Government Operations Committee on Nov. 20th, 2025

[The Chair, Conservative, Kelly McCauley]

Welcome to meeting 16 of the House of Commons Standing Committee on Government Operations and Estimates, known, of course, as the mighty OGGO.

First of all, thank you to everyone for accommodating another committee timeline for witnesses. We've switched with them, so thanks to everyone for your flexibility.

We want to wish a very happy birthday to our vice-chair Ms. Khalid, whose birthday is today.

[Some hon. members]

Hear, hear!

[The Chair, Conservative, Kelly McCauley]

We will not subject our witnesses to our singing, but perhaps after.

Pursuant to Standing Order 108(3)(c), the committee is holding a briefing session with the Parliamentary Budget Officer on his analysis of budget 2025.

We'll start with a five-minute opening statement.

Mr. Jacques, welcome back, as always, to you and your team. The floor is yours.

[Jason Jacques, Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you, Mr. Chair and distinguished members of the committee, for the invitation to appear before you today to discuss our report regarding budget 2025.

I am joined by my colleagues Mark Mahabir, Kristina Grinshpoon, Diarra Sourang and Caroline Nicol, the technical experts that led our work on analyzing budget 2025. They will be in a better position to answer your questions.

At this point, witnesses typically read speaking points that repeat text from a report that you have already read. Instead of that and given this committee’s role as the House committee responsible for reviewing our estimates, I would like to provide a brief administrative update before turning to your questions.

First, our strategic reorientation continues. We are focusing more on serving our parliamentary clients and less on media engagement.

Since the beginning of September, we have held more meetings with parliamentarians and their staff than we would typically hold over the course of an entire year. This increase in outreach has been offset by declining a substantial number of media requests for on-the-record interviews. This is part of our effort to prioritize our mandate of supporting Parliament and ensuring that people focus on the technical content of our work.

Second, our plan for a 5% reduction in the office's budget has been finalized and will be submitted to the Speakers of the House and Senate in the coming days. Our CFO is now developing a medium-term plan to reduce overhead expenses while maintaining the quality of service to Parliament. I expect to have an update for the committee early in the new year.

Finally, the OECD legislative review of our office began this week. I want to thank all parliamentarians who shared their time with the review team. We expect a report with recommendations to be published in the coming months. The results of this review are expected to guide further reforms to the office that will ensure it continues to be one of the top independent fiscal institutions in the OECD.

As always, our office remains committed to its core mandate: providing independent and non-partisan analysis to support Parliament in its scrutiny of public finances and the economy.

Consistent with this legislated mandate, my office prepared an independent analysis of budget 2025, which was published last Friday. Our report highlights key issues, including the government’s adoption of a new budgeting framework that separates operating expenses from capital investments and the introduction of new fiscal anchors.

With that, Mr. Chair, we look forward to answering your questions on the budget issues note and continuing to support the committee in its important work.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll start this six-minute round with Mr. Lawrence.

Mr. Lawrence, welcome back to OGGO.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you. It's a pleasure to be here.

Thank you, Mr. Jacques, for being here. Thank you for your courage, your non-partisan nature and your willingness to speak truth to power. The Canadian people truly owe you a debt of gratitude, so thank you very much for that.

I want to take you back, Mr. Jacques, to the election where Prime Minister Carney had two primary commitments or promises to the Canadian people. He promised, first, that the operational budget would be balanced and, second, that the deficit-to-GDP ratio would be declining.

In your report, you had the ability to review the budget and you had some pretty clear commentary on that. I want to give you the opportunity to make your comments and put them on the record.

In the Parliamentary Budget Officer's opinion, will the government deliver on its promise to balance the operational budget?

[Jason Jacques]

Thank you for the question.

During the election campaign, at that point, the Liberal Party of Canada platform included a very important and long-standing key fiscal anchor that has existed for the Government of Canada for about the past 30 years: a declining debt-to-GDP ratio.

Turning to your question with respect to the operational budget and the probability of the government achieving its new fiscal anchors, based upon the analysis we've conducted, there is a low probability of respecting the fiscal anchors the government has set out for itself.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

I believe you put the chance at less than 50%—if that's not incorrect—in your report. That's in addition to moving items—you've had considerable commentary on this—that would be traditionally, or at least in the U.K. system, classified as operational over to the capital side to enable a greater chance of achieving this balance.

I'll move on.

I agree with you that they have cast aside the fiscal anchor of debt-to-GDP ratio. That seems to have been forgotten from six or eight months ago.

If we go to their metrics and just play on their field, as it were, and go to the deficit-to-GDP ratio, they have also committed to having a declining balance, which is a much easier mark to hit, in my opinion, than the debt-to-GDP ratio.

What do you believe the chances are that they'll deliver on this second fiscal anchor?

[Jason Jacques]

Kristina, do you want to respond to that one?

[Kristina Grinshpoon, Director, Fiscal Analysis, Office of the Parliamentary Budget Officer]

Sure.

For the deficit-to-GDP ratio, we've estimated it to be around 7.5% that they will achieve this target. In our assessment of this anchor specifically, the condition is that the deficits will be declining every single year over the projection horizon.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

To be clear, as you correctly point out, Mr. Jacques, there were actually three fiscal anchors that Prime Minister Carney promised to deliver on for Canadians. One was the debt-to-GDP ratio, one was the deficit-to-GDP ratio and the other was balancing the operational budget. It's very unlikely that he will achieve any, if all of them. Is that correct?

[Jason Jacques]

That's correct.

I only raised the debt-to-GDP anchor because, as part of the premise to your question, you mentioned the election campaign. You mentioned the fiscal anchors that the Liberal Party of Canada campaigned on.

I know that potentially, for some, there's a bit of a lack of clarity regarding the changes that have occurred to those fiscal anchors since the election campaign, in particular leading up to the Prime Minister's comments in the House of Commons in the third week of September, where he indicated that the debt-to-GDP anchor was still one of the fiscal anchors of the Government of Canada. As we and others learned with budget 2025, the government decided to cut that anchor.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Numbers are important, but sometimes.... I'm a little bit of a math guy myself. Not as much as you, Mr. Jacques, but I do like numbers.

For many folks, it's important to put numbers in context. I was trying to think of an analogy for the likelihood of Prime Minister Carney delivering on his election promise, specifically on the declining deficit-to-GDP ratio.

I looked up the odds of the Toronto Maple Leafs winning the Stanley Cup. The cellar-dwelling Maple Leafs team has a 7% chance. Over the next two years, it's 12%, which means the Toronto Maple Leafs have a much greater likelihood of winning the Stanley Cup than Mark Carney does on delivering his promise. Is that correct?

[Jason Jacques]

I don't follow hockey.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

If you accept the odds of 12%, then it's much more likely that the Toronto Maple Leafs will win the Stanley Cup than Mark Carney will deliver on his election promise. Is that not correct?

[Jason Jacques]

If you say so.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you very much.

Now I want to get to a bit more serious—

[The Chair, Conservative, Kelly McCauley]

You have no more than 20 seconds.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

I'll save the rest of it for my next round.

Thank you very much, Mr. Jacques.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Lawrence.

I apologize to Leafs fans everywhere.

We have Mr. Gasparro, please, for six minutes.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Mr. Jacques, it's good to see you again.

Do you agree directionally with our government's plan?

[Jason Jacques]

Given that the mandate provided to the Parliamentary Budget Office is simply to undertake technical analysis, it's not our place to agree or disagree with an economic or fiscal policy of the government.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Well, I'm glad you said that, because maybe we can drill down a bit there. In the report you tabled, you said:

Given the proximity of the baseline federal debt-to-GDP ratio in 2055-56 to its initial level in 2024-25, our framework would suggest that there is a modest negative fiscal gap. That is, based on Finance Canada projections, current fiscal policy in Budget 2025 would be deemed sustainable over the long term.

We're investing more in infrastructure that has productivity benefits over the long term for our economy. You've provided testimony here before that suggests our government's plan to invest in infrastructure and long-term productive assets will help alleviate some of the concerns that currently exist within the economy.

Do you believe capital spending—investing in hard assets that generate revenue and increase productivity—is where the government should be focused? Should the government be focused more broadly on capital spending?

[Jason Jacques]

It's not our place to offer recommendations to the government with respect to their fiscal and economic policy.

I would repeat what I said at previous committees, which is that I think broadly speaking, most mainstream economists would recommend investments in the economy to increase its overall productive capacity and, in turn, increase the growth potential of the Canadian economy, which in turn increases the potential for improvements in the quality of life for the population. That is not to say whether I endorse the government's fiscal and economic policy or not. That's more of a theoretical geeky response to a very specific question about a specific document.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Well, we do geeky well here, so welcome.