Evidence of meeting #2 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A video is available from Parliament.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
The entity does not have the ability to simply flow its costs through for payment by the government.
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
I mentioned, for example, that the corporate plans must be approved, and I probably didn't say that they go through a process that involves approval by the Treasury Board. I'm sure you would have seen corporate plan summaries of various entities tabled recently in Parliament as well, but they tend to include the planned activities and the cash requirements for an upcoming year. But in behind that there is diligence by whichever is the lead department—in this case the lead department is the Department of Finance—as well as the diligence of the other central agencies on those corporate plans.
In terms of a planning document, there is oversight in that way.
It sounds as though you may have an interest in the Canada Account. Within the legislation there is a limitation. There is an upper threshold on that as well. That's not an area that I am responsible for, so I don't have the background on that, but we could follow up if you're interested in that instrument.
Liberal
The Chair Liberal Wayne Easter
We have time for a very quick one.
Mr. Poilievre, you can have a quick one.
Conservative
Pierre Poilievre Conservative Carleton, ON
All right.
What estimates do we have for the final construction cost of the Trans Mountain pipeline at this point?
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
The estimate that has been released publicly by the board is quite old at this point. It's the $7.4 billion that I'm sure you have seen.
Conservative
Pierre Poilievre Conservative Carleton, ON
Right. So, we're still operating on that old number. That was the number I remember hearing at the outset. Do you have any idea of whether that number's going to change?
Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
Projects of this nature that have encountered significant uncertainties and delays on an already very large infrastructure project.... My experience in seeing infrastructure projects is that costs tend to go up over time. I wouldn't be surprised if that's the direction, based on the delays and so on. However, we really do stand ready to receive the views of the board of directors of Trans Mountain Corporation with respect to what its more detailed costing suggests is necessary for the project.
Liberal
The Chair Liberal Wayne Easter
Thank you.
We'll go now to Mr. Fraser for five minutes. We don't have anybody else on the list after Mr. Fraser, so if others want in, we can go.... The department has agreed to be here until 5:30. We don't have to go that long because we have three hours tonight, and we should probably take a break and have a bite to eat sometime between 5:15 and 5:30.
So, first we'll have Mr. Fraser, and then we can have a show of hands for who wants to go next.
Liberal
Sean Fraser Liberal Central Nova, NS
Excellent.
Thanks very much to each of you for being here. I think, given the nature of the exercise we're undertaking—a pre-budget consultation—it might help to frame the notion of where we stand in terms of our fiscal position right now. There were a few comments at the outset of the meeting around our debt-to-GDP ratio.
Do you mind sharing on the record what our debt-to-GDP ratio actually is, as of the most recent date you have the data for?
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
As published last December, our federal debt-to-GDP ratio is 30.9%. I guess that was our forecasted debt-to-GDP ratio for the conclusion of this 2019-20 fiscal year.
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
I don't know the number off the top of my head.
Liberal
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
I pride myself on being a numbers guy, so I don't want to throw out a number if I don't know it.
Liberal
Sean Fraser Liberal Central Nova, NS
No, it's fine. We can dig it out.
What I'm getting at is that one of the bullet points in the minister's mandate letter was to preserve fiscal firepower in the event of a downturn and continue to make investments that are essentially going to help people. It was phrased, perhaps, more eloquently than that.
In your view, given that we have a AAA credit rating—I think that within the G7, only Germany shares that status—do we have room today to respond should a downturn come on the radar in the near term?
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Yes, we work with credit rating agencies to review our debt dynamics. We don't just talk about our own debt dynamics, but the debt loads that provincial governments are facing. I think everyone around the room knows that provinces are the most likely to face acute pressures over the coming generation with the costs of an aging population and those pressures. I think that it should be stated that our debt loads are pretty good compared to other advanced economies. We have a significantly lower debt-to-GDP ratio than other comparators in the G7, so that bodes well. Likewise, we have well-funded social security schemes, like the CPP and the QPP.
Looking forward to the next recession.... That is a tough one to call. Every recession is different, with its own character and in terms of when and where those pressures and impacts will be most felt. I guess the next recession is going to be a lot different from the last one. We'll have a lot less monetary policy room—
Liberal
Sean Fraser Liberal Central Nova, NS
None of the economists advising the minister today are projecting that we're going to be there in the near future, though. Is that correct?
Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
No, there are no recession doomsayers out there right now. As things go, it's very cyclical, depending on what's going on that day or week and on what the yield curve or labour market report is telling us, so we're always prepared for what could be an economic shock on the horizon.
Liberal
Sean Fraser Liberal Central Nova, NS
You mentioned the CPP. Another item in the minister's mandate letter that I'll pick up is the completion of the enhancement of the CPP. Can you tell us where that initiative is at as of today?
Associate Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance
In the mandate letter, there are two separate things on the CPP. I think you're asking about the enhancement itself?
Associate Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The enhancement is well under way. Those payments have started to be made. Both of those contributions have started to be made, and there's a phased-in approach to it, as I'm sure you're well aware. There were some additional regulatory pieces that needed to happen in order to ensure the long-term sustainability of the CPP regulations moving forward, and we continue to work with provinces and territories to make sure that we're able to bring those particular pieces into force. The enhancement has begun and is rolling forward.
Liberal
Sean Fraser Liberal Central Nova, NS
Has anyone quantified the risk in economic terms of where we would have been had the CPP enhancement not been put in place?