Government Operations Committee on Nov. 23rd, 2023

[William Robson]

I can't speak for—

[The Chair, Conservative, Kelly McCauley]

I'm afraid I'm going to interrupt you, Mr. Robson, because there is no time left. Perhaps Mr. Powlowski will ask the same question.

You have six minutes, sir.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

No, I'm not going to ask the same question.

Mr. Robson, appropriately, I'm asking you a question. I am the member of Parliament for Thunder Bay—Rainy River. I would note that C.D. Howe was from Thunder Bay, so maybe it's good I'm asking you a question.

You talked about the importance of speed in the government's release of financial reports. With that in mind, I'll ask you for your reaction to the 2023 fall economic statement. It certainly included a lot of numbers in terms of how the government is doing in financing. Is that not the kind of thing that you're interested in with regard to government financial reporting?

[William Robson]

Since you gave me the opening, I will say that in our report there is a column that looks at in-year updates, and I think those are good things. In fact, the federal government, with its monthly fiscal monitor, provides a service to people who want to keep tabs on what's happening. There are some accounting issues as you go month by month, reconciling it to the year.

I think the tradition of a fall economic statement is a very good one for everybody who's looking ahead to the spring budget. What it can do is give a sense of what happened in the economy, whether revenues are coming in more or less as projected and what's happening to the spending track.

What concerns me is that we live in a world of constant campaign communications and everybody feels there have to be announceables every day of the week, so that has caused fall economic statements—not just federal but in the provinces that issue them as well—to sometimes be a bit like mini-budgets, where you're getting all kinds of potential legislative changes introduced partway through the year. I think that's unfortunate. I think it jams the legislative process. It's much harder, similar to when you're considering estimates late in the year, to really feel confident that you understand how what you're being asked to vote on fits into the framework—or if it doesn't, what kind of a change it's going to make.

I guess I've implicitly criticized the fall economic statement for having introduced some policy initiatives, as opposed to just telling us how things are shaping up relative to what we expected. Of course, certain types of initiatives might well be necessary. If you have a natural disaster or if a war breaks out, it's natural that you're going to have to change your plans, and you want to put those into the statement so that people can understand it's not necessarily just the GDP growing more quickly or more slowly, or what have you.

In general, I think the fall economic statement is a good tradition, but I think we should also be very careful about not expecting it to be full of legislative changes and program changes that, as I say, jam the parliamentary process and undermine the credibility of the budgeting process at the beginning of the year. If you know that, after a few months, there's going to be a very significantly different fiscal plan, not because of circumstances beyond the government's control but because they changed their minds about what they're going to do, what that does is really cast a bit of existential doubt on the whole budget process.

It's supposed to be the foundation of representative government in the financial sense, whereby parliamentarians consider it, it's taken very seriously, it's voted on and governments stand or fall on it, but then a few months later, you might discover they're planning to do something quite different.

I like the institution, but I'm not sure we're using it wisely.

[Marcus Powlowski, Liberal, Thunder Bay—Rainy River, ON]

Mr. Robson, I am a Liberal member of Parliament. Certainly, for the Liberals, it's in our best interest to portray a rosy view of the economy, but I would say the Minister of Finance, in presenting the fall economic statement, had a lot of good things to say about the economy. There's the fact that we have the lowest deficit in the G7 and the lowest debt-to-GDP ratio. We're third-highest in terms of direct foreign investment—which certainly looks good—suggesting that companies around the world want to invest in Canada. We have a low unemployment rate. We have a deficit of $40 billion. I think that's the projected number.

Do you disagree with any of that? Certainly, the Minister of Finance tried to—and I think she did—portray a fairly rosy view of the economy. Do you disagree with those numbers or that outlook?

[William Robson]

The comparisons internationally are certainly favourable to Canada, so I agree with that.

I will point out that when you are netting assets of the Canada and the Quebec pension plans, or some of the big public sector pension plans, against the liabilities of governments when that money is already spoken for for other reasons, you're not misrepresenting the picture as it would appear to a foreigner, but you are overstating the degree to which the federal government might be able to service its obligations, so there are some nuances there.

Comparing ourselves to some of the fiscal problems abroad makes us look better, but sometimes I think that if the rest of the world is in tough fiscal shape.... Maybe the U.S. is in worse fiscal shape than us, and it certainly is, but when we're all trying to finance ourselves, it may be that they are a little more easily able to attract the financing.

When I step back to look at the big picture, I don't disagree with some of the specific comparisons that were made in the fiscal update, but I think it understated the economic and fiscal challenges in front of us. You'll recall that in the spring budget there was a projection from the OECD—as it happens, a former C.D. Howe Institute person who I think very highly of was one of the authors of that study, so it carried a bit more weight with me—showing Canada, in terms of—

[The Chair, Conservative, Kelly McCauley]

I have to cut you off there, Mr. Robson. I apologize.

[William Robson]

I'm sorry. I was digressing a bit, so please excuse me.

[The Chair, Conservative, Kelly McCauley]

Next, we have Mrs. Vignola, please.

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

Thank you, Mr. Chair.

Mr. Robson, I poked around on the C.D. Howe Institute website to find the latest report. It looks like it was published in English only.

Do you have a copy in French?

The institute may have been founded in Montreal, but aren't finances and the economy of interest to francophones, too?

[William Robson]

No, that is not my intent. It's a matter of resources. The C.D. Howe Institute has a very small budget. As a result, we are not easily able to publish everything in both languages, as we would certainly like to do. I apologize for that. If you would like anything in particular to be rendered in French, we would be pleased to do it. I'm hoping that with advances.... We have a large francophone staff. Our VP of research, and my frequent collaborator on fiscal policy is also a francophone.

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

Thank you very much.

[William Robson]

We should be able to do better in the future.

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

Thank you very much.

It seems to me that bilingualism is often essential for francophones, but not for anglophones. That's a personal comment.

Let me go back to Mr. Giroux.

Earlier, you said that the current 2023‑24 budget really is a lot bigger than the most recent normal budget, the 2018‑19 one. Apparently, the increase is due to new programs being added and funding for certain programs being increased.

That piqued my curiosity because Quebec and the Canadian provinces have been complaining more and more about federal interference in areas under their jurisdiction. For example, the feds are negotiating directly with municipalities even though that is within the purview of Quebec and the Canadian provinces.

Could the growing number of programs interfering in jurisdictional areas that are clearly set out in the Constitution explain, in whole or in part, the bigger budget?

[Yves Giroux]

That could explain part of it. One example is transfers for $10‑a‑day child care, which was included in the previous budget and therefore contributed in part to higher spending.

There are also other upcoming expenses, such as a national pharmacare program. We can look at all of the federal government's recent initiatives and see which ones might be considered provincial in terms of jurisdiction.

There have certainly been transfers for sectors usually considered to be provincial. Infrastructure is another example of a sector in which the government increased transfers to the provinces and, in some cases, municipalities.

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

Thank you.

According to figure 2‑3 of your report, in 2018‑19, personnel spending dropped by 1.2%. The following year, it was up almost ten-fold.

Why such a dramatic jump?

Is it healthy to increase current personnel spending by 6.5%, or is that still pretty high?

[Yves Giroux]

That's the increase in personnel spending, not in the number of FTEs, or employees. The decrease followed by an increase in 2017‑18 was probably an anomaly. There may have been one-off factors. The thing we need to pay attention to is the trend.

Is it worrisome? Yes and no.

It's not worrisome if services provided by the public service are getting better. It is worrisome if those services aren't getting better, that is, if there aren't more services or if the quality of the existing services doesn't improve or deteriorates. That's something we would have to look at along with the results that the government and Canadians are getting for that money.

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

Thank you.

From a budget—

[The Chair, Conservative, Kelly McCauley]

Thank you. That is our time.

Mr. Johns, please go ahead for five minutes.

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

I'm going to go back to the CEBA loan. I want to understand this. Right now, it's projected that there's going to be $21.6 billion paid out to highly paid consulting companies, and let's face it, six of those highly paid, profitable companies are going to benefit the most.

I did the math. It would cost $904 million for the government to help protect 250,000 businesses, which closed their doors to protect public health, by extending the CEBA loan for one year. The math says that's about a 4.2% cut to highly paid outsourcing that would be required to cover the CEBA loans. Does it sound about accurate to you that, if we cut outsourcing by 4.2%, it would cover the costs of helping to save 250,000 businesses? A third of those businesses have identified that they cannot borrow from the bank, and they will not be able to pay the loan and will lose the one-third forgivable portion.

[Yves Giroux]

Your math seems about right if you look at $904 million, which is the cost we estimate for an extension of the CEBA loan repayment period. That seems to be, roughly speaking, the right proportion of the overall spending on professional and special services. That seems to be, roughly speaking, the right percentage and proportion.

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

What I find just absolutely incredible is that we've had more and more of these consulting companies appear before committee. We're learning that a lot of them don't even do the work, and they charge between 15% and 30% for commission. We've had IT specialists show up who don't even understand IT, or who aren't really experts in IT, but they're experts in finding people to do the work. Some of them don't have offices, and some of them don't have staff.

By reducing just the commissions by 4.2% on the $21.6 billion, we could cover the CEBA loan extension for 250,000 businesses. Does that sound about right?

[Yves Giroux]

I'm not sure what the commissions themselves represent as part of the overall spending on professional and special services. We haven't looked at that specific component as part of the overall spending in that category.

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

I bet you can't, because we can't even get to the bottom of how much is actually going into commissions, despite the many questions we've asked here at this committee.

My colleague from Nunavut wrote to the Speaker yesterday to request an emergency debate regarding the government's upcoming failure to meet its deadline to close the infrastructure gap for indigenous peoples by 2030. We now know the infrastructure gap for indigenous communities is about $350 billion. Behind that number are communities across Canada where homes are overcrowded and unsafe, including in my riding. Schools are crumbling, and there are no functional ports. There are 28 communities still under long-term boil water advisories. The government promised there would be none by March 2021, but here we are in 2023, and there are Canadians who still don't have clean drinking water.

We all know that would never happen in Toronto or Vancouver. The government will not meet its deadline. Since 2016, it has spent less than 3% of what's needed to close the gap. Now, we see the government is planning on sunsetting many critical programs and services that indigenous peoples rely on. At the end of this fiscal year, funding for mental health and wellness will sunset. We're facing a decrease in funding for indigenous infrastructure projects, and for the health and safety of first nations on-reserve housing, water and community infrastructure.

Do you see any possibility that the infrastructure gap, which is really a quality of life gap, a health and safety gap, can be closed with only 3%, right now, of the necessary spending that's been allocated? Can you speak to the importance of that actually being closed and how we're going to get there?

[Yves Giroux]

I have no knowledge of the first nations infrastructure gap—no knowledge of a quantifiable gap. We have not looked at that specific issue ourselves. However, we did look at the water and waste-water issue a couple of years ago. We found there was no gap in the capital spending itself but a significant gap in the operating funding for the operations of water and waste water. I can only speak about that specific aspect, not the overall infrastructure gap, unfortunately.