Finance Committee on March 18th, 2021

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Okay, thank you.

May I ask another quick question, Mr. Chair?

[The Chair, Liberal, Wayne Easter]

Okay, but very quickly, Gabriel.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Mr. Giroux, does the government provide you with the data you need in order to properly analyze the programs?

[Yves Giroux]

In general, yes. We have had some problems or concerns with some departments from which information seems to be more difficult to obtain, such as Innovation, Science and Economic Development Canada and the regional development agencies.

However, overall, things are quite good.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

We're turning now to Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

Thank you for joining us today, Mr. Giroux and Ms. Yan.

We are grateful to you for the huge amount of work you have done for Canadians during the pandemic. We hope that your loved ones and yourselves are healthy and safe as we go through an extremely difficult time.

When my constituents ask me for explanations about the way certain things work or about the way in which they could be improved, I tell them about your studies.

My question is along the same lines as Mr. Ste-Marie's. No budget has been brought down for two years. I know that you are in contact with your international counterparts. In your opinion, are there any other major industrialized countries that have had no budget for two years?

What price do Canadians have to pay if no budget has been tabled for so long? Having no budget for two years is unprecedented in Canada's history.

[Yves Giroux]

Thank you, Mr. Julian.

We actually do have regular meetings and discussions between parliamentary budget officers or the equivalent positions in the industrialized countries, and even in countries that are a little less so.

To my knowledge, no country, at least in the G-7, has not yet brought down a budget. Most countries are facing the same pandemic and the same level of uncertainty but, to my knowledge, most, if not all, of the G-7 countries have tabled at least one budget since the pandemic began.

The lack of a budget therefore sets Canada apart. It deprives Canadians of a good look at what will happen in the coming weeks, months and years, once we have come out of the pandemic. The government has not yet indicated what its plans will be for the economic recovery or for the time after the pandemic. That would probably be included in a budget.

Everyone understands that there is a lot of uncertainty. All the provinces have to deal with that uncertainty, of course, but all provinces and territories, I believe, have been able to table a budget, despite the high degree of uncertainty.

It is therefore a little surprising that the federal government has not yet done so. I don't believe that it is because it can't do so, because the officials in the Department of Finance are top-notch when it comes to crafting budgets. They are certainly capable of doing so.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you for that answer; it really puts Canada in the worst possible position compared to all other industrialized countries. It really is perplexing to so many Canadians that when other industrialized countries have been able to produce a budget, we have now been waiting for an unprecedented two years.

Another concern that has been raised around the fall economic statement is the issue of the revenue side of the equation. The government is not making any provision for wealth taxes or pandemic profit taxes; in fact it has rejected those scenarios, and yet we've seen Canada's billionaires increase their wealth by over $60 billion through this pandemic. I'm interested in asking about the revenue side. You did an excellent study on the wealth tax and evaluated the ability for a wealth tax to actually contribute to the overall fiscal framework of the government. I'm wondering—because the last study dates to before we saw an increase in assets among Canada's wealthiest citizens—whether the PBO is in the process of revising its overall figure in terms of how much a wealth tax would bring.

My other question is around the borrowing authority. There are concerns being raised about raising the borrowing authority. What are the alternatives, for example, on the revenue side, that would mean that raising the borrowing authority would not be necessary because the overall balance of federal finances was taken care of?

[Yves Giroux]

With respect to the wealth tax, as some of your colleagues pointed out, we have been quite busy. I could say I had a full head of hair before the pandemic and I lost it as a result of hard work, but that would not be true as you all know. We have, nonetheless, been quite busy. For now we don't have plans to update our work on the wealth tax, but if it's the desire of the committee for us to do so, we would certainly undertake to do that and we could provide the committee with a timeline under which we would be able to do that. As I said, if it's of interest to the committee, we'd be happy to undertake that work.

The alternative to increasing the Borrowing Authority Act or the borrowing limit would be to decrease spending in other areas to ensure that the government did not bust that ceiling but still delivered on core areas of priority, or increased its overall revenues to ensure that its debt ceiling was not busted. Besides increasing taxes or revenues, or decreasing spending in other areas to ensure that it continues to provide services in areas that are determined as key, there are not that many alternatives to increasing the borrowing authority or the borrowing limit.

[The Chair, Liberal, Wayne Easter]

Thanks, all of you. We are out of time.

We'll turn to Mr. Falk next. I believe he's splitting his time with Mr. Cumming.

[Ted Falk, Conservative, Provencher, MB]

That's correct. I will be splitting my time.

[The Chair, Liberal, Wayne Easter]

And then we'll have Ms. Koutrakis.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, Mr. Giroux and Ms. Yan, for your testimony this morning at committee.

I think that penalizing the individuals who have become wealthy is very short-sighted. I think the government should be focused on creating initiatives and plans for individuals to become wealthy, for our country to prosper and for there to be economic growth and abundance here.

I'm wondering if you can comment on that. Have you seen anything at all from this government that would indicate they have plans for people to prosper and to become wealthy?

[Yves Giroux]

That's a broad question. Generally speaking, the best way to increase wealth across a country is to increase the productive capacity of an economy. That could be done in a few ways, but not that many ways.

One way is to increase the number of people who participate in the labour force, by providing incentives to work and join the labour force. Another good way is to provide incentives to increase the capital, the machinery and equipment. Finally, there are measures that increase productivity, and these take a variety of ways, depending on the sector that you are targeting or looking at. These are generally the main ways of increasing the wealth of a nation.

As to whether we have seen that many initiatives from the government, that's an area that's probably highly sensitive politically and policy-wise, so I'll let each and every one of you be the judge of that, because different persons may have different perspectives on that. By that, I mean that some investments that are socially oriented might increase productivity in the economy, while others could be reducing the productive capacity of an economy, and not all investments are created equal.

[Ted Falk, Conservative, Provencher, MB]

Thank you.

I have a very quick question before I turn my time over to Mr. Cumming. The government has indicated that they don't have fiscal anchors. Instead, they're using the terminology “fiscal guardrails”. Can you very briefly explain to this committee and to Canadians the difference between an anchor and a guardrail?

[Yves Giroux]

That's a very important distinction.

An anchor is a goal you have that's guiding the overall fiscal decisions: spending, taxing and so on. A guardrail, rather—at least as described by the government—is something that will determine when you stop some types of expenditures. In that case, the guardrails have been expressed, at least so far, as the labour market indicators: the unemployment rate, the number of hours worked and the participation rate, if I'm not mistaken. One is shorter term. The other is longer term.

[Ted Falk, Conservative, Provencher, MB]

Thank you very much.

Go ahead, Mr. Cumming.

[James Cumming, Conservative, Edmonton Centre, AB]

Thank you, and thank you to the witnesses.

Mr. Giroux, it's good to see you again. Thank you for the work you do.

You have talked about measurables. It strikes me that within Bill C-14 or the fiscal update we see significant spending and unallocated spending. At the very least, should there not at least be some outcome-based analysis when putting these numbers together?

You've talked about productivity. You've talked about growth rates. You've talked about efficiencies. When I look at the level of spending that we've had—the second-highest level of spending in the G7, with also the highest rate of unemployment—should we not at least have some form of outcome-based spending so we can do an analysis to see if it's effective?

[Yves Giroux]

That's certainly among the best practices for governments to decide how they allocate spending. They have to have in mind an achievement, a target or a goal that they're pursuing, whether they quantify it publicly or not—that's probably up to them—but I would hope that they would have these types of trade-offs or quantified objectives in mind.

I haven't seen anything—yet at least—from the government on recent measures. I don't think I've seen that very often in the Canadian government setting, to be honest, but that's certainly something that should be top of mind among decision-makers when they make these allocation decisions.

[James Cumming, Conservative, Edmonton Centre, AB]

On the analysis that you did on growth rates, are you somewhat concerned that those growth rates are achievable without knowing whether the spending anticipated will be related to productivity, to innovation—things that will drive the Canadian economy?

[Yves Giroux]

It's certain that it's a bit more difficult to determine whether an investment or an expenditure will have a long-term or short-term impact when we don't know the areas that will be targeted. I assume you're referring to the $70 billion to $100 billion mentioned in the fall economic statement. It's very difficult to determine precisely what will be the short- and longer-term impacts on the economy of these expenditures without knowing exactly where they will go. Not all spending is created equal when it comes to generating economic growth and generally social welfare.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll turn to Ms. Koutrakis, followed by Mr. Ste-Marie.

You have five minutes, Annie.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you, Mr. Giroux, for your testimony this morning and for your service.

I think it's important to remind all Canadians who may be watching today of what Bill C-14 is and what we're studying here at committee. The only spending Parliament is being asked to approve through Bill C-14 is to introduce a temporary and immediate support for low- and middle-income families who are entitled to the CCB, the Canada child benefit, totalling up to $1,200 in 2021 for each child under the age of six; to provide the regional development agencies an additional $206.7 million; to replicate the CEBA loan limits for gap-filling programs and the RRRF gap-filling capacity; to ease the financial burden of student debt for up to 1.4 million Canadians by eliminating the interest on repayment of the federal portion of the Canada student loans and Canada apprentice loans for one year, 2021-22; to provide funding of up to $505.7 million as part of the new safe long-term care fund to support long-term care facilities, including funding to prevent the spread of COVID-19 infection, outbreaks and deaths in supported care facilities; to provide additional funding of up to $133 million to support access to things like virtual care, mental health tools and substance use programming; and to provide up to $262.6 million for a suite of COVID-19 initiatives, including testing, medical research, countermeasures, vaccine funding and developments, border and travel measures and isolation sites. I think it's important to put that on record and to remind everyone of what Parliament is being asked to approve.

Having said that, I hear my colleagues on the opposition harping on the fact that there's the lack of a budget.

You're right that this is an unprecedented event. It has never happened before in our Canadian history. We've never had to deal with such a pandemic, and I think it merits keeping that in mind.

Having said that, Mr. Giroux, I'm interested to know what were or are your thoughts on the biweekly updates provided to the committee by the Department of Finance earlier last year.

[Yves Giroux]

I think that was a very good practice in the sense that it provided parliamentarians with a very good idea of how quickly the pandemic was evolving and how the impacts on Canadians were being felt. It provided the committee members, as well as parliamentarians and Canadians, with an idea of how many people were using these benefits. In that sense, it was a very welcome transparency initiative. I personally was hoping it would continue after prorogation because of the value of the information it represented, certainly for me and my office as well as many stakeholders.