Government Operations Committee on Oct. 27th, 2009

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

So this information was released to the media but not to your office?

I appreciate that you're hoping you're going to get this information tomorrow, but what recourse do you have if it's not forthcoming? I mean, you have a job to do. Your office exists for a purpose. You're asking for information. If it's not forthcoming, what recourse do you have?

[Kevin Page]

We rely on committees like this to put pressure on the necessary people to ensure we have information so that we can do the analysis for you.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

We appreciate that. Without the information we're looking for, obviously we can't do our job, as a committee.

Even though my colleagues sometimes question the approach we take and the questions we're asking, clearly for us to do our job of dealing with the very purpose for the stimulus package in the first place, which was to create jobs and deal with ailing infrastructure throughout the country, we need to be able to find out exactly what is happening, the amount of money being spent, what it's being spent on, and the number of jobs being created.

That's precisely why we're here and why we're asking these questions. It's difficult for us to do our job when you don't have the information we can ask you about.

I have a problem with the deadline for March 2011 and the fact that we're already one year into the stimulus program. Have you been told this is a definitive deadline? Is there any chance, at all, that this deadline could move?

[Kevin Page]

We follow the Budget Implementation Act and what was said in budget 2009 with respect to the timing. Again, as budget officers, we will look at the impact of this on the economy. We know that the economy has been severely hurt in 2009. By most estimates we'll still be operating well below Canada's potential in 2010. If this money flows to a significant degree in 2010, it still will have a significant impact.

One of the things we, and I think the government as well, addressed earlier on is principles of timeliness and it being targeted and temporary. By the finance minister's own admission, we are looking at a deficit for this year of about $56 billion. It's somewhat smaller next year. I think there was an effort to try to target this money and also to make sure it was temporary. Those would be trade-offs that the government will have to make.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

My apologies. I said 2011; it should have been 2010.

My concern, as well, is for the smaller municipalities. Based on the bit of information you do have, do you have any indication that smaller municipalities are reluctant to get involved? With what you've seen, are there many small municipalities engaged in this process, or are these bigger initiatives in the larger municipalities and cities? Has it become more of a cities initiative versus a rural type of initiative?

[Kevin Page]

I think if your question is directed at the ability of smaller municipalities to launch these types of projects, competition among construction firms, what have you, it's something we will definitely keep an eye on.

Again, when we get this data, as I've been told by the deputy minister, we'll have start and finish dates on these projects and we'll be looking at that carefully too, and we'll be monitoring that as the data get updated from quarter to quarter. So we can come back to you and brief you on that.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

At this point, based on the information you have, can you tell us whether or not there seems to be a predominance of contracts or initiatives being undertaken in cities versus in rural communities?

[Kevin Page]

As we go through the data, we can sort that out for members. It's obviously something you'd be interested in. We could do that, and we could sort it out by different types of projects too, because some of the projects will have a bigger economic multiplier, so to speak, as well. So we will do that.

[The Chair, Liberal, Yasmin Ratansi]

Thank you, Ms. Foote.

I'll go to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much for giving me a second opportunity to ask a few more questions.

Again, I want to thank our guests. This has been exceptionally helpful, and your candour and sincerity is quite appreciated. I want to come back to a couple of things that have been said and that I want to clarify for my own understanding.

Since my round of questioning, a member talked about lies by omission. I'm not sure if that was meant—and I'm not here to ask the member opposite what he meant—to somehow imply that by virtue of the fact that you don't have the information, it's deemed to be a lie. Do you sense the government is lying, or is it too early to say that the government is lying? Have you any thoughts on that, sir?

[Kevin Page]

As a budget officer, I don't think I'm put in a position to make those kinds of comments one way or the other, sir.

[Ed Holder, Conservative, London West, ON]

And I wish members opposite wouldn't either. So thank you for that.

I guess the other question is about another reference that was made about this free-for-all of spending, but I thought I heard you say in your opening comments something along the line that you noted that the infrastructure funding is the biggest job multiplier. Could you elaborate? Why is that so important? I could imagine it's because you've got three-for-one spending, if you will, and that you've got municipalities contributing, provinces contributing, and the federal government contributing. Is that what you meant by that?

[Kevin Page]

From an economic point of view, I think if you even just walk down the street—for example, Bank Street in Ottawa—you could see the incredible amount of work that's taking place and the different types of tradesmen who are involved. I mean, you are employing people who may not have been employed, when you provide that kind of stimulus money. When those people are employed, they're purchasing things at grocery stores and other types of stores too. There is a second round of economic effects that are making sure we have people employed during this period of significant economic weakness.

[Ed Holder, Conservative, London West, ON]

I think that's great. It's great to hear that as a comment. In fact, I take some comfort when you indicate that your view of the level of tracking, report over report, is getting better. You have some hope and expectation that it will be stronger in this fourth report, and I agree.

Again, someone earlier made a comment about dollars being spread around in some partisan way. I would like you to give us some sense, perhaps after you've had a chance to look at the fourth-quarter report, whether you believe—and I'll take my own province of Ontario and maybe my own city as an example—that somehow the mayor of London and other mayors across my province, the Liberal leader of Ontario, and the federal government have somehow conspired to spread around things in a partisan way.

Are you going to respond, because we've heard a lot of that, and I would appreciate it if you might make some comment about that once you've had a chance to assess your report.

[Kevin Page]

Actually, I don't think that's really in my job description, so I would probably stay away from that one, sir.

[Ed Holder, Conservative, London West, ON]

Finally, based on the dialogue that has taken place between you and the department, do you have any reason to believe you'll not receive the information as you've requested?

[Kevin Page]

I'm hoping we will see this data starting to roll out towards my office as early as tomorrow on a province-by-province basis. That was the nature of the commitment.

Again, if we get the information the way it was described to me—a description of the project, the amounts, project start and end dates—we can come back to you and give you a sense of what the potential economic impact could be too. I'm sure the Department of Finance will be doing the same.

[Ed Holder, Conservative, London West, ON]

And we appreciate that.

Here is a final question--and thank you, Madam Chair, for this.

A lot of the questions seem to me to suggest you're here almost a week early in terms of being able to give us a report, frankly, because you don't have the fourth-quarter report to respond to. Is it fair for me to assume that the concerns expressed by members opposite are premature?

[Kevin Page]

I have no comments there.

What I hear are some of the concerns relative to the gaps between the kind of information reporting we have on stimulus in Canada vis-à-vis what they have in the United States. To be honest, there is a gap. The U.S. is actually outperforming us. I think we can close the gap in Canada, and maybe we'll close it in the fourth quarter. We'll start to get at not just the level of commitments but disbursements, and we'll start to do an economic report. In the U.S., the Council of Economic Advisers has already started to estimate the impacts on the economy, starting in the third quarter. We have lots of smart people at the Department of Finance. I'm sure they'll be all over the data from Transport and Infrastructure, and we'll be doing the same.

[Ed Holder, Conservative, London West, ON]

And you'll be able to report more thoughtfully about it once you've received it.

[The Chair, Liberal, Yasmin Ratansi]

Thank you, Mr. Holder.

As chair I don't normally ask questions, because I want to listen to how the questions are coming. The purpose of this meeting was for the committee to have a look at government spending, because that's your responsibility, and for you to give us the state of the nation's finance.

You are the Parliamentary Budget Officer. We can get a minister, and the minister can give us any political spiel he wants to, because that's his job. That's his raison d'être. For us to get information from you, we have to ask you these questions. I am an accountant by trade, a consultant by trade as well, and I'm listening to what you're saying. You say you look at the planning and determine the outlay, from A to Z. What is the process for tracking the money?

I'll give you a classic example. The Comptroller General came before the public accounts committee. I used to sit on public accounts. We asked him to explain how $3 billion—this was unprecedented money, not part of the budget—had been spent and whether it really stimulated the economy. The frustration of this committee is not that infrastructure money does not stimulate the economy; the frustration of this committee is that pie-in-the-sky assumptions are made. If you commit $3 billion, you are going to spend $3 billion. If you don't spend $3 billion, then the stimulus that you claimed was going to happen is not going to happen.

My question to you is, who controls the data? You said you do not receive the data. Who controls the data? Is it the Treasury Board? Finance? Where do you get the data to help you make decisions and to help us follow the money?

[Sahir Khan]

It depends on the source of the inquiry. It could be from this committee or from other parliamentarians. We might ask the Department of Finance for information we need for economic and fiscal forecasting purposes. To get a better understanding of the implementation of the budget vis-à-vis infrastructure, our request would go directly to the deputy minister at Transport and Infrastructure.

The Parliament of Canada Act says that the Parliamentary Budget Officer must make the request to the relevant deputy minister of the department from which the budget officer seeks the information. In some cases, that information is going to be in a line department. In other cases, the information may exist within the central agencies—Treasury Board, Finance, PCO. We would direct requests to departments according to the nature of the inquiry.

[The Chair, Liberal, Yasmin Ratansi]

As Parliamentary Budget Officer, you are the person we rely on. Why is it so difficult to track the dollars? Why is it so difficult to track, whether I commit $1 billion or $3 billion, what I have used? You're following accrual accounting. The government is following accrual accounting. It's not cash or modified cash, which is what the departments are using. If the departments are using the cash-basis system, and the government is using accrual, what's so difficult about tracking those dollars?

[Kevin Page]

To add to what Sahir said in terms of the difficulty, if it weren't for the budget implementation reports, which we think are a great innovation--we're getting more reporting now than we've had in previous years--we would basically be relying on the Receiver General to see how money is going out the door in real time. For example, the latest information we have from the Receiver General is for the month of July.

Thanks to the budget implementation reports, we're now getting more up-to-date information on projects, so we can get a sense for you--which, again, I think is really the nature of your question--of what the impact is going to be on the economy, on output and on jobs, and we can estimate that for you.

Again, the overall demands for reporting are set by the Treasury Board's executive. The Ministry of Transport and Infrastructure will follow those demands. They will provide the data to the Receiver General. We have a new level of reporting with this budget implementation report. Again, if I get this information this week, we can start looking at project start dates, project completion dates, how much money federally, and how much money at the provincial and municipal level. We can start aligning that relative to construction schedules. We can see it's going to have an impact on the third quarter, the fourth quarter, the first quarter in 2010, or whatever, and we will start that for you.

Is it difficult? I don't think it's difficult because, you're right, the information is there and the accounting procedures are well established. The chart of accounts is there and is being followed by departments. I think we've made significant progress in the budget implementation report. We think we need to make more progress in the fourth quarter.

[The Chair, Liberal, Yasmin Ratansi]

Are you asking for financial statements from departments, Mr. Page?