Government Operations Committee on Dec. 2nd, 2020

[Matthew Green, NDP, Hamilton Centre, ON]

When we lend banks this money, then, are we lending it from our own sovereign currency, basically creating it and giving it to them?

Why can't we do that for social spending?

[Yves Giroux]

We can't do it because that would create inflation. If you create money and it is spent and no liability is recorded, that creates inflation and devalues the Canadian currency in that context.

[Matthew Green, NDP, Hamilton Centre, ON]

But doesn't—?

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Green.

We will now go to Mr. McCauley for four minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

Just for the record, I'll correct Mr. Kusmierczyk's stats. Between 2006 and the Liberals' taking of power, the public service stayed at about the same amount, whereas the previous Liberal government actually cut 14% of the public service.

Mr. Giroux, I want to ask you a question. The finance minister commented in her update that we're locking in low rates by issuing more debt in longer-term instruments. I'm looking at the Bank of Canada website and I see a massive amount of short-term treasury bills being issued, but very little long-term debt.

I'm wondering whether you could comment on that. Are we actually issuing a lot more long-term debt, locking in these low rates?

[Yves Giroux]

We are issuing more long-term debt, but not that much more. We can argue about the reasons—whether the government has done the maximum or could do even more—but the issue with long-term maturities is that there's only limited demand for that.

If the government tries to issue all of its debt as 30-year bond maturities, it will probably have to pay significantly higher interest rates, because there's limited demand for these very long maturities. That may explain why the government has not issued only 30-year bonds but has instead gone, for still a majority of its financing, through shorter-term bonds.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

Getting back to the issue of transparency, I understand there was difficulty when the PBO was accessing information in order to properly cost out pay equity, in that you weren't able to get the full information from TBS.

Could you comment on that? What was the issue?

[Yves Giroux]

The issue was that we asked for detailed information on federal employees to determine the cost of the federal legislation with respect to pay equity. We were told that the information would not be provided to us because it was a cabinet confidence. It was probably included in a memorandum to cabinet or a Treasury Board submission and was therefore a cabinet confidence.

That's the explanation we were given. We went around it by going through other sources of information. We used publicly available information, but we were denied the information we were asking for because it was deemed a cabinet confidence. When we get that, we can't even look at the data to make our own assessment as to whether it is really cabinet confidence. It's off limits for us.

[Kelly McCauley, Conservative, Edmonton West, AB]

It's a potential $600-million bill to taxpayers, and you cannot get access to the information to provide a confident projection of the costs.

[Yves Giroux]

No. These days, $600 million seems like a small amount when we're talking about dozens of billions, but you're right; that was a bit surprising. That type of data is not what you typically expect to be covered in cabinet secrecy.

[Kelly McCauley, Conservative, Edmonton West, AB]

What is our total projected debt when you add the debt owed by our Crown corporations? That's generally not added to the $1.1 trillion being bandied about. Then, if you add pension liabilities and everything else....

[Yves Giroux]

The government has updated its debt-management strategy as part of the fall economic statement. They're looking for amendments to the Borrowing Authority Act, pushing the limit, proposing a maximum borrowing amount of $1.8 trillion, if I'm not mistaken: $1,831 billion.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. McCauley.

We'll now go to Mr. MacKinnon for four minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Hello, Mr. Giroux. I welcome you and your team. On behalf of parliamentarians, thank you for your usual diligence.

I'd like to change the subject a bit and discuss your recent report on the fiscal sustainability of governments.

I don't know if you have the same numbers in mind, but we are told that the federal government has taken responsibility for about 80% of the pandemic-related expenses.

The perspective on the fiscal sustainability of governments in Canada seems to validate that decision, doesn't it?

[Yves Giroux]

Yes, if we consider the provinces as a whole, they are not sustainable in the very long term, whereas the federal government is sustainable over the same long period. This does seem to suggest that it was appropriate for the federal government to support the majority of the efforts on COVID-19, given the different financial capacities of the two levels of government.

[Steven MacKinnon, Liberal, Gatineau, QC]

Since we are talking about transfers to the provinces, whether they are permanent or not, do you think we should always keep in mind that the Government of Canada has already taken responsibility for almost all of the spending, with hundreds of billions of dollars for the benefit of the provinces, sometimes even for things that fall under their jurisdiction?

[Yves Giroux]

This will certainly be considered by the people participating in the discussions. It's not for me to judge whether it should be considered or not. These discussions are eminently political and many other issues come into play.

[Steven MacKinnon, Liberal, Gatineau, QC]

Yes, but elsewhere you refer to the Canada health transfer of around $40 billion a year, which goes from the Government of Canada to the provinces. In one year alone, that's tens of billions of dollars for direct health care spending, whether for personal protective equipment, vaccines, or equipment related to the immunization process. The Government of Canada alone is taking the responsibility for almost all of the spending.

[Yves Giroux]

Yes, and I don't think anyone has questioned that. In the Fiscal Sustainability Report 2020, our analysis is based on a 75-year horizon. The immediate expenditures for COVID-19 are for one year of 75. Although there is no common measure between this spending and what we have seen in the past, the expenditures are still for one year.

[Steven MacKinnon, Liberal, Gatineau, QC]

Let's go back to financial sustainability. We don't have a lot of time left, unfortunately. Could you briefly talk about the importance of demographics in your analysis?

[Yves Giroux]

That's a good point.

Demographics is probably one of the two most important factors, the other being productivity growth. In the federal system, demographics generate a lot of differences, particularly through equalization and the structure of transfers, since they depend largely on population.

Provincial spending is highly dependent on the make-up of the population. For example, an aging population requires much more health care than a younger population. The interplay of transfers and rates of population growth that vary from place to place means that provincial needs will increase, but not all at the same rate. When health and social transfers and equalization are added to this, the issue becomes more complex. So—

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Giroux.

I hate to interrupt you, but I appreciate your comments.

We'll now go to Ms. Vignola for two minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

On November 4, the President of the Treasury Board said that the GC InfoBase contained all the detailed financial information on COVID-19.

As of November 4, was all the information in the GC InfoBase?

A month later, has the situation changed? Is the information available or not?

[Yves Giroux]

There's a lot of information in the GC InfoBase, but I haven't looked very carefully at every line. So I can't certify that the site contains data for every program related to COVID-19. Ms. Giswold and Mr. Stanton may be aware of it. I wouldn't want to bet my paycheque on it.

That said, as I mentioned, the site does have information on maximum financial authorities for programs. However, it does not have the expenditures to date for those programs.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

You have also created a monitoring tool, which we received some time ago.

What is the difference between your monitoring tool and the GC InfoBase?