Government Operations Committee on May 28th, 2026

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone. We are in session. Welcome back to OGGO.

Today we welcome back the Parliamentary Budget Officer and her team for the main estimates.

Welcome back. It's wonderful to have you with us.

If you have an opening statement, the floor is yours for five minutes. Please go ahead.

[Annette Ryan, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you very much, Mr. Chair and honourable members of the committee.

Thank you for inviting us to appear today as part of your study of the 2026-27 main estimates.

I'm joined today by Mark Mahabir, director general and general counsel of costing and budgetary analysis, and Govindadeva Bernier, director of budgetary analysis. They headed up the work on our 2026‑27 main estimates report published on May 7, 2026. I'm also joined by Caroline Nicol and Nora Nahornick, who are both adviser analysts.

The 2026‑27 main estimates include budget authorities of $502.8 billion. Parliamentary approval is required for $230.4 billion. The current statutory authorities amount to $272.4 billion.

These main estimates are the first since the government adopted a fall budget cycle. They include $14.8 billion for the budget 2025 measures, out of the approximately $20 billion in the budget 2025 expenditures to be listed in the 2026‑27 appropriation bills. This amounts to about 72%. The Department of National Defence accounts for the largest share of the budget 2025 expenditures, at $9 billion.

This morning, supplementary estimates (A), 2026-27, were also tabled. These include $11 billion in budgetary authorities, including $3.7 billion for measures announced in budget 2025 and $358 million for measures announced in the spring economic update. My office will prepare an analysis of these supplementary estimates, and that will be published in the coming days.

As part of my appointment process, I committed to paying close attention to how budget measures are implemented—from their announcement through to their inclusion in these estimates and then, ultimately, their reporting in the public accounts. This is a central element of parliamentary oversight. I look forward to working with committee members on how to best support you in this.

Finally, we are simply happy to be here this morning.

We look forward to answering your questions.

[The Chair, Conservative, Kelly McCauley]

That's wonderful. Thank you very much.

We'll start with Mr. Patzer for six minutes, please.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you very much, Mr. Chair.

Thank you, again, to the PBO and her staff for coming.

We really appreciate the work that you are doing.

I'm just going to start off the top, Ms. Ryan. At the last meeting, PSPC said that it's moving away from low bid because of the buy Canada policy, but it didn't have an estimate on the added cost. Is the added cost for taxpayers something that you can look at?

[Annette Ryan]

In terms of the cost of the policy, I'd have to think about what that would look like for an information request to the department and agency in terms of how they've documented this as a policy change for them and whether they plan to incorporate this within existing budgets. It would be my guess that they will work within existing costs for what they plan to procure and will target, essentially, quality versus price in how they're rolling this out.

It's not been part of our study to date, but I would offer that as an initial thought of how we might go at it. I'm happy to work further on that.

Mark or Govindadeva, do you have anything to add? No.

I'll pass it back to you, sir.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

I appreciate that.

I think it's important that when the government has a fairly substantive policy, such as the buy Canadian policy, we need to understand what the cost analysis might be for that if it's moving away from a previous policy, which was low bid.

In your report on the main estimates, you expressed some concern around the debt servicing. There's roughly $523 billion of federal market debt that is coming due by the end of 2027. It's basically at 1%, and current rates are roughly 3%. That's a pretty substantive increase. When you look at the current trajectory of the federal debt and the cost of servicing it—and we're seeing it going from 1% to 3%—what does that look like for taxpayers? What is the implication going to be for the public finances?

[Annette Ryan]

The question of digging into the government's debt profile is an important one, and it should be subject to parliamentary scrutiny. I think it reflects a couple of different factors, so we can start to discuss those a bit.

The government continues to run deficits. That, of course, adds to the debt every year. That sense of debt service charges going up in step makes straightforward sense. The part that is less well understood and that we could perhaps provide a greater profile on is the extent to which the government is using short-term debt versus longer-term debt and what that cost of borrowing will look like a couple of years out. There are these different factors that are driving that profile into the future.

I'll pause to see if some of my colleagues want to jump in with greater detail, versus the commitment that we would definitely like to dig more into that—

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Briefly, does anyone have another comment?

[Caroline Nicol, Advisor-Analyst, Office of the Parliamentary Budget Officer]

I'd add that we look at all of the borrowing costs of the government. That increased interest cost is definitely a driver for public debt charges that we've seen.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Yes, because it's going up to 13% of government revenue that will be debt charges. Is that correct?

[Annette Ryan]

That's the ballpark figure. On a per capita term, it's rising from roughly $1,500 per Canadian to $1,900 per Canadian over the profile.

We've started to dig into different aspects of what it looks like from different perspectives. I think there's work to be done in terms of what the mechanics are of how the additional deficit figures are adding to the debt and how the government is managing money in terms of its short-term versus longer-term debt. It has an exposure that will, should interest rates spike, definitely put pressure on the debt-to-GDP ratio and debt servicing charges, which we don't have a lot of room to deal with under current plans.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

The jump, though, from 1% to 3% is going to have a marked impact on any fiscal anchor that the government is going to rely on.

When you look at some of the creative accounting practices, such as changing the definitions of capital and operating expenditures, there's growing concern around the implications they're going to have going forward, because there's still not a lot of clarity around some of those definitions. What impact is this ballooning cost going to have, even if we go with the government's creative accounting on these new terms?

[Annette Ryan]

Under the current track, I think it's specified, per the spring economic update. What's less specified is how much buffer room that leaves to respond to external changes to things like interest rates, which will throw that track off. In that case, we won't have the balance that is holding right now against the government's stated fiscal anchor of deficit-to-GDP.

There are a number of different aspects that we could model and provide some clarity on to OGGO, if that's helpful.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Yes. Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Gasparro.

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

Thank you, Mr. Chair.

Ms. Ryan, thank you for being here.

Real GDP has been growing for the past two months. That is higher than the Statistics Canada estimate, which called for a flat reading.

Scotiabank's CEO, in his quarterly call yesterday, said investors are looking at Canada again because Prime Minister Mark Carney's “business-friendly government is trying to get things done.” The International Monetary Fund recently stated that Canada will maintain the strongest fiscal position and the lowest debt-to-GDP ratio in the G7. The Global Infrastructure Investor Association, the GIIA, in its spring 2026 pulse survey, identified Canada as “the most attractive infrastructure investment market [in the world] for the first time since the survey [began]”. It goes on to say several factors are driving confidence in Canada, including a strong, nation-building, infrastructure agenda; faster approvals and delivery of major projects; growing opportunities in energy, transportation and digital infrastructure, and Canada's ability to attract global capital from large, institutional investors, such as sovereign wealth funds.

What does this tell us about the underlying strengths of Canada's economy?

[Annette Ryan]

Let's be clear that Canada has many strengths as a country and in its economy, and it's good to celebrate the resilience of the economy, which we recently profiled in our assessments of the spring economic update.

There are a lot of uncertainties and risks in the global context, including tariffs and the conflict in the Middle East, and what they mean for supply chains, oil prices and investor confidence. Seeing Canada navigating this is something we all want.

I think you've captured the aspect of profiling the strengths of the economy well. The goal for the parliamentary budget office is supporting parliamentarians in terms of where debate may be warranted, and that goes to the questions—perhaps more so than the idea that investment should drive growth and prosperity—of how the government is going about it. It goes to how parliamentarians can be supported with the amount of detail so that we can do our studies to give a factual basis about what that might mean in terms of the impacts on the economy and impacts on government finances.

We look forward to working with the government to support parliamentarians with this information.

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

I appreciate that, Ms. Ryan. I'm connecting it to what you previously said to my colleague about how there were some questions about, for example, debt-to-GDP ratios, etc.

I just quoted the International Monetary Fund, which said we are in the best position in the G7. Some of the other statistics that I laid out for you are structural benefits to the economy. These aren't some short-term market gains. These are real, tangible, structural benefits.

I am curious to know how there can be a dislocation between the comments you made to my colleague a few moments ago and the very clear structural benefits the Canadian economy is seeing.

[Annette Ryan]

I would make a few distinctions. I view the questions posed by your colleague as being focused on Canada's readiness for future scenarios, to respond to the ability to finance our existing debt going forward, based on the government's current fiscal tracks. That's a discussion.

Your questions and framing put that discussion in an international context. From an international perspective, you've quite rightly quoted how the IMF views these figures and certain profiles about how Canada holds up in the international setting.

Canada has worked very hard over many years to make sure that programs like our pension obligations have been funded in advance versus on a pay-as-you-go basis, which other countries face, and that also contributes to Canada's positive profile from a comparative setting. That doesn't mean it's necessarily the right answer for parliamentarians, who have already posed questions to me along the lines of what the right balance is for spend now, pay later. Also, there are a range of questions about how Canada looks comparatively when you add provincial debt and when you add the debt of households.

I don't in any way take away from how you framed issues, but I wish to provide context for a range of questions beyond the points you've made. They stand, but further context can broaden them.

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Mr. Gasparro. We're just past our time.

Next is Madame Gaudreau.

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

Thank you, Mr. Chair.

When we return to our constituencies, our constituents often ask us questions. They want to know about our standing as a G7 country and our credit rating with the rating agencies.

To give them the current true picture, what should we tell them? Can we pat ourselves on the back or are we actually on shaky ground?

[Annette Ryan]

Basically, we have a solid aspect and a fragile aspect.

As Mr. Gasparro said, compared to other countries on the international stage, Canada has many strengths. However, it faces unprecedented risks. We're starting to see an increase in debt, which limits the country's ability to address these risks in the future.

My role isn't to say whether the debt level is right or wrong. My role is to support you and to see whether a per capita debt of $35,000 is right for Canadians.

I can refer to a study from the International Monetary Fund. It shows that Canada differs from other countries in the sense that Canadians don't have a clear idea of the per capita debt level. Moreover, this gap for Canadians is greater than the gap in other countries.

It's fair to say that we're in a good position among the G7 countries. Yet that isn't the whole story. Canadians must decide whether they're comfortable with the debt amount and the change in that situation.

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

We must add some nuance, because things fluctuate. People often wonder about our economic stabilizer. We're currently talking about employment insurance. We're talking about the ability of businesses to continue operating. We're focusing on buying Canadian, but some factories are shutting down right now. Many people don't understand and find this absurd.

It's fair to say that we must remain vigilant. Furthermore, we mustn't get too boastful when we hear such fine speeches.

I also wanted to draw your attention to the old age security program. I just saw that $100 billion will be spent on this program by the end of the decade. I suppose that the demographic shift has an effect, given people's ages, but is there another factor? The main reason isn't that people will fall into the age range where they can collect benefits. Is there another factor?

[Annette Ryan]

I'll let Ms. Nicol respond.

[Caroline Nicol]

In general, the old age security program is relatively predictable. The projections are really based on demographics, in this case the number of Canadians aged 65 and over, and on the indexation of benefits, which basically ties in with inflation.

If we assume that inflation is around 2%, in the best of times, and that the population aged 65 and over is growing at around 3.5% a year, or slightly less, this growth would remain compatible with the projected expenditures.