Evidence of meeting #72 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 cost.
A video is available from Parliament.
NDP
Gord Johns NDP Courtenay—Alberni, BC
Sure. I imagine it would backlog a lot of requests made to those departments, and that's costly on its own.
Are there any recommendations that you can make to this committee, given that...? My guess is that it's going to cost tens of millions of dollars.
Do you have any recommendations to this committee for best practices moving forward, so that we get the information we need to make good decisions?
Second, have you seen a committee do this at this magnitude before?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'm not an expert on committee business, but I would think one way to limit these types of impacts would be to have a clear definition or a clear request that is as limited as possible, as opposed to being wider or...that is less subject interpretation is what I mean.
Conservative
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Thank you, Mr. Chair.
Maybe I could let you, Mr. Giroux, answer the question I posed at the end, which is the ROI question with the $16-billion investment.
Have you seen an ROI calculation for it, as the minister claims there will be in five years? If not, what would it take to get an ROI on such a large investment?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The ROI I've seen—or the multiplier effect, as some call it—is 3:1 in the current state of the industrial sector in Canada, which could rise up to 6:1 if the majority of inputs were to be sourced from Canada. That would be considerable at 6:1, and that's based on external estimates when it comes to EVs and batteries.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Thank you.
Did you look at the question of the capital cost allowance? Will Volkswagen be able use the capital cost allowance deductions with this investment it's making?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'm not sure. I don't remember seeing or hearing any public statement by the government about Volkswagen's not being eligible to use the CCA in the same way as any other business. It's quite possible, but I think—
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Reuters has reported that it's a $6-billion to $7-billion investment that Volkswagen is making in the construction phase. A larger part, obviously, with that would be considerable. Would it require special legislation for it to not be able to use the capital cost allowance?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, that's my understanding. Like any other business, it's eligible to claim it, so to prevent a specific corporation from claiming the CCA, there would need to be legislative amendments to exclude either that type of business or that corporation itself.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Is that based on the fact that there hasn't been any legislation passed to make it tax exempt? I'm referring back to your first answer to me earlier about your calculation that this will actually cost $2.8 billion more than the Liberals are estimating.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Exactly. There hasn't been legislation passed, tabled or even mentioned to this date about exempting Volkswagen from tax on the government assistance that will be provided.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
You used finance department documents to make this analysis, so it seems to me that perhaps the minister is more confused about what's required to do that than your report is.
Not at this committee meeting but I think in briefings earlier today, Stellantis said it will walk away from the investment under the same strategic investment fund that is financing the construction of that building. Stellantis is asking for a deal similar to what Volkswagen got—which is what I would do too, if I were Stellantis—in order to ensure a competitive playing field. I believe you said that if it comes through at the same level, it will probably cost more than this contract. Is that true? It's hard to know, since we haven't seen a contract for either the construction phase or the production phase.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's very difficult to know. It depends on the production schedule and capacity, because the subsidies are per unit produced. It depends on the capacity of that other plant, the Stellantis plant. In the absence of having any clear idea as to what the production capacity of that plant would be, it's difficult for me to assess whether it would be more or less expensive.
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Not in these specific fields but generally, when the government signs a large contract with a private sector company and there's government support for it, there are milestones and metrics, and usually there are conditions that say that either party can walk away from the deal or choose to cancel the deal. Stellantis is saying that it's going to walk away from the deal unless it gets more. There must be a cancellation clause, then, in these contracts in order to allow them to do that, wouldn't there be?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I haven't focused on the cancellation clauses. I focused on the financial metrics, so that's—
Conservative
Rick Perkins Conservative South Shore—St. Margarets, NS
Therefore, if there isn't a cancellation clause, we get stuck with the bill for what's been invested already, and they walk away.
Okay. Thank you.
Conservative
The Chair Conservative Kelly McCauley
That's pretty much your time, Mr. Perkins.
We'll go to Mr. Jowhari, please.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thanks, Mr. Chair.
Welcome back, Mr. Giroux and your team, to the committee. Thank you for the work you're doing.
In looking at the report that you put out on the supplementary estimates (A), I see that you've broken the report into three parts around major expenditures. With regard to budget 2023, you talk about the 15 budget measures to the tune of about $4.4 billion, and then the indigenous reconciliation, as well as about $700 million on personnel.
I'd like to start with the major part of the budget 2023 expenditure, which is about $2.5 billion. My understanding, based on the report, is that this is the first of the 10 instalments of $25 billion that the government set aside from the $46.9 billion on shared priorities with the provinces. Can you give us some details around where that $2.5 billion is being used, or at least earmarked to be used, and the impact it's going to have?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
These levels were not in the estimates themselves. On that, I would probably refer to the public statements made by the government when it announced the investments or the additional expenditures on the health transfers.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
When you talk about the debt, you mention “through which the government has announced that it intends to provide $25 billion over 10 years”. You then say, “Notably, one of the areas of focus in these agreements is improving access to quality mental health and substance use services.”
Is this $2.5 billion that they're accounting for in these estimates specifically focused on mental health and substance abuse? What positive impact is that going to have? Further down, you talk about the opioid crisis and provide a chart. How do you think this $2.5 billion will help?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It should contribute to reducing mental health issues, hopefully, especially for those who suffer from addictions, notably to opioids, which is an issue in most regions of the country, if not all. The amount of $2.5 billion spread across the provinces and territories might not seem like a lot, but I think it will certainly help those who suffer from addictions, based on the expertise of public health authorities.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you.
With regard to personnel spending, you talked about $708 million in budgetary authorities as part of the estimates. Can you tell us where this money is being spent in the increases on the personnel side?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We don't have these details off the top of our head. We know the amount, but at this moment we don't know which specific areas and which departments are going to—