Evidence of meeting #46 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 aluminum.
A recording is available from Parliament.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Thank you.
The government has said that this year's deficit will be $65 billion, and your office has said it will be closer to $72 billion. Who should we believe, you or the government?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I would say that our forecast reflects probably an extra two months' worth of information, at least—
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Could we say that the government's books are in worse shape than the government is telling Canadians?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In the two months' difference between when we published our update and when the government locked down its forecasts, there was more bad news than good.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
The report says that there's less than a 1% chance the government's deficit-to-GDP plan will unfold as projected. For the average Canadian watching at home, does that mean that there's a 99% chance the government's plan will not unfold the way they say it will?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think that is a fair statement, unless the government takes action to correct how bumpy the economy can be.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Would you describe that as a significant fiscal risk?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I would describe that as a risk to the anchor itself. There's probably more margin to manage safely and prudently within that space, but the anchor itself has some design issues.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
If a business person went to a bank with a financial plan that had a 99% chance of failing, they would never get a loan. With that in mind, should Canadians be concerned about the government's current economic situation?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The implication of that work is to say that because the economy remains subject to so many risks and because the anchor is so sensitive to movement in the deficit as well as the GDP, it's going to be a tough target to hit.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Does your report suggest that the government has left itself very little room for error if the economy weakens further?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I would say that it has left itself little room to hit the declining deficit-to-GDP target year over year in a consistent way. I think there remains room to respond to economic conditions separate from that.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Your office forecasts economic growth of about 1.6%. The Bank of Canada forecasts 1.5%, and the government forecasts 1.9%. Would it be fair to say that both the PBO and the Bank of Canada are more cautious about Canada's economic outlook than the government is?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Our forecasts reflect more news throughout the year, because they were published after the government locked down its forecast, and they are definitely more pessimistic than the government's.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Would a difference of 0.3 or 0.4 percentage points in economic growth have a meaningful impact on government finances over several years?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, it would.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Does using overly optimistic growth assumptions make the government's finances appear healthier than they may actually be?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Time will tell on where it lands, but in a straightforward way, if the assumptions are too high, the forecasts will be too high.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
What are the biggest risks that could cause the Liberal government's fiscal projections to miss their targets?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
There are a number of fiscal risks. People are very cognizant of the trade situation, especially with the U.S. The ongoing conflict in the Middle East has implications for oil, for trade, for supply routes and for supply chains. I think global stock markets are an increasing source of risk in that people are very concerned that the valuations we're seeing right now may be overly inflated, and it could be painful to see them unwind.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
If you take away Canada's connection to the U.S. market, basically you take away one of the biggest reasons that companies choose Canada in the first place. Would you say that's a big risk?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think it's straightforward that Canada has significant ties to the U.S. and that what happens in the U.S. has always had big implications for Canada.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
Your office projects that spending will be roughly $6 billion higher by 2030 than the government projects. Is that correct?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think that holds.
Conservative
Tamara Jansen Conservative Cloverdale—Langley City, BC
That means your office expects government spending to be higher than the government says it will be.