Evidence of meeting #65 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 budget.
A video is available from Parliament.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
If the committee wishes to do so and passes a motion, we'd be happy to do that.
Conservative
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
That's great.
How much time do I have remaining, Chair?
Conservative
Michael Barrett Conservative Leeds—Grenville—Thousand Islands and Rideau Lakes, ON
We've heard that the government's fiscal policies are making the job of the Bank of Canada to tame inflation harder.
Is that tension that's being created between the government and the Bank of Canada's objective of getting inflation under control something that needs to be addressed in terms of policy or just in terms of the budget that the government puts forward?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
When there's a tension like that, it's up to the bank and the government to discuss it to the extent possible, but there's not that much to discuss when the government decides its fiscal policy and gives a mandate to the Bank of Canada.
As you pointed out, when the government's fiscal policy is sustaining inflation—if not worse—it makes the job of the bank slightly more difficult. It forces the Bank of Canada to increase interest rates slightly more than it would otherwise have to.
It's the federal government, but also provincial governments that are contributing to that by increasing their expenditures. As you pointed out, it can lead to tensions between the fiscal policy and the monetary policy. The way to solve that is by having slightly higher than expected, or higher than otherwise needed, interest rates.
Conservative
The Chair Conservative Kelly McCauley
Thank you very much.
Ms. Thompson, go ahead, please, for five minutes.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you, Mr. Chair.
Welcome back to the committee.
I'd like to go back to the health transfer and specifically speak about dental care. Certainly you well know that dental and oral care are health care. Certainly there are very strong evidence-based models that demonstrate the health outcomes that follow.
Will you be conducting a cost analysis on the funds that are being spent on dental care and their relationship with the outcomes in health care?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We have asked the government for detailed information on the parameters of the dental care program that was announced in the budget. We have been told that the details we need are not yet available. In fact, we have been told that these are cabinet confidences, so we have not yet been able to cost the dental program that was announced in the budget. I'm hopeful this will change.
As to whether this will lead to savings in other areas of health care, it is not yet part of our analysis because it would be quite difficult to assess the downstream impacts of this program on other health care expenditures.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
As someone who helped build a primary health care team for very vulnerable persons at street level and put in dental care, I'm very excited about the data piece attached to the health transfers. I think that data system, which is a national system, will go a long way toward being able to provide that outcome.
Switching now to carbon pricing, I'd like to take the opportunity, if I could, to clear the air.
Is it true that all revenues gained from carbon pricing are redistributed as rebates to those under the federal carbon pricing system?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
My understanding is that all the revenues for a carbon levy—the vast majority, at the very least, if not the totality—are to be redistributed to households in the provinces in which they are raised.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
With carbon pricing, why did your office not use a comparison in your comments on carbon pricing, when we know there are comparative models out there that very clearly speak about the cost of climate inaction? I use the example of my province of Newfoundland and Labrador without the impacts on the Atlantic provinces of hurricane Fiona and the real cost now on the south-west coast. Could you speak to why the actual price of climate inaction wasn't included?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We did attempt to cost the impacts of climate change on the Canadian economy between now and 2100. We have estimated, in our best attempt at estimating, the most likely impacts of climate change on the Canadian economy. What we have not done is compare a world where nobody acts on climate change with the so-called “benefit” of acting on climate change, because this is a very difficult counterfactual to find.
We have estimated the cost of the carbon tax, how much households will receive, how much it will cost, the cost of climate change and so on, but we have not found a credible, reliable model that would allow us to tangibly cost the benefits of acting on climate change. And even if we did, we'd have to assume that in that counterfactual nobody does anything on climate change, which is not very credible. That's the difficulty of trying to estimate the benefit of implementing a carbon levy or a carbon tax and other actions to fight climate change.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
If I could switch to debt-servicing costs for a moment, what measures is the government taking to bring down the public debt?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Right now, I don't see measures to bring down the government debt. What we see are deficits for the foreseeable future. These deficits will continue to increase the federal debt.
What we are seeing, though, is a commitment by the government to reduce the debt-to-GDP ratio. So the debt in absolute terms will continue—or is expected to continue—to increase, but compared to the overall size of the economy, it's expected to represent a slightly diminishing share of the national economy.
Conservative
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
Mr. Giroux, in her speech, the Minister of Finance announced that spending on consulting, professional services and travel would be reduced by approximately 15%. Approximately how much will be saved?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I believe the government is targeting about $3 billion in savings through cuts to travel and consultants. I'm not sure if these figures are accurate, but my colleague Ms. Vanderwees can correct me if I'm wrong.
Kaitlyn Vanderwees Analyst, Office of the Parliamentary Budget Officer
Thank you for the question, which I will answer in English.
In dollar amounts, the government has indicated its plan for reducing consulting professional and special services and travel by $500 million this fiscal year and $1.7 billion ongoing. To give you some information, in 2021-22 management consulting was $800 million.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Okay. My understanding is that this is not a substantial amount in the context of the budget, which is over $430 billion. Is the decision to make these cuts driven more by politics or by logic? Was the decision based on waste or was it related to public pressure? Was it because people were unhappy, so cuts would be made where it was most apparent, but spending would not be cut elsewhere?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That is a good question. The minister is probably in a better position than me to tell you why these expenditures were targeted. Indeed, one can speculate, since this comes on the heels of the controversy surrounding a well-known consulting firm. With my experience in the public service, reducing travel costs is a fairly easy target. If all the travel cost reduction exercises had been implemented as planned, I don't think the Ottawa airport would still exist.
Bloc