THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, February 7, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 9:02 a.m. [ET] to study matters relating to federal estimates generally and other financial matters; and, in camera, to study the Main Estimates for the fiscal year ending March 31, 2023.
Senator Éric Forest (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Welcome senators, and welcome to all Canadians who are watching us on sencanada.ca.
[English]
My name is Éric Forest, senator from the province of Quebec, and I’m Deputy Chair of the Standing Senate Committee on National Finance.
[Translation]
I would like to inform you that our chair underwent eye surgery in mid-January. I will endeavour to replace him, with greater effort than talent, but rest assured that I will do my best.
[English]
This is a great opportunity for you to practise your French, as I will speak in French.
I would now like to go around the table and ask my colleagues to introduce themselves.
Senator Pate: Merci. I am Kim Pate, and I live here on the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
[Translation]
Senator Galvez: Good morning. Rosa Galvez, independent senator from Quebec.
Senator Gignac: Clément Gignac, a senator from Quebec.
[English]
Senator Duncan: Bon matin. My name is Patricia Duncan, senator from Yukon. Thank you.
Senator Bovey: I’m Patricia Bovey, senator from Manitoba.
Senator Boehm: Peter Boehm, Ontario.
Senator Smith: Larry Smith, Quebec.
[Translation]
Senator Cardozo: Good morning. I am Andrew Cardozo and I am a senator from Ontario.
[English]
Senator Dagenais: My name is Jean-Guy Dagenais, and I come from Quebec.
[Translation]
The Deputy Chair: Thank you. We are accompanied this morning, as always — which will help me do my job and conduct a good meeting — by Mireille K. Aubé, committee clerk, Sylvain Fleury, analyst, and Shaowei Pu. We are in good hands.
As per our general order of reference, we are pleased, as always, to welcome Mr. Yves Giroux, Parliamentary Budget Officer. Mr. Giroux is joined by Jason Jacques, Director General, Costing and Budgetary Analysis and Chief Financial Officer.
Welcome and thank you for accepting our invitation. It is always enlightening to have you here. Mr. Giroux, your testimony always helps us — and we thank you, on behalf of all Canadians — to focus on our committee’s four key principles of transparency, accountability, reliability and predictability.
[English]
We will now hear your opening remarks.
[Translation]
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Thank you. To follow up on your opening remarks, I am pleased to take this opportunity to practise my French.
Honourable senators, thank you for inviting us to appear before you today. We welcome the opportunity to discuss our analyses with you in the context of your study of matters relating to federal estimates generally and other financial matters.
I am accompanied today by Jason Jacques, Director General, Costing and Budgetary Analysis. He is also responsible for keeping the office’s finances in order as Chief Financial Officer.
The Parliamentary Budget Officer is mandated by law to provide independent, non-partisan analysis to assist parliamentarians in fulfilling their constitutional role of holding the government to account. In keeping with this mandate, my office publishes timely analyses of the government’s main and supplementary estimates. In its reports, it reviews the budgetary authorities sought to make expenditures announced in the federal budget and elsewhere, highlighting noteworthy problems and missing information, in order to assist parliamentarians and members of your committee in their consideration of the government’s appropriation bills.
Financial reports continue to be untimely for parliamentarians and the public to review the government’s spending plans. This year, the Public Accounts of Canada were tabled on October 27, seven months after the fiscal year end. Canada is still not meeting the advanced practice standard for financial reporting set out in the International Monetary Fund guidelines. This standard requires governments to publish their annual financial statements within six months. Parliamentarians may wish to consider requesting that the government publish Public Accounts and Departmental Performance Reports within a maximum of six months after the end of the fiscal year.
[English]
Once Supplementary Estimates (C) 2022-23 have been tabled, we will work diligently to make our analysis available to you as expeditiously as possible.
In addition to our estimates work, my office will continue to prepare reports and analysis on the state of the nation’s finances and economy. Next month, my office plans to release our Economic and Fiscal Outlook report. This report provides a baseline projection to help parliamentarians gauge potential economic and fiscal outcomes under current policy settings. Our last outlook was published in October.
Our upcoming report will present updated projections, taking into account increases in interest rates and other recent developments. My office is also planning to publish an independent cost estimate of the F-35 program.
Although the timelines for our analysis depend on the type and timing of the information provided by the Department of National Defence, we expect to release our report in the spring.
Jason and I would be pleased to respond to any questions you may have regarding our estimates analysis or other PBO work. Thank you.
The Deputy Chair: Thank you very much for your statement.
[Translation]
We will now proceed to questions. I would like to remind senators that they have a maximum of five minutes for the first round of questions. If time allows, you will have a maximum of three minutes for the second round. I would ask you to direct your questions to Mr. Giroux, and I would ask Mr. Giroux to respond succinctly. The clerk will notify me when your time is up.
I remind senators that the meeting will proceed in camera at 10:30 a.m. We will begin this round of questions with Senator Gignac.
Senator Gignac: Welcome, Mr. Giroux, and welcome to your colleague. Thank you for making yourselves available. As always, it is a pleasure to see you again.
I have two questions. The first one pertains to macroeconomics. A budget will be tabled in the next few weeks. You typically update your macroeconomic analysis, which is non-partisan. It provides the committee with insight as to the validity of the minister’s assumptions. I would like to know when you plan to table your report. Will there be significant changes?
As I recall, the last time you appeared before this committee, you were relatively optimistic that a recession could be avoided. But I understand that yesterday, the Bank of Canada released a survey that showed that the majority of Bay Street economists are a little more nervous and are even predicting negative growth for the coming year. Perhaps you could expand on your thoughts? Afterwards, I’ll have a second question.
Mr. Giroux: Thank you for the question, senator. I recall that when we last discussed the economic forecast, some committee members described our forecast as “optimistic.” At this time, we have not completed our analysis of the next economic and budget forecasts, but if all goes as planned, we will release them in the first week of March.
I don’t have the preliminary results yet. However, over the last few weeks certain economic indicators suggest that a soft landing is still possible and that a recession is not inevitable. Therefore, it is still possible to avoid it.
In fact, the International Monetary Fund predicts that most European Union economies will avoid a recession, with the notable exception of the United Kingdom. This suggests that a recession can still be avoided, despite the fact that many private sector economists are anticipating one. I can provide more detail once my colleagues and I have completed the necessary work on laying out our economic and fiscal forecasts.
Senator Gignac: As per the “rules of thumb” you recently released, you revised our GDP downward by 1%. Each percentage point of GDP revised downward has a $5-billion to $7-billion impact on the deficit. Is that the case?
Mr. Giroux: Yes.
Senator Gignac: Here is my second question. There will be a meeting today between the premiers and the Prime Minister to discuss health transfers. We don’t have a crystal ball. Nor are we privy to what will be offered.
However, I would like to understand how the Standing Senate Committee on National Finance could be called upon to review the offer to provinces. When we have to authorize appropriations, we do so, but in the case of appropriation acts that have already been passed, there is no need to do so.
According to various rumours, if I understand correctly, there would be two components. The first would be automatic under the health transfers, and we wouldn’t be required to vote on that, since the law has already been passed. The second would be negotiated on a per-province basis. In that case, will parliamentarians have to vote on it, or is it all covered by some kind of legislation?
I’m trying to make sense of it all. Will parliamentarians have to vote if there are bilateral agreements?
Mr. Giroux: I would say that regardless of how additional funds are transferred to provinces, parliamentarians will have to vote. There are two possible scenarios. The first is a legislative change to the statute that governs health transfers, since the transfers are already legislatively mandated.
However, if the government decides to improve them by amending this act, that would be a legislative amendment to be considered by parliamentarians. It could be part of an omnibus budget bill, or it could be a one-time legislative amendment, so it could be a bill. Also, as you mentioned, if there are one-off agreements, they could increase payments to provinces through different mechanisms.
We have historically seen trusts where amounts are paid out at the end of the fiscal year and disbursements are made over the years. This also requires a legislative amendment. There may also be a legislative increase to the parliamentary appropriation voted in each year, which again requires transparency or review by parliamentarians. This brings us back to the basic principle that no money can be disbursed without parliamentary approval, regardless of the mechanism used.
Senator Gignac: Thank you.
[English]
Senator Smith: Mr. Giroux, in 2017, the government introduced reforms to the estimates process by changing the Standing Orders of the House of Commons. As you know, these Standing Orders expired at the end of the Forty-second Parliament.
Based on your experience, do you believe the temporary reform process for estimates increase transparency and should the government consider bringing it back?
Mr. Giroux: The changes to the Standing Orders contributed to increased transparency because it allowed the Main Estimates to be tabled later than they normally are, which, in theory, could have allowed more of the budget items to be included in the mains. However, what we saw was budgets that were tabled still later. Budget items were not fully included in the mains, so it could have contributed to increased transparency and made your job as parliamentarians easier. But given that the government decided to table its budgets later, it didn’t result in the expected outcome of most, if not all, of the budget items being in the mains so that you, as parliamentarians, had an easier job of reconciling both documents.
I think there is still enormous scope to change the estimates and the budget process so that your job is made — I wouldn’t say easier — less difficult by having a budget that is tabled soon enough so that officials can include most budget items in the mains so that you see the budget, and then you see the Main Estimates, and you can see where budget initiatives are funded and how they are funded in the mains.
Right now, the process is totally upside down. We can see the mains, but the mains don’t include budget items.
Senator Smith: How would you suggest that the proper discipline could be implemented? Is there a magic wand that can make this work? If so, what is it?
Mr. Giroux: I don’t think it’s magic. I think it’s discipline and timeliness. I think a fixed window to table the budget and a window that would be soon enough in the process so that officials at Finance and Treasury Board Secretariat have time to include budget items in the mains would be a good way to achieve things.
For example, a budget in February and mains being tabled — I don’t know; they could talk to TBS officials — April 1. That would allow the budget initiatives to be reflected in the Main Estimates so that when the Main Estimates are tabled and are brought to this committee for study, you will see budget items reflected in the mains, and the Main Estimates would paint a more accurate picture of the government’s overall expenditure plans rather than being just a piecemeal and very partial approach.
Senator Smith: Without being critical of the government and leadership, who or what group should take that initiative to make it work? Is it the Minister of Finance? Where does the initiative start? It is a discipline and business of importance. I’m not trying to pick on anyone within government, but where does it start?
Mr. Giroux: The timing of the budget is the prerogative of the Minister of Finance and the Prime Minister, and the Main Estimates fall under the purview of the president of the Treasury Board. These are the three key players.
Senator Smith: Departmental results, which you’ve talked about, are our federal government’s attempt for accountability for the departments and agencies. As you’re quite aware and as you’ve noted in your reports on the estimates for several years, these reports are often incomplete, late or non-existent, as you talked about earlier. In the cases where they are published, many departments regularly failed to meet their targets.
In your view, is there some alternative forum that could be used to deliver the results in a more effective and timely manner?
Mr. Giroux: There are many ways to achieve that. First of all, the targets in the department results reports are determined in large part by the public servants responsible for delivering the programs themselves. So ADMs, assistant deputy ministers, and approved by deputy ministers, approved by ministers. But in my experience, ministers are not very well equipped to challenge their own officials — neither is the Treasury Board of Canada Secretariat equipped to challenge these targets — so we end up in a situation where it’s public servants who are responsible for delivering programs and set their own targets. And they usually set the bar not too high so that it doesn’t look too easy but neither too low. It’s fairly easy to achieve most of the time; yet, by their own assessment, they fail to deliver on many of these.
There is a system that is broken. The challenge function, those who challenge these estimates or these targets, are not very well equipped or don’t have the tools or the willingness to challenge them and ensure that the targets, the objectives themselves, are ambitious enough to make a meaningful difference. That’s one failure in the system, in my humble opinion.
Senator Smith: So this sounds like, in typical business, you would have people responsible for trying to improve, educate or set up some process so that you’re going to get the results that you need. Again, is this an opportunity for the leadership within governments and government departments to actually step up and set some simple plans in process. It’s all about execution. When it comes down to success, success depends on execution and the quality of the people that you have.
Is there an opportunity for the government to get going? Not to say that the public service is not competent. That’s not the point. The point is, how can you make it better?
Mr. Giroux: It’s clear that there is an opportunity to make it better. I’d be curious to see in the next Departmental Results Report what Passport Canada will claim are their achievements. The next time we see a Departmental Results Report, I wouldn’t be surprised if they claim some sort of success despite the disaster we’ve seen in the last couple of months.
Clearly, I think there is room for enhanced leadership to improve service delivery for Canadians.
[Translation]
Senator Boehm: Welcome, Mr. Giroux and Mr. Jacques.
[English]
I am following a bit along the lines expressed by my colleague, Senator Gignac. The Economist, in a recent issue, referred to “poly-crisis” or “poly-recovery,” because there is so much uncertainty among economists whether we will see a soft landing, or whether we are going to see a recession, or if we will see the recession first and then a soft landing or the reverse. As we sometimes characterize economics as the “dismal science,” it appears to be the case where there is a lot of uncertainty.
Growth is very slow. Employment rates are increasing. The U.S. economy is doing very well. China seems to have unblocked with its relaxation of its COVID lockdown. There seems to be more movement there; yet, there is still a war going on, and there are difficulties. If there is a downturn in the U.S., obviously that is going to impact us as well.
During deepest, darkest COVID, a number of us got together and formed the Senate Prosperity Action Group. We produced a report. We relied a lot, also, in a meeting with you and with others to look at elements. This is a question of fiscal anchors or at least guardrails. With debt-to-GDP increasing, and according to some of your earlier estimates, even a 1% increase in interest rates could add $10 billion to public debt charges. How would you project future development, and what do you think the government should do, given all of the expenditure that’s on the horizon?
I’m thinking particularly of discussions today on health.
Mr. Giroux: That’s a question that probably warrants a full meeting in and of itself, so I’ll try to be short here.
The government has decided to use as a fiscal anchor the declining debt-to-GDP ratio. However, there are immense pressures on government in the social area, of course, but also to increase health spending or health transfers as well as defence, to name just two big areas. This could make it difficult to keep the debt-to-GDP ratio declining or at least declining at a slower pace than what the government anticipated.
It could also result in the debt-service ratio going up, and it will probably go up if the government delivers on many of its promises and on pressures.
I think the government should make clear choices to ensure that the debt-to-GDP ratio continues to decline, because, as some have pointed out, focusing on the debt-service ratio, I don’t think, is the best fiscal anchor. The debt-service ratio is the proportion of the revenues devoted to servicing the debt, and the denominator in that ratio is tax revenue.
So it’s fairly easy to — fairly easy — it’s possible to have a debt-service ratio that is declining if you just increase tax rates. It doesn’t give a good picture, I think, of the health of the economy and the weight the government is imposing on the economy.
I think debt-to-GDP ratio that continues to decline so that public finances are ready to face the next crisis, whatever it is and whenever it happens, should be the priority to ensure that public finances remain sustainable.
Senator Boehm: Thank you.
Do you think that government — and I say “governments,” actually, including provincial governments — could look at new revenue sources? You mention a tax increase. There has been speculation about going back to increasing the GST and the revenues this would generate, as politically unpalatable as it might be. Do you have any thoughts on that?
Mr. Giroux: It’s a policy decision that governments will have to make. The federal government has already made some of these decisions, for example, by announcing a tax on share buybacks, corporations buying their own shares. We’ve estimated that this could generate about $3 billion over five years, if I’m not mistaken. That’s one aspect. There is also tax on luxury goods.
If governments wanted to increase tax rates, they could. The sales tax is one possibility, but there is also another possibility, which is applying more rigorously the current taxation, the Income Tax Act and the Excise Tax Act, by more targeted enforcement.
We heard in public news that the CRA doesn’t deem it worthy, appropriate or worth the effort to go after an alleged $15 billion in potential overpayments, which is a bit disconcerting when you hear that and the government is faced with a deficit. I think there is a call for better enforcement of existing legislation, but it’s also a clear possibility for governments to increase taxes if they want to generate more revenue. But it comes with drawbacks, obviously.
Senator Boehm: Thank you.
Senator Duncan: Thank you, again, Mr. Giroux and Mr. Jacques, for appearing before us. It’s nice to see you again.
Ministerial mandate letters contain the phrase “whole-of-government approach,” and it’s a term we hear a lot.
In our first meeting under this subject matter last year with the Auditor General, she appeared before us, and one of her concerns was:
. . . our audits have also shown that the government needs to take action to resolve long-standing and known problems, such as the lack of interdepartmental collaboration . . . .
We as parliamentarians and as members of this committee struggle to hold the government to account on behalf of Canadians with values of predictability, accountability, transparency and openness. Looking through the documents that are provided to us and that are publicly available, the subparagraph (b), for example, I can find a number of items funding the same program. It’s difficult to ensure that the public funds are spent on similar, yet slightly different, programs. This confuses recipients of public funding as to where to go for relevant project applications, because so much of it is application based. There can be a great deal of duplication. At the same, we must be cognizant that one size does not fit all in this country.
In the past, has your office done — or is it able to do in the future — an analysis of how much this lack of interdepartmental collaboration is actually costing the Government of Canada?
Mr. Giroux: You have great ideas for reports from my office, senator. Again, that’s something we could probably discuss for a full meeting.
In the past, we point out that there were some duplicates. For example, in SUPs, there was a significant amount for rapid tests, if I’m not mistaken, in two different pieces of legislation or appropriation. We flagged that as an issue of concern for parliamentarians. We could look at the potential savings from duplication, but, given that the Government of Canada is an enterprise of over $400 billion per year, it would be a significant undertaking.
Senator Duncan: Let’s take one example from today — health care funding. Canada is the fourteenth province at the table with regard to health care funding and fiduciary responsibility for First Nations and Inuit people. Is it possible for your department or for you to do an examination of where that funding is matched in provinces, or where it is underspent, or where there are gaps in the funding that Canada is providing in terms of health for First Nations in comparison with provinces?
Mr. Giroux: It would certainly be possible. The quality of that work, however, would be highly dependent on the information we would get, or could get, or that Indigenous services would be willing to share with us, as well as provinces. The difficulty in doing that work would be gathering the relevant information from the various levels of government. I am sure it exists. If it doesn’t exist, that would show an abysmal failure on the part of government departments, but I’m confident that data would exist. It may not be to the full extent that we would like, but there is certainly a good chunk of data that exists to undertake that type of work.
Senator Duncan: Who could request that study? Could First Nations themselves request it?
Mr. Giroux: A committee of the House or the Senate could request that.
Senator Duncan: Thank you very much I appreciate that.
[Translation]
The Deputy Chair: You were concise; you still have a little time left, Senator Duncan, but we will wait for the next round.
Senator Dagenais: Mr. Giroux, it is always a pleasure to have you here. My first question concerns the Bank of Canada. After advancing billions of dollars to the government at very low interest rates to deal with the economic crisis caused by the pandemic, the bank ran its first deficit in 88 years. We’re talking about a deficit of about $520 million, whereas the Bank of Canada has always had positive balance sheets. I imagine it will take years to make up the deficit.
How do you interpret the impact of this situation on the government’s finances? Will the government have to act to return the bank to normality? If so, what will that cost?
Mr. Giroux: That’s a very good question. It’s something other countries are dealing with as well, countries whose central banks took action similar to the Bank of Canada’s. Australia’s central bank responded with a large-scale government bond-buying program. The bank has obviously never gone into deficit before, but the situation was highly foreseeable.
The Bank of Canada sells banknotes valued at $20, $50 and $100, but they cost very little to produce, a few cents per note. That makes up a large share of the bank’s revenues and profits, in addition to its exchange market activity. Over the past few years, the bank engaged in massive bond-buying while interest rates were quite low. It did that to keep liquidity in the financial markets and make sure that interest rates stayed low throughout the crisis. With the rise in interest rates, the Bank of Canada owns bonds with a return of 1% to 1.5% but, itself, has to pay 4.5% interest on financial institution deposits. That means the bank is bringing in little revenue but paying a lot of interest, and the result is a deficit.
As the bank’s bonds are repaid or reach maturity, things will even out. Since the Bank of Canada is part of the Government of Canada’s reporting entity, when the bank does well profit-wise, it’s good for the government. It’s been that way ever since the Bank of Canada was established. When the bank has a deficit, it has a negative impact on the government’s deficit.
Nevertheless, it’s a temporary situation. The government can amend the legislation to allow the Bank of Canada to run deficits and to wipe them out as the bank returns to a profit position — which it should as long as the bank isn’t called upon to again intervene in financial markets because of a crisis, say. The situation should resolve itself in a few years’ time. As the Parliamentary Budget Officer, I’m not worried about the situation. It’s a natural consequence of the bank’s massive intervention and is in no way a reflection of mismanagement. The situation is unfortunately the result of actions that were necessary at the time.
Senator Dagenais: Now, I’d like to turn to immigration and refugee claimants. They represent a vast expense for the government, which keeps saying that it will bring in more of them. In fact, the Mayor of New York City, I believe, opted to pay for taxis and buses to send prospective refugee claimants to Canada more quickly, so we can expect more and more of them to arrive.
Another factor in the expense is how much the provinces expect to receive in reimbursement, since they do need to be reimbursed, especially Quebec given the Roxham Road situation. The federal government is currently in no hurry to reimburse that money. Has the documentation you’ve received helped you get a sense of how much it’s costing the government to deal with these immigration cases?
Mr. Giroux: I’ll answer that in two parts. You’re probably referring to the migrants crossing into Canada at Roxham Road.
Senator Dagenais: The gaping hole in the border, yes.
Mr. Giroux: In 2018 or 2019, we did a study on the provincial costs, when it was also a problem. I can’t recall the figures, but we had come up with an estimate of what the costs for the provinces were. Back then, Quebec was feeling the biggest impact, and Manitoba was impacted to a lesser extent. We haven’t done an update on the study, but it’s safe to assume that the costs are more or less the same.
Here’s the other part of my answer. We are in the process of estimating how many applications Immigration, Refugees and Citizenship Canada receives, or how much it costs to handle certain types of immigration applications. At this point, we are focusing on economic immigrants, not refugees. Are the seemingly systematic processing delays within the department due to a lack of resources or lack of productivity?
We were trying to get a sense of where things stood pre-pandemic and how much it cost to process economic immigration applications at that time. However, when we asked the department for the information, it told us that the pre-pandemic costs were covered by cabinet confidence. Our office will attempt to get additional information on that because it shouldn’t be secret or confidential. Nevertheless, some departments are reluctant to share information that should be fairly readily available.
Senator Dagenais: I’m a bit surprised to hear it referred to as a “cabinet confidence.”
Mr. Giroux: Me too.
[English]
Senator Bovey: I always find this very informative and interesting.
I want to pick up on what Senator Duncan asked you, and I’m going to flip it the other way around. I appreciate that her question was about the duplication of expenses between departments.
In my view, if there were more collaboration, there could be fewer expenses. Too many departments are siloed, and the work being done in one could positively affect the work of another. I’m specifically going to talk about Canadian Heritage.
My research over many years has proven how audiences who attend arts organizations live two years longer, cost the health system less, get out of hospital earlier after elective surgery, miss less work, and the list goes on and on. We also know that involving young people in programs out of schools with creative organizations, be it theatre, dance, whatever, has tremendously positive effects on crime rates for youth and reduces recidivism rates for youth. I could go on. That’s been my life. I can go on and talk about many other examples.
When are we going to take a look at the holistic approach of government to various activities which, in fact, could reduce societal needs and crises?
Mr. Giroux: That’s a very good question, senator. I don’t have an easy answer for that. I would point out, however, that in departmental results reports or departmental plans, the focus is very often on amounts spent and public servants hired. The results are often reported in terms having spent many millions or hundreds of millions. We know that it’s sometimes very often a necessary condition to hire public servants or spend amounts of money to deliver, but that’s not in and of itself the end. Departments still have work to do in terms of thinking about what it is that we want to achieve. Do we want to spend or do we want to get outcomes out of these expenditures? I think that is a very good place to start, when public servants, deputy ministers and ministers think about the program.
We still see that in announcements, that the government will invest or will spend that many millions to do this and that. But what will the results be?
I go back to the passports. We have hired that many hundreds of public servants. Okay, but, “When will I get my damn passport?” That’s the outcome, and that’s what we are after.
It’s one thing to go after the metrics like that, but the outcomes still are not front and centre in people’s minds when they are thinking about government programs.
Senator Bovey: From your perspective as Parliamentary Budget Officer, what role can you play to help measure or help encourage departments to measure those outcomes? They are truly significant. If I could find that out long before I was in the Senate, I don’t know why siloed departments can’t find that out.
Mr. Giroux: I can provide you with information and analysis so that you can hold the government to account. I can testify at committees like this and speak my mind and lose the only maybe two or three friends I have left in the public service, which I lost a long time ago, I think. I can help you hold the government to account, but I cannot do this just by myself. There has to be a willingness to receive that information and act on it.
Senator Bovey: I think there are societal savings and monetary savings that can be found if people decide to get out of their silos.
Senator Pate: Thank you very much, Mr. Giroux and Mr. Jacques, for all of your work and for always appearing before us and providing extremely useful advice.
One of the areas that your department focuses on is the independent analysis of the state of the nation’s finances, the government’s estimates and the Canadian economy. For that to be possible, as you have indicated, you have to have access to accurate and up-to-date information from the many departments and government organizations.
Do you have sufficient resources to do that? Also — I think you have already answered this, but I would like to provide you with an opportunity to elaborate — are you receiving the required information that you need in a timely fashion and with all the relevant information that you require or do you need to have further and better data in order to give fulsomer investigations and reports about the nation’s finances, not just to us but to be made publicly available to all parliamentarians and the public as well?
Mr. Giroux: Thank you, senator. When it comes to resources, I think I have sufficient resources to fulfill my mandate. Could I do with more resources? Probably, but I think we’re in the sweet spot where the office is big enough to respond to most requests, not all, and small enough to be nimble and agile and respond in a timely manner to requests. On the resource side, I think we’re okay.
When it comes to access to information, I would say it depends on the departments. There are pockets of excellence, and I would mention that the Department of Finance Canada and the Department of National Defence is another area where we get excellent collaboration. But there are other pockets where it’s much more difficult to get information.
In response to a question by Senator Dagenais, I mentioned that Immigration, Refugees and Citizenship Canada has alluded to secret information which I think should be public, such as how much it cost them to process immigration applications in the past. It’s not a cabinet confidence. Not because something was discussed at cabinet that you can’t disclose it, if it’s otherwise publicly available.
Sometimes we also encounter resistance from departments. For example, when we studied Bill C-13 on official languages, we asked for information. We got three letters from deputy ministers saying that the information is not public and to please forget it. When we made a public fuss about that, I got calls from deputy ministers asking me, “Would you please call us before making a fuss?” I said, “You sent me a letter. You said that I didn’t have access to that information, and now you want me to call you and say, “Are you sure you want me to take a hike?” So there are pockets of non-excellence.
Lastly, I will close with the Canada Revenue Agency, or CRA, where we have an information request that we sent in November on real estate investment trusts. It’s fairly straightforward, in my opinion, but every single time we have an interaction with them, we get incomplete information. It has to be vetted before sending us aggregate tax information. It’s vetted by the Commissioner of Revenue. And that is from the institution that said to the House committee that it’s not cost-effective to go after $15 billion of potential overspending of pandemic relief, but it’s time effective for them to review information requests that we make. It tells you where priorities are in some institutions.
Senator Pate: You have given us some idea, but what other data, in your opinion, would you need, and what could we do to assist? What could this committee recommend to assist you to better track and obtain the information that you need to provide us with the information that we’re seeking from you and to provide a more fulsome picture of the financial situation of the country?
Mr. Giroux: If I had a couple of wishes that I could get, Christmas gifts in advance, it would probably be legislative amendments so that CRA would stop hiding behind taxpayer confidentiality. For example, when we asked for information about real estate income trusts, I don’t really want to know information about a specific income trust.
For example, we asked the proportion of REITs, as we call them, that are foreign-based. I don’t want to have names, but they hide behind the fact that maybe we could guess which real estate income trusts this information is about, which is not what I’m after. They use that excuse to delay provision of information. Departments often use cabinet confidence as an excuse. However, because you talked about a Globe and Mail article at cabinet doesn’t mean it’s a secret. They use the fact that something was tabled at cabinet to prevent disclosure.
I don’t think they’re doing that at the upper echelons, but there’s still some misunderstanding at some levels in some departments. Legislative amendments would provide us with access to information despite the fact that it might be taxpayer information or cabinet confidence. Again, I’m dreaming here, in case somebody wants to be generous.
[Translation]
Senator Galvez: Thank you, Mr. Giroux and Mr. Jacques, for being here today and answering our questions.
[English]
I have two questions and I have five minutes, so distribute your answer as you wish. One concern is the financial cycle and the fiscal legislative amendments; the other is the economic situation and the economic outlook.
Consistent with your role and your mandate to promote fiscal transparencies, you recommended considering legislative amendments to the Financial Administration Act and you suggested three things there: move the required release date of the Public Accounts by three months, from December to September; require the corresponding resulting documents to be released no later than September 30; and then there was a third one.
Following what Senator Pate asked — and you are asking for gifts — what is the state of these amendments that you recommended? If it didn’t work, how can we make the request for them to pass this stronger or more aggressive? Today, you have used strong wording, like “The system is broken.” You have also said that, “The process is upside down.” That sounds like we need to do something about it. That’s my first question.
My second question is on the economic situation. We are talking about performance indicators, but in order to have a goal in performance indicators, we also need to know the causes. Right now, we are worried about inflation and this recession. Some people don’t agree with what the Bank of Canada is doing. When I look at the global economic outlook, the cost of living and the disruption of supply chains are some of the causes. But there are also natural disasters, failure to mitigate or to adapt to climate change and the erosion of the social fabric, especially with respect to public health. In Canada, I believe we should have a report card that states priorities. Instead of coming here and talking about everything at the same time, we could prioritize being more efficient in controlling this recession and inflation here in Canada. Thank you.
Mr. Giroux: Thank you, senator. I’m sorry for my harsh words, but at least I didn’t swear. I see that as success.
For your first question, I’ll ask Mr. Jacques to answer it.
Jason Jacques, Director General, Costing and Budgetary Analysis and Chief Financial Officer, Office of the Parliamentary Budget Officer: To the best of our knowledge, there have not been any legislative amendments tabled. Although Mr. Giroux has great insight into these matters, he is neither an elected member of the lower house nor an appointed member of the upper house, which means he can’t actually move the legislation.
From our perspective, going back to a point that Senator Smith raised earlier, there is a clear lack of discipline internally within the system with respect to the timing and the tabling of Public Accounts. In the fall, we saw the chief accountant for the public service indicate that it was entirely feasible to actually move up the date. He had already identified possibilities to move up the tabling date of Public Accounts to the end of September or early October, but, again, we see the Public Accounts tabled about six weeks after that. So the government and the public service simply is moving on it at this point. That speaks to the need for external discipline. Whether those be legislative amendments that are tabled by somebody and are actually put up for debate or amendments of standing orders. From our perspective, it’s warranted in this situation. Otherwise, Mr. Giroux wouldn’t have recommended it.
Mr. Giroux: With respect to the second part of your question, the economic situation and a report card on what should constitute priorities, I think the government already has the tools and instruments to explain what its priorities are. The Speech from the Throne is usually where the government outlines its priorities not only for economic growth but also for social cohesion and addressing issues that it deems important as well as budgets where it indicates what it will do to deliver on these priorities.
When you see a budget that focuses on specific areas, I think it outlines the government’s priorities. The absence of specific elements in these documents, namely, the Speech from the Throne and the budget, is an indication that these areas are not deemed priorities by the government. A report card to see the success and the progress that the government is making on these priorities is a good idea. The departmental results report should be closely linked to these priorities, but I don’t think departments do a stellar job in identifying which of their indicators are clearly related to the Speech from the Throne or the budget, which are government priorities.
That’s probably not a very concise and complete answer, but it’s because it’s quite a complex area.
[Translation]
Senator Cardozo: Thank you, Mr. Giroux and Mr. Jacques, for being here.
[English]
Let me follow up on the questions that Senator Gignac and others have asked about the health accord. What are the kinds of things that you will be looking at with the money going out the door now? They’re talking about big money. What kinds of things are you looking at in terms of value for money? What do you think we should be looking at?
Mr. Giroux: First, I’ll be looking at the amounts and whether they are such that they will have a significant impact on the fiscal track — that is, the government’s deficit — the surplus going forward and the duration of the agreements and whether or not conditions will be attached to some or all of the money such that some of the amounts could not be paid to provinces. We’ll be looking at any other conditions or ways that the money could be delivered, be it legislation — well, it will have to be some legislative format — or something that is less transparent and accountable, such as trusts, which we have seen in the past. We’ll be looking at the delivery vehicle as well as the fiscal impact and any conditions that are attached which could render the funding not accessible to some jurisdictions.
Senator Cardozo: In terms of the conditions, is it your practice to look at whether those conditions are met, given that the expenditures will be at the provincial level?
Mr. Giroux: Not typically. That would be more for the Auditor General as well as the provincial auditors general. Given the uniqueness of the health accord, it’s something we could look at, depending on the nature of these conditions. These could be stringent conditions or conditions that are statements of intention. If there is any accord, we’ll have to see what these are and what the fine print states.
Senator Cardozo: On that point about the Auditor General, how do you define the difference between your responsibility and the agency’s?
Mr. Giroux: That’s a good question that I often get asked. Usually the Auditor General will look at what happened in the past. Was the money well spent according to the rules, regulations and conditions that were laid out? That’s looking backwards.
Whereas, we will generally be looking forward. How much will something cost? What will the impact be on the economy, a department or specific group, so we tend to have a forward-looking approach.
Senator Cardozo: I don’t want this to come out rude, but you are watchdogs. Who watches the watchdog in your case? Who looks at whether you were accurate, or do you look at your own level of accuracy when you are making projections?
Mr. Giroux: That’s not rude at all. Whatever we do, all of our work is public on our website, and it’s tabled in both chambers. There are quite a number of stakeholders, who, as you can imagine, when we release a report that’s not to their satisfaction, can look and pour over our reports and look at inconsistencies, mistakes and errors. It’s happened in the past where inaccuracies were pointed out. We correct them when that happens.
The fact that our work is public serves as oversight, as well as questions from parliamentarians, who are not shy, usually, to challenge us, especially in the House of Commons where things can get a bit more partisan and, at times, heated.
Senator Cardozo: Unlike our very gentlemanly committee here.
Mr. Giroux: Exactly, the chamber of sober second thought.
Senator Cardozo: Indeed.
On immigration, the government has talked about its immigration levels and increasing the immigration levels. Senator Dagenais mentioned some of the issues around Roxham Road and refugees.
Do you look at the cost-benefit analysis of immigration? If we’re increasing immigration — and one of the big arguments is for economic purposes — did you provide a cost-benefit analysis of immigration?
Mr. Giroux: It’s not something we have done yet, but it’s something we are actively considering, given the stated intention to significantly increase the level of immigration, the intake, especially from the economic class.
It’s something that is fraught with challenges. It’s very difficult to assess benefit of increased immigration, because there are things that can be measured, for example, taxes paid and contributions to the labour market, but there are also a lot of intangibles, for example, vitality or social diversity and economic — not economic; I’m an economist, so I keep talking about economics — but also demographic benefits.
It’s difficult to fully assess the benefit. That is what I’m trying to say.
[Translation]
The Deputy Chair: Before we start the second round, I have a question for Mr. Giroux.
If we look at last year’s Supplementary Estimates (C), we see that the bill was passed on March 31, the last day of the fiscal year. Given the forecasts in the supplementary estimates, were the funds already spent on the assumption that we would pass the bill? I remember that, for the G7 summit, the government wanted to buy vehicles, which meant that they had to be ordered. Were the orders placed before the votes were authorized? The budget cycle makes me a bit uneasy. As senators Smith and Galvez pointed out, it doesn’t make sense to spend funds that won’t be authorized until the last day of the fiscal year.
Mr. Giroux: That’s a good question. It reminds me of something one of my old bosses used to say: Nothing would get done if it wasn’t at the last minute. My colleague Jason controls the purse strings at our office, so I’m going to let him answer that.
Mr. Jacques: Thank you for your question. Last year, the money was spent before the Senate passed the bill. That’s normal in the Government of Canada, where the money comes out of one pocket and goes into another, taking into account the possibility of cash management.
Mr. Giroux: Departments are basically managing risk, because they have indeed spent the funds in the hope that they will be authorized by Parliament. If ever Parliament didn’t authorize the funds, departments would have a big problem on their hands.
The Deputy Chair: It wouldn’t be acceptable in any other administration. In my old life, if I had managed the city that way, I would have been in big trouble.
I have one last really quick question. When the Main Estimates are being put together, are managers at each department given an objective? Are they told to keep the year’s budget increase to 1% or 2%, or in line with inflation, for instance? Are managers given a target?
Mr. Giroux: It all depends on the government in power. What is the direction from the government? What are its priorities? A minister or government can tell employees to keep budget increases to 1% or 0%. It may also depend on the sector, but overall, it’s determined by the budget. It all depends on the government’s priorities.
The Deputy Chair: We will now begin the second round. Honourable senators, please keep your questions succinct, and I would ask the witnesses to do the same when answering. You will have three minutes. We have 25 minutes until we move in camera, so I am counting on your diligence. Senator Gignac will start off the second round.
Senator Gignac: Mr. Giroux, as we know, the nature of your position makes you independent. When the finance minister is working on the budget, does she meet with you, or does she usually do so afterwards?
Mr. Giroux: Neither. I have no involvement in the budget. I ran into the Minister of Finance once, when we were appearing right after one another before the same House of Commons committee.
Senator Gignac: It goes without saying that we take comfort in your neutrality.
You are experienced enough to have covered a number of budgets. Some departments are known to be very prudent in their approach to budgeting, creating a reserve fund and using economic presumptions that are more conservative than the consensus would dictate. How would you describe the minister’s approach? Would you say it’s on the prudent side, or has the approach changed over the years? I’d like a comparison for the benefit of my fellow senators and I. If we look at the figures from the most recent Fall Economic Statement, we don’t see the contingency or prudence funds that we’ve seen with finance ministers in the past. In light of all of this economic uncertainty, would you recommend that the minister return to the use of contingency funds or prudence money, so to speak?
Mr. Giroux: You raise a good point. Prior to the economic update, we often heard the government as well as the finance minister and deputy prime minister say that they would be budgeting in anticipation of an economic downturn, setting funds aside. However, after the economic statement, I said publicly that the government had not set aside much of a reserve, having spent more than half of its wiggle room in the economic statement.
Is that a prudent approach to budgeting? Clearly, the answer is no. The budget does not include a reserve to cover contingencies. The government would say that it’s being prudent, because it’s putting forth a pessimistic outlook. However, simply mentioning that a scenario could be worse does not mean that the government is being prudent. In its economic statement, the government readily spent the wiggle room it had thanks to higher than expected economic performance and tax revenues. That means there isn’t much left in the budget to deal with unforeseen expenses or other pressures, including the health transfer increases requested by the provinces, large-scale support for Ukraine or higher defence expenditures. The government hasn’t shown any prudence in its economic and fiscal planning.
Senator Gignac: Would you be in favour of returning to the previous way of doing things, when governments and finance ministers kept reserves to ensure fiscal balance?
Mr. Giroux: That would be a good practice, but the fact that the government isn’t doing that shows it’s fine with running deficits larger than pre-pandemic levels.
[English]
Senator Smith: Mr. Giroux, in terms of urgency within government departments, we’ve talked about various departments and the issue of discipline. I just find it kind of astounding. Is the public aware of this? Is the messaging being blocked? Again, there are a lot of excellent people within the public service. That’s not the issue. The issue is the coordination of certain departments and certain groups. You talked about discipline.
How do you create a sense of urgency in a positive way so that constructive steps can be taken to try to improve the performance of key departments? Is there something that’s being done so that the Prime Minister and the group of senior ministers and senior public servants can sit at a table and say, okay, we have this many departments; these are the pros, these are the cons and we need to take some steps to set up some form of an action plan? Does that happen?
Mr. Giroux: I don’t know if that happens. Your question about whether the public is aware, I think if you ask anybody who has recently applied for a passport, Employment Insurance, Old Age Security and the list goes on, they are probably very well aware that the level of service Canadians are getting is not what one would expect from a world-class public service.
Senator Smith: You’ve mentioned three or four areas right off the top. If you have five, which two need to have immediate action taken?
Mr. Giroux: I think Employment Insurance, where we have never or rarely seen an unemployment rate so low, yet it takes weeks and weeks for people who claim EI to get their cheques. There needs to be a crack of the whip big time or a change of some sort in that department.
Another one is passports, which seem to be better but still not great. With respect to access to information requests, anybody who places an access to information request, it takes the time it takes and that’s it.
There are pockets of excellence, but there are also pockets of, I would say, nonchalance in the public service. They’re overwhelmed or something is not right. Not being inside the public service, unfortunately, I cannot pinpoint what is in need of fixing.
Senator Pate: Earlier you mentioned some of your upcoming reports, and I’m curious what other reports you have besides the F-35s and the usual reporting in response to the government’s financial agenda.
I’m also curious, in light of what you said about the government often hiding behind privacy laws, whether you have some idea of how we could get a more fulsome picture, in particular of how harder-to-reach populations, particularly those most impoverished, are being served and how we can assess. You mentioned the fact that the government is not going after the billions of dollars that they see as overpayment. Many of us are less concerned about the individual impoverished people but certainly the companies who massively benefit, as well as provinces who effectively have a financial windfall by clawing back resources from some of the most impoverished in this country.
Do you have any recommendations there about what we could be doing to assist you to do your job, as well as if there are other legislative amendments? And again, which reports are you looking at producing that you haven’t already mentioned?
Mr. Giroux: Thank you, senator. I mentioned the F-35s. We will be looking at that. We will also be looking at the immigration system, whether there are appropriate resources in the department that processes the economic stream. We don’t know the type of success we’ll have, given that we have received partial information, but we’ll try to do our best with what we are able to access.
We’ll be doing our usual economic and fiscal outlook, the mains and sups as well as our budget notes. Those are just a few key highlights. We’ll see what other initiatives the government puts in place.
With respect to potential legislative amendments, I think granting my office access to aggregate tax information would probably contribute to lifting some of the veil of secrecy and heavy processes that the CRA usually has to go through before sending us information. That would probably contribute to helping us assess whether more could be done to combat tax evasion, especially by high-net-worth individuals and multinational corporations, which sometimes do not pay a very significant portion of taxes compared to the income they declare — or generate, not necessarily declare.
[Translation]
The Deputy Chair: We now go to Senator Bovey for questions.
[English]
Senator Bovey: I have no questions. Thank you.
Senator Duncan: Thank you again for your appearance today, Mr. Giroux and Mr. Jacques.
I just want to follow up on the issue of collaboration and cooperation. When you receive the financial documents, there are things that are obvious to anyone who takes the time to read them. As an example from Supplementary Estimates (B), there’s funding for First Nations and Inuit policing activities, a separate line item of funding for a First Nations and Inuit policing program, and then there are transfers from the Department of Public Safety to the RCMP for First Nations community policing services.
Again, one size does not fit all in this country, so there could be very logical and important reasons why those three different line items fund different programs. But when there are obvious line items like this in the budget that seem to be similar, does your department look at those specifically? Do they leap out at you in terms of investigation for cooperation and collaboration?
Mr. Giroux: It’s usually not something we will do unless the amounts are new and significant. We flagged when there was funding in two different legislative vehicles for rapid testing. We were talking about hundreds of millions, if not billions of dollars. But if we were looking at specific areas, such as First Nations policing, we could be allocating significant resources, a large number of analysts to look at all of these areas.
Without a specific request to look at this area and that area, it’s something that we could be spending most of our time on, given the magnitude of government operations and the number of areas where there are multiple departments involved in seemingly the same area.
Senator Duncan: I may have missed it in our discussions today, but is there some way that we can recommend that the government have some interdepartmental collaboration and cooperation? Other than these whole-of-government mandate letters, how can we ensure the money is being spent with a whole-of-government approach? Is there a recommendation you’d have for us?
Mr. Giroux: The easy way would be to summon departmental officials responsible for these departments and ask them how they collaborate. I sincerely believe that with most of these multi-departmental areas, there will be some level of interdepartmental collaboration. Will it be optimal? I’m not convinced.
Do they fully take into consideration the fact that this department and other departments are also involved in the same area to ensure there is optimal delivery results or outcomes? I’m not convinced, because I haven’t looked at that myself.
Senator Duncan: Thank you.
Senator Galvez: I became a member of this committee not long ago, and I don’t know if it is my impression or if this is true, but I would like to have your opinion.
Most of the time, we concentrate on expenses. A lot of times we are talking about expenses in the fiscal cycle. Very few times do we talk about GDP, revenues, tax avoidance or tax evasion, cutting subsidies or royalties, or corporate tax. You talk about fiscal responsibility and sustainability in public finances. How can we attain that if we are focusing only on the expenses and we don’t look as much at the revenues?
I’m sure you consult with other countries. I’ve been talking with parliamentarians from many other countries, and they don’t have the same system. They have separate times in which they look at expenses and at revenues. Do you have any comment or opinion on that?
Mr. Giroux: I would say, senator, you’re demonstrating that being a member for a short time does not mean you cannot ask pertinent questions, and that’s a good demonstration of that. It’s easy to focus on expenditures, but the other side of the equation is revenues. It’s a sound practice of holding the government to account to also look at revenues and what it’s doing to maximize its revenues within the existing legislation, and asking questions as to whether there are other sources of revenues that would lead to fiscal outcomes or economic and social outcomes.
This is a very valid question because governments, in general, are using the tax system more and more over the last, I’d say, 20 or 30 years. They’re using the tax system to deliver on social and economic objectives, not only solely as a source of generating revenues. The revenue stream is also used more and more to deliver on policy objectives.
That’s a very appropriate line of questioning in a study for committees and parliamentarians.
Senator Galvez: Thank you.
[Translation]
Senator Dagenais: Mr. Giroux, the fact that Immigration, Refugees and Citizenship Canada classifies as secret what it’s spending to bring in immigrants raises red flags for me right away. You can count on me to keep digging and trying to get more information.
As far as the very questionable $100 million worth of contracts awarded to McKinsey since 2015 is concerned, have you submitted any access to information requests? If so, have you received a response indicating that the information is classified as secret? Do you intend to take a more in-depth look at the contracts?
Mr. Giroux: I didn’t ask questions about the reports or the contracts awarded to McKinsey. I didn’t ask to see the contracts. Since a House of Commons committee is already looking into it, I didn’t ask any of those questions so as not to duplicate what’s being done. Furthermore, I didn’t receive any requests to access those contracts or look into the issue. If a committee were to ask me to examine the matter, I would. For the time being, however, it’s not something I plan to do given all the attention being focused on the issue as it is.
Senator Dagenais: I have one last question. Senator Forest mentioned this. The funds are usually spent before we’ve examined the budget. The money is spent, and the study is conducted afterwards. There’s no denying it’s been a futile exercise in some cases. It doesn’t make sense for the government to spend the money and, then, ask us to examine the funds that it’s already spent. The spending is already a done deal. Given how long it takes to submit documents and open files, do you think things are done that way deliberately, or is it more about sloppy practice on the part of public servants?
Mr. Giroux: That’s a good question. In my view, when Parliament’s authorization is being sought to spend money, the government should show a bit more rigour and do it before the end of the fiscal year. It shouldn’t take until March 31 to get authorization to spend money that’s already been spent. I can appreciate that, from time to time, risks have to be managed or health and other demands come into play, and as a result, the funds need to be spent right away. However, that shouldn’t be standard practice. It’s a quirk of the supply system that we can find ourselves in this peculiar situation, where the last set of estimates are submitted at the end of February and finally approved at the very last minute. In an ideal world, that’s not how it would work.
[English]
Senator Cardozo: I want to ask you a question that follows up on what Senator Smith was talking about. You said earlier that some departments or agencies are better than others. What makes them better than others? Is it that the deputy head is particularly obstinate or doesn’t care, or is it the culture of the agency?
Mr. Giroux: I’d say it’s probably the culture of the agency and a lack of knowledge of the mandate of the office. They see a request sent to their minister and filtered through the system from the minister and deputy ministers, and even though our request for information quotes the section of the Parliament of Canada Act that allows us to get free and timely information and gives us the mandate to study specific things, they treat us like an ordinary entity from the outside. If it’s publicly available, yes, we’ll get it. If it’s not publicly available, forget it.
There is a culture of, I’d say, nonchalance, where they don’t take the time to look at whether it’s a parliamentary entity or not. “You’ll get it if we have it readily available. If not, it’s a secret.” There is some scope for shaking things up.
Senator Cardozo: Do the people in the system really not understand the role of the PBO?
Mr. Giroux: I think there are still pockets in the system even after more than 15 years of existence of the office.
Senator Cardozo: To build on Senator Smith’s point, I think a Senate committee can make that point probably better than a House committee, simply because I think a House committee, because of the minority parliament, the opposition parties will quickly say something like that, and that’s not any less legitimate because that’s how we elected our house. I think there may be a way in which a Senate committee can make that request in the non-partisan manner that you were mentioning earlier.
Mr. Giroux: I say it’s not a culture, but in some instances it’s a high aversion to risk. The CRA is a good example, where they want to avoid any potential disclosure of anything that would be detrimental to the agency. They take an extreme approach by having the [Technical difficulties] of everything that gets to me, which I think is overkill, but they see it otherwise.
Senator Cardozo: Thank you very much for today. I found it very interesting.
[Translation]
The Deputy Chair: I’m going to take a moment to ask one last question about the Income Tax Act. Originally, when it received Royal Assent, it was supposed to be in force for a specific period of time. For a great many years, governments have added to the act and made new regulations in an effort to access new tax fields.
As I see it, a tax regime should have three characteristics. First, it should be fair, meaning that everyone should be made to pay their fair share, taking into account their means. Second, it should be effective, meaning that it gives the government the ability to deliver the desired level of public services. Third, nowadays, it needs to be somewhat attractive. We are seeing that now with the labour shortage. Our economy is increasingly globalized, so we need to ensure that our tax regime can compete with those of our neighbours and competitors.
Don’t you think it’s time to do the heavy lifting and review the tax system?
Mr. Giroux: That’s a great question. If a committee or the government ever decided that a major streamlining of the tax system was in order, I would welcome it with open arms. People with some tax knowledge should be able to fill out their own tax returns without fear of making a big mistake. That’s also true for businesses and not-for-profit organizations, which have their own tax obligations. A comprehensive review to simplify the tax system is probably an excellent idea.
The Deputy Chair: That brings us to the end of the public portion of our meeting today, honourable senators. Thank you to Mr. Giroux and Mr. Jacques. It’s always nice to have you with us. Your insight gives us plenty of food for thought as we move forward and work towards the committee’s objectives. Thank you.
We will now suspend and move in camera.
(The committee continued in camera.)