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Results: 1 - 15 of 240
Darlene Bess
View Darlene Bess Profile
Darlene Bess
2019-06-18 11:03
Good morning, Mr. Chair, and members of the committee.
Thank you for the opportunity to present the main estimates for the 2019-20 fiscal year on behalf of the Department of Finance.
With me today, as you mentioned, are departmental officials to assist in providing you with a more in-depth perspective on the rationale and policy supporting the numbers within our estimates.
As you know, the Department of Finance's mandate is to assist the government in developing and implementing strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs with the goal of creating a healthy economy for all Canadians.
This year's main estimates reflect a departmental budgetary spending of $99 billion, which is composed of $99.4 million in voted expenditures, $1.4 million in budget implementation vote items, and $98.9 billion in statutory expenditures. These main estimates reflect a net increase of $5 billion in departmental budgetary expenditures, stemming from forecasted increases of $4.2 million in vote 1 program expenditures and an increase in statutory spending of $5 billion.
The increase of $4.2 million in vote 1 program expenditures in this year's main estimates is due to increased activity under the following initiatives: $1.6 million for a carbon pollution pricing system, $1.5 million for tax competitiveness monitoring, $1.2 million to enhance capacity for indigenous policy, $0.8 million for an open banking review, and $0.6 million to increase trade dispute resources. This increase is partially offset by sunsetter funding that the department received for the G7 summit.
The 2019-20 main estimates also include $1.4 million of new budget implementation votes for each spending measure announced in budget 2019. Funding for these initiatives will be allocated to the department through Treasury Board submissions.
The 2019 budget implementation vote items are made up of $0.8 million to strengthen Canada's anti-money laundering and anti-terrorist financing regime, $0.4 million to introduce a Financial Consumer Agency of Canada governance council, and $0.2 million to protect Canadians' pensions.
The 2019-20 anticipated statutory spending is based on the most recent official estimates from budget 2019, released by the Department of Finance on March 19, 2019. Statutory expenditures are not included in the appropriation bill, as they have already been approved by Parliament through enabling legislation. They are included for information in the estimates documents.
As identified in the statutory forecast, the main contributing factors to the $5-billion increase are an accumulation of the following: $2.1 billion due to increased interest on unmatured debt, $1.8 billion due to an increase in the Canada health transfer, and $0.9 billion due to an increase in fiscal equalization payments.
Mr. Chair, this concludes my overview of the main estimates for the department.
We would be pleased to answer any questions the committee members may have.
Thank you.
View Tom Kmiec Profile
CPC (AB)
Okay.
My next question is going to be just on one of the budgetary line items here. It says, “other interest costs”. What is “other interest costs”? That's a significant amount of money, and it's actually decreasing year over year. I know what “interest on unmatured debt” is, but as for "other interest costs”, what is that?
Darlene Bess
View Darlene Bess Profile
Darlene Bess
2019-06-18 11:16
That's the interest on the public sector pensions, and it's based on a 20-year average long-term bond rate, which is decreasing.
Glenn Purves
View Glenn Purves Profile
Glenn Purves
2019-06-12 16:35
Thank you very much, Chair, and thank you to committee members. Good afternoon.
I'll be as brief as I can to allow for as much time for questions as possible.
Again, thank you for inviting us today to speak about the estimates. The main estimates present financial requirements for the 2019-20 fiscal year, including but not in addition to the amounts already shown in the interim estimates.
Part I of the document, the Government Expenditure Plan, gives an overview of spending requirements for 2019-20 and comparisons to previous fiscal years.
Part II, the departmental Main Estimates, provides information on planned spending by each federal organization requesting authority through the appropriation bill.
Additional details are available online, including forecasts of statutory spending, allocations from Treasury Board central votes, and expenditures by program or purpose.
Finally, I would remind the committee that the Government of Canada Infobase is also available to provide you with more information on authorities and expenditures.
Mr. Chair, the main estimates for 2019-20 present a total of $299.6 billion in planned budgetary expenditures. Of this amount, $125.6 billion is for voted expenditures, while $174 billion is forecast to be spent under statutory authorities.
Of the $125.6 billion in voted spending, the largest departments are the Department of National Defence, at $20.5 billion; the Department of Indigenous Services Canada, at $12.2 billion; Treasury Board Secretariat, at $7 billion; the Department of Indian Affairs and Northern Development, at $6.9 billion; and the Department of Foreign Affairs, Trade and Development, at $6.4 billion.
Voted expenditures are approximately $12.7 billion higher than the previous main estimates, including $6 billion for budget 2019 initiatives.
The increase in voted expenditures also reflects funding decisions made prior to budget 2019, including additional funding to settle outstanding claims, advance reconciliation and improve services and infrastructure in indigenous communities; the ramping up of infrastructure spending under the investing in Canada plan and the new building Canada fund, as well as the Gordie Howe International Bridge; increased capital spending for Canadian Coast Guard ships and VIA Rail trains; and increased funding to reduce greenhouse gas emissions and protect species and habitat.
Of the $174 billion in statutory spending, the largest components are benefits for the elderly, at $56.2 billion; the Canada health transfer, at $40.4 billion; public debt charges, at $24.7 billion; fiscal equalization, at $19.8 billion; and the Canada social transfer, at $14.6 billion.
The estimates do not include payments from the employment insurance operating account or expenditures legislated through the Income Tax Act, such as the Canada child benefit.
In terms of individual departments, four have increases of over $3 billion in comparison to last year's main estimates.
For the Department of Finance, the $5 billion increase relates to a $2.1 billion increase in interest on unmatured debt due to the upward revision of forecasted interest rates by private sector economists, and increases in the Canada health transfer, fiscal equalization and the Canada social transfer.
The Office of Infrastructure of Canada sees a $4.6 billion increase, due mostly to an additional $2.2 billion through the gas tax fund to address short-term priorities in municipalities and first nation communities as announced in budget 2019, and an increase in $2.1 billion in contributions under the investing in Canada plan, the P3 Canada fund and the new building Canada plan.
The Department of Indian Affairs and Northern Development increase of $3.9 billion relates to settlements for federal day schools, the sixties scoop and specific claims.
The $3.8 billion year-over-year increase for the Department of Employment and Social Development relates primarily to a $2.8 billion increase in benefits to the elderly, due to changes in the average monthly rate and in the number of beneficiaries. The department also has a total of $333 million in budget 2019 funding for a wide range of initiatives.
There is one particularly significant decrease, $6.6 billion, for Treasury Board Secretariat, which relates to the one-year funding of budget 2018 initiatives across the government.
With that, Mr. Chair, I will hand it over to you for questions.
View Mike Lake Profile
CPC (AB)
I'll go to Mr. Cross, to see if he might want to comment on any of this.
Adam, you might want to comment on the fact that this government has increased the debt by $2,000 right now for every single student you represent. Ultimately, those students are going to have to pay this off a generation later, just like Canadians had to do in the late 1990s.
Adam Brown
View Adam Brown Profile
Adam Brown
2019-05-09 12:34
I can answer quickly.
CASA doesn't have any formal stance on government debt. It is up to a government to decide how they make their budgets and allocate that funding. What we are here to continue to push is the mentality that we need a post-secondary system in this country that is affordable, accessible, innovative and of the highest quality. Certainly, we could get into some of these debates, but we don't have any formal position on government debt.
Philip Cross
View Philip Cross Profile
Philip Cross
2019-05-09 12:35
I'll make a small point. Olivier Blanchard, former chief economist of the IMF, has said that one of the lessons we learned in the 2008 crisis was that levels of debt that seemed sustainable before the crisis suddenly became unsustainable.
Brandon Ellis
View Brandon Ellis Profile
Brandon Ellis
2019-05-08 17:42
Thank you, Mr. Chair.
As noted, a study by the Fraser Institute has stated that this government has accumulated more debt over the past four years than any other government not in a period of recession or wartime in the history of this country.
The heavy reliance of the government on the federal debt-to-GDP ratio has our membership concerned as well. It is also misleading in the sense that it does not capture the true ratio of a jurisdiction because it does not take into account the debts of the provinces. If it did, the number would be significantly higher. Canada's total debt-to-GDP ratio is roughly around 65% to 67%. My province of Newfoundland and Labrador, for instance, would be around 85% to 90% with combined ratios.
The current pathway to a balanced budget that is projected by the Department of Finance also does not take into account harsh economic times, nor what a recession may look like. Like the Chrétien and Martin governments of the 1990s and early 2000s and the early Harper years, we must have the foresight to pay down the debt and lower our deficit. If we do not have the foresight to save during the good times, we will come to regret it in hindsight if we ever enter the bad times.
What is the outcome of our high debt? We either have to increase revenues or reduce expenditures to pay for it. Reducing expenditures in our belief as a business organization is a logical option. If government decides not to go the route of expenditure reduction, who shoulders the burden of increased revenues? It's people like our members, their customers and their employees, through higher taxes.
Can Canadians pay for this debt? A poll completed in January by MNP Ltd. showed that the number of Canadians who are $200 or less away from financial insolvency at the end of the month has jumped to 46% from 40% the previous quarter. Those Canadians are the customers of our members and of other chambers and boards of trade across the country. The answer is “No, they cannot.” Taking money out of the pockets of the taxpayers, in turn, hurts our members. Canadians will have less disposable income to shop in local stores or to see the attractions of our great province of Newfoundland and Labrador, or in turn, our great country.
Canadians and businesses are on the brink of just being able to pay what they owe and each day we seem to lose our ability to be competitive with the United States. We cannot see more red tape in this country for business. We cannot see more burdensome taxes, as implied by the tax changes suggested on page 207 of the budget.
The last time the government tried to change tax loopholes, they got it wrong. Business pays more than its fair share in taxes. With any further tax changes concerning business, we request that this committee asks the Minister of Finance if he consulted with small business and with tax professionals, and if so, what those individuals told him. The last time there were consultations, our membership—all of our accountants—told the minister that he got it wrong.
This budget and this bill are disappointing for our organization on a number of fronts. The budget itself has little to nothing, in our analysis, for business. On top of that, we see all of this new spending. Our members know that someone will have to pay for all of these deficits and all of this new spending. That will almost certainly be them and their customers.
To be clear, to give an outlook to this committee of what the majority of our members look like, they are small businesses. Roughly 90% of them are small businesses with fewer than 10 employees working for them. They are entrepreneurial businesses and innovators looking to grow, but they are becoming increasingly stifled by the taxation and red tape. As the debt grows, taxation will likely grow with it.
We respectfully request that the government move forward with the recommendations of the Senate Committee on Banking, Trade and Commerce, which are supported by chambers of commerce across the country, and implement a royal commission on taxation. As well, we request that government implement the recommendations of the internal tax committee of the St. John's Board of Trade, which are outlined in your brief, and demonstrate a short-term pathway to a balanced budget, ideally within the next two years. Not addressing our growing debt and weakening position on the world stage will ultimately hurt the best interests of Canadians.
Thank you, Mr. Chair.
View Pierre-Luc Dusseault Profile
NDP (QC)
What effect would a change in interest rates have on the federal debt and the cost of servicing the debt? Every year we pay between $20 billion and $30 billion to service the debt; those are approximate figures since I don't have the exact figures before me. Do you evaluate the effect of the overnight rate on the federal debt and the annual deficit?
Stephen S. Poloz
View Stephen S. Poloz Profile
Stephen S. Poloz
2019-04-30 11:33
That is part of our net analysis of the effects of interest rates on the economy. People who have bonds receive interest. The yield curve is very flat and has not changed for a long time. For the moment, there is no very big change, but I expect that some risk may change the yield curve one day or another. This will probably increase longer term rates as compared to short-term rates.
Overall conditions lead us to think that the yield curve will remain somewhat flat for a long time. It is possible that interest payments may increase because of other reasons, but for the time being, that is not what we forecast. We see a slight increase.
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-04-30 12:37
Thank you very much, Mr. Chair and ladies and gentlemen members of the committee.
Thank you for your invitation to appear before you to discuss our financial and economic perspectives from April 2019, which were published earlier today.
As you know, the Parliamentary Budget Officer provides parliamentarians with independent, non-partisan economic and financial analysis. As the Parliament of Canada Act indicates, we provide these analyses in order to raise the quality of parliamentary debate and promote greater transparency and accountability. Pursuant to the mandate of the Parliamentary Budget Officer, my office produces independent economic and financial cost estimates.
As you mentioned, Mr. Chair, I am accompanied today by Jason Jacques and Chris Matier, who will help me to answer your questions. They have a lot of knowledge and experience in the affairs of my office.
The Canadian economy is working its way through a temporary slowdown. Economic growth slowed sharply in the fourth quarter of last year following the decline in Canadian oil prices. We estimate that the real GDP growth remains subdued in the first quarter of this year but expect it to pick up over the remainder of the year as temporary factors dissipate.
Looking further ahead, we continue to expect the economy to rely less on consumer spending and housing and more on business investment and exports. We project real GDP growth to increase from 1.6% in 2019, the current year, to 1.9% in 2020, and then to average 1.6% annually through 2023. We judge that the risks surrounding our economic outlook are broadly balanced.
In terms of downside risks, we believe the most important risk is weaker export performance due to rising protectionism in global trade policies. On the upside, the most important risk is stronger consumer spending, fuelled by increased household indebtedness.
With respect to the fiscal outlook, since our October 2018 outlook we estimate that policy actions taken by the government will cost almost $10 billion per year, on average, over 2018-19 to 2023-24. Nonetheless, our updated outlook for the government's bottom line is, on balance, little changed compared to our October report. This reflects offsetting revisions to underlying revenues and expenses. In other words, we underestimated the amount of fiscal room in our economic outlook, mostly due to stronger than expected income tax revenues.
For fiscal year 2018-19, we expect the budgetary deficit will be $15.7 billion, which amounts to 0.7% of the Canadian economy. We project the deficit to rise to $22.3 billion in 2020-21, due in part to forgone revenues from introducing accelerated capital expensing. The budget deficit is then projected to decline to $11.9 billion, or 0.4% of GDP, in 2023-24. It's important to note this assumes no new policy actions are introduced.
We also project that the federal debt will consequently decline to 30.5% of GDP in 2020-21, which is almost 1.5 percentage points below the government's official debt anchor. We also project the federal debt-to-GDP ratio to fall to 28.9% of GDP in 2023-24.
Given the possible scenarios surrounding our economic outlook, and again without further policy actions, it's very unlikely that the budget will be balanced or in a surplus position over the medium term.
In our report today we also highlight some key issues arising from budget 2019 related to budget-estimates alignment, operating expenses and unannounced measures, among others. We would be happy to explain these issues if you wish us to and we can expand on that as well.
I would also like to direct your attention to another report we published this morning in which we independently established the cost of 11 Budget 2019 measures in order to prepare our estimate of the cost of electoral commitments, pursuant to my office's mandate.
The next general election will be the first in Canada where political parties will be able to ask us to prepare estimates that will be independent from the costs of their proposals. We acquired the necessary resources to manage the requests in an equitable and secure way while preserving the confidentiality of our clients. We are ready to seize this historic opportunity and provide the best possible cost estimates. We encourage all political parties to use our services in order to improve the quality of the information provided to Canadians.
My colleagues and I would be happy to answer your questions on our economic and financial projections, or on any other analysis from the Parliamentary Budget Officer.
Thank you very much.
View Blake Richards Profile
CPC (AB)
That's about 10 years after it was promised to be.
Let's move from deficit to debt. What are your numbers for where the current federal debt stands?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-04-30 12:56
We have as a proportion of GDP, which is a useful measure because it puts it into perspective—
View Blake Richards Profile
CPC (AB)
Sure, but what I'm actually interested in is the number.
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2019-04-30 12:56
For the absolute level of debt, we forecast federal debt at $687 billion—
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