Government Operations Committee on Dec. 2nd, 2020

[Yves Giroux]

Well, as the quote you just used exemplifies, we didn't look at the differences in capabilities. What we took as an assumption, however, was that because the navy currently uses the Asterix and it seems to be doing the job, it could—and I say “could”—be a substitute for the JSS. However, without looking at the different capabilities of both types of ships, we cannot make that assessment.

We looked at the cost differential, but because the Asterix seems to be doing the job for now—and it might not be a suitable solution for the long term—we took it for granted that it was an acceptable substitute. It might not be, and I recognize that.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

I understand that the Asterix wasn't actually built in Canada. Rather, it's the Ikea model. The parts were sent here and then it was assembled here. With that in mind, I was wondering if you considered the relative benefits of the two ships being built in Canada fully, in terms of local economic impact.

[Yves Giroux]

No, we looked at the costs only, because what was asked of us was the differences in costs. We obviously could have taken into account the fact that there will be benefits for spending more money domestically for these ships, but the mandate and the question asked of us was to look at the cost differentials.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

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

[The Chair, Conservative, Robert Gordon Kitchen]

The alarm just went off. Thank you.

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

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

Thank you very much, Mr. Chair.

Mr. Giroux, in your report on supplementary estimates (B) 2020-2021, you indicate that the government is seeking Parliament's approval for additional funding to address the COVID-19 pandemic. This includes personal protective equipment and materials, but there is also $1 billion to clean up inactive oil and gas wells in Alberta. I have nothing against that, but I'm trying to understand how that relates to the pandemic.

Can you explain how this fits into your analysis?

[Yves Giroux]

That is obviously not directly related to the pandemic. Rather, it is related to the economic crisis that was largely caused by the pandemic. The oil and gas sector has been hit hard by the pandemic, like every other, but it has also taken an indirect hit from the drop in oil prices that was caused by the pandemic and the reduction in demand.

You're right, it's not directly related to the pandemic. Oil wells have not contracted COVID-19, but the oil and gas sector has suffered more than other sectors, proportionally, due to the collapse of international prices.

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

In your report on the main estimates 2020-2021, you point out that now that Parliament has returned to the original budget tabling date of March 1, these main estimates no longer contain the new budget measures, which are deferred until the supplementary estimates. As a result, expenditures will have to be subject to a detailed review by the Treasury Board Secretariat, which will lengthen the time between the announcement of new measures and their implementation.

In a situation such as the one we are currently experiencing, what could be the possible consequences of this increased delay, both for the public and for businesses, non-profit organizations and the government itself?

[Yves Giroux]

As you said, when the main estimates are presented prior to the federal budget, new measures introduced in the federal budget are not reflected in the main estimates and must be included in the supplementary estimates. Statutory programs, on the other hand, are directly funded through enabling legislation.

When measures are not in the main estimates but rather in supplementary estimates, this effectively lengthens the timeframe, because it takes time for funding to be requested from Treasury Board, for funding to be provided, for programs to be put in place, and for the government to finally spend the money.

That said, when there are emergencies such as COVID-19, the government can significantly shorten these timelines by expediting internal procedures. The extent of the negative impact on the disbursement of funds, assistance to the population and equipment purchases therefore depends on the ability and willingness of the government to shorten the timeframe through these internal approvals.

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

Your analytical work allows us to do our work.

What are the consequences of this extension on your work, and, consequently, on ours?

[Yves Giroux]

The longer it takes to get the money out the door and carry out government activities such as equipment purchases, the longer it delays our reporting. For example, if the government is slow to put programs in place or purchase equipment, we will not be able to provide you with a report on equipment that has not yet been purchased or programs that are not yet in place.

As these measures are not officially announced and the details are not provided publicly, this remains a matter of cabinet confidence or deliberation and we do not have access to them. As a result, it lengthens the time before we can write our reports.

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

Therefore, it also delays our analysis work.

On November 4, the President of the Treasury Board...

[The Chair, Conservative, Robert Gordon Kitchen]

You have 10 seconds.

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

Okay. I'll give them to Mr. Green.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

Mr. Green, you have five minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

As it relates to the fall economic statement, in a recent interview the PBO said that he hoped the Minister of Finance would include clear targets for Canada's public finances in the fall economic statement 2022.

Why is it important to set clear targets when the COVID pandemic is ongoing?

[Yves Giroux]

It's important for two reasons. One, it allows the government to have fiscal credibility. It's a clear statement about where fiscal policy will be headed in the future. That's probably the main reason.

The second aspect is that it makes the job of the Minister of Finance easier because, as one can easily imagine, with the Minister of Finance announcing in the update that there will be a stimulus package worth between $70 billion and $100 billion—“but give us your great ideas”—the Minister of Finance will be put under tremendous pressure. Having clear targets allows the pressure to be taken off to a certain extent by making it easier for the Minister of Finance to say yes to priorities, and no to other proposals because that would steer the government away from its fiscal targets.

[Matthew Green, NDP, Hamilton Centre, ON]

I'm a little bit unclear on your personal or professional opinion on this. Do you believe that this fall economic statement achieved clear targets?

[Yves Giroux]

No.

[Matthew Green, NDP, Hamilton Centre, ON]

Would you expect the stimulus package to be expanded, both in terms of length and funding, in the near future?

[Yves Giroux]

That depends, because the government indicated in the economic statement that it will look at indicators related to the labour market, but some of these indicators, like the employment rate, may never come back to pre-pandemic levels. Because of an aging population, the share of adults working will probably be on a downward trend as people get older. People stop working at a certain age, at least on average.

Other measures could have the opposite impact. The number of hours worked could, according to many forecasters, return to pre-pandemic levels within 12 months. There are contradicting indicators on that. Depending on which ones the government decides to focus on, we could be in stimulus for a very long time or a very short period of time. That's why the anchors, or the targets, in the statement are—

[Matthew Green, NDP, Hamilton Centre, ON]

They called them guardrails, if you recall.

I'll share with you that I can recall the finance minister making very grandiose statements to a very large economic forum, telling them that these measures would be temporary, trying to get investor confidence, and then going to the public and telling the public that they would be here for them in the long run.

I share your concerns, quite frankly, because I'm unclear which Liberal government we're going to get: whether we're going to get one that will continue to support Canadians throughout this second and potentially third wave, or whether we're going to get a government of austerity that is going to yank the supports from underneath people.

Will a three-year stimulus package valued at what you've just suggested—between $70 billion and $100 billion—even be sufficient to help the Canadian economy recover from COVID, in your opinion?

[Yves Giroux]

It depends on the pace of development and rollout of a vaccine and treatments, on whether we have a third wave or not, and how confident and secure Canadians will be when this is over. If they feel totally confident to resume their daily lives, we may not need much stimulus, but if people are still concerned and worried and feel unsafe, we may need a bigger stimulus. It's a bit early to determine the size of the stimulus.

[Matthew Green, NDP, Hamilton Centre, ON]

It does beg the question, though. We talked about this earlier, $70 billion to $100 billion over three years. Yet this government put $750 billion in liquidity supports and loosened regulations for Bay Street. Can we anticipate that there will be more bank bailouts in the future as well?

[Yves Giroux]

Personally, I don't anticipate the need for bank bailouts. There hasn't been a bank bailout; what the government has provided is additional liquidity in the system, mostly through loans or a relaxing of some provisions regarding ratios for banks, so—