Finance Committee on Oct. 3rd, 2022

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

What is the cost to administer—the total cost to the taxpayer per eligible individual?

[Jason Jacques]

That is a great question, for which we do not, sadly, have an answer, because we did not incorporate administrative costs.

One of the major reasons we don't incorporate administrative costs as a part of our cost estimates for these types of measures is that we have found it ranges significantly. While we're in a good position to read what departments provide to us in terms of how they're planning on spending the money, often we're not in a particularly good position to actually understand why, in some situations, it costs a heck of a lot more than one would anticipate to make a minor adjustment to a program.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I would agree with you there. It's amazing sometimes how much a dollar can cost the government to give.

I'm also reviewing your report from March of this year, “A Distributional Analysis of Federal Carbon Pricing under a Healthy Environment and a Healthy Economy”. Under there, I see that the average cost for Albertans is $845, the tripling of the carbon tax net of the rebate; $495 for Saskatchewan; and then $310 for Manitoba.

I'm going to ask a relatively simple question, and I suspect I'll get a great answer. It would be a lot more efficient and economical and beneficial to Canadians if they simply cancelled their planned tripling of the carbon tax instead of providing this rebate, correct?

[Jason Jacques]

That sounds like a policy question, for which—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Sorry; it's just the math of it. Individuals are getting $225 from the GST rebate, versus the average.... It's going to be significantly more that they're going to be paying in the tripling of the carbon tax.

[Jason Jacques]

Again, certainly from our perspective, the government has not necessarily presented....

Well, in the past week, the government has not necessarily connected the two measures of the federal carbon levy and the GST credit, so from a policy perspective, it's difficult for us to compare the two.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

But $845 is larger than $225, right?

[Jason Jacques]

Yes.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence and MP Albas, for those questions.

We are moving to the Liberals.

It's good to see our colleague Heath MacDonald back here from P.E.I. I know it's been a challenging time over on the island.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Peter—Chair. Sorry; it's been a week.

I have a couple of questions.

To take you back, how many individuals is this temporary measure going to affect, did you say?

[Jason Jacques]

Our count is similar to that mentioned by the Minister of Finance, so it's roughly 11 million.

[Heath MacDonald, Liberal, Malpeque, PE]

Okay.

My colleague talked about the administrative side, but basically we're doubling the GST tax rebate, which is already a process. I'm wondering whether there would be any concern there for administration on top of that.

[Jason Jacques]

Again, I am a pointy-headed economist, and sadly, I am not well placed to guess how many additional officials one would need to hire at the Canada Revenue Agency to reprogram code for a specific program, and so on and so forth.

We have looked at administrative costs for various programs over the years. There is a significant divergence, and occasionally it's somewhat unexpected how expensive seemingly relatively straightforward things are.

[Heath MacDonald, Liberal, Malpeque, PE]

Is that for new programs or existing programs?

[Jason Jacques]

It's for both.

I'd say to stay tuned. We're currently doing work on Bill C-31. In the case of new programs such as the new dental program proposed by the government, obviously administrative costs come into play on that front, and in the housing benefit as well.

[Heath MacDonald, Liberal, Malpeque, PE]

Last week the Parliamentary Budget Officer appeared before the Senate—you talked a little bit about that—to discuss Bill C-30. He was quoted as saying it would not affect materially the fiscal sustainability of the federal government. Can you give us a more broad definition of what he meant by that?

[Jason Jacques]

Sure.

We produce a report every year that analyzes the fiscal sustainability of the federal government and also looks at subnational governments—so, generally speaking, provinces and territories as well. The last time we produced that report, the federal government was deemed to be sustainable over a 75-year period, so it had additional fiscal flexibility to actually undertake additional spending. The $2.6 billion countenanced in Bill C-30 would fall well within that range.

[Heath MacDonald, Liberal, Malpeque, PE]

The second part of that is that he said he didn't think there would be a measurable or significant impact on the economy or it wouldn't cause a spike in inflation. I think that is what he was quoted as saying. How do you measure that?

[Jason Jacques]

Internally we measure it as part of our macroeconomic modelling. We have a macroeconomic model with close to 400 equations. When you drop $2.6 billion into the Canadian economy, which is several trillion dollars, we're able to come up with point estimates or estimates of the inflationary impact. Needless to say, given the sums of money involved, the size of the economy and the size of how much we're actually looking at spending incrementally in Bill C-30, the impact is relatively small—well, it's small for the federal government, but, going back to a point that was made earlier, it's potentially quite substantial with respect to the impact on households and the targeted households.

[Heath MacDonald, Liberal, Malpeque, PE]

How much time do I have left, Mr. Chair?

It's three minutes.

The federal government shouldered the lion's share of the pandemic spending and sheltered many households from having to take on debt over the course of COVID, and we're doing that again. It's helping Canadians with the cost of living. We know the pressures that most Canadians and most families are under. What sort of impact will that have on the finances of governments—provincial and federal—or do you have that depth in that evaluation?

[Jason Jacques]

Again, with respect to Bill C-30, we have not looked at its precise impact in terms of the extent to which it's going to alleviate the impact on households and their budgets at this point, nor have we looked at any interaction effect with respect to provincial governments.

Nasreddine, do you have any additional details with respect to the relative household impacts of Bill C-30?

[Nesreddine Ammar]

Actually, I may have some additional information related to that.

I have conducted a kind of distribution analysis to see the effect of Bill C-30 on household incomes. What I have seen is that 20% of the households with the lowest income will see an increase in their disposable income of 1.1%. Of course, they will see the highest increase in comparison with other household income groups. That's one fact that I have observed, and I can tell you that with confidence.

[Heath MacDonald, Liberal, Malpeque, PE]

Then basically we have a large impact on households positively and a negative impact or—I wouldn't, maybe, use the word “negative”—very little impact on government financial stability and sustainability. Is it fair to say that?

[Jason Jacques]

That's a good paraphrasing of what my boss said last week at the Senate banking committee.

[Heath MacDonald, Liberal, Malpeque, PE]

Okay. Good.