Finance Committee on June 3rd, 2024

[Yves Giroux]

I mentioned that the government has economic analysis on the impact of the carbon tax itself and the OBPS, the output-based pricing system. We've seen that—staff in my office—but we've been told explicitly not to disclose it and reference it.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

The government has given you their analysis, but they have put a gag on you, basically, saying you can't talk about it.

[Yves Giroux]

That is my understanding.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay. Can you tell us what it says?

[Yves Giroux]

It confirms the report that we have published, essentially. That's why I'm comfortable with what we have already published, with the understanding that it provides the impact of the carbon tax and the OBPS, which was not our intention, unfortunately.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Are you saying the report the government did on the carbon tax, the report that they provided to you, confirms the analysis that you have done on the carbon tax?

[Yves Giroux]

Maybe Chris, one of the DGs who works in my office, can provide more details.

[Chris Matier, Director General, Economic and Fiscal Analysis, Office of the Parliamentary Budget Officer]

Mr. Giroux filed a formal information request to Environment and Climate Change Canada to obtain the underlying economic impacts related to the emissions reductions that the government published related to carbon pricing back in late March or early April. They provided us with their estimates on real GDP, on labour income, on capital income, and they indicated on the response form that these were confidential and that we could not disclose—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

The chair is going to time me out.

Can you table that report that they gave you with the committee?

[Chris Matier]

Yes.

[The Chair, Liberal, Peter Fonseca]

If you could table that, that would be fine.

We'll go to MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

Thanks to all the witnesses for being here today.

My first question is actually to Mr. Jim Stanford.

Jim, I only have a minute and a half for you, and then I have a question for Ms. Webb.

Can you comment on the debt levels that are in our budget?

If I read correctly over the weekend, our currently stated debt levels are above the 1% guardrail that we put into place, but I know that we have made a commitment to update those numbers and have that adjusted to meet those guardrails in the fall. If you could comment on the debt levels, I'd be grateful.

[Dr. Jim Stanford]

The debt that was recorded in 2022-23 was 41.7% of GDP at that time. It increased somewhat in 2023-24, as Mr. Giroux has mentioned, and then it's scheduled to decline slowly over the years ahead.

I do think that we shouldn't get too carried away with whether it's a fraction of a percentage point higher or lower. What really matters is that it's not growing at an unsustainable rate, and Canada's debt level is very low relative to most other industrial countries—certainly much lower than our neighbour to the south. So much attention on the debt itself at the expense of other macroeconomic indicators, I think, is misleading.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

Ms. Webb, thank you so much for your leadership on the food program. It's something that we're very proud that we have introduced in this budget. Canada is no longer the sole G7 nation without a national school food program.

What can we learn from our G7 peers in terms of implementation and results?

[Carolyn Webb]

Thank you so much.

There are so many opportunities to learn from others. We can learn about local procurement. We can learn about the challenges of what happens when you do a stigmatized program and the benefits of universality and making sure that at least each child in a school that receives a program has access to that program. We know that we can't roll it out across the country to all children right now, but we know that stigmatization really hurts. It hurts the students, their well-being and participation.

We also know that community partnerships are important and that not having the private sector in control and supporting the community sector is really important, and health and nutrition are paramount.

I know you don't have much time.

[Julie Dzerowicz, Liberal, Davenport, ON]

That's excellent. Thank you.

[The Chair, Liberal, Peter Fonseca]

That's the time, MP Dzerowicz.

Now we go to MP Ste-Marie, please, for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Giroux, you say there's no publicly available central tracking document.

Would you please say a few words about that? What could be done about it?

[Yves Giroux]

Thank you, Mr. Ste‑Marie.

Many cost-cutting exercises have been announced in recent budgets since 2002. Some have been completed, others cancelled, and most are under way, but we have information on only a small percentage of all spending cuts and reallocations that have been announced. They likely amount to $500 million out of a total of roughly $15 billion or $16 billion. Consequently, we have some idea of the size of the cuts that have been made to spending on consultation, professional services and travel announced in the 2023 budget, which we estimate at half a billion dollars, but we don't yet have any details on the remainder.

What could be provided, and what has already been provided, for this half-million dollars, for example, is a list of departments and types of spending that have been cut. However, we still don't have details on every item for approximately $15 billion in spending cuts.

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

Thank you very much.

Once again, I ask Mr. Turnbull, who represents the government, to provide us with that information as soon as possible.

I have one minute left.

Mr. Hazell, I'm going to let you have the last word since you didn't have time to answer any questions.

[Stephen Hazell]

Thank you.

I would say that we are looking for several amendments to the impact assessment as amendments to Bill C-69. The government has covered off the constitutional issues that the Supreme Court of Canada has raised. We think that's been done adequately, but they have overreacted to that. They fear another court challenge.

Our view is that with the changes that the environmental community has provided to the committee, and I think several parties as well, those issues relating to transboundary issues can be corrected. We can ensure that the federal government can do assessments to the limits of its constitutional authority.

Thank you for that opportunity.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we go to our final questioner, MP Davies, for the last two and a half minutes with this panel.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Dr. Stanford, some Milton Friedman adherents who testified at this committee have claimed that Canada's productivity problem is essentially caused by too much government spending squeezing out the private sector. What's your view on that?

[Dr. Jim Stanford]

No, I do not think that's a credible discussion or explanation of our productivity trajectory.

Again, looking at broader international comparisons, Canada's government sector is not large by OECD standards, and there are other countries in Europe, for example, with superior productivity performance but higher public sector spending and higher taxes.

In Canada's case, we clearly have under-utilized resources at the moment. We see significant levels of unemployment, growing unemployment and under-utilization of many resources in low-productivity activities.

I think we need more engagement by both the public sector and the private sector in innovation and investment and in developing high-value industries in Canada. The government's measures on investment tax credits and related measures to try to support investment in Canadian industries related to the renewable energy transition, such as the EV investments that we've been seeing, are very positive in that regard.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Ms. Webb, I will say quickly that I agree with you on universality.

The government's school nutrition program is something the NDP has campaigned on and pushed hard for in this budget, but it's only going to fund 400,000 students. There are over two million Canadian children in elementary school in this country.

How do you see this money resulting in a program that results in universal access to school nutrition in Canada?