Government Operations Committee on April 14th, 2026

[Nick Leswick]

The government has set in motion a path to increase non-residential business investment and housing investment, but investment in the energy sector, trade corridors, other infrastructure.... If that was a sound policy set before the conflict in the Middle East, it would probably be more confident that it is a sound policy direction now. It seems that Canada, just in terms of brand, as being in a sound economic framework, is probably a less risky environment than perhaps other energy exporters these days. It does bode well for perhaps business investment intentions going forward.

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

I'm moving on to operating versus capital expenditures. We've spent a lot of time here at committee talking about the separation between operating and capital expenditures. I'm hoping you can touch on what impact that will have, in your opinion, on our ability to lower our operating costs and invest more in capital.

What are some of the impacts that it would have on the Canadian economy?

[Nick Leswick]

Yes, that's well understood. I might turn to Thomas for the answer to this.

[Thomas Larouche]

Thank you. It's a very good question.

We should say that the separation is an additional lens that has been introduced by the government. It's supplementary information. It's helping guide decision-making to channel government activity toward capital formation.

In general, it does two things. It's one of the government's anchors; the government has two fiscal anchors. It's allowing the government to keep an eye on day-to-day operating spending and to ensure the commitment that by 2028-29, day-to-day operating spending will be matched by revenues. That's a key fiscal anchor as a guide toward better fiscal management and fiscal discipline.

The commitment is that by 2028-29, the deficit, as projected in budget 2025, will be entirely composed of capital investment. When you take decisions, this helps to keep a focus on the objective, which is to stimulate capital formation. I mean, if we have questions on—

[The Chair, Conservative, Kelly McCauley]

I'm sorry. I have to interrupt you. We're past our time.

Madame Gaudreau, go ahead, please.

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

Thank you very much, Mr. Chair.

Let’s talk about the future. I have serious concerns about future generations. I am very worried about what will happen after 2029. We are talking about massive spending, a significant portion of which is on defence. In concrete terms, what burden are we passing on to future generations?

You are able to make the figures speak for themselves. People want to know what the situation will be after 2029, perhaps in 20 or 30 years’ time. What will the per capita debt be?

Have you assessed the long-term impact of this on the ability to fund public services, such as Canada Post, amongst other things?

I would like to hear your views on this.

[Nick Leswick]

Thank you very much for the question.

We publish a long-term fiscal sustainability report as part of the budget. Underlying that are many variables, such as assumptions on productivity, population growth and such. In that analysis, we demonstrate the government's fiscal framework as sustainable, in that its debt load doesn't outgrow its GDP over the long term, subject to those assumptions. It's part of the analysis that we inform the government with and that the government puts forward as part of its budget.

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

We cannot do everything at once; we are all well aware of that.

As regards priorities, what has been envisaged for defence, public services and structural investments?

[Thomas Larouche]

I want to make sure I understand the question correctly. As I understand it, you are talking about how the government sets its priorities with regard to defence and other structures.

As I explained earlier, the government has put in place an investment guide. Separating measures related to operating expenditure from those related to investment helps the government to prioritize the expenditure it wishes to focus on.

In the area of defence, most investments related to infrastructure or, as you said, structural investments, are accounted for and classified as investment expenditures. A portion of the investments will be classified as investment expenditures, and by that very fact, will be prioritized.

In short, it is, in a way, a guide designed to facilitate decision-making. The government has put it in place to help make the right choices regarding its objectives.

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

I won’t hide the fact that the new regulatory sandbox and the room for manoeuvre worry me. The management of priorities and the trade-offs that will be made worry me enormously. This leads me to ask you a question about the social safety net.

We are already under enormous pressure. I am thinking of the transfer payments made to Quebec and the provinces for social programs and services to citizens.

How can we guarantee that the social safety net will not be affected? People are worried.

[Nick Leswick]

Thank you for your question.

Quite frankly, there are no guarantees. There's a revenue line and an expense line, and a minus b equals a surplus or deficit.

In order to ensure that these programs—old age security, the Canada health transfer, the Canada social transfer and employment insurance—are sustainable over the long term, we need to be very careful in terms of revenues, growing the economy and ensuring that we don't erode the tax base from a tax policy perspective. It's about ensuring that expenses—whether statutory expense profiles, old age security or non-statutory programs and services being delivered by the department—are sustainable over the long term.

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

I must admit that I am really concerned. We make choices. You talk about priorities. So, when we set priorities, we leave others aside. When I talk about the social safety net, I am thinking, amongst other things, of health care as well as services for older people and the most vulnerable.

As we have seen in Quebec, the demands of community organizations are warning signs. There are problems that are not confined to a single sector. This worries me, and I would like us to be kept informed of any adjustments that might take place.

Are the priorities being set a little broader to reassure citizens? Honestly, they have every confidence in democracy, as we have seen, but we will need to walk the talk. People are genuinely worried.

As I only have a few seconds left, I will ask my other questions during my next turn.

[The Chair, Conservative, Kelly McCauley]

Thanks.

We'll go to Mr. Hallan.

Welcome to OGGO, Mr. Hallan.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

Thank you, Chair.

Thank you to the officials for being here.

Will this spending review reduce the deficit?

[Nick Leswick]

The spending review itself will not reduce the deficit.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

Okay. I wanted to confirm that, because the Treasury Board Secretariat admitted the same thing—that this would most likely not reduce the deficit.

What would be the point of the review, then, if we're not reducing costs for Canadians?

[Nick Leswick]

From my perspective, as a bureaucrat advising ministers, it provides an opportunity to reallocate from some programs and services to others.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

We have such a massive deficit. This government has doubled the deficit since the last prime minister left—Justin Trudeau. To be responsible, one might think that the review would be, in part, to reduce costs. That's not happening, obviously.

Again, what would be the point of the review?

[Nick Leswick]

The blueprint is to stop doing some things and do more of others, quite frankly. The spirit and intent of the process is to reallocate away from low-performing, low-priority programs, to take the savings associated with that and allocate them to other initiatives and priorities.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

It wouldn't be savings. We're just spending it somewhere else.

Is that correct?

[Nick Leswick]

I totally admit that. There are no net savings to the fiscal framework.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

What is the interest on the debt?

[Nick Leswick]

If I understand the question, the answer is that it's projected to be $60 billion this year.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

That's right.

Can you tell me what goes to the health care transfer to the provinces?

[Nick Leswick]

The health transfer for the 2026-27 year—this fiscal year—is $57.4 billion.