Government Operations Committee on Oct. 19th, 2023

[Yves Giroux]

We have assumed that if you have a single payer in Canada for prescription drugs, there will be a bigger and more powerful negotiating power on the part of that single payer and they'll be able to negotiate a lower cost for drugs. As well, some confidential rebates that are currently being provided to some provincial public plans would also be included in that single-payer drug plan.

Therefore, it's a result of lower overall drug costs as result of that bargaining power. That will be, in part, eaten up by more access to drugs, notably by those who don't have a drug plan right now or who have to pay a significant portion out of pocket. An increased use of drugs—

[The Chair, Conservative, Kelly McCauley]

Thanks. I'm afraid that's our six minutes. We'll go to our next round.

Mr. Lawrence, go ahead for five minutes, please.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

Thank you very much, Mr. Giroux. I always enjoy the conversations we have.

Just to pick up on what Mr. Johns was talking about, what would be the total cost to the taxpayers of a single-payer pharmacare program?

[Yves Giroux]

We estimate the total cost to be $33 billion in the first full year of implementation, rising to $38.9 billion. That's the gross cost in 2027-28.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

In your economic and fiscal outlook, you haven't included that cost, correct?

[Yves Giroux]

No, because that was not known as of September 15.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Do you think that would have a material impact on your numbers?

[Yves Giroux]

It would have a material impact, but it would depend on the exact split between the federal and provincial governments. The numbers I quoted to you were gross numbers. If we subtract amounts already spent by provinces and by the federal government, the net cost comes down to about $13 billion, so it depends on how that additional expenditure is split between federal and provincial governments, but it would have a material impact on deficit figures going forward.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Of course, you are also aware that Canada is not living up to our NATO obligation of spending 2% of our GDP. If we were to do that, would that have a material impact?

[Yves Giroux]

If we were to reach the 2% target, that would mean additional costs of $10 billion to $12 billion per year. I don't remember off the top of my head, but we released a short report last year on that very topic.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

You have probably also read that the former head of Statistics Canada, Philip Cross, has said we currently have the worst per capita GDP since the Great Depression, and the OECD predicts us to have the least and the worst capital investment of any OECD country, the lowest productivity and the lowest economic growth.

Clearly, there is a storm brewing here, right? These numbers are not great. I don't feel great and I don't think the people of Northumberland–Peterborough South feel great about a debt-to-GDP ratio approaching 50% and a deficit now predicted at $46 billion, but this could get much worse, couldn't it, Mr. Giroux?

[Yves Giroux]

If the government follows through on a pharmacare plan, for example, or increasing defence expenditures, and that is not associated with additional tax revenues, the deficit will go higher and the debt-to-GDP ratio could stop falling or it could even start rising, so it's quite possible.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Giroux, you've been very candid before, and I really appreciate your candour. When, as a Parliamentary Budget Officer, would you start getting concerned or nervous for the financial stability of the country? Is it at a 50% debt-to-GDP ratio, a $100-billion deficit? What would be...?

[Yves Giroux]

It's not necessarily an absolute number, because we see countries such as Japan, which is above 200% or was above 200% of GDP but is doing still relatively well in the financial markets. It has to be looked at in conjunction with other countries. There is no one number where we hit a wall, so to speak. It's in the perspective of being on a path of ever-increasing debt-to-GDP ratio in the longer term. That is what would really be worrying.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

We've also heard from many economists. We heard from Tiff Macklem that we were going to be low for long, and now we're hearing it's going to be high for long.

The other risk factor is that we could have continuing high interest rates, which could cause our debt services charges to increase. Is that something we should be concerned about as well?

[Yves Giroux]

It's always something to be concerned about when you have an accumulated stock of debt that has to be refinanced. It's always risky to assume that when interest rates are low, they will stay low forever. Hoping for the best and planning for the best is not very prudent. That's why it is always advisable to factor in some level of prudence when you are making long-term projections.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

We've seen some evidence that this might be occurring as we look at the bond markets, and we've seen the bond prices appreciate considerably over recent days. Is that something your office follows? Is it something that should give Canadians concern?

[Yves Giroux]

It depends. It depends on what happens in the fall update that the government will be tabling imminently or in the fall, and what happens in the budget. If the direction is decreasing deficits, it won't be that worrying, but if we see deficits increasing and the debt-to-GDP ratio not decreasing or even going upward, that is something that could be worrying, depending on the longer-term trend.

[The Chair, Conservative, Kelly McCauley]

Thank you very much. Thank you, Mr. Lawrence.

We have Mrs. Atwin, please.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you very much, Mr. Chair.

Thank you very much, Mr. Giroux, for joining us.

The last time we saw each other was at the indigenous and northern affairs committee. I'm happily on the OGGO committee now.

I'd like to focus on the overview of the government's digital service transformation. I'm particularly interested in environmental impacts, and also how accessibility can improve service delivery in our own riding offices as well.

Your report mentioned there were inconsistencies, even though there have been improvements made, and also perhaps a lack of transparency. I'm wondering how we could improve transparency to determine whether funding for the digital transformation initiatives is sufficient to address the priorities identified in Canada's digital government strategy road map.

[Yves Giroux]

The comments related to transparency related to the fact that when the government announces investments in digital services or IT transformation, it often announces the numbers overall, allocating millions or hundreds of millions of dollars to improve digital services and upgrade IT systems. It's very difficult for us, for anybody in fact, to determine the part that is allocated to maintaining or upgrading the back office systems—for example, the hardware that makes everything happen—versus the amounts that are spent on improving or digitizing services.

That's what we meant by “transparency”. Departments don't seem to track these numbers distinctly. They see it as one big bundle.

[Jenica Atwin, Liberal, Fredericton, NB]

I also noted that there were important aims to improve client services in CRA and in ESDC, and there was a comment about the linking to the My Account piece and not being able to access some of that information.

I'm wondering if you've followed up with the CRA about their information and why it could not be publicly disclosed.

[Yves Giroux]

We have followed up with them. It was an inadvertent mistake that they identified the information as confidential, when in fact it was not confidential. We asked them before they released the report if they were sure this was confidential, but there was a misunderstanding somewhere in the chain of command at the CRA, and they mislabelled the information as confidential.

[Jenica Atwin, Liberal, Fredericton, NB]

Maybe without even disclosing some of that specific information, could you describe any conclusions that your office could draw from the My Account tool?

[Yves Giroux]

Yes.

The My Account tool at CRA is quite efficient at providing a whole suite of services, and CRA has made significant investments over time to ensure that My Account is providing more and more services, going beyond just the statement of account to providing the capacity to look at your notice of assessment to then providing information that you need, for example, as a result of an audit or an information request. Gradually the CRA has been able to expand its services delivered through My Account, which we found was an interesting development. Having used these services myself, I found them quite convenient.