PBO Yves Giroux on Canada’s spending track record | Power Play with Vassy Kapelos

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Now much of the anticipated fall economic statement will be presented on that day so will that fiscal restraint come through in the statement with us on this armed with fresh reports today showing some new budget shortfalls is Canada’s parliamentary budget officer Eve jiu thanks for taking the time to be

With us let’s start with that clip and what we just heard from the Prime Minister that this government always exercises fiscal restraint do you agree with that well I I’ll let the adjectives to other people but what we have noticed is that spending uh has increased at a

Very steady Pace over the last several years granted there was a pandemic but even outside of pandemic spending there has always been steady increases in government spending including in in the number of federal civil servants so the pace of increase in spending has not significantly slow down over time so if

That is fiscal restraint well I’ll let people who are watching judge whether it is fiscal restraint or not it doesn’t sound like you think it is no I don’t think it is fiscal restraint do you think that that foreshadows what we’re about to see in the fall economic

Statement or do you hope that it foreshadows that well that’s up to decision makers to make that call but there are still a couple of promises that have not been costed or booked in the fiscal framework for example there’s a disability benefit bill that was that received Royal Ascent in June and

There’s no detail as to what form this will take and the benefit level the clawback or the eligibility criteria there’s a national pharmacare program that has been promised for which we don’t have details and these two programs could cost anywhere between 13 billion per year to 30 something billion

Per year so that’s the type of details that are yet to be made available to Canadians and at the same time this government is facing pressure not to continue to overspread to continue to Spur inflation so how narrow is that needle eye that they have to thread next

Week it’s it’s very narrow that’s always a very delicate trade-off when you have an economy that’s running at a close to capacity it’s slowing down now at the same time as there in there is inflation and the governor of the Bank of Canada is saying that government spending and

Not only the federal but government spending in general is probably contributing to uh some extent to inflation so that’s a very delicate balance that the government has to has to to to to to walk on some of the spending that you have calculated and looked at was specifically on the

Government uh the money that they’ve put in on the EV battery manufacturing plants um the government offered big subsidies with the promise of return on investment how good was their math in your estimation well it’s always tricky to estimate how long it will take for government spending or investment to to

Be recouped through additional taxes but initially the the the math was not very solid the government estimated that in the case of Volkswagen they would recover the spending in less than five years that was based on erroneous assumptions it was since corrected in good part thanks to reports that we

Produced and for the most recent announcement northvolt they used our own methodology which is much more realistic than the initial estimate in the case of Volkswagen the other one that that your report looked at as well uh was the government decision that dominated a lot of political debate around the home

Heating oil um and their decision to suspend the carbon tax on that one what will that cost this government well it could cost close to nothing because the suspension of the carbon tax on home heating fuel I is reducing the rebate that will be going back to households in

Provinces where the federal back stop regime applies so it could end up costing nothing to the feder federal government depending exactly how they they finance that but we don’t have all of the details yet but we our assumption is that it will be cost neutral for the

Government as it will reduce the rebates going to households and I know you’re apolitical but this is happening in a very political environment where there are even more asks now to do away with that carbon tax do you think that it will continue to have that formula where

Because the rebates that they’re putting out will be lower that it won’t cost that much even if they have to do more carve outs which this government has said they won’t be doing well we’ll have to wait and see how whether there will be further carve outs and how they’ll be

Designed and what will be the financing mechanism whether it’ll be through reducing the the rebates that are sent to households or whether it’ll be funded out of General Revenue so can’t speculate on that we haven’t seen anything on that front yet yeah and what are you expecting on Tuesday in the fall

Economic statement I mean are you expecting um them to really really sort of set that fiscal path if the Prime Minister today was saying that they always exercise uh fiscal responsibility do you expect or are you more hoping that you see that on Tuesday well what we’re looking for is having the

Government indicate what its fiscal anchor is so what’s the basis for its spending and taxing decisions you say anchor they’ have used the term guard rails in the past guard anchors almost seem like they’re gone now well they they s anchors from debt servicing cost as a

Share of revenues to a declining debt to GDP ratio so we’ll be looking at whether the anchor declining that to GDP Ratio or the guardrail whether that still holds and what’s the trajectory of that fiscal anchor because the Prime Minister today insisted that in the G7 Canada has

The lowest debt uh or debt or deficit I forget which one he had said um you know is that still a good anchor for people to sort of hang on to here that’s probably a very good good anchor comparing to G7 countries but there’s also G20 count so you have to be careful

The comparison group that you choose but the G7 we’re part of the G7 so it’s um as good a comparison as as any other and that’s true that compared to G7 peers we’re in good fiscal shape yeah okay and hopefully we will see how good that

Fiscal shape is on Tuesday Mr Eve jiru the parlamentary budget officer thank you so much for joining us as always appreciate it pleasure

Parliamentary Budget Officer Yves Giroux discusses the feds’ spending track record and whether he thinks they practice fiscal restraint.

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15 COMMENTS

  1. Yup, Canada is going to hell in a hand basket.Two more years of Trudeau will a lot of damage to Canada.Trudeau knows that he will loose in 2025, and he is going out with vengeance to inflict a lot of pain to Canadians!!!

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