Government Operations Committee on June 14th, 2023

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order. Good afternoon, colleagues.

Welcome to meeting number 72 of the House of Commons Standing Committee on Government Operations and Estimates, also known as the mighty OGGO, the only committee that matters.

Pursuant to the order of reference adopted by the House of Commons on Monday, May 29, 2023, the committee is meeting on its study of the supplementary estimates (A), 2023-24, and vote 1a under the Department of Public Works and Government Services.

Before we introduce our guests, colleagues, I have a special request from our interpreters regarding our headphones: Please keep them away from the microphones. It's causing bad feedback. Please do not drop them or do what a lot of us do when we're bored, which is spin them around. Please just be advised of these issues that are being caused for our valued translators. Thank you, colleagues.

We welcome back our Parliamentary Budget Officer, Mr. Yves Giroux, who is an honorary member of OGGO. We thank him for joining us, along with Ms. Vanderwees, our estimates expert.

Mr. Giroux, do you have an opening statement for us?

[Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

I do, Mr. Chair.

Good afternoon, Mr. Chair and members of the committee. Thank you for the invitation to appear before you today. We are pleased to be here to discuss our report on the supplementary estimates (A), 2023-24, which was published on May 30, 2023. With me today is our lead analyst on estimates and on the report, Kaitlyn Vanderwees.

The government's supplementary estimates (A) for 2023-24 outline $21.9 billion in incremental spending. Parliament's approval is required for $20.5 billion. Statutory authorities, for which the government has Parliament's approval to spend via other legislation, are forecast to increase by a total of $1.4 billion.

Roughly one-fifth, or $4.4 billion, of spending is for 15 budget 2023 measures. Most notably, this includes $2.5 billion to the Department of Health to improve health care for Canadians.

More than half of the proposed spending in these supplementary estimates, roughly $13 billion, relates to the negotiation and resolution of indigenous claims.

Including these supplementary estimates, the total proposed year‑to‑date budgetary authorities are $454.8 billion, which represents a $11.5 billion, or 2.6 per cent, increase compared with the estimates to date for the preceding year. This is generally consistent with the spending growth forecast in budget 2023.

To support parliamentarians in their scrutiny of budget 2023 implementation, we have prepared and published tracking tables that list all budget initiatives, the planned spending amounts and the corresponding legislative funding authority. These tables are available on our website and will be updated over the course of the year as the Government brings forward its legislative agenda.

Ms. Vanderwees and I would be pleased to respond to any questions you may have regarding our estimates analysis or other work by the Office of the Parliamentary Budget Officer.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Giroux.

We'll start questions with Mr. Chambers, please, for six minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Chair.

Welcome back, Mr. Giroux and Ms. Vanderwees. It's always good to have you at the committee. We appreciate the work your office does to support parliamentarians. I know that those of us who do not have large departments or staff rely on your work on a regular basis. It's of very high quality.

You mentioned that in the supplementary estimates.... I know that we're spending more per year on debt servicing costs than we have in the past—almost double, in fact. I'm a little nervous about the projections the government has for debt servicing costs, because there was a surprise interest rate increase announcement last week. I believe the government's projections are that rates were supposed to have come down by the end of the year. I haven't been able to find the average interest rate that the government expects to roll over or issue its debt at for this year coming up.

Have you considered or are you tracking the debt service costs? It's now one of the largest components of the spending line.

[Yves Giroux]

It is indeed one item of expenditures that we are closely tracking, because it obviously matches interest rate variations very closely. The Bank of Canada recently increased its interest rate once again, and this will quite obviously have an upward impact on the debt servicing costs. However, that impact will not be immediate—well, some of it will be immediate, because the government finances itself through treasury bills, but also bonds, which have various lengths of maturity.

We will be following the impact on debt servicing costs closely, but we expect this to have an upward impact on debt servicing costs compared with what was laid out in the budget. I don't think people anticipated that the bank would increase its rate to what it is right now.

[Adam Chambers, Conservative, Simcoe North, ON]

Do you recall what the debt servicing cost is for this year?

[Yves Giroux]

I don't, off the top of my head. It's in the vicinity of $43 billion, I think.

[Adam Chambers, Conservative, Simcoe North, ON]

That's right. I want to thank you for answering that question. Sometimes it's very hard to get answers to factual questions like that. I appreciate it.

It's about $43.9 billion, which is quite close to what we're transferring to the provinces for health care this year. That expenditure.... Any upward revision is going to make it harder to pay for some social programs, I think.

I want to turn now to some of your other work on everybody's favourite topic: carbon pricing.

You did the fuel charge distributional analysis. You also did the clean fuel standard distributional analysis. I want to get some impacts on the price per litre when it's fully implemented.

We're calling the federal carbon charge the “fuel charge.” How much will that be per litre when it's fully implemented?

[Yves Giroux]

I think the estimate at this time is that by 2030, when the carbon tax price per tonne amounts to $170, it will be about 40 cents per litre. I think 41 cents is the number.

[Adam Chambers, Conservative, Simcoe North, ON]

The clean fuel standard—is that about 17 cents a litre?

[Yves Giroux]

Yes. Based on the government's own estimates, it should be about 17 cents per litre for gasoline and 16 cents per litre for diesel.

[Adam Chambers, Conservative, Simcoe North, ON]

If you take those two together and we apply HST—which is what happens at the end of the bill—it's about 61 cents per litre. Is that around right, if you're in Ontario?

[Yves Giroux]

It's in the order of magnitude. I wouldn't add them together, personally. There could be some interaction impacts between clean fuel regulations and the carbon tax, but the number you mentioned would be quite close.

[Adam Chambers, Conservative, Simcoe North, ON]

Think about Ontario for a moment, where I'm from. In terms of the cost to an average family, the net cost for the carbon charge, once fully implemented, will be about $1,820. Does that sound about right?

[Yves Giroux]

Yes.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

The clean fuel standard net cost, once fully implemented, will be about $495.

[Yves Giroux]

Yes.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay. The total will be just over $2,300 once they're fully implemented.

[Yves Giroux]

Yes. For an average household in Ontario, that sounds about right.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

We spend a fair bit of time arguing about regulation versus carbon pricing and other actions the government can take. Most governments are doing either a carbon price or regulations. Our government has chosen to do both.

How should we think about the impact these measures are going to have on emissions?

[Yves Giroux]

Well, that's a good question.

When we look at the clean fuel regulations, they're expected, by the government's own estimate, to reduce emissions by 26 million tonnes of CO2 equivalent in 2030. That's the stated impact, based on the government's own estimate. The carbon tax itself will also have an impact. I don't remember, off the top of my head, the exact number.

The point is that whether it's a carbon tax or regulations, both have a cost. It's a matter of how obvious and transparent the cost is.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Chambers.

Mr. Housefather, go ahead, please, for six minutes.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you, Mr. Chair.

Thank you very much to Mr. Giroux for being here.

I want to get a better understanding of the difference between the federal government and provinces. The public sector, for example, has grown considerably. We've heard a lot about it in our committee recently in the last couple of years.

Can you please compare this growth of federal and provincial governments? Has the personnel of provincial governments grown to a similar extent during COVID in recent years?

[Yves Giroux]

It's an interesting question. Unfortunately, I don't have an answer to that question, because my analysis focused on—as it generally does—the federal government. I haven't looked at provinces specifically over that period of time.