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.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
A recent news story from La Presse outlines a scenario in which the deficit exceeds $100 billion. Could this really be possible?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I guess we'll see. Actually, someone mentioned the article to me, and my immediate reaction was that the last time we were close to a $100-billion deficit was 2021-22 during the pandemic and during lockdowns, vaccine mandates and capacity restrictions; I don't know, as I haven't had to wear a mask in a long time. Potentially we are closing in on $100 billion, or potentially not. I won't say our numbers are close to that or not; you'll have to wait until next Thursday.
Conservative
Kelly Block Conservative Carlton Trail—Eagle Creek, SK
Food costs are up by 3.5% in today's StatsCan inflation release. Core inflation is above target. Will a deficit that's pushing $100 billion make this situation worse? I'll just remind everyone that the Prime Minister has said Canadians will judge him by the cost of food at the grocery store, so will the cost of food and the core inflation being above target potentially make the situation worse if we're pushing $100 billion in deficit?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think it depends on how the money is being spent. That's always the bottom line.
Currently, by our estimates and the estimates of other economists, there's a fair amount of slack in the economy. Engaging in some sort of economic stimulus traditionally wouldn't be a bad thing when you have slack in the economy, to ensure that people can more easily find jobs and businesses have customers.
One could also anticipate a situation in which the money is being spent in such a way...if it is being spent on investment, on infrastructure and facilitating the flow of goods from other parts of the world into Canada, and vice versa. Supporting our exports is also something that could potentially reduce inflation and reduce food prices.
Again, it's tough to say a speculative figure without a budget so we know how the money's going to be spent. I'm very much off in wonderland right now.
Vince Gasparro Liberal Eglinton—Lawrence, ON
First of all, thank you for your service—not just for now, over the next 166 days, but for your previous public service. It's great to see incredibly talented people like you stepping up, so thank you.
I really enjoyed your presentation. It brought me back to previous careers I had before I decided to join this place. I was the head of sustainable finance at a global financial institution, and at one point I was the principal secretary to former Toronto mayor John Tory.
As you know, the City of Toronto has an operating budget and a capital budget. I can tell you, as someone who's financed infrastructure, that there's a fundamental difference between spending money on operating expenses and investing in productive assets. The separation between operating and capital is critical. Frankly, the federal government should have been doing this sooner.
I just want to drill down a bit here. Is it safe to assume that when you are investing in infrastructure, the long-term productivity benefits to the economy and the revenue it generates more broadly aren't necessarily inflationary? Does that increase in productivity actually help to alleviate some of those problems?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes. I can give you a longer answer—
Liberal
Vince Gasparro Liberal Eglinton—Lawrence, ON
No. I just wanted a nice, simple, clear answer, because there seems to be some confusion from the other side about what the difference is between the two.
Do you also agree that financing productive assets, in the long run, helps to alleviate our deficit?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
To the extent that they are productive assets that enhance productivity and the growth rate in the economy, absolutely.
Liberal
Conservative
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Earlier, Mr. Jacques, there was what I would consider an offhand comment about how many days you have left in office, but I think it goes to the bigger question about the process and how it was that you came to be the interim Parliamentary Budget Officer.
Were you contacted by the Prime Minister or the Prime Minister's office? What did that process look like for you to be appointed as the interim PBO?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'll speak to my own experience. It was very fast and occurred over the Labour Day weekend.
I was contacted by the Prime Minister's Office, and they asked if I would be willing to serve on an interim basis. My immediate response was that I knew someone who was really qualified, who was going to be unemployed on Wednesday, and who would definitely be an incredibly talented interim Parliamentary Budget Officer, and that person was Mr. Yves Giroux.
There was silence on the other end of the phone line from the Prime Minister's Office. At that point, I indicated to the Prime Minister's Office that if I were to take the job to fill in for a set period of time, then I would continue to do everything that Mr. Giroux had been doing up to that point. There would be no change in terms of the focus on excellence and transparency in the office and the frequency of reporting, and the Prime Minister's Office said that they expected no less.
Yes, definitely, if you receive a phone call on a Saturday night over a long weekend from someone purporting to be from the Prime Minister's Office, it might actually be real. I tell my kids not to take those phone calls, but....
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Do you think there is any opportunity or pathway for you to become the permanent PBO after your 166 days are up?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
As part of the interim appointment, the understanding I have and what's been explained to me by both the Prime Minister's Office and the Privy Council Office is that at the end of the interim appointment, I will return to my old job in the Parliamentary Budget Office as the director general of economic and fiscal analysis.
The Prime Minister's Office asked me if I would be willing to continue for a full seven-year mandate, and I explained to them that it wasn't up to them. They can propose whomever they want, and it's up to parliamentarians to make the determination regarding who will serve them as their Parliamentary Budget Officer for a seven-year term.
I think the best path.... We'll see who the Prime Minister ultimately decides to nominate and put forward to you for a seven-year term. If the Prime Minister, through his office, asks me to serve, I would certainly be willing to be a candidate, but ultimately it's up to parliamentarians to make that determination.
The position of Parliamentary Budget Officer was created under the Parliament of Canada Act, so it's not a government position; it's a parliamentary position. The office was created to support parliamentarians in their understanding and enhance their understanding of the budget and to support parliamentarians in challenging what the government is bringing forward.
It's really not up to me. I would argue it's not even up to the government, either on the public service side or on the Prime Minister's side. It's up to parliamentarians to determine whether the candidate the Prime Minister wants to bring forward is the candidate they think is best placed to actually support them in their deliberations.
Conservative
Jeremy Patzer Conservative Swift Current—Grasslands—Kindersley, SK
Do you think the process by which interim PBOs are selected should mirror that by which the permanent PBO is selected? Do you think the process may be flawed, or should it be fixed, after what you've gone through?
To your point, you work for parliamentarians and not for the government. Do you think that without the consultation of parliamentarians, appointing an interim PBO.... I appreciate the work you're doing. I'm not saying this as a slight against you. I'm just talking about the process here. Do you think there should be changes to the process?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes. The simple answer is that it is ludicrous that you have somebody foisted on you who is selected by the head of the executive branch, and it could have been anybody. Under the legislation, it's a person whom the Prime Minister can appoint, so the Prime Minister could have selected anybody. I don't even think they need to be a Canadian citizen. The Prime Minister could have appointed anybody from around the world with a pulse, without any consultation with parliamentarians.
I happen to think it's a big endorsement that he chose somebody from the office who has worked in the office since 2008 when it was established under Prime Minister Harper, and who has worked with Kevin Page, Jean-Denis Fréchette and Yves Giroux, and with the expanded mandate under former Prime Minister Trudeau. I think it's a great testament to the confidence that the Prime Minister has in the work the office is doing.
There's a big legislative gap, because you could have had anybody in front of you today who doesn't understand the work of the office and who has never dealt with parliamentarians before.
In addition, it could have been someone who wouldn't have been able to communicate with you in French. There is no requirement for bilingualism, and no experience in budget management is required.
That's a huge gap.
I was told by the chair that I shouldn't ask questions of members of the committee, but I'll ask you this question. I assume that you have input in hiring your own staff. Is that right? In this situation, you didn't. You had somebody else who knows your best interests, who said, “Hi. This is the person who's going to be helping you pull apart budget 2025 and make sense of it.”
Yes, from my perspective, it needs to be fixed.
I'm sorry.
Conservative
The Chair Conservative Kelly McCauley
Thank you very much.
Thank you, Mr. Gaheer.
Does anyone wish to follow up? Otherwise, we'll go to Ms. Jansen and Ms. Gaudreau, and then we'll be done, except for some housekeeping.
Liberal
Iqwinder Gaheer Liberal Mississauga—Malton, ON
No. Our side doesn't have any more questions.
Thank you.
Conservative
The Chair Conservative Kelly McCauley
Perfect.
We'll go to Mrs. Jansen for five and Ms. Gaudreau for five, and then we'll finish with Mrs. Block.
Please go ahead.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
If you don't mind, I'd like to change the channel. I would love to talk about the housing report that you guys put out from your office.
When it comes to housing, the Prime Minister promised warp speed, but it feels like we ended up circling the parking lot. In the election, he promised 500,000 homes a year and told Canadians he would be doubling construction. Your report says the real number is closer to 227,000.
Is that correct?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's correct. Our number is substantially lower, yes.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
At this rate, it's a 690,000-home shortfall by 2035. Is that correct? According to your math, we're way off.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Actually, it's one of those very unexpected reports in which there was actually good news for the government. Even though we disagreed with the government's findings of needing to build 500,000 homes per year, our conclusion was that it needed to build fewer homes to return to the target, so there's less of a challenge than originally anticipated.
One of the key things we identified was that if you built all of those homes, based on the historical structure of the housing market you would have a vacancy rate north of 10%, so one in every 10 homes would be empty. That would be unprecedented and could arguably result in a situation wherein there's significant downward pressure on housing prices.