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
We'd have to refinance the debt at the current short-term rates.
Liberal
Charles Sousa Liberal Mississauga—Lakeshore, ON
That's a much higher rate. We took precautions.
One thing you mentioned in your proposal was the amount of prudence that's essential. Is the Government of Canada fiscally prudent? We can't manage monetary policy, but we manage the fiscal policy. Do we have prudence built in?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I don't think so.
Liberal
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
There is not—
Conservative
The Chair Conservative Kelly McCauley
Colleagues, I'm going to interrupt for a second. I understand we're all having a lot of fun, but please let's allow a question and an answer. I hate to sound like the Speaker, but please....
Go ahead.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Prudence in the sense of a reserve or a cushion has not been the government's practice. Are their forecasts reasonable or consistent with our own? Yes.
Liberal
Charles Sousa Liberal Mississauga—Lakeshore, ON
We have taken those precautions to ensure that we have our bases covered as we go forward.
When you look at our authorities from the other agencies, do you see a risk on the horizon over Canada's ability to sustain or be strongly rated?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, there are no doubts on international markets about Canada's capacity to service its debt.
Liberal
Charles Sousa Liberal Mississauga—Lakeshore, ON
What is your assessment of the way the government's operating in light of those situations and the demands that are being put upon us, because of the monetary situation, general inflation in the world, supply chains, and all of the other circumstances that are affecting Canada? Are we taking precautions and reacting effectively?
October 19th, 2023 / 4:45 p.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's a difficult question for me to answer. That would mean passing judgment on government policies and the overall direction of the government.
Conservative
The Chair Conservative Kelly McCauley
That is our time.
I think we have enough people around the table who are willing to pass judgment, one way or the other.
We're short of time, colleagues. For the final round we're going to go with three and a half minutes and three and a half minutes. Then it's one and a half minutes and one and a half minutes. Please watch your clocks carefully so that we can get in the full time. Thanks very much.
Mr. Genuis.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Thank you, Mr. Chair.
I haven't had a chance to welcome Kathleen Wynne's former minister of finance to the House of Commons. I want to congratulate him on joining us. He shared with us his deep concern for fiscal responsibility. He just asked to balance the books. Stephen Harper balanced the books. He's concerned about fiscal responsibility—he wants us to believe. I can only say that if Kathleen Wynne's finance minister is the voice of fiscal responsibility in the Liberal caucus, then we have even bigger problems than I thought we did.
We heard previously that Canada is going to spend $46.4 billion this year on debt servicing. That's not new spending. That's not new debt. That is just taxpayers' money that we have to spend to maintain the debt we already have. That's in a context where the current Prime Minister, Justin Trudeau, has more than doubled the national debt.
To the Parliamentary Budget Officer, how does that $46.4-billion figure compare to the total amount that the federal government transfers to the provinces for health care?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's slightly lower than the Canada health transfer, which this year is expected to be $49.4 billion.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Okay, so it's $46.4 billion to $49.4 billion. With about a $3-billion difference, we transfer about the same amount of money to the provinces for health care as this government spends on servicing the debt.
Hypothetically, if we didn't have debt in this country, we could actually double the transfers we're sending to provinces. If we didn't have the debt that was accumulated under this government, we could increase the amount of health care transfers to provinces by 40% or 50%. That's the real-world impact of the out-of-control debt and out-of-control increases in costs associated with debt servicing that have come under this government.
We heard from this government in the past. They said not to worry about the cost of servicing debt. They said the cost is low because interest rates are low. They failed to consider the fact that interest rates, of course, go up.
Could you confirm, sir, that we've seen significant increases in the costs of debt servicing as a result of the increase in the interest rates?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, that's an important factor.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Okay. In comparison to last year, you said previously that there's been an increase of over $10 billion in debt servicing costs in total as a result of the increase in the interest rate.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's the interest rate, but it's also an increase in the debt stock.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Right. The government is increasing spending and increasing debt. That's driving inflation, which is increasing costs for consumers. That's leading to increases in the interest rates because of rate hikes that are responding to that, and that is further leading to an increase in the debt servicing cost.
Is this a kind of snowball effect that we're seeing as the government spending is driving an increase in various indicators that are all impacting the costs that Canadians have to bear?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's one factor that contributes to increasing interest rates and inflation, but it's obviously not the only one.
Conservative
Conservative
The Chair Conservative Kelly McCauley
Thanks very much.
Mr. Kusmierczyk, are you splitting your three and a half minutes with Ms. Atwin? Yes.
Go ahead, please.