Government Operations Committee on Feb. 26th, 2026

[Tom Osborne, Liberal, Cape Spear, NL]

I appreciate that answer.

I would anticipate that the ratio would change as the infrastructure component of national defence expands, but it would be nice to get some indication as to what that may look like.

In our changing geopolitical world, I think it would be naive—and I'm not asking for an opinion, because you are non-political and unbiased—for our country not to increase defence spending, in addition to the fact that it would have huge benefits for the economy as we continue to grow. We are becoming less reliant on our neighbours to the south and more reliant on other, reliable trading partners.

I'm just looking at some of the recommendations from the OECD. They put a strong emphasis on neutrality and non-partisan communication. How does your office interpret this recommendation, particularly in light of the highly charged political environment that the House of Commons is? Will you consider formalizing a process, as was recommended?

[Jason Jacques]

Yes, a process needs to be formalized. Again, as I mentioned, in reference to my age, things were partisan 20 years ago, and they're certainly more partisan now and certainly more heated. For what reason, anyone could speculate.

I would also say that, in addition to the policies themselves, something else that the OECD pointed out, which I think is worth mentioning, is that there should be.... I agree with the OECD's recommendation and observation that there's a benefit in having a shift away from the PBO as an individual, as the Parliamentary Budget Officer, to the parliamentary budget office.

In particular, if you look at other jurisdictions, including our neighbours to the south, with their Congressional Budget Office, the Congressional Budget Office will also appear at committee hearings in their House and Senate. Often, it's not the director of the office. Most often, it's the analysts who appear. They appear for a short period of time, 30 minutes, and they answer technical questions with respect to the reports. Once parliamentarians or legislators are happy, they go away. I do think, in a highly partisan environment, it's a better way for us to meet the needs of parliamentarians.

There might have been a justification, 20 years ago, for having a lot of emphasis on a single individual who is called the PBO. The context has changed, and we've moved well beyond that. Certainly, from my perspective—and, I think, the OECD's perspective—we need to shift to an environment where it's the parliamentary budget office meeting the needs of parliamentarians, as opposed to the officer representing the officer's work, because everything we do should be supporting your needs.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, Mr. Jacques.

You promised to have the new PBO follow up on Mr. Osborne's request. Why don't we just consider it an official request from the committee, just so we can set priorities?

We'll now go to Mrs. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I believe Mr. Gill should be on the list.

[The Chair, Conservative, Kelly McCauley]

Mr. Gill.

[Harb Gill, Conservative, Windsor West, ON]

Thank you, sir.

Thank you, Mr. Jacques, for being here. I appreciate your candidness and honest answers, as always.

Canadians were promised fiscal guardrails, including a declining deficit-to-GDP ratio. Given your estimate of only about 7.5% probability of meeting the target, do these supplementary estimates move us closer to that path or farther away, and are the pressures largely structural or temporary?

[Jason Jacques]

Thank you for the question.

The numbers you're seeing in the supplementary estimates (C) were largely reflected in budget 2025. In terms of the government's spending path and fiscal guardrails, nothing would be substantially changed based on what's in budget 2025 and our observations around the probability of the government being able to respect its fiscal anchors.

In terms of the structural versus the cyclical components, it's a little bit of column A and a little bit of column B. Certainly, there are structural components. When you look out over the next five years and see that, even after the output gap—which is a nerdy, technical economics term—when the economy, three or four years from now, is firing on all cylinders and everyone who wants a job can get a job and everything is going great, we still have a fairly sizable federal deficit, based upon our last outlook and the outlook from the government, it means there's a structural deficit.

There are cyclical components, and the government has highlighted that.... Especially as part of their new economic strategy, the government is doubling down on additional capital investment at this point, which of course they need to borrow the money for. That will be offset to a certain extent as they implement the cuts to the operating budget. Over time, hopefully we're going to see things improve.

[Harb Gill, Conservative, Windsor West, ON]

Well, hope springs eternal, as we all know, but we have to have some concrete measures. There are structural issues that need to be corrected.

With that in mind, the growth we often see.... It's given to us in Parliament that we are the fastest-growing economy, and yet the OECD analysis shows weak GDP per capita growth. Some studies from the banks have indicated that we have been in a recession in terms of our GDP growth over the past three to four years.

Is Canada's revenue growth driven only by population increase, or do we expect some productivity gains? Do you see anything on the horizon that tells you we might be pulling ourselves out of the population growth scenario as opposed to actual GDP growth?

[Jason Jacques]

That's a very pertinent question, because this morning we actually published our updated demographic outlook for Canada. In that publication, to your point, we highlight that, effectively, population growth in the country—probably flat in 2025 and probably flat in 2026—is going to start growing again from 2027 onward at a rate most people would be familiar with from prior to the pandemic.

Notwithstanding that, the Canadian economy is continuing to grow. Something I've highlighted in the past is that there continues to be productivity growth in the Canadian economy, because the Canadian economy is Canadian people, and Canadians work hard, learn and work more efficiently and more effectively over time. We've seen that. If you look back over the history from StatCan over the past 40 or 50 years, notwithstanding recessions, trade wars or other hiccups in the economy and global affairs, the Canadian economy and Canadian workers always come back.

[Harb Gill, Conservative, Windsor West, ON]

On the debt trajectory we have, compared to other OECD countries, are we underperforming or over-performing? What can Canadians expect going forward, especially with the inflationary pressures we are facing right now? Affordability is a huge issue. We have seniors resorting to having to shoplift just to feed themselves. Where is all that going?

[The Chair, Conservative, Kelly McCauley]

I'm afraid your time is up, so your answer can perhaps be in your next round.

We'll go to Ms. Khalid, please.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Thank you very much, Chair.

Thank you to the witnesses for being here today.

I want to explore a little bit about frozen allotments and the variance between frozen allotments reported in the supplementary estimates (C) and in public accounts. How much of that is due to timing, and how does that impact frozen allotments as a leading indicator of the total frozen and lapsed funds that appear in the public accounts?

[Régine Cléophat]

By timing, do you mean the timing of the implementation of programs?

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

That's right.

[Régine Cléophat]

That would be reflected in permanent frozen allotments that are categorized as re-profiles. As you can see in the supplementary estimates (C) of this year, they make up the bulk of the $7.4 billion. I think it's about $5 billion in re-profiled funds.

I wouldn't be able to speak to how that indicates how much the government will lapse overall by the end of this year, but if you take a look at the document about frozen allotments that is tabled along with the supplementary estimates, you can find details per organization and the reason the department is seeking to re-profile the funds, as well as the specific amount.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

How does that impact your work in the PBO? Does the timing of the two different reports with the frozen allotments have any impact in terms of the discrepancy with the public accounts?

[Jason Jacques]

We would call it less a question of a discrepancy and more a question of a timing difference with respect to when it's reported.

Going back to a response I provided to one of your colleagues, prior to 2015 we were only waiting on the public accounts, so there was nothing. In 2015, the government ultimately decided to share additional information. It's not perfect and comprehensive, but they're sharing something. Ultimately, it reconciles with what's in the public accounts, but it doesn't give us a perfect line of sight to what's published eight months later. It's a good problem to have.

Something I mentioned to this committee and to other parliamentarians in the past is that when a public servant comes to a committee hearing and is asked, “Oh, could you release additional non-confidential information? Could you put it on a website? Could you incorporate it as part of the existing financial reporting cycle?”, I've never seen a public servant say no. I've only seen public servants say, “Sure”. They're producing these documents for you so you can make better decisions. If this is what you want and parliamentarians find it helpful, then they'll do it.

I know I'm eating up your time. I apologize.

The last thing is that it's important to always remember that with additional reporting, there's an associated cost to the government. That's why, on our end, even though it might not be perfect information, we're always very cognizant that public servants have full-time jobs, and their job isn't to respond to PBO requests: It's responding to ministers implementing the government's agenda and responding to parliamentarians. Even though the information they provide around frozen allotments might not be perfect, before we ask for more information, we would have to think long and hard about whether spending an additional $10,000 in taxpayer money to collect that information would be justified.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Just on that, one of the recommendations in the OECD report was about formalizing the process of collecting data from different departments. Canada has a more informal process of getting that information to you. What are your views on that, especially in terms of cost-effectiveness?

[Jason Jacques]

It's a great idea. It works in other jurisdictions.

From my perspective—and I think my colleagues in the public service would agree with me—it works during election campaigns. One of the aspects of our mandate is to support political parties in the costing of electoral platforms. During that costing period, we do have memoranda of understanding with various government departments, and the collaboration works very well. It eliminates overlap and duplication. There's a free flow of information, and everything is kept in a confidential way.

From my own perspective, I think it should be done. I think there would be a real benefit, not only for us but also for you and for taxpayers. Mr. Gill mentioned the affordability crisis when he asked his question. It's a really challenging time. Certainly from our perspective, right now there's no need for our organization to come back and ask for additional taxpayer money to implement any of these recommendations. We'll see if the new PBO agrees.

I think there's a great opportunity for better collaboration with the public service at this point.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Madame Gaudreau.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you, Mr. Chair.

Let's talk about Cúram.

Some 85,000 seniors are experiencing or did experience onboarding problems during the transition to the new software. Did the Office of the Parliamentary Budget Officer assess the potential impact on the budget as a result of these delays?

[Jason Jacques]

No, not yet.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Okay.

Could a long-term administrative delay temporarily reduce planned expenditures without reflecting a real reduction in need? We are talking about 85,000 seniors, which is a considerable number.

[Jason Jacques]

Yes, absolutely, and we will be happy to analyze this issue if your committee passes a motion to that effect.