Mr. Speaker, members will have noticed through the Olympics, post-Olympics and probably for many months still to come the multi-million dollar advertising budget the government is spending on its action plan. I am holding in my hand a summary of “Canada's Economic Action Alan Year 2”, published by the Minister of Finance.
This is supposed to be the plan by which Canada returns to a balanced budget. Unfortunately, there are those who look at the numbers as they are provided by the Minister of Finance and his department and beg to differ with the economic action plan of the government. The Parliamentary Budget Officer, as late as last month, said that the government's current fiscal structure was not sustainable over the long term.
A budget is both simple and complicated at the same time. It deals with revenues, expenditures and the economy. A fairly educated guess is made on what the expenditures will be, what the revenues will be and what the economy will look like over the period of the budget. Frankly, the further time goes on, the less reliable are the figures.
The Parliamentary Budget Officer is highlighting a very important issue, that the government's current fiscal structure is not sustainable over the long term. In simple language, on the basis of the government's projections for the economy, the revenues and the expenditures all that will happen in addition to debt. He states, “under the current fiscal structure, the Government's debt relative to GDP is projected to increase on a substantial and sustained basis over the long term”. Simply put, our debt will grow, it will grow in absolute numbers and it will grow relative to our GDP.
He goes on to say, “To close the fiscal gap, permanent fiscal actions either through increased taxes”, something the Minister of Finance and the Prime Minister do not want to talk about, “or reduced program spending”, also what they do not want to talk about, “or some combination of both—amounting to 1.0 and 1.9 per cent of GDP are required under the baseline and alternative scenarios respectively”. That means that somehow or another some combination of revenues, increased economic growth and reduced expenditures have to amount to 1% or 2% of GDP. We have an economy of $1.3 trillion, so it is $13 billion through to $26 billion. Somewhere or another, we have to find the numbers in order for these numbers to be realistic.
The Parliamentary Budget Officer goes on to say, “The fiscal action plan required to achieve sustainability does not need to be taken immediately”. I agree with that. “Implementing the necessary measures may be delayed until the economy has fully recovered”.
Again, that is essentially buying into the consensus of all of the economists that at this point it is not appropriate to take measures until the economy has actually recovered. It does speak to the long-term sustainability of this economic action plan and he is calling it into question.
Yesterday, the Minister of Finance took the unprecedented step of essentially trash talking the Parliamentary Budget Officer. The Parliamentary Budget Officer, in my experience, is a pretty responsible individual. He has come before the finance committee on quite a number of occasions and lays out the way he sees the numbers.
In his report, which apparently so upset the Minister of Finance, the first point he makes in the first sentence of his report is:
PBO’s assessment of the Budget 2010 outlook is, however, limited by the lack of detailed information and data pertaining to the Government’s assumptions that underlie the translation of the private sector economic forecast into the fiscal forecast...
He goes on to say that he is not disagreeing with the 20 or so private sector economic forecasts that were made. He basically buys it.
It is very interesting that his first point is that the department, the minister and the Prime Minister withheld information from him in order that he could make what we all need, which is an independent assessment of the statements and the viability that this plan projects. In the first sentence, he is taking issue with the availability of information.
We cannot have it both ways. We cannot say that he is wrong and then also say that we will not give him the information to look at. This is not the first time the Parliamentary Budget Officer has complained about the lack of information coming from the Department of Finance and this particular minister.
The report continues:
PBO believes that the private sector economic outlook, on which Budget 2010 fiscal projections are based, provides a reasonable basis for fiscal planning.
To my point, he is not disagreeing with the private sector economists but he cannot do a full bore analysis on the basis of the information that has been provided by the Minister of Finance.
The report continues:
PBO disagrees with the overall characterization of the Canadian economic situation and outlook in Budget 2010.
Essentially, he is saying that the Prime Minister and the Minister of Finance have put a touch too rosy expectations on the performance of the economy.