Evidence of meeting #77 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was accounts.
A recording is available from Parliament.
4:40 p.m.
NDP
The Chair NDP David Christopherson
Thank you very much.
We will move along now to Mr. Williamson. You have the floor, sir.
4:40 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Thank you, Mr. Chair.
I must say, following my Liberal colleague, I'm a bit perplexed about his line of questioning, given that our government really just followed the wise policy his government initiated in 2000 by lowering corporate taxes, and we've seen the results, both in job growth and revenue growth, from these tables.
I'm curious to ask a couple of broad questions.
Looking at some of the numbers, we see that the federal government posted a budgetary deficit of $26.2 billion in the last fiscal year that we're currently looking at, 2011-12, down from $33.4 billion in the previous year, 2010-11. Over that period, revenues were up 3.34% during the same period from $237 billion to $245 billion, and expenses were up 0.4% from $270 billion to $271 billion. Public debt charges were $31 billion in the 2011-12 fiscal year.
I'm curious to get your opinion on the main reason for decline in the budget deficit over those two years, fiscal year 2010-11 to fiscal year 2011-12.
4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
I think you described some of them. Obviously, with revenue growing faster than expenses, that's going to contribute to a decline in the budgetary balance. Revenue coming in, as you mentioned, around 3.5%, slightly below nominal GDP growth, is not stellar revenue growth, but it's still steady.
I think the answer lies more on the expenditure side, controlling that to, as you said, 0.3%, if you look at program expenses. I think that reflects a couple of factors. EI benefits, in light of the improvement in the labour market, came down quite significantly. You also had the impact of the wind-down of the stimulus program. The temporary nature of the stimulus program saw that spending wind down over that period, and that helped to control the spending.
4:45 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Right.
Just as a side note in terms of the EI debate, there are kind of flyers floating around in my province saying that the federal government doesn't contribute to EI. That's not quite accurate, is it? I mean, we carry any surplus or deficit.
4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
Is that in terms of the EI account?
February 14th, 2013 / 4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
The EI account is currently in a deficit position.
4:45 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Right—which is carried by the federal government.
4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
It's consolidated on our books, yes.
4:45 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Right.
As a kind of projection, if interest rates were to increase by, say, 1%, what kind of impact would that have on the deficit, and I suppose on the debt as well?
4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
In each budget and update, we actually have a series of shocks presented. I believe the budgetary balance would deteriorate by in the order of $600 million in the first year, building toward about $200 million by the end.
4:45 p.m.
Conservative
4:45 p.m.
General Director, Economic and Fiscal Policy Branch, Department of Finance
Just a second; I can get you the actual figures so that I'm not just....
It's always in the update and budget. There's always a sensitivity table. For example, as you said, on a 1% increase in interest rates, you would see in the first year a deterioration in the budgetary balance of $600 million. That would build to $1.9 billion by the fifth year.
4:45 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
Right. Okay.
How is my time, Chair? Do I have time for one more question?
4:45 p.m.
Conservative
John Williamson Conservative New Brunswick Southwest, NB
I've been away from the public accounts for a little bit, but when I was at a group called the Canadian Taxpayers Federation, I recall that the biggest line item was debt interest. We're seeing a move away from that, actually. Now we're seeing old age security as well as other transfer payments as a larger line item than debt interest.
Perhaps to Ms. Cheng, I recognize that when you review the public accounts of the country, you're really just taking a snapshot. Can you comment at all on the impact of what I'll call “demographic change” going forward, on the pressures of some of this change, where we're now seeing entitlement spending on seniors creeping up so that it's now the largest single item on the table here?
4:45 p.m.
Assistant Auditor General, Office of the Auditor General of Canada
Mr. Chair, I don't think I would be in a position to really answer that question. The scope of the audit really was to look at the financial reporting against the accounting framework.
In terms of program spending—
4:45 p.m.
Conservative
4:45 p.m.
Conservative
4:45 p.m.
Assistant Auditor General, Office of the Auditor General of Canada
No. We're not in a position to do that. That's not part of the audit.
4:45 p.m.
NDP
4:45 p.m.
NDP
Malcolm Allen NDP Welland, ON
Thank you, Chair.
I'm going to share some of my time with Mr. Giguère.
I have one comment to make.
Mr. Nevison, I appreciate your earlier explanation to Mr. Giguère around the $6 billion—and I don't disagree with you, by the way—but I think it illustrated how difficult it can be sometimes to follow the flow, which we're supposed to do. Part of the mandate of a parliamentarian is to vote on things, and it's difficult to know what the heck you're voting on when you can't follow it sometimes. It is an issue of how easy...and I know Mr. Kramp and I have similar views on this.
It needs to be transparent so that you know what you're doing, in the sense that we understand you folks know how to spend and count it. We have to know what we're voting on when we're spending it. That's the issue I think that gets here...if it were $6 million, sir, it falls off the table. When it's $6.2 billion that's not chump change that falls off the table. That's why, when you see such large swings of money, you ask exactly where that came from. It makes perfect sense what you said, sir, but nonetheless....
Mr. Williamson is right about who has the largest expenditure: it's the operation of this government. It's on page 1.6 of the first volume. The second piece, of course, is 25.2% of the total, which includes, but is not limited to...and let me read from it:
...consists of elderly benefits, EI benefits, the Canada Child Tax Benefit and the Universal Child Care Benefit. Major transfers to other levels of government (the Canada Health Transfer...to provinces on behalf of Canada's cities and communities...).
That's a big chunk, but it's certainly not about money just to folks like my mother. It is, of course, if you count if she uses the medical system in Ontario, which she does, which a lot of us do. Then I guess that's part of the money my mother gets too. I would suggest that this big piece is not rounded up just because we have a bunch of old folks like my mum anymore. We might have a few more old folks, but they're vibrant folks, especially my mother.
If she's listening on television, Happy Valentine's Day, Mum. By the way, she quite often watches the committee when it's on TV.
