Evidence of meeting #4 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 report.
A video is available from Parliament.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That would be conventional macroeconomic policy as practised by the world.
Conservative
Adam Chambers Conservative Simcoe North, ON
Are we close to where we were in the mid-1990s? Are we closer to where we were in the mid-1990s than we were 10 years ago?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The numbers in the mid-1990s were far more alarming. Now, with the federal debt-to-GDP ratio forecast to increase, if we don't change things, we're going to end up there again. Thankfully—
Conservative
Liberal
Pauline Rochefort Liberal Nipissing—Timiskaming, ON
Thank you.
I'd like to go back to a previous report that you had published on the Canada Infrastructure Bank. In that report, you highlighted Canada's infrastructure deficit and said it was substantial. I think you had a range, but I think the amount went up to $1 trillion.
Organizations at a municipal level in our country, such as the Association of Municipalities of Ontario, talk about the infrastructure gap. Even yesterday, the Association of Alberta Municipalities talked about being substantially underfunded when it comes to infrastructure. How can the federal government, in terms of transfer payments, better collaborate with provinces and municipalities to optimize every dollar that is spent?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Going back to 2016 when we started to do work in this area, the need for better collaboration with provincial governments and large municipalities across the country was something that we did note and highlight.
In particular, some of the feedback that I recall receiving from large municipalities across the country was that it was great that the Government of Canada has cut them a cheque, but there was already a 10-year capital plan in place, the contractors were lined up and there wasn't a plan to pay people to work between 10 o'clock at night and six o'clock in the morning because they would have to pay them double time. They said thank you for the money and they'd just add it on to year 11 at this point.
I think that working with the existing plans of municipalities and provinces, which are best placed to identify the most immediate priorities, as opposed to exclusively making those decisions in Ottawa, was one of the key findings we had identified previously.
The other one is with respect to the construction industry. It's focused on the trades because there's a bottleneck. There's a lot of focus on infrastructure and housing because we do have a housing crisis. There's only so much capacity to go around to actually build at this point, so whether it's on infrastructure or on the housing file, trying to take a coordinated approach across all levels of government with limited resources available certainly makes sense.
Liberal
Pauline Rochefort Liberal Nipissing—Timiskaming, ON
Do you feel there's room for reducing infrastructure spending at a municipal level?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I would not be well placed to comment on that. I'm sorry.
Liberal
Pauline Rochefort Liberal Nipissing—Timiskaming, ON
I noticed that the Canada Infrastructure Bank is included in the list of departments that account for most of the federal infrastructure spending.
Could you describe the composition of transfers to the Canada Infrastructure Bank?
Are these committed funds? What is the status of those funds when we see them in the report?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The majority of the funding for the Canada Infrastructure Bank is committed funding. It's notionally earmarked for something, whether it's in the early stages of negotiation or closer to a final project at this point.
One finding that we've made in the past with respect to the Canada Infrastructure Bank and other infrastructure projects is that there can be a lot of uncertainty between the initial announcement or something that's worked out at a high level, and actually having shovels in the ground and getting the work done.
I'm not an expert; I've never worked for a municipality on infrastructure projects. I think that's normal.
Liberal
Pauline Rochefort Liberal Nipissing—Timiskaming, ON
Do you see the opportunity for more private capital aligned with those projects? I think you had referred to that in your study.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think there is far more. When you look at the public capital versus the pools of private capital, the private capital is much larger.
When looking at the draw right now in the policy area of defence, which is probably—hopefully—not funded by private capital, you're going to need to have the private sector come in and provide that type of support. If for no other reason, it will keep the borrowing or investment costs relatively lower for the government.
Conservative
The Chair Conservative Kelly McCauley
We'll now go to Ms. Cobena for five minutes.
Welcome to OGGO. Go ahead.
September 25th, 2025 / 4:40 p.m.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
Thank you.
In your report, you lowered your economic growth assumptions for this year and next year.
To what degree does this weaker growth amplify the risk of structural deficits and large deficits that we're seeing right now?
Director, Economic Analysis, Office of the Parliamentary Budget Officer
The area where it has the biggest impact is nominal GDP, which is used as an approximation for the tax base of the federal government. We've revised our outlook for nominal GDP by approximately $13 billion annually between 2025 and 2030. That's the main impact.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
In the report, we see about $115 billion in new spending.
Considering that we have weak growth, could you speak to how many of those expenditures could be deferrable to a time where we have a stronger economy?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I am not going to pass judgment on what could be or should be deferred. I would, however, say that when you look at the composition, $150 billion over about five years, about a third of that ends up being defence spending, additional defence spending on the part of the government. Another substantial chunk is the decline in revenues associated with the reduction in the lowest personal income tax rate from 15% down to 14% and the elimination of the digital services tax.
Could it be deferred? Could those things be deferred at this point? It ends up very much being a policy question of what are the priorities of parliamentarians.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
Can you speak to whether you see the absence of meaningful expenditure discipline?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's hard for us. We have published many reports over the past 10 years with respect to the government's efforts around spending restraint and spending review activities. I think up to this point, the results I would characterize at best as being uneven. In particular, there's one expenditure of new activity where the government took credit for underspending for pandemic benefits and declared victory around spending restraints and spending cuts. That said, we're in a new era. The announcements and the official language from the Government of Canada and in the House of Commons are certainly different with respect to the comprehensive expenditure review. I guess we're going to find out on November 4.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
You've expressed your doubts on whether the government still has credible fiscal anchors. In your view, what would you count today as a credible fiscal anchor for Canada, and how far is the government from meeting it?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The most important fiscal anchor, which the Prime Minister indirectly touched on in question period last week, is the debt-to-GDP ratio, simply, the amount of money that is coming into the federal government and our ability to sustain debt levels. Right now based on the status quo forecast and the announcements made today, with plans, we're not on track. The government will not be on track to actually achieve that fiscal anchor.
That said, all of us are still waiting for the government to come up with a plan to officially announce their fiscal anchors as opposed to providing an overview in QP, and also a plan to ensure how they are actually going to respect those fiscal anchors.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
What do you think are the consequences of Canada not having credible anchors in terms of investor confidence, borrowing costs, credit ratings, etc.?