Finance Committee on Nov. 24th, 2025

[Jason Jacques]

That's correct.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

If a fiscal anchor has only a 7.5% chance of being maintained, is there any purpose in stating an anchor?

[Jason Jacques]

I think that's a better question for the Minister of Finance than for me.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

All right, but your assessment is there's a 92.5% chance that this government will not maintain this anchor.

[Jason Jacques]

That's correct.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I think we want to conclude that there's really not much point, especially since they just cut loose their last anchor, and, in fact, even their own budget says they will not meet their last anchor.

When the finance department decided on its own to change the definition and then give itself this new anchor with almost no chance of being maintained, they were actually violating the accounting principle of separation of responsibility.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Kelly. We're going to have to end it there.

We'll continue with Mr. MacDonald for five minutes, please.

[Kent MacDonald, Liberal, Cardigan, PE]

Thank you, Madam Chair, and thank you to the witnesses for attending today.

Mr. Jacques, all our forecasting, or what you and your team would be doing, is a moment-in-time analysis, I would take it. In my previous career running a business, all you could use was a moment in time.

There are many fiscal risks that we have faced in the last year—12 months or less—but we've seen a lot of these recent developments in major trade agreements around the world and global capital attraction since our Prime Minister took office. In particular, on the weekend, we heard about a $70-billion deal with the U.A.E.

How do these things fit into...? They wouldn't have fit into your initial analysis of the budget, but obviously they're going to affect our ability to pay down debt and realize more returns.

Can you comment on that?

[Jason Jacques]

The short answer is yes. It will definitely have some sort of effect on growth and our ability to pay down debt.

The longer answer is we're constantly updating our economic modelling. In addition to the four colleagues you see at the table, there are another 35 colleagues back in the office at this point. They are some of the smartest economists in Canada, who are constantly monitoring external and international economic developments, as well as domestic developments and additional policy decisions made by the Government of Canada. When we publish or update the “Economic and Fiscal Outlook” sometime in the spring, all of that will be reflected.

[Kent MacDonald, Liberal, Cardigan, PE]

You understand where I'm coming from. Growth is very slow in Canada. It's a result of negative shocks from tariffs and situations like that. The opposition's been speaking a lot about transparency today.

One of your predecessors, Kevin Page, said the following:

The separation of operating and capital spending is a reporting change, not an accounting change, and it increases transparency on capital investment. The hard target of a balanced operating budget in 2028-29 will put more constraints on the government than would fiscal rules tied to changes in the size of the economy (such as a declining debt-to-GDP ratio).

Can you comment on that?

[Jason Jacques]

I didn't see Mr. Page's analysis.

[Kent MacDonald, Liberal, Cardigan, PE]

In budget 2025, we see major measures to attract new private sector investment.

Could you outline how increased private capital inflows typically affect the fiscal outlook and how they can reduce pressure on government's borrowing needs over the long term?

[Diarra Sourang]

Typically, when we see investment increase, it reflects directly on nominal GDP. We say it's usually one of the largest proxies of the government's tax base. It eventually translates into corporate tax revenues and also personal income tax revenues because more people are employed and wages are growing. Consumption is growing as well, so there are more GST revenues.

[Kent MacDonald, Liberal, Cardigan, PE]

I have just one more question, on regional development effects.

Since I represent Atlantic Canada, with a lot of fisheries and agriculture, how does trade expansion and capital attraction benefit the rural areas? We're export dominant. We're dependent on exports.

[Jason Jacques]

I would go back to the comments my colleague, Diarra, just offered with respect to additional trade, economic development and economic linkages to the extent that it's easier for somebody to take their high-quality Canadian products and, where there's a trade agreement negotiated with another country, export those products in an easy way. Obviously, that company and also that region end up being further ahead.

If you're looking at the east end of P.E.I., beyond beautiful beaches and great dairy products, there are people producing things for export. There is a lot of good light manufacturing at that end of the island that potentially would benefit from additional trade agreements.

[Kent MacDonald, Liberal, Cardigan, PE]

I have time for one more question.

When you guys do your analysis, what outcome indicators should we be watching most closely to measure the success of budget 2025 in the future? A year or two down the road, is there a trade or investment strategy—

[The Chair, Liberal, Karina Gould]

f I'm sorry, Mr. MacDonald. That concludes your time.

[Kent MacDonald, Liberal, Cardigan, PE]

I guess I don't get that question.

[The Chair, Liberal, Karina Gould]

You got the question, just not the answer yet.

Thank you.

I now give the floor to Mr. Garon for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I'm going to continue on the issue of fiscal anchors. This year, with a few weeks' notice, the government unilaterally decided to tell us that the deficit as a share of GDP had to decline and that this was the new anchor.

If we wanted to use the deficit as a fiscal anchor, shouldn't we instead ask that the deficit in relation to GDP be capped at the rate of growth of the economy, for example, which would guarantee us a decline in the debt-to-GDP ratio?

In fact, in its current form, there is no guarantee that even if the debt-to-GDP ratio declines, there is no guarantee, even mathematically, that debt will not continue to increase relative to GDP.

Is this just a way of covering up the fact that the government decided that the debt-to-GDP ratio was going to go up and manufactured a fiscal anchor as a result?

[Jason Jacques]

Mathematically, I agree with you in terms of the relationship between deficit-to-GDP and debt-to-GDP ratios. However, I'm not in a position to tell you why the government decided to change the anchors.

[Jean-Denis Garon, Bloc, Mirabel, QC]

The government said it was going to reduce the size of the public service by about 40,000 positions. In this regard, we see in the budget implementation act that a lot of penalties—if not all penalties—are being removed for early retirements. That will have an impact because it generates liabilities in the pension fund.

Would you be able to tell us how allowing people to retire without penalty will affect Canada's debt?

[Jason Jacques]

Obviously, there is a cost, which is indicated in the 2025 budget, which will increase the deficit and the debt.

[Jean-Denis Garon, Bloc, Mirabel, QC]

To reduce the size of the public service, public servants will be allowed to retire without any penalty. Since the people who leave won't have contributed fully to their pension, am I right to say that, for 20, 25 or 30 years, the Canadian taxpayer will continue to pay for these retirements through pension fund liabilities?

[Jason Jacques]

It's the public service pension fund, and it's the Government of Canada and public servants who are responsible for paying for that.