domestic inflation measured by consumer price index and your terms of trade, so WTI and other commodity indicators. Ultimately, we take an average of what the private sector tells us for GDP inflation.
