Government Operations Committee on May 28th, 2026

[Annette Ryan]

I think that this constitutes a sound principle that has proven its worth in the past.

I believe that Parliament's role in overseeing government expenditures includes the task of ensuring that the expenditures incurred will help to achieve the promised and expected results. Without this oversight, we can spend money without producing results. This poses one of the most serious risks in the government's tax plan.

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

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Mr. Gill, you have five minutes.

[Harb Gill, Conservative, Windsor West, ON]

Thank you, Chair.

Thank you, folks, for being here.

For the past month, you've had the opportunity to review the government's books, Ms. Ryan. What has shocked you the most about the government's fiscal planning—or lack thereof—once you gained access to these numbers and the assumptions behind these projections? To put it another way, what's keeping you up at night as our country's watchdog? I ask because many Canadians are facing serious issues and insolvencies to the same levels as in 2009. That's what's keeping the rest of the country up.

[Annette Ryan]

Let me start with a positive element. One thing that's shocked me is the goodwill and responsiveness of many parts of government to our requests. There is a good relationship and there is a willingness to provide the answers to Parliament. That's a positive surprise.

In terms of what keeps me up, it is absolutely the idea that each year the government is spending $500 billion ostensibly towards services for Canada and Canadians. The connection between what is spent and what is realized has gotten weaker through time.

We should be able to give Canadians, who are facing all the affordability challenges and economic and business uncertainty, as you quite rightly describe, a better sense of how all of that government spending helps them individually and what they can expect for their tax dollars. The idea is that there is accountability and transparency. Absent that, we are really facing some serious risks for the country in a very turbulent time with many risks on the horizon.

[Harb Gill, Conservative, Windsor West, ON]

We are worried about temporary deficits. They are supposed to eventually shrink, yet the deficits appear to be permanent. Based on what you have seen so far, is there a credible path back to fiscal discipline, or is that a notion we have abandoned?

[Annette Ryan]

There is a path that will deepen our balance. The government has outlined that it intends to spend less through time. The comprehensive expenditure review is meant to be part of that. Deepening that look at what programs are not delivering is something that is part of that path back to balance.

Certainly, with the spring economic update, we saw an improvement in the government's overall fiscal position. Rather than invest that improvement in either repayment of the debt or tax reductions, the government chose to increase spending again. That has been the demonstrated path with subsequent budgets. That path doesn't lead us necessarily back to the path you described.

[Harb Gill, Conservative, Windsor West, ON]

Ms. Ryan, I'm saying that there's zero fiscal discipline from these folks. Whatever money they are generating, they're quickly spending. They're not really focusing on servicing our debt or reducing our debt load so that future generations don't have to pay for what we are doing right now. I don't see anything from this government, especially based on your testimony, that shows that it actually does have a fiscally disciplined approach. Whatever it's gained, it's put right back in.

[Annette Ryan]

The government has announced two fiscal anchors. Deficit as a share of GDP, which it's meeting, isn't as stringent as debt as a share of GDP, which it's going to increase and decrease according to spending tracks. It has a second fiscal anchor, which it says it has met, but public definitions are not available, so that limits the extent to which we can see whether it's on its own track or not.

I'll hold it there. I think you have a different line of questioning, and I might not be hitting it.

[The Chair, Conservative, Kelly McCauley]

Next, we have Mr. Danko.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you, Chair.

Before I go into questions, there was some discussion at the last committee meeting about having Minister Lightbound appear before committee in the context of buy Canadian. I did have an opportunity to take that back and talk to the ministry. The consensus is that we are interested in some additional meetings on buy Canadian.

I think there is consensus that this will likely be the will of the committee. This would then push us into the fall session, at which time the minister could appear.

I wanted to give that update to the committee.

[The Chair, Conservative, Kelly McCauley]

Thank you.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

I have three questions. I'm not sure I'll have time to get to all of them.

I want to talk about our government's reshuffling of the timing of the budget and changing how the budget is reported to separate out capital and operating costs in investments and expenditures.

The first thing is on having the budget in the fall instead of the spring. I worked in construction for many years. Budgeting and economics in Canada are still very seasonal. You set your budget in the fall, you're doing your tendering during the winter, you contract awards, and a lot of that work happens in the spring and summer months. It aligns with standardized business practices.

I want to give you an opportunity to help us understand how that has made your job different or better. What should we expect moving forward in the alignments between what the budget is and what the actual estimates and mains are?

[Annette Ryan]

Thanks for that, Mr. Danko.

I think the shift in the budget timing will allow a greater alignment of the budget, main estimates and supplementary estimates. That profile gives a lot more smoothness toward government planning, spending and so on.

We did speak to this in our report that came out on the main estimates.

Govindadeva, do you want to pick that up?

[Govindadeva Bernier]

Indeed, in the main estimates this year, we actually have $14 billion of budget measures. In the past, when the budget was in the spring, we would usually see budget measures only in the supplementary estimates period. Those are typically tabled in the fall. That's an improvement for sure. We can already start tracking.

That $14 billion represents only about 70% or 72% of the total planned spending on budget measures in the current fiscal year, as we are in 2026-27.

Yes, there's a difference. It's going to allow us, by the end of the year, to see if we've reached all that budget spending that was planned.

Actually, in the supplementary estimates (A) this morning, there's another $3.7 billion in budget spending. Now we're getting close to 90% of the announced budget spending that's been tabled in the estimates so far.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

I think that's really good news and something to highlight, especially when we're talking about government accountability and transparency. Aligning the budget to better enable accurate estimates is really important, to make your job as easy as possible and to hold us, as a government, accountable.

I also want to talk about the separation in reporting that separates out capital and operating expenses. When I was at the City of Hamilton, we did this exact exercise of separating out operating and capital costs, with a $2.5-billion annual budget.

Everybody who works in business is familiar with this. This is how all businesses do their budgets. It's bizarre that governments haven't done this until now.

In household budgeting, people are very familiar with the differences among their capital expenditures—house, investments, vehicle and things like that—and their day-to-day spending.

My question is, moving forward with that differentiation between capital and operational, how can we make sure that it is as transparent as possible?

How will that impact your evaluation of the government's performance?

[Annette Ryan]

I think the government previously had very solid definitions of operating and capital expenditures from an accounting perspective. The government's new plan to hold itself to account with a fiscal anchor that balances operating spending with operating revenues is something that could advance us forward. It would be further advanced if the government would share its definitions of what those terms are.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We're now going to go to Mr. Patzer and Mr. Lauzon, for five and five. We'll finish with Madame Gaudreau for two and a half minutes.

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

Thank you very much, Mr. Chair.

I want to note that Finance Canada said that it takes the IMF report that's been mentioned numerous times this meeting “with a grain of salt”.

When you look at a lot of the numbers over the past decade.... For example, over $1 trillion of foreign direct investment has left Canada, which means that for every dollar of investment in Canada, two dollars left. I think that when they look at that kind of a track record, that's why they're looking at that IMF report and saying that it's not quite so rosy.

That's having a substantive impact on Canadians, too. We're looking at some of the insolvency numbers. There's a higher rate of Canadians facing insolvency than there has been since 2009.

Are you seeing some of those trends and concerns in any of the work you're doing?

[Annette Ryan]

There's a lot in what you've captured there. I'd rather put it in a forward-looking perspective. I would see a lot of merit in building dashboards that would help us take different views on the government's assertions about the positive parts of our economy balanced with areas where maybe there are more clouds and concerns.

The aspect of bankruptcies is clearly in the space of affordability and overall business climate and health. I think balance is good. Let's shed more light on both sides of the complexity that is the Canadian economy.

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

When you look at household debt, so non-mortgage debt, for example, it has reached $43,300 in the first quarter, up from $40,200 two years ago. Some of these numbers are pretty alarming and pretty staggering, when you look at how Canadians are paying for things beyond their mortgage.

Another example is that, among homeowners, average non-mortgage debt reached $82,000, up 19% compared to two years ago. Those are alarming numbers. I know there are some pressures such the cost of a vehicle, for example, which is at an all-time high, but Canadians are using debt services at a higher and higher rate.

Again, for all the grand talk about how Canadians have never had it so good, as we're hearing from the government, the data shows a completely different story. This is why I brought up the point about the federal market debt coming up for renewal from 1% to 3%. Canadians are seeing, for example, their mortgage rates go up and increasing. When you look at mortgage renewals, a substantial number of mortgages are up for renewal over the next year or two, and they will be coming in at much higher costs.

When you're looking forward, as you said you want to do, and you're seeing the state of the cost of servicing debt at the government's level but also at the consumer level, how concerning is that projection for the average Canadian, when that's what they're faced with?

[Annette Ryan]

I would say that is quite concerning. It speaks to the question earlier about the risks that both households and governments face. If there were to be a significant increase in interest rates, it would be very difficult for many households to absorb, for exactly the reasons you just described.

If at that same time the government's fiscal position were worsening because of the way that it has structured its short-term versus longer-term debt, that could be a situation where both households and the government are struggling to find balance. That's the type of buffer the government may not have if it is favouring further spending and further investments with any extra fiscal room, versus that type of ability to withstand shocks, especially to interest rates.

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

Right.

I want to change topics quickly for the last couple of seconds to your report on the FIFA World Cup. You said that there's an estimated $128 million classified as capital expenditures. Should the rest of the funding for the FIFA World Cup, which is $473 million dollars, be considered operational spending? How is that going to be classified?

[Govindadeva Bernier]

It will mostly be operational spending. A lot of it is security costs, obviously, because the RCMP is covering some of that. Public Safety, expedited visas, the Canadian Food Inspection Agency...a bunch of government departments are involved with some level of operating spending.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Lauzon, welcome. The floor is yours for five minutes, please.