Evidence of meeting #157 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A video is available from Parliament.
Conservative
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Overall, in theory, it's yes, but the magnitude is up for discussion.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Thank you.
Recently, the government introduced a two-month tax trick, where they're pausing the GST and HST on certain items. We know that the GST is already not applied to a lot of groceries.
In your report, as my colleague highlighted, you said that the carbon tax makes prices go up and incomes go down.
Would you agree that, to make things more affordable for Canadians, it's better to take the carbon tax completely off everything for everyone for good, instead of offering a temporary, two-month tax trick?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's a policy choice by the government. A fuel charge or carbon tax is not just to generate revenues; it also has other objectives in reducing carbon emissions. Whether one is better than the other is really not for me to say. It's up to the government and legislators to determine.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
But comparatively, would it be more beneficial to have a permanent tax taken off—something like axe the tax and get rid of the carbon tax on food, gas and home heating—or to just have a two-month GST pause when it comes to affordability?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
If you're talking about affordability and if the trade-off—“if” the trade-off—is between a two-month tax reduction or a permanent reduction, I think the answer is quite obvious that a permanent reduction would be better to improve affordability.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
So axing the tax would be better.
You've also highlighted that this government— no surprise—is going to blow through their budget deficit by $6.6 billion. This temporary GST pause, according to the government, is also going to add another $1.6 billion to the deficit, at a minimum. What does it say about affordability for Canadians to have the government go even further into their deficit? Will that help Canadians when it comes to affordability or will it make things worse?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Well, it depends on where these additional expenditures are going. If the increase in the deficit is due to higher expenditures, it depends on where they are going. One thing we can say for sure, though, is that when you have a higher deficit, other things being equal, it forces public debt charges to go up. That in good part is why we have seen public debt charges go from around $20 billion or $25 billion to $52 billion this year, expected to rise to $67 billion by 2029-30.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Mr. Giroux, I've been hearing from businesses about this temporary GST pause, this tax trick, about what it's going to cost them. They have to change their POS systems twice, once before the change and once after the change. This is also happening during one of the busiest times of the year, which is Christmas. We're hearing from some stores that it's anywhere from $1,000 to $1,500 each. They don't see that there will be a benefit from this, at the end of the day.
Have you done any analysis on the impact to businesses from this pause?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, we have not done a study or an analysis on that aspect.
Conservative
The Chair Conservative Kelly McCauley
Thank you very much, gentlemen.
Mr. Bains, we'll go to you next. We haven't tested your mic, but please go ahead. If there are any issues, I'll interrupt and we'll go to Ms. Atwin.
Go ahead for five minutes, Mr. Bains.
Liberal
Conservative
December 3rd, 2024 / 12:40 p.m.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Okay.
Thank you to our officials for joining us today.
First, your report highlights the spending through statutory authorities. What are the implications of statutory versus voted authorities for transparency and accountability in government spending?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Statutory authorities don't need be voted again; the government already has the authority to proceed with these expenditures. They are therefore included in supplementary estimates (A) to give a more accurate or more complete picture of the additional expenditures that the government plans on initiating. It's an enhanced measure of transparency to include these statutory expenditures in supplementary estimates, as they don't need to be there, per se. They're included to give a better picture, a more accurate picture, to parliamentarians.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
If the estimates were not yet passed in the House, what would happen?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
When it comes to statutory spending, nothing in particular would happen. These expenditures already are allowed under separate pieces of legislation.
When it comes to voted authorities, it would mean that departments and agencies seeking funding in the supplementary estimates (B) would need to cash-manage and reduce spending in other areas, or postpone some expenditures, or use surpluses from other programs to fund what they are seeking funding for in the supplementary estimates (B), or, in some cases, suspend specific types of operations.
I don't have a clear window as to which departments and agencies will be running out of cash before the end of the fiscal year in the absence of the supplementary estimates (B). This is something that the minister, the President of the Treasury Board, and individual ministers would be in a much better position to explain.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Have you done an analysis on which programs would be at risk of sunsetting should the estimates not get passed?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's hard to determine with certainty because we don't have access to real-time information on the cash needs of individual departments and agencies, and certainly not at a disaggregated enough level to determine which programs would be at risk.
Generally speaking, departments and agencies lapse money. They're allowed to lapse up to 5% of their operating spending and carry it forward. In most cases, it would mean that the lapse they could carry forward to the next year would be lower. I don't think many, if any, departments and agencies would have to stop operations before the end of the fiscal year, but again, specific ministers would be in a better position to determine whether or not they would run out of cash.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
This may be my final question. With respect to trends, what do you anticipate in future budget proposals? What trends do you anticipate from the government, particularly regarding spending priorities and fiscal sustainability?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Based on our economic and fiscal outlook in October, we anticipate expenditures to keep growing. We had an estimate for this year of $543 billion, rising to $553 billion next year and rising at roughly the same pace to reach $628 billion in 2029-30. However, that was before the government announcements related to the GST holiday and the $250 cheques for those making less than $150,000, which will create a small increase, or a small bump, in expenditures this year and next.
That's what we expect. The debt-to-GDP ratio should be on a downward trend—not necessarily this year or next, but starting in 2026-27 and with a gentle decrease after that.
Conservative
The Chair Conservative Kelly McCauley
Thank you, gentlemen.
We'll go to Mrs. Vignola for two and a half minutes, please.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
Mr. Giroux, we often talk about the threshold of 2% of GDP when it comes to spending on the military.
From one year to the next, we don't manage to spend all the money that is sent to National Defence, for a multitude of reasons.
When you talk about this threshold of 2% of GDP, are you talking about what appears in the budgets, i.e., what is planned, or what is actually spent?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In general, we talk about what is actually spent, because there could be a large discrepancy. It would be easy to promise spending without actually doing it, which would mean artificially reaching the targets set by the North Atlantic Treaty Organization.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
According to your report, personnel-related expenses account for approximately $2.9 billion or 11.7% of supplementary estimates (B) budgetary authorizations.
From one year to the next, is the amount allocated for personnel-related spending roughly the same in all budgets, i.e., the main estimates and supplementary estimates?
Does the budget allocated to the public service represent 11.7% of government spending?