Government Operations Committee on Oct. 19th, 2023

[Yves Giroux]

There are probably two things. One is funding, because resources are scarce. We were also told by senior government officials that even if there were unlimited funding provided, for example, it would be very difficult to find the qualified individuals who would be capable of establishing end-to-end digital services for citizens. Money is one driver but, more importantly, qualified staff is another.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay.

From a strategy point of view—I only have about 30 seconds, which won't leave you much time to respond—you said that we are ranking well. When it comes to the execution, we are not ranking as high as when we look at the strategy.

Could the fact that we in Canada are dealing with the challenges of staffing, especially in that technical area, be a driver of that?

[The Chair, Conservative, Kelly McCauley]

I'm afraid that there's no time for an answer.

[Yves Giroux]

I had 30 seconds.

[The Chair, Conservative, Kelly McCauley]

No, you have two seconds.

We'll go to Mrs. Vignola for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Mr. Giroux, thank you for coming to see us again on such short notice.

Mr. Giroux, we've already talked about how the number of public servants has gone up significantly in recent years. Despite that, there are problems with passports, as someone mentioned, and Canada Post. For example, one of my colleagues received notes from someone in a riding other than his. That's to say nothing of neighbouring villages that have identical addresses and postal codes. Apparently mail intended for one is being delivered to another. You have to experience that first-hand to understand.

Should we be worried that spending on hiring is going up even though the impact on service leaves something to be desired? How can existing services be improved?

[Yves Giroux]

That's a very interesting question.

My office and I have observed a significant increase in the number of public servants over the past few years. Since about 2016, the number of public servants has gone up dramatically, and payroll spending has gone up proportionally in part because there are more employees and in part because compensation is higher.

What we haven't seen is significant service improvements. We have observed some recent improvements, but departmental performance indicators are not all rosy. We did a study a year ago on Indigenous Services Canada's performance indicators, and about half of the indicators were not met. Departments set these targets themselves, so it's very concerning that they can't even achieve half of them. In addition, there were high-profile issues that surfaced in the summer of 2022: border services, passports and delays in other services.

So, yes, that worries me a lot.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Giroux.

The number of programs is currently growing. We've already talked about that.

The Research Institute on Self-Determination of Peoples and National Independence, or IRAI, published a study yesterday. That study focused only on Quebec, so it doesn't cover Canadian provinces and Canadian territories. According to this study, there is $7.5 billion in duplication of services between the Government of Quebec and the federal government.

Is that figure acceptable? Should there be duplication? Could your office study the implications of service duplication between levels of government?

[Yves Giroux]

In my opinion, this is almost inevitable in a federation where several levels of government have to share certain responsibilities. Some responsibilities clearly belong to one government rather than the other, but there are also shared responsibilities. I am thinking, for example, of justice and certain other areas where responsibilities have been transferred over time. I think it's normal for there to be some duplication.

I haven't seen the $7.5‑billion figure, so I can't comment on it. However, I know from experience that there is duplication in the collection of taxes. There is duplication between Quebec and the federal government. It can easily reach hundreds of millions of dollars.

We could estimate the administrative cost of these duplications if the committee passed a motion to that effect and determined certain parameters. We could look at that.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

Before such a motion is proposed, I would like to go back to your recent report, titled “Economic and Fiscal Outlook—October 2023”. In that report, you say that the federal debt-to-GDP ratio will rise to 42.6% in 2023‑24, and that, if no further measures are taken, that ratio will decline to 37.8%, which is still well over the pre-pandemic rate of 31.2%.

Has your team estimated how many years it will take to get back to the pre-pandemic rate?

[Yves Giroux]

We haven't estimated that. We usually do five-year forecasts. The period in which the debt-to-GDP ratio would return to pre-pandemic levels extends well beyond a five-year horizon.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I find that quite worrisome, especially since a number of infrastructure assets are currently at the end of their life. They are 40 or 50 years old, and their renewal must be planned.

Is the renewal of infrastructure assets at the end of their life included in your estimates? Could it change that estimate?

[Yves Giroux]

That may make it vary. It depends on the time horizon in which the government is making the investments to renew or to keep the infrastructure in place.

Here's what happens with the accounting infrastructure under accrual accounting. If the government buys the infrastructure, that has no net impact on the deficit or the debt in the first year; it is the amortization of that infrastructure that would have an impact.

[The Chair, Conservative, Kelly McCauley]

Mr. Johns, go ahead, please.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you.

Thank you for being here and for the important work you're doing.

Last time you were here, we talked about the carbon tax. You stated that eight in 10 Canadian families will come out ahead on the carbon tax.

The Governor of the Bank of Canada cited that the carbon tax would have an inflation impact of about 0.15%. That's 15¢ on $100 spent. Would that equate to the same on a $100 bag of groceries? Would it be 15¢?

[Yves Giroux]

It would depend on the exact composition of that bag of groceries, but on average, that should be about the same thing.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I calculated the corporate profits from big grocery stores. That looks like about $3.90 on a $100 bag of groceries. Have you looked at and done an analysis on the corporate profit side of things?

[Yves Giroux]

We have not; not on groceries.

[Gord Johns, NDP, Courtenay—Alberni, BC]

You also identified that when it hits $170 a tonne, the carbon tax impact on inflation is going to be about 0.5%. It's not nominal and it's not nothing, but it is related.

Have you looked at the corporate profits of oil and gas, as I mentioned around groceries? We've seen huge profits in oil and gas. The carbon tax went from 11¢ to 14.3¢, but where I live, it's $1.78 at the pump for a litre of gas. Very little of that is the carbon tax. Most of it is corporate profit.

Have you done any studies on the impact of that?

[Yves Giroux]

We are in the process of looking at the motion from your colleague, Mr. Morrice, which asks us to cost a tax on profits for the oil and gas sector. We were planning on releasing that soon—a few days ago, actually—but we encountered unexpected delays. We plan to release the revenue-raising measure of such a tax.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Have you looked at what the impact would be on the Canadian economy if we didn't have the carbon tax and what the impact would be of a border carbon adjustment that would be applied on Canada, should we do nothing?

Secondly, if we did nothing, what would the eight in 10 who currently get a rebate shoulder if we put it on everybody and shared it?

[Yves Giroux]

We haven't done a scenario in which nothing is done.

What we have done looks at the impact of climate change. In that hypothetical scenario, we have assumed that everybody does what they're supposed to do. We have two scenarios. In one, people have made commitments and they fully meet these commitments. In the other scenario, it's only the policies that are implemented as of now. We find there is a significant economic impact between now and 2100—over the next 75 to 77 years.

[Gord Johns, NDP, Courtenay—Alberni, BC]

In a report you did way back in 2014, I think, you projected that the impact of climate emergencies would be about $900 million a year and that it would eventually be between $43 billion and $50 billion a year. My understanding is that we're well over $5 billion in the last year from wildfires and flooding. Have you looked at the impact on inflation from climate-related emergencies?

I can share with you that in my riding, the highway was cut off by a fire. The impact on inflation where I live was much more than the 0.15% from the carbon tax.

Have you looked at or are you considering doing a study of the impact of climate-related emergencies on the Canadian economy and how much that impacts inflation?

[Yves Giroux]

We haven't looked at the impact of climate-related emergencies on inflation, but there is a lot of interest from parliamentarians in our work on carbon and climate. We are constantly reassessing what the next topic in that area should be.

[Gord Johns, NDP, Courtenay—Alberni, BC]

As you can imagine, this won't be a surprise question from a New Democrat who was part of the team that negotiated a pharmacare plan in the confidence and supply agreement with the Liberals.

Back in 2017, you conducted a cost analysis for a single-payer universal pharmacare program for Canada. The report found that we can extend comprehensive prescription medicine to cover every single Canadian while also saving billions in overall drug costs.

Last week you published a report updating that analysis of single-payer universal pharmacare and once again found that it will save Canadians billions of dollars over the next five years, starting with $1.4 billion of savings in the next fiscal year alone.

Can you explain why you found that comprehensive, single-payer universal pharmacare will expand access to the millions of Canadians who currently lack adequate coverage while also reducing overall drug costs?