Public Accounts Committee on March 13th, 2012

[Ronnie Campbell]

We began to undertake a series of audits. In March 2009 the Auditor General wrote to the Secretary of Treasury Board outlining what we thought were the key issues public servants had to be concerned about, and they were the key issues we audited. So we started that process at that time. We did the first audit, followed through, and have now completed the second one.

The economic action plan was an enormous undertaking, with tens of thousands of projects. We felt that we could get the best leverage for Parliament by giving some assurance on how well they designed the program in the beginning, to make sure they met the issue of timeliness. I think it's important to recall that when the economic action plan was conceived, timeliness was the primary issue. There was a concern that if government were to stimulate the economy, they had to do it at the right time. If they were too late, there were concerns it wouldn't have the same effect. So that's the path we followed.

In addition, many of those projects were proposed by provinces and municipalities, and many of them were paid on a cost-sharing basis. The federal government didn't pay the whole amount. So there was a bit of sharing the risk, where the provinces, municipalities, and federal government each put in one-third.

In order to have the economic action plan launched in a timely fashion, the federal government had to find a way to rely on the provinces and municipalities to identify what was important to them. So that's what they did. But the key objective of the economic action plan was timely stimulus. Each province has an auditor general, and I believe they're doing some work in this area as well, so perhaps they'll get into more of the details.

Thank you.

[The Chair, NDP, David Christopherson]

Very good, thank you.

Your time has expired, Madame. Merci.

We'll go over to Mr. Shipley. You have the floor, sir.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses.

It sort of amazes me that we talked about a plan where there were 35 federal department agencies, many programs that were developed through this, and it would seem to me that since 2009 there have been more than 600,000 jobs created. If you look to industrialized countries, I'm not so sure there are any that can actually say that, where they've come above where they were at the start of the recession.

I want to go back to the comment about how we evaluate this on a project-by-project basis. I'm going to be honest with you that I hope we don't. I'll give you an example. Whether it was in my riding in Lambton—Kent—Middlesex or others, you might have a transportation infrastructure program that actually created jobs at that time within our community, within the industry of the construction, to develop that. But we are now continuing to move ahead with trade agreements with countries, which means we're developing an infrastructure that will continue to grow, to use the development of our county's infrastructure, our commodities, and our primary resources. Those actual job creations are not just the one time to develop that, but actually it is a continuum that will create jobs, because that project is done, because we are developing trade, because of a number of things that are good for our community. So I guess my comment would be that I really hope we don't spend a lot of time trying to pinhole the projects, but let's look at this in a bigger context. Even though this was a temporary infusion in cooperation with provinces and territories and in fact municipalities, it was a temporary infusion that gives a global perspective for Canada that has been very successful.

I wouldn't mind asking Industry Canada just to follow up on those comments, because we did work with provinces and territories and municipalities. I'm wondering just how this was accomplished. Canada is a big place with different views, but it got accomplished for an end purpose, and I'm wondering if you can touch on that, either Mr. Dunlop from the Department of Industry or Mr. Sarantakis from Infrastructure Canada.

[Taki Sarantakis]

Thank you.

With respect to your comment, I think it's very important, because it's not just the initial jobs that were created during the course of the construction period. That was obviously the impetus for the programs and the impetus for the economic action plan writ large. But as you note, those jobs actually created infrastructure projects. In our case, at Infrastructure Canada, there were some 6,500 infrastructure projects that were financed under the economic action plan that will continue to create jobs into the future, whether they're roads, waste water plants, recreational facilities, highways, or broadband. These are the types of projects that we hope will help improve Canada's competitiveness and Canada's productivity over time.

While we're very proud of the front end, we think also there's a back-end story to be told over time, which is about the effects of those projects on Canada's economy.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I don't know if anybody in the Department of Industry, Mr. Dunlop, had anything to say. Or do you just agree?

[Robert Dunlop]

I would add a little bit, Mr. Chair.

Obviously building the capacity of universities and colleges has a tremendous potential impact in the future. Mr. Kramp mentioned Capilano University as an example of that.

The areas that KIP supported included repair and maintenance, which maybe doesn't get the credit it deserves. We've had a number of institutions that are looking at significant reductions in their energy costs going forward, at a time when their provincial funding may be affected. That allows them to keep their activities going at a time when otherwise they would have to cut back on the education that happens.

The other areas we supported were building the teaching capacity of the universities and colleges—and there's no need to elaborate on the impact of that—as well as research capacity.

We're doing our best now that the final reports are coming in to measure those impacts, so that we'll have a good record of the overall impact of the $2 billion investment the people of Canada made through the federal government, but also the $5 billion investment that was made in total in KIP projects.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Sarantakis, I have one more quick question.

The economic action plan had guiding principles: that it was timely, targeted, and temporary. I think it's important that Canadians understand why that was important. I'm wondering if you could just make some quick comments, because the chair is indicating that I'm almost out of time.

[Taki Sarantakis]

Sure. As we talked about at the beginning, the stimulus that was required in the Canadian economy was required right away, certainly to have economic activity generated as quickly as possible. Otherwise we would have been in a situation like a lot of the other G-8 countries, and the recession would have been deeper than it was.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

Thank you, Mr. Chair.

[The Chair, NDP, David Christopherson]

Thank you.

Over to the Honourable Gerry Byrne. You have the floor, sir.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair.

The messaging on this particular program seems to be coming here to this committee as a bit of a moving feast. If specific, short-term, immediate-impact jobs were not necessarily the entire end goal, if there were other values that had been equated into the overall evaluation and assessment of projects.... I want to this to be very specific to you, Mr. Sarantakis. Why wasn't the G-8 legacy fund, the $50 million that was approved by Parliament through the border infrastructure fund, incorporated within the overall scope of the community infrastructure program? Would that have been a better program to fund that $50 million initiative?

[Taki Sarantakis]

I'm not sure I understand your question.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

You used the border infrastructure fund, which was part of the overall economic strategy, the economic action plan, but what you did not do is.... You're now creating an environment here for the committee that in addition to short-term jobs, there was also long-term value that was created. You have not defined for Parliament any of the assessment criteria you used for that overall assessment.

I'll bite now on what Mr. Campbell asked us; I'll get more directly to the suggestion that Mr. Campbell made. When are you going to provide Parliament with an overall evaluation of the jobs that were created and the economic impacts that were provided by this program?

Mr. Campbell, you had no opening comments whatsoever to make in rebuttal to the Office of the Auditor General, so you agreed with the Office of the Auditor General's comments, in everything they put in their report. You have not yet provided Parliament with a specific and descriptive analysis of what criteria you used to determine eligible projects and what criteria you have used to determine the number of jobs. The government continually suggests that thousands of jobs have been created here, using absolute figures, absolute certainty that the program met its key objectives.

When are you going to provide that analysis?

[Taki Sarantakis]

Perhaps I'll start and then I'll turn it over to my colleague at the Department of Finance.

The stimulus programs were designed, as we noted, to be timely, targeted, and temporary. So the primary objective of the program was to generate economic activity rapidly. That being said, it wasn't just money being thrown away; it was money that was spent on infrastructure. Ancillary benefits of that were to create longer-term jobs.

With respect to reporting, my colleague from the Department of Finance has already noted that there have been seven quarterly reports to Parliament, but there's additional.

[Douglas Nevison]

Thank you.

Just to follow up on your question, as I mentioned, in terms of tabling to Parliament, both budget 2009 and budget 2010 had the methodology for the jobs estimate that I mentioned, using the macroeconomic model. That methodology has been presented to Parliament on two occasions. It's also been elaborated in the reports to Canadians that I mentioned.

Coming back to the Office of the Auditor General's recommendation, which the Department of Finance and the government agree with, once the information is in place that a final economic assessment can be undertaken, that will be tabled as well and it will use the same methodology that we've mentioned--a macroeconomic base so we can look at the entire range of job creation impacts, not just at the direct project level.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you.

I'll ask Mr. Campbell, then. You suggested to us to specifically ask our witnesses about what were the plan and the timeframe for reporting to Parliament on the delivery and economic impact of the economic action plan. What specifically have they left out that you suggest they need to be more forthcoming with?

[Ronnie Campbell]

I think the only thing I missed there was a date.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

A date?

[Ronnie Campbell]

I didn't hear the government say on what date or approximately what date they intended to table the report that assessed the impact of the economic action plan.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Mr. Chair, if there is time, would the witnesses be able to provide a date?

[The Chair, NDP, David Christopherson]

You have 15 seconds to try to get it out of them.

[Douglas Nevison]

No date's been determined. As I said, we're still looking at the most recent information we received. Once we feel this information has been verified, then the decision will be taken on when the report will be released.

In terms of a particular date, we do know that the spending information for the four infrastructure funds that were extended will be presented in the public accounts, which will be released in the fall of 2012.

[The Chair, NDP, David Christopherson]

Thank you. Your time has expired.

Moving now to Madam Bateman, you have the floor.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Thank you very much.

Thank you all for being here. I appreciate your perspectives. I so appreciate that this was a collaborative effort and that this was an investment in the future of Canadians and it was made possible through the elasticity—you spoke about how you merged the policy elements.

Everybody did extra, and the result is that Canadians were incredibly well served. I was on the outside looking in when this happened, unlike some of my colleagues who were members of Parliament at that time, and as Jane Q. Citizen, I was impressed with the bureaucracy and the alacrity they showed. That came out loud and clear in everything I heard about it.

There's something I heard today I'm really interested in. Well, there are a few things.

By the way, compliments also to working in partnership with your provincial and territorial colleagues. I may get to that question as well, but first I heard from Mr. Nevison about the macroeconomic models you're using; it's rare for a chartered accountant to be interested in macroeconomic models, especially when so much audit stuff is going on. Could you elaborate on that? I think that's really important for us to hear. It's a way of extrapolating the results, and you were only able to touch on that in your response to another colleague. If you could take a moment, I would appreciate that.

[Douglas Nevison]

I'd be happy to.

As I mentioned, even though data was gathered at the project level, there was a feeling early on, based on previous experience and experience in other jurisdictions as well, that it's very difficult to get consistent job numbers across such a wide range of projects and project proponents. As I mentioned, using that bottom-up information doesn't capture things such as the indirect job impacts from a particular project. That would be the suppliers that the project proponent is subcontracting to or buying supplies from. An economic impact and job impact goes along with that.

There are also the induced effects. As economic activity is elevated in a particular region, incomes go up, and that has a positive impact on economic activity in terms of income.

Finally, as I mentioned in my earlier comments, there is also the important fact that the economic action plan wasn't entirely project-based. There were some very important elements, particularly in employment insurance benefits, for example, tax reductions that spread to the entire economy, so they couldn't be measured on a project-level basis.

Based on those criteria, we determined that the best thing to do in terms of determining the job impact of the economic action plan was to use our macroeconomic model. It has multipliers in it for each individual element of the plan, whether it be infrastructure, EI measures, or tax reductions. This multiplier gives you a sense that every dollar invested or a reduction tax has a certain impact on the economy in terms of GDP. The model can then translate that into an employment impact.

As I mentioned, we've used that approach throughout the process. We've tabled three particular assessments on the job impact. Our most recent was in January 2011 in the seventh report, and it was determined that the economic action plan created or maintained 220,000 jobs.

Obviously the Canadian economy has created much more employment than that since the trough of the recession. I think somebody mentioned 610,000 jobs since July 2009.

This is a way of isolating the impact of the action plan itself. A similar approach was used in the U.S. by the U.S. Congressional Budget Office, based on similar findings from the U.S. Government Accountability Office. They said they had the same issues with the project-level job information they received through their American Recovery and Reinvestment Act.

Finally, it was also validated by three private sector economists here in Canada to make sure that our multipliers were on the prudent side, relative to other models that were being used in other jurisdictions.

In a nutshell, that's the way we've approached it to get a sense of the overall impact of the economic action plan, not just the bottom-up approach.