Evidence of meeting #37 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A video is available from Parliament.
Comptroller General of Canada, Office of the Comptroller General of Canada
But that's a different number than what we've been talking about with the lapse, because Finance knows that infrastructure money generally lapses in fairly significant amounts. DND usually lapses big funding. That's kind of the trail.
Comptroller General of Canada, Office of the Comptroller General of Canada
Did I miss anything, Nick?
General Director, Economic and Fiscal Policy Branch, Department of Finance
I would add only that for the $2.6 billion it was a revision to the Alberta flood liability in the order of about $1.2 billion that actually drove that number as high as it is.
Conservative
Stephen Woodworth Conservative Kitchener Centre, ON
Yes. So it actually makes the planning almost bang on, which I find very impressive, so thank you for that.
General Director, Economic and Fiscal Policy Branch, Department of Finance
On the expense side, yes, we did well.
Conservative
Stephen Woodworth Conservative Kitchener Centre, ON
Yes, on the expense side. That's correct.
I also want to also go back, Mr. Leswick, to where I left off earlier about revenues and taxes. I'll start with the chart on page 1.6 that shows an increase in income tax revenues, an increase in other taxes and duties, and an increase in total revenues.
We know that under the current government taxes have been not only restrained but in fact reduced, so can you shed some light on this for us as to how we can continue to see increasing revenues even though the Government of Canada has been reducing rates of taxation?
General Director, Economic and Fiscal Policy Branch, Department of Finance
Again, this links to our discussion earlier in the session. We continue to garner increased tax revenues because the economy is growing. While tax rates are going down, the economy is growing, people are consuming more, and people are making more money, so we collect more taxes, notwithstanding a lower effective tax rate. It's really just a function of economic growth.
Conservative
Stephen Woodworth Conservative Kitchener Centre, ON
The GDP growth in the year under examination was 3.4%, if I'm reading things correctly. I'd like to ask you a little bit about that. Program spending went up by only 1%, which was not as great as the 3.4% GDP growth. Would the increased revenue that we're seeing from GDP growth be enough to kill off the deficit if there had not also been restraint in program spending?
Did I make that question clear?
General Director, Economic and Fiscal Policy Branch, Department of Finance
I think so.
Again, our program expenses are a function of the major transfers, major transfers to provinces, which are effectively tied to nominal GDP growth, so we'll pay more as long as the economy is growing more. Likewise, some of the transfers to persons are indexed, so for the expenses, a certain amount is out of our control.
Conservative
Stephen Woodworth Conservative Kitchener Centre, ON
I'm speaking of the program expense line, which I saw somewhere was limited to 1%, and other government expenditures in fact were reduced. What I'm asking you is whether the revenue increase alone would have slain the deficit, or was there also a need for fiscal discipline in restraining spending?
General Director, Economic and Fiscal Policy Branch, Department of Finance
Go ahead, Bill.
Comptroller General of Canada, Office of the Comptroller General of Canada
I have a couple of thoughts, and Nick can weigh in with the actual detailed numbers. I'd say we're not back to a surplus yet. They're forecasting a surplus, but for the current year we've posted a deficit. We haven't actually realized a surplus yet.
If you think about the size of the savings measures, we certainly wouldn't be so close to being back in balance without those. The strategic and operating review, or DRAP, reduced the deficit by $5 billion annually on an ongoing basis. We had about $700 million related to pension contribution rates that's taking effect. We had an operating budget freeze of $550 million. Then we had retiree health care at $7 billion over six years. Those are pretty significant numbers. It would take a lot of growth to make these up.
At the same time, we have some expenses that are growing. From a legislative perspective, there are the old-age benefits. We need to make reductions in some spending to offset the growth in the statutory spending.
NDP
The Chair NDP David Christopherson
Sorry, but the time has expired. I actually let a little time go by there.
Colleagues, that exhausts our usual rounds of questioning. At this time I will thank our guests for being here.
If I might, I have just one last comment before we close. There is lots of credit to go around for the clean audit, but as the longest-serving member of this committee in Parliament—I've been on this committee now since 2004—I can say that we continue to have an issue with National Defence. It's a chronic issue. It's a lot like health and social services for first nations people and other aboriginal Canadians. It's chronic. It just goes on and on. It crosses party lines. It is a management issue as much as it's a political issue. It's been over 10 years. That's long enough. There needs to be some resolution.
Mr. Matthews, I understood when you talked about the lapsing, especially in the case of defence, because of the big numbers. We've been through this before many times. The auditors are very much aware that there is that kind of latitude, yet we continue to get this notice both when we're doing public accounts and on certain chapters.
National Defence needs to know that this committee and the Auditor General's office are going to continue to stay focused on this until it ups its game and gets to where it needs to be. We're very proud of the things that are good, but we need to stay focused on the things that aren't, so that we can continue to earn that reputation. National Defence needs to up its game in this area. It's not good enough. I hope that gets carried back.
With that, I want to thank you all very much.
Mr. Matthews, I particularly want to thank you. There's a divide here, between the auditor folks and the folks who are working for the government, yet during a question from Mr. Allen, when you thought he might need to get a question in there.... I've seen so many bureaucrats come in. They can play the game. They can run the clock. But you actually paused and said, “I think there was maybe another question you wanted.” That's appreciated. Notwithstanding that you're here representing the government's interests, as the chair of this committee, I want to tell you that's exactly the kind of professionalism that underscores how proud we are of the work we do. That was very good, sir. I hope to see more of that from senior people who come here.
Colleagues, with that, this committee is ready to stand adjourned, with thanks to our guests. All in favour of adjournment, please leave.