Evidence of meeting #79 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 services.
A recording is available from Parliament.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes. Last year we estimated these numbers to be $34.8 billion. We'll have final numbers when the government tables the public accounts.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Since the current Prime Minister is responsible for about half of the national debt, it follows that half of the total debt servicing costs we're paying are a result of debt accumulated in the last eight years. Is that correct?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Not exactly. We need to look at the historical debt and what the composition of that debt is. Debt that was incurred, for example, in the 1990s would be at a higher interest rate and we would still be carrying some of that debt on our books.
Half is a rough approximation, but that may overstate it slightly.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
As that old debt has to be renewed, we renew it at the current interest rates, which may be lower than they were in the nineties, but they're substantially higher than they were two or three years ago as a result of the various factors that have led to an increase in the cost of borrowing for government as well as for Canadians.
In terms of that debt servicing cost of $46.4 billion, could you give Canadians a sense of what else could have been purchased for that amount of money, in terms of health care transfers or other needs that Canadians have? What is that value equivalent to?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I can give you a couple of numbers to put these things in perspective.
Elderly benefits this year will be $76 billion. That's providing old age security and the guaranteed income supplement to all seniors. Employment insurance this year will be $23 billion. Regular EI and parental and maternity benefits, etc., will be $23 billion.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Just to interrupt you there, that's an interesting thought experiment.
If this Prime Minister is responsible for debt that led to about half of the debt servicing costs.... You say it could be a little less than that, so let's say that we're paying $20 billion to $23 billion in debt servicing costs associated with this Prime Minister's debt. That's the equivalent to doubling employment insurance or doubling the value of maternity leave for everyone. We could be doing that, let's say, instead of paying debt servicing costs.
October 19th, 2023 / 4:15 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's one interpretation. I wouldn't want to be the one stating that, because I need to do a bit more analysis.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
You're very precise, sir. I appreciate that.
Overall, your estimate is $46.4 billion in debt servicing costs. Roughly half, maybe slightly less, is solely the responsibility of this Prime Minister, who has doubled our national debt in the last eight years. I think it's clear that he is not worth the cost.
I thank you for your hard work and analysis.
Conservative
The Chair Conservative Kelly McCauley
I'm not going to be able to give you time for a response, but perhaps at another time.
Mr. Bains is up for five minutes, please.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Thank you, Mr. Chair.
Thank you to Mr. Giroux for joining us again.
The President of the Treasury Board of Canada recently published this month “guidance about the use of contracted professional services, including management consulting.” The press release stated that this new set of guidelines “will help managers determine when to contract for professional services versus when to use internal resources.” It also says, “The Guide also lays out practical considerations for managers when structuring contracts so that they deliver best possible value, can be effectively managed, and fully align with requirements of the Directive on the Management of Procurement.”
Could you please tell us your thoughts on this new set of guidance?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's difficult for me to assess and to speak about these guidances, because that was part of the spending reviews. My understanding is that it was part of the spending reviews and the announcement that there would be a reduction in service contracts. I forget the exact terminology.
It's difficult for me to comment on that specifically. I'm sorry.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Okay. I'll go into something else.
You asked parliamentarians and legislators to consider examining existing legislation to identify and address other potential barriers to service digitalization, data protection and security and exchange.
Do you have pieces of legislation in mind?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's mostly the FAA, the Financial Administration Act, which restricts the type of agreements that federal institutions can enter into with their counterparts when it comes to providing digital services.
It was a commitment by the government, I think in the 2021 budget, that there would be amendments to the FAA, as we call it. Instead, the government went through regulations.
Those are the kinds of things that we had in mind—amendments so that federal institutions can more easily enter into agreements for service delivery with their provincial partners, for example, or other entities at other levels of government.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
What would be required for the government to implement a centralized process to track costs and savings resulting from its digitalization initiatives?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think it would be a directive from the Treasury Board and the Treasury Board Secretariat so that departments can better distinguish between the cost of maintaining their IT systems on the one hand and the cost of improving digital services or introducing new services on the other. I think that would be the easiest way to track these two different types of spending streams.
Essentially, a directive from the Treasury Board and the Treasury Board Secretariat would probably be sufficient.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
You estimated in a written communication to committee that “the...cost for the average full-time equivalent for the public service” was roughly $135,000 for 2023-24.
Have you costed the savings that would result from the projected decline in full-time equivalents from the current fiscal year to 2025-26?
I'm not sure I heard that earlier. I'm not sure if it was asked.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, we have not costed the savings resulting from the projected decrease in full-time equivalents. What we have found, however, is that even though there might be plans to decrease the number of FTEs with successive budgets, fall updates and off-cycle announcements, they often entail additional FTEs. Even though there might be planned reductions in expenditures, they don't always materialize as the government announces new measures.
The short answer is no, we haven't costed that.
Liberal
Parm Bains Liberal Steveston—Richmond East, BC
Those are all of the questions I have for today.
Thank you for joining us again, Mr. Giroux.
Conservative
The Chair Conservative Kelly McCauley
Thanks, Mr. Bains.
We have Ms. Kusie, please, for five minutes.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Thank you, Chair.
I mentioned the AG reports that came out earlier today, Mr. Giroux. One of the data points that came out was that there was no historical data and that 12% of the necessary reporting was missing.
Was this something that you encountered when you were completing your digital report?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We didn't look that far back in history, but we found that government departments were not keeping track of potential cost savings when moving from paper-based or other means of service to digital services. That seemed to be widespread.
We found, however, that Immigration, Refugees and Citizenship Canada had a rough estimate of moving to e-applications—electronic applications—for passports, and they found there would be savings of $1 to $5 per application. The savings seem low, but it's because it's only the application that will be digitized. For a good reason, there will still be heavy manual interventions in the processing and the issuance of passports, which is what one would expect from a country issuing passports.
There's not a lot of information tracking when it comes to e-services and digitization of services.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Further to that, another interesting point around the AG report today on modernization was that it's been 24 years since the government recognized that there was a serious infrastructure equipment deficit and that this has been a critical issue. To this day, after eight years of this Liberal government, there is no centralized plan for modernization.
Did you encounter that when you were conducting your report? Why do you think that is? Why do you think that there is currently no centralized plan?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We didn't look at that specifically, but what we found was a lack or an absence of distinction between maintenance of mainframes and other IT equipment versus investments in digitization. The reasons for that.... I had been providing advice to ministers before I was the Parliamentary Budget Officer, and it is always very difficult to sell to a minister that they need to invest hundreds of millions or dozens of millions, or even a million, to maintain IT equipment, because it isn't very sexy and doesn't lead to interesting announcements. That's the main reason, I would say, to be very candid.