Government Operations Committee on Oct. 19th, 2023

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Colleagues, welcome to meeting number 79 of the House of Commons Standing Committee on Government Operations and Estimates, also known as “the mighty OGGO”.

Pursuant to Standing Order 108(3)(c) and the motion adopted by the committee on Thursday, September 28, 2023, the committee is meeting for a briefing by the Parliamentary Budget Officer and to consider committee business. We'll go in camera for the last 15 or 20 minutes for committee business—mostly the budgets.

I will remind everyone not to put the earpieces next to the microphone, as it causes feedback and potential injury.

Mr. Giroux, this is meeting number 79, and I think it's probably your 75th appearance. Welcome back. It's wonderful, as always, to have you here. We'll turn things over to you for your opening statement.

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

Thank you, Mr. Chair.

My opening remarks will be brief because I'm sure committee members will have plenty of questions for me.

In the last few weeks, we have released a number of reports, notably on a universal drug plan, on the potential return on investment on electric vehicle car battery plants and on our economic and fiscal outlook. I assume that you and your colleagues will have questions on these reports, but I'm happy to take questions on these or any other topics.

[The Chair, Conservative, Kelly McCauley]

That's wonderful, sir. Thank you very much.

We'll start with Mrs. Kusie for six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

Thank you very much, Monsieur Giroux, for being here with us today. It's very much appreciated.

As I said in the House yesterday, back in March the finance minister said that the budgetary deficit was going to be $40 billion, and in your recent report you indicated that she was off by more than $6 billion. Why would it be that she was off by such an incredibly large amount?

[Yves Giroux]

We base our estimate on information that is known at the time, but there is one big unknown, information that the minister probably has but we don't, and that is the final deficit for the year that ended on March 31. We still don't have the public accounts. Based on that incomplete information, we do indeed estimate that the deficit for the current fiscal year will be $46.5 billion, and that's due to slower revenue growth and also higher expenditures. That's why we think the deficit will be some $6 billion higher than what the minister indicated earlier this year.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much for that response.

I see that between the current fiscal year of 2022-23 and that of 2028-29, expenditures will increase significantly. I believe it's an average of $4 billion every year. Why is that, please?

[Yves Giroux]

It's due in good part to new programs that have been announced and included in our fiscal projections. There are a number of programs. I don't have the precise, specific list, but we included all the information that was available as of September 15, including information that was provided to us by the Department of Finance. It's mostly due to new programs, because existing programs tend to cost slightly less than what the government indicated. It's mostly new spending and new programs being introduced.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's right. In your report you say, “This upward revision is due to new measures”, so I was going to ask you to expand upon those new measures that are outlined in the report—those announced in budget 2023 and through to September 15. Are there any specifics you would like to mention within those new measures or those new expenditures relative to the deficit increase, please?

[Yves Giroux]

Well, the dental program is certainly a significant piece of these new expenditures. So, to a large extent, are the subsidies for electric vehicle battery plants, even though these will be progressively coming into force as production ramps up at the two plants. These are two things that come to mind.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I believe my colleague Mr. Lawrence will get further into the finance aspects of it, but would you say that reduced expenditures would make us less dependent on nominal GDP growth in the future?

[Yves Giroux]

Reducing the overall rhythm, pace or absolute level of expenditures would certainly have one advantage: It would reduce the debt servicing cost, which is another item of expenditure that is rising relatively fast, due in good part to the rising level of debt but also the increasing interest rates. Slowing down the pace of revenue, assuming that this would translate into a lower deficit, would contribute to reducing the reliance of the government on debt financing and reducing debt servicing cost.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

You're saying that if the government spent less, then we wouldn't have to rely so much on nominal GDP and therefore taxation adding to revenues.

[Yves Giroux]

Reducing expenditures could allow the government to reduce some taxes. If that's your question, then the answer is yes, it could lead to that.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

I'm now going to move on to the “Overview of the Government's Digital Service Transformation”.

Your comment in the summary of your report reads:

While the Government has made improvements, there is still inconsistency in the ease of access and use of services. There is also no centralized information on the total amounts that have been spent or saved on these initiatives, as the latter is generally not tracked.

Why do you think this is the case? Why do you think that in a time when we're seeing a $46-billion deficit, $6 billion greater than anticipated, even back in March, we're seeing a government that isn't even making the effort to track or use data for savings within the government?

[Yves Giroux]

That's a good question: Why are departments not tracking that information? For example, the progress they are making towards digitizing the client or citizen services and the potential savings that are derived from this increased digitization is, in my opinion, a missed opportunity to track what is potentially a good story when the government is digitizing services from end to end, because it can lead to substantial savings.

For example, processing a tax return or an application electronically costs significantly less than processing it manually, whatever the system is or the process is. Doing that end to end electronically costs significantly less than doing it in person or through call centres. The government doesn't seem to be tracking these savings, or certainly not to a significant extent.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

In the AG report this morning, a third party estimated that to modernize the systems, it will take between $2.7 billion and $3.4 billion. Would you agree with this estimate? Give me a yes or no.

[Yves Giroux]

I don't know. I haven't looked at the cost of—

[The Chair, Conservative, Kelly McCauley]

I'm afraid we'll have to take that “I don't know” as an answer for now.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair. Thank you, Mr. Giroux.

[The Chair, Conservative, Kelly McCauley]

We have Mr. Jowhari for six minutes, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Once again, Monsieur Giroux, welcome to our committee.

I want to go once again on the record, as I always do, and thank you for making yourself available to this committee, always on short notice, and also for being a great partner in our office. Every time I've called your office, you and your team have been very accommodating and very helpful.

I want to actually stay on the same topic as Madam Kusie and talk about the digital service transformation.

You had touched on some of the benefits this will bring to the government, but also, in your report, you talked about some of the unique challenges that Canada is facing. We've benchmarked ourselves against the OECD and some other countries. Can you talk about some of those challenges? You were quite clear in your report that there are areas where we could improve, and opportunities around tracking, around integration. I would appreciate it if you could spend a little bit of time on those challenges as well for us.

Thank you.

[Yves Giroux]

Sure.

In discussing with experts in the lead-up to that report, it became obvious to us that there were several challenges.

Providing services from coast to coast to coast and even internationally, when we talk about passport services and immigration services, is a challenge, with various locations in different time zones. These are not insurmountable challenges, but these are challenges.

The other very important aspect is security. That is very important to everybody who works in the IT space, and it's especially true for the government, because people put their trust in government when it comes to safeguarding their personal information. It's even more important for governments to ensure the security of IT systems and citizen-facing systems.

Another aspect is the provision of services in both languages, which some countries don't have to face. Again, it's not an insurmountable challenge, but it adds to the complexity.

As well, there are the legacy systems, which are another challenge for government services.

Finally, what came out loud and clear in talking to government sources were the staff and labour shortages in the IT system.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Specifically, in your report you hit on a couple of initiatives. The CRA was one and the IRCC was another one. You rightly touched on the fact that, especially when we are trying to process the application of a file, international security plays a huge role, as these are core systems around our immigration and our processing.

Given that these initiatives may be starting at different times, can that result in data being available, as far as integration is concerned, at different stages? It might be considered a reason that we are not at a stage that we should be in the integration of these systems.

[Yves Giroux]

It could be one reason, although not being an IT specialist myself, it's difficult for me to say that it is definitely one reason. Based on what we've seen, it's a plausible explanation. The fact that the government may want to move in increments, as opposed to doing one big transformative approach, could also be one reason that progress is not as fast as some would like.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you for highlighting that increment. As you highlighted in your report, when it comes to passport digitization and online processing, the target number is about 600,000, whereas the overall need is about 4.5 million to 5 million passports.

In your opinion, when you did the study, what might be the driver of that phased approach?