Government Operations Committee on Sept. 25th, 2025

[Jason Jacques]

The reason that somebody has fiscal anchors is it increases the certainty and clarity that you're more likely to achieve your objectives and you're more likely to be able to manage your finances and budget in an effective way. The absence of that obviously increases uncertainty. The lack of transparency on that front results in a situation where, if you can imagine, you go into a bank and you want to start a small business. You ask them for a couple hundred thousand dollars and they say, “Where's your plan?” “Oh, I don't have a plan, but I have a really good idea.” “Well, do you have any assets?”

[The Chair, Conservative, Kelly McCauley]

I'm afraid I have to cut you off there. We're past our time.

Mr. Gasparro, you have five minutes.

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

Great. Thank you.

This is going to be a bit of “wayback playback” from last week, talking about the difference between operating spending and capital investment. A capital investment is an investment in our country.

Would you agree that when we are investing in infrastructure, it achieves several objectives? First, it increases productivity. Second, it increases employment. Third, it dampens inflation. Fourth, it attracts private capital into our country. Would you agree that those four pillars are absolutely critical in a modern economy?

[Jason Jacques]

I would agree, if it's done effectively. Yes, I would agree with all four.

For me, it's the analogy of dropping $100,000 on your house for a renovation. You expand the footprint of your house and you have additional space. Potentially, you can resell it and get the $100,000 back. If you drop $100,000 on a luxury kitchen with a boutique pasta maker, you're potentially not going to get the money back. Of course, the devil is in the details of what you're investing in.

Otherwise, in theory, I don't think you're going to find a conventional economist anywhere in the country or around the world who is going to disagree with you.

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

Yes, I'm using your definition of infrastructure: capital projects—bridges, roads, power—all the things our country needs to ensure we are successful in moving forward. For example, your estimate is that we are going to spend $159 billion in infrastructure over the next four years, not accounting for the NATO 5% spending, as you rightly pointed out.

Again, do you agree, using your analogy of investing in your home and maybe paying off a credit card by borrowing money, etc., that there is a substantial difference between, again, operating spending and capital investment?

[Jason Jacques]

Yes.

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

Perfect. I just want to make sure we're back on the record on that, because there seems to be still some confusion from some members of the committee that spending a dollar is different from investing a dollar.

Do you think we're spending enough on infrastructure?

[Jason Jacques]

That's a really good policy question, which I do not have the mandate to answer, sadly.

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

In your analysis, you spend a great deal of time looking at our projections moving forward. Do you think our focus on infrastructure and some of these investments can set us up for success over the long term?

[Jason Jacques]

It needs to happen. The trick is going to be in the execution.

The mainstay of how the Canadian economy used to operate vis-à-vis our integration with the U.S. is gone. There is an obvious and pressing need to make additional investments so we can reorient our supply chains and have capacity in place to export to other countries.

Also, as the other member pointed out, provide supports: If somebody loses their job in Hamilton and jobs are available in Calgary and they need to be retrained, and they need to move and their spouse needs to move and their kids need to go to a different school, there are supports in place so that can happen as well. Or if you're a business and you need to reorient your business plan, your small business of 25 or 30 employees, there is support to make sure that can happen.

Again, the question comes back to the execution. When you look at the numbers that we presented today, it should reinforce to everybody both the seriousness of the situation and the urgency to make good choices very quickly.

[The Chair, Conservative, Kelly McCauley]

I'm afraid that's our time.

We'll go to Ms. Gaudreau for two and a half minutes.

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

Thank you, Mr. Chair.

That's precisely the issue. The issue is that major decisions have to be made and there's a flagrant lack of transparency.

I'd like to go back to the models I talked about earlier. I obviously mentioned Quebec, but I'm also thinking of the maritime provinces, namely New Brunswick and Nova Scotia, as well as British Columbia. I believe those provinces have not only an operating budget, but also an investment budget.

How could that model grant us more transparency regarding what we expect on November 4 and what we have in front of us?

[Jason Jacques]

I think there are two aspects to transparency. First, certain types of investment could have long-term benefits for the Government of Canada and Canadians. Second, there's an advantage in having some clarity.

As I mentioned last week, if the government had a budget management plan for the public service of Canada, with a diagram of operations and investments in assets, there would be much more transparency, and we could explain that to MPs and parliamentarians by presenting all the data that would have been used to make decisions.

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

I imagine that the choices they'll have to make will include a specific calculation for revenues and spending, because, for anyone who knows how to count, the government can't make ends meet.

We're talking about risk management and an unsustainable situation, and we're hearing that we're in trouble. Do you think people are aware of the current situation and of what's coming?

[Jason Jacques]

I hope they are now.

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

I hope so too.

[Jason Jacques]

Our organization's primary responsibility is to increase financial transparency for MPs and senators. It will then be up to you to explain that to the Canadians in your ridings.

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

Thank you for your work. I hope we'll have a very clear budget.

[The Chair, Conservative, Kelly McCauley]

We'll go from the Bloc to Mrs. Block.

Go ahead.

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

Thank you very much, Chair.

In appendix C of your report, you have corporate income tax increasing year over year. In recent months, we have had reports of companies moving south of the border and billions of dollars of investment leaving Canada.

Was that taken into account in your projections for corporate income tax?

[Kristina Grinshpoon]

We did take into account recent information, specifically from “The Fiscal Monitor”, for corporate income taxes. As well, in our corporate profits projection, we've incorporated the nominal GDP decline, which is our broadest tax base.

You do see a decline in 2025-26 compared to the level for 2024-25, but we are still observing high corporate income taxes in “The Fiscal Monitor”, so perhaps the information you're referencing is not yet reflected in “The Fiscal Monitor”.

We have taken into account a decline through the nominal GDP, just to be clear.

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

Thank you.

Are there any concerns that if the government continues on with its current policies, businesses and investment will continue to leave Canada, leaving the government with less revenue overall?

[Jason Jacques]

The simple answer to that question is that the status quo approach is not sustainable.

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

Thank you.

Additionally, in your report, you mention a risk of prolonged trade uncertainty bringing about even worse deficits. Does your report also take into consideration the flow of capital leaving Canada during a prolonged trade dispute and how it would affect the ability of our economy to recover?

[Diarra Sourang]

That's actually one of our biggest downside risks. As Jason said, in the current situation, the status quo is not sustainable.