Evidence of meeting #2 for Government Operations and Estimates in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was going.
A video is available from Parliament.
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
We will continue to monitor the situation to ensure that we have the time we need to analyze and discuss the reports.
I don't have much time left and I'd like to ask you a question about our credit rating. Last week, France was downgraded by Fitch Ratings, a financial rating agency, because of political—and therefore economic—instability.
We're told that we need to build a strong Canada. That's well and good, but what about our rating and the outlook for our rating?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
All the other countries are having exactly the same problems right now. As you mentioned, when it comes to Canada's debt-to-GDP ratio, we are better positioned than certain other countries, particularly European ones. However, everyone is facing precisely the same challenges.
In Canada, our fiscal framework has somewhat more flexibility than that of some other countries, which don't have a lot of financial flexibility. However, we are asking the same types of macroeconomic questions to determine what strategy we can implement to achieve long-term economic growth.
At the same time, there are still issues that need to be examined. Changes always bring the possibility—sometimes the likelihood—of losses. There is the economy and there are people, and people will face obligatory changes, such as job losses, changes in businesses, the requirement to change jobs or develop new skills, for example.
It is your job, rather than ours, to ensure that Canada's new economic structure is fair. As economists, we know that sustainable economic growth leads people to view the system as fair and just.
Bloc
Marie-Hélène Gaudreau Bloc Laurentides—Labelle, QC
Thank you very much, Mr. Chair.
Thank you, Mr. Jacques.
Conservative
Conservative
Conservative
The Chair Conservative Kelly McCauley
Thanks.
Ms. Jansen, the floor is yours, please, for five minutes.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Thank you very much.
Mr. Jacques, I really appreciate the fact that you recognize we are not all accountants here and that you're going to help us understand things.
In that vein, for regular Canadians, can you explain, just in simple words, what the Liberals mean when they say they're going to separate an operating budget from a capital budget? What changes on the books when they do that?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'll answer your last question first. The bottom line of the government will not change. The international public sector standards that everyone uses to measure the deficit and levels of debt will not change. The first reason that won't change is that those are the accounting standards. The second reason is that the ratings agencies won't let you change it. That's the first thing they're going to go to, and if they have a sniff that somehow something...that there's a change in presentation, you can bet your boots that we're going to be paying more for debt pretty quickly.
In terms of operating capital, again, we, on our end, don't know precisely what the government has in mind. There's been no backgrounder published on the website. In some of the communication materials, the government has mentioned the United Kingdom, which has had a similar system in place. In that situation, on the operating side, the U.K. includes the operating expenses that I mentioned earlier—so, the traditional measure—in addition to other types of transfer payments. On the capital side, it includes the traditional measure, as well as transfer payments or money that's being paid out to third parties that also invest in capital.
We have a report that's going to be coming out on Thursday that looks at infrastructure spending. The federal government transfers—I don't know—over the next five years I think it's going to be over $100 billion to provinces, municipalities and first nations to spend on infrastructure. That doesn't show up as capital spending for the federal government, but it actually results in building capital assets. So, that's something that the government could have in mind, but I don't know. I'm not inside the tent.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
I guess your bottom line is that debt is debt. If a family takes out a loan for a new roof, it's still debt, even if they call it an investment. It's the same for Ottawa borrowing. It's still debt.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, it's absolutely still debt.
I'm hopeful—and, potentially, not naive—the nuance is that if this is the new management approach for the Government of Canada, and every time they make a new spending decision they say, “Okay, this is going to result in some sort of productive asset that's going to provide a stream of long-term benefits,” then that is certainly different from the way the Government of Canada managed its money up to this point internally. If that's going to be the way they're going to manage things, then I hope they would convey that and explain that to parliamentarians, just by way of transparency, because you deserve to know how they make decisions.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
To think about this a little further, if credit rating agencies or lenders see the government starting to change things—for instance, even just the budget date, making a lot of changes that way—and our debt climbing.... If Ottawa's just saying, “Oh no, everything's fine,” could that hurt our credit rating or raise the cost of borrowing for Canadians?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
With respect to credit rating agencies, they have quantitative metrics that they look at. They also have qualitative metrics that get down to a question of credibility. Certainly, if there isn't a fixed budget date—if the budget date is being delayed and the government is not publishing a medium-term forecast—then, obviously, it eats into the confidence that one's going to have regarding.... Especially in light of all the additional spending announcements, it could eat into the confidence that people have.
At the same time, happily, Canada is also blessed with the best independent fiscal institution in the world, according to the OECD, which means that if there is a lack of transparency in one area, we're in a good position to offset that. I can say that we meet with the ratings agencies on a regular basis, and they are very keen to receive our analysis.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
I understand, then, that your office is going to commit to publishing clear side-by-side numbers, using the old method and the new one, so Canadians will really be able to see borrowing, no matter what the government calls it.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, absolutely. What we've committed to do—and what we committed to do in the report we published in the summer—is to use the traditional measure, the measure that everybody else in the world uses and the Government of Canada used up to this point. That's what we're committing to.
We will see what the government incorporates, in budget 2025, in terms of the operating and the capital budgets. If the definitions they develop, from our perspective, are not helpful to parliamentarians or are potentially misleading, then we will not analyze that, because it's not helpful. There are only 36 of us in the office. Our time is limited. Your time is limited. We shouldn't be spending time analyzing things that simply don't make sense.
Conservative
The Chair Conservative Kelly McCauley
Our time is limited. We'll go to Ms. Rochefort, please, for five minutes.
Liberal
Pauline Rochefort Liberal Nipissing—Timiskaming, ON
Thank you, Chair. I do have a question to ask, so I'm glad it's my turn. Thank you so very much.
I appreciate being here this morning, at our first meeting of the fall.
Mr. Jacques, I really liked your comments about the fact that we're not living in normal times, and the use of the word “breakdown” when discussing our relationship with the United States, because that's what we're going through right now. You also said that all countries were in a difficult economic situation, that we were facing economic restructuring in Canada and that this was bringing a lot of change. I appreciate that comment as well.
In that context, I'm wondering what your priorities are for the next 166 days. Do you see any potential changes from the way your predecessor did his job? How do you see the next 166 days in the context of such changes?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Thank you for the question.
As an organization, we are devoting all of our resources to budget 2025. I imagine that all House of Commons resources, as well as your time, are also dedicated to it.
As for the change and the comparison between my work and that of Mr. Giroux, as I explained to the Prime Minister's Office when I received the call, there will be no change. Mr. Giroux has been able to build an incredibly effective and productive organization, and I'm going to continue in exactly the same vein. His departure will not change anything. The Prime Minister's Office said that was wonderful and that they wanted exactly the same thing. They also said that they wanted a robust organization.
So I think it will be possible to maintain that for the next 166 days.
Conservative
The Chair Conservative Kelly McCauley
You have five minutes. Are you done?
Mrs. Block, please go ahead for five minutes.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you very much, Mr. Chair.
At the end of my last round of questioning, Mr. Jacques, you confirmed that Canadians are still left to pay for the Liberals' inflationary spending. Should that concern or alarm Canadians?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In the same way that you'd be worried about managing your own household finances—people are really aware of how much money they owe and how much they're paying on debt service costs—yes, you definitely should be aware of it. In a context in which the labour market sucks, wages are not going up, you're facing significant technological change right now and some of the major prior assumptions of how the world and the economy work are changing or are gone, yes, I think it would cause anybody anxiety to worry about how much debt you had and how much you were paying on it.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Thank you.
Given that the Liberals' election plans included $20 billion in tariff revenue and now there are no countertariffs, can Canadians expect the deficit to grow even more?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
You're trying to get a sneak peek at our new figures for next week.
Without divulging anything, I'm at committee and you're the clients, so the short answer is yes. I won't get into the precise numbers, but in comparison to our last medium-term forecast, the deficit will absolutely be higher. The countervailing tariffs are certainly one part of that, and the other part of it is additional spending.