THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, February 3, 2026
The Standing Senate Committee on National Finance met this day at 9 a.m. [ET] to examine and report on matters relating to federal estimates generally and other financial matters; and, in camera, to examine the subject matter of all of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Good morning. Welcome, honourable senators. Welcome back home, at work. I hope you had a good holiday season. To our friends from the Office of the Parliamentary Budget Officer, I hope you had a great holiday season as well.
To support the smooth operation of committee proceedings, the following guidelines must be observed by all participants to prevent audio feedback.
[English]
Keep your earpiece away from all microphones at all times. The microphone must not be touched. Activation and deactivation will be managed by the console operator. Avoid handling your earpiece while the microphone is active. The earpiece should either remain on the ear or be placed on the designated sticker at each seat.
Thank you for your cooperation.
[Translation]
I am having a hard time pronouncing the words. I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca. My name is Claude Carignan, senator from Quebec and chair of the Standing Senate Committee on National Finance. I would like to ask my colleagues to introduce themselves.
Senator Forest: Welcome. I am Éric Forest, independent senator from the Gulf region of Quebec.
Senator Gignac: Good morning. I am Clément Gignac from the Kennebec region of Quebec.
[English]
Senator Pupatello: Sandra Pupatello, senator from Ontario.
[Translation]
Senator Galvez: I am Rosa Galvez from Quebec.
Senator Cardozo: I am Andrew Cardozo from Ontario.
Senator Dalphond: I am Pierre Dalphond, independent senator from Quebec.
[English]
Senator Ross: Krista Ross from New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
[Translation]
Senator Hébert: I am Martine Hébert from Quebec.
The Chair: Honourable senators, today we are meeting under our general order of reference. For the second hour of our meeting today, we will have an in camera discussion on future business.
Joining us today from the Office of the Parliamentary Budget Officer, we welcome Jason Jacques, Acting Parliamentary Budget Officer; Mark Mahabir, director general, costing and budgetary analysis, and general counsel; Kristina Grinshpoon, director, financial analysis; Diarra Sourang, director, economic analysis; and Jason Stanton, advisor-analyst.
Welcome and thank you for accepting our invitation. Mr. Jacques, I invite you to make your opening remarks on your latest report, and then we will surely have questions.
Jason Jacques, Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Mr. Chair and distinguished members of the committee, thank you for inviting me to appear today. Since my last appearance before the committee in early December, we have published 10 reports directly related to Budget 2025 and matters studied by Parliament.
Among them is an initial assessment of the government’s planned spending cuts as part of the comprehensive expenditure review and the $1 trillion investment included in Budget 2025.
I will be happy to answer your questions, but let me first follow-up on our report on issues related to Budget 2025.
[English]
I wanted to follow up on previous testimony we provided to the committee regarding our Budget 2025 issues report. Members will recall we highlighted concerns regarding the government’s decision to abandon its debt-to-GDP fiscal anchor and its overly broad definition of “capital” as part of the new operating budget fiscal anchor.
Last month, the International Monetary Fund, or IMF, published its Article IV consultation report on Canada. The IMF also concluded that:
. . . a clear debt-to-GDP anchor should remain central to the fiscal framework, extending Canada’s strong tradition of fiscal prudence. . . .
In addition, it noted that the government’s new definition of “capital” remains “broad” and would benefit from closer alignment with existing standards used by Statistics Canada and other countries.
We encourage parliamentarians to follow the progress made by the government in implementing the International Monetary Fund’s recommendations.
I also wanted to seek the committee’s assistance in resolving a problem we currently have regarding information access. Consistent with the Parliament of Canada Act, last month, we requested information from all departments and agencies subject to the Comprehensive Expenditure Review. All but one lonely organization provided us with the information requested. The organization that did not get back to us is Library and Archives Canada. By our assessment, this organization is legally required to provide us with the information requested.
We respectfully ask the committee to consider a motion requiring this organization to provide us with the information immediately.
[Translation]
In closing, I would like to say that my office remains determined to provide Parliament with clear, timely and impartial analyses to help you in your study of federal expenses and budgetary policy.
We appreciate the committee’s constructive engagement in favour of transparency and accountability in the federal budget process. My colleagues and I will be happy to answer your questions.
The Chair: Thank you very much, Mr. Jacques.
Senator Forest: Thank you for joining us and welcome. In your document, you talk about $100 billion in investments generated by the federal government. I remember the Liberal Party’s election platform and the budget talked about $500 billion in additional private investment generated by federal investments. I think you tried to sort out the difference between $500 billion and $1 trillion. Can you explain where that difference comes from in terms of the major impact on contributing partners? I’m thinking particularly of municipalities. They carry a significant amount of debt, and this approach will add to that.
Diarra Sourang, Director, Economic Analysis, Office of the Parliamentary Budget Officer: Regarding the difference you’re talking about, I think we have to make a distinction between the figures in the Liberal Party platform and those in the budget. According to our information, those figures aren’t linked, which means that when the government says it’s going to invest $280 billion to support third parties, that’s the starting point on the way to the $1 trillion.
However, in reality, of that $280 billion, only $41 billion comes from the 2025 budget. The rest, about $140 billion, comes from measures already in place before the 2025 budget. It’s this $41 billion that, in our opinion, will generate about $126 billion over the next five years, from 2025-26 to 2029-30. Those two figures are the ones to keep in mind, that is the $41 billion in net investments coming from the budget, and the almost $126 billion that will be generated from total investments: $41 billion from the federal government, and $85 billion from the private sector or other levels of government.
Senator Forest: That means if we work a rule of three . . . Typically, federal government programs are divided into thirds, meaning a third from the federal government, a third from the provincial government, and a third from the municipal government. That doesn’t seem to have changed. Therefore, there isn’t much room in that $41 billion to generate private investment.
Ms. Sourang: That amount includes multiple programs, including infrastructure. In the case of infrastructure, the structure of thirds still applies, but for other programs that don’t necessarily have investment obligations from other levels of government, different ratios or multipliers are used.
Senator Forest: Have you made an analysis to determine what types of investments generate maximum benefits for public infrastructure, housing and public services, such as roads and highways?
Have you made an analysis to determine what type of infrastructure is most promising to increase the impact of the investment?
Ms. Sourang: We haven’t had the chance to do that in this study. The purpose of this note was really to explain where the $1 trillion of total investments announced came from, because there seemed to be some confusion, both in the private sector and with other stakeholders. We really wanted to shine a light on the relationship that exists, starting from the $280 billion announced leading to the $1 trillion in investments.
Senator Forest: In short, we’re mostly talking about programs and budgets that were already in place.
Ms. Sourang: Yes.
Senator Forest: You have to be quite the analyst to detect any new money injected in these types of objectives.
Ms. Sourang: That is indeed a lot of money that was already available, as well as supports that already existed. About $900 billion of the $1 trillion was already in the economy.
[English]
Senator Cardozo: Thank you for being here, Mr. Jacques and colleagues. My question is about youth unemployment. It may be specific. I do not know if you can help me here or will need to get back to us.
I would like you to confirm the way I am analyzing this: The youth unemployment rate is 14.1%, roughly twice that of the population at large. According to my calculations, that comes to about 370,000 young people.
In Budget 2025, the government once again has the Canada Summer Jobs program. For about $300 million this year and next year, there will be jobs for 100,000 but only for 8 weeks as opposed to 52 weeks — or even 16 weeks, which is how long full-time students are available for. Would you agree with those figures — 100,000 for 8 weeks as opposed to 370,000 for 52 weeks?
The point I’m making is that, from what I am seeing, we have a growing youth unemployment crisis. What we are doing is similar to the programs we have had for many years. They are addressing around 10% of the problem.
Mr. Jacques: The numbers you cited are ones we follow closely in terms of the total number of youth unemployed. The most recent number I’m familiar with is just over 400,000 kids between the ages of 15 and 24 who are looking for work and cannot find it.
In terms of the over 14% unemployment rate, it is more than double that of the population at large. It has come down a little for that segment, but it is still quite high, especially in comparison to where we were prior to the pandemic.
It is not the mandate of the office to comment on government policy or what the government should be doing.
From an academic research perspective — and I have a 17‑year-old son at home, so I feel this near and dear to my heart — where and how you start your career has a poignant and prominent influence over its trajectory. If you are not able to find that first job, or find a first job related to your studies, chances are your attachment to the labour force writ large over your lifetime — and certainly your lifetime earnings — will be lower. This means that there could potentially be an impact on the tax base, nominal GDP and productivity with respect to those individuals.
Sometimes, that is something that is forgotten. The current situation, obviously, is quite pernicious and challenging if you are one of those kids between the ages of 15 and 24. However, more broadly, if we look at the selfish interests of people in Ottawa and myself in wanting to see budgetary revenues go up, both now and over a longer period of time, making those investments and providing those supports now will potentially provide a substantial return.
Senator Cardozo: Yes, and it goes beyond that. Certainly, the pernicious part is their trajectory will not be as good as others. Given the rapid advancement of technology in the workplace, they get further left behind by not having that kind of technological work experience.
There are a couple of other programs, if I may, that deal with the Youth Employment and Skills Strategy and the Student Work Placement Program. There is also the Climate Corps, which only provides, if I am correct, 500 jobs.
My question is about expanding the program. What if the government took the summer jobs program and doubled the number of students, so instead of providing 100,000 jobs, it provided employment for 200,000, then provided 16 weeks instead of 8 weeks for every student — because you do not get much experience or earn much money in 8 weeks — and made the program eligible for non-students within that age? I would also argue that we should be looking at up to age 29, because people in that age group live in the same circumstances as younger people in terms of not having permanent jobs or homes and living with that same level of uncertainty. Would that not be an efficient way of expanding the program, given that thousands of people have applied for it? Both employers and employees have applied for it. The government has a way of going through these applications and getting the money. Would expanding the current program be an efficient way of employing more youth?
Mr. Jacques: It is a good question. That is outside the mandate and remit of the Parliamentary Budget Office.
That said, if you would like a cost estimate, I would encourage you to table or present a motion in the Senate. We would be happy to look at that proposal and potentially put some crunchier numbers around it for you.
Senator Cardozo: I’d be happy to do that. Thank you.
Senator Ross: Good morning. Thank you for being with us today.
Can you give me additional information on the cuts that would impact the Atlantic Canada Opportunities Agency, or ACOA? In Atlantic Canada, we are seeing layoffs and job losses. Do you have information on whether that is mostly attrition or layoffs and what programs will be cut?
One of the things that is a concern for me is that every $1 that ACOA invests usually leverages somewhere between $2 and $3 of other money. Do you have a sense of the loss to the economy if they are cutting some of that spending as well? Of the $1.5 billion in savings across all five agencies, how much of that will impact ACOA?
On another note — what information were you requesting from Library and Archives Canada that were you not able to obtain from them?
Mr. Jacques: I will start with your question with respect to ACOA. Then I will turn it over to my colleague Mr. Stanton regarding Library and Archives Canada.
We have detailed information from ACOA with respect to the cuts that they intend to put into effect across program area, along with full-time equivalent, or FTE, impacts and dollar impacts and the agency’s assessment of what those impacts will be. We asked them from a service-level perspective whether those impacts would effectively have a low-, medium- or high-risk impact on service levels for existing programs. ACOA has designated that information as confidential, so we are not necessarily in a position to share it at this point.
From our perspective, we have been clear that we do not agree with the confidentiality that departments have insisted upon. Having been before this committee in the past, we have highlighted research that indicates transparency works to everybody’s advantage when there are tough restraint measures or cuts going through the system, so parliamentarians can understand, discuss, debate and build buy-in from the broader public.
I understand, at this point, that there is additional information that the government intends to release over the coming weeks with respect to the cuts by program on ACOA, but they are all legitimate questions that are best put to ACOA.
Senator Ross: When you receive that information, if they are going to release some of it as not confidential, would you be able to share that with us?
Mr. Jacques: Absolutely. The nature of the confidentiality cited by the government at this point is that they need to let their staff know. From our perspective, as soon as the government tables the Main Estimates, which is linked to an appropriation bill which has the cuts included in it, it is under debate and discussion by Parliament. Any erstwhile confidentiality is put by the wayside because parliamentarians are debating it and will have to vote on cuts to ACOA across program lines, and people need to know what they are voting on.
Senator Ross: With respect to the programs that are being cut and the people who implement those programs, both of those pieces of information are very important in Atlantic Canada. Thank you.
Jason Stanton, Advisor-Analyst, Office of the Parliamentary Budget Officer: In terms of Library and Archives Canada, they did not provide us any additional information that wasn’t included in the budget. For all 83 organizations included as part of Annex 3 of the budget, we were seeking additional information on the savings by program, the dollar values by program, FTE reductions as well as any impact on service levels. All organizations responded; however, Library and Archives Canada did not provide any additional information that we were seeking for that breakout.
It is a consistent request that we ask all organizations. It was the only one that didn’t provide any of the additional details we were seeking.
Senator Ross: Was their response, “We will not provide it”? Or was it, “Here is what we have already shared; we’ll reshare this with you”?
Mr. Stanton: It was kind of the same language, primarily that they were not able to share due to not having notified their employees of potential cuts. That was the language they used.
Senator Ross: Were other departments from which you requested information that impacts employees able to share that information?
Mr. Stanton: It varied. A lot of organizations provided all the information that we had requested. Some provided some additional information, which we categorized as partially disclosed. In this case, Library and Archives Canada did not provide any additional information.
Certain organizations provided some additional details by program — some on FTEs, some on service level — but maybe not all of it. However, this is the only organization that did not provide anything additional that we had asked for.
Senator Ross: Thank you very much.
Senator Galvez: The government’s new Capital Budgeting Framework gives the deficit a makeover. We agree with that.
It recasts almost every dollar as an investment in the planned promises to balance day-to-day spending with revenues by 2029 while nearly doubling capital expenditures from $32 billion in 2024 to almost $60 billion by 2029-30. They promised to spur productivity and long-term growth. By then, 100% of the deficit will be branded as investment spending.
But when I read the budget, it did not offer a metric of return as we are talking about. As my colleague Senator Forest said, there is no measure of efficiency.
In particular, and more importantly, there is no test of climate alignment regarding whether this new $40 billion is building real resilience or simply deepening our debt.
Based on the data you were able to obtain, how would you rate the anticipated efficiency in comparison to current processes and approaches?
I am sure your office has done this exercise in the past for other budgets. I would like to know.
Based on the data that you received, what metric of return might be applied to this new way that the government is presenting the budget as an investment?
Then I have another question.
Mr. Jacques: Sure. Thank you for the question.
I will deftly avoid providing an overall rating regarding efficiency for the government’s budget — for a 400-plus page document with a lot of complex calculations.
That said, on our end, the rate of return for the investments is important. It is something that Diarra and I incorporate as a part of the macroeconomic forecast because a dollar of consumption spending is not equivalent to a dollar of investment spending.
Going back to a question that was asked earlier, not all investment spending is created equal, in the same way that not all consumption spending is created equal. If you give an additional dollar to a billionaire, the chances are they will save it and potentially put it into an offshore tax haven. If you give an additional dollar to someone who is below the poverty line, they will probably spend it on food or another essential, which definitely has a differential impact on the economy.
What I would suggest, given the interests of the committee, if there is a motion from the committee for us to undertake a more detailed study with respect to the differential rates of return on investment in the budget, that is something we would be very happy to undertake. I think it would be a natural extension of the work we already do within the office, especially given the government’s emphasis on capital, both the traditional definition and a broader definition.
Senator Galvez: I will note that for the future, to make these motions.
We know that 83 federal government organizations are targeted for spending reductions, and this was a horizontal cut.
I read in an op-ed that that is an inefficient way of doing cuts. Upon what do you base these horizontal cuts when more efficient cuts can be done?
What are your thoughts on that? Have you seen in other reduction planning how this can affect the gained efficiency of the new little investments we are putting on the table on this budget?
Mr. Jacques: Thank you for the question. I would speak to the motivation behind us sending out the request to 83 organizations to get a sense of what the cuts are, because, of course, as part of the restraint exercise, it is a big chunk of change. It is directly related to the government’s fiscal anchors and its ability to balance the operating budget over the next three years.
What we were most interested in whether there were plans in place. Based upon the $60 billion in savings and the 16,000‑plus — I guess 40,000 — full-time equivalents they are planning on potentially getting rid of, was there a plan in place to actually achieve that? That is important because if there isn’t a detailed plan from the bottom up that adds up to the public numbers in the budget, on our end, it gives us pause regarding whether it is a credible plan to actually achieve the savings.
At this point, we are still analyzing the figures provided by departments.
We’re not in a situation at this point where we can reconcile the total FTE savings. Two weeks ago, we published a quick summary based upon what departments have provided to us. Can we add up to the 16,000 FTE figure announced in the budget? We’re currently not in a position to do that, even with the additional information that has trickled in over the past two weeks. That certainly gives us pause regarding the plans that are in place.
The other thing we haven’t looked at because we haven’t had to at this point — but you asked about, and it is a very legitimate question — is around the service-level impacts because, of course, public servants do not hire themselves. Public servants are hired by the government to implement programs for Canadians.
We have asked questions about service-level impacts. Virtually every department and agency has responded to say that they will be low or limited.
From our perspective, we have simply tested and asked whether they have plans and if there is potentially a risk that, once these are being implemented, there will be some sort of pushback from the beneficiaries of these existing programs. The response from government departments is effectively no. That said, we have not seen those plans; we haven’t asked for those plans.
I would say, as an agent of Parliament, the questions we ask meet our narrow needs. Potentially, they won’t fully meet the needs of parliamentarians or the Senate in determining if there are cuts — to ACOA, for instance — whether those cuts will impact service levels in a way that the government did not fully anticipate.
That is something we have not looked at. That’s why we’re encouraging the government to be more transparent in releasing the information around the cutbacks program.
[Translation]
Senator Gignac: Welcome. We are studying Bill C-15, to which many amendments were made. You’ve published a number of reports since mid-December, including one on a change made to the Borrowing Authority Act. Under section 8 of this act, the government must table a report every three years on the amount of borrowed money, and if that amount changes, it explains why.
You issued a note saying there isn’t much explanation in the budget as to why the government is proposing to increase the debt ceiling after only 18 months. Can you speak to that? What rights do we have as parliamentarians to request more information on the matter? It’s quite unusual to raise so significantly the debt ceiling after such a short period of time.
[English]
Kristina Grinshpoon, Director, Fiscal Analysis Office of the Parliamentary Budget Officer: In terms of the Borrowing Authority Act, we have received information on the additional borrowing that the government is requesting and the breakdown of the incremental borrowing, whether it’s coming from the budget itself or coming from Crown corporations. We posted information on our blog post before we had received that information, so some of those numbers are a bit different based on when exactly those estimates were made.
In terms of the information that you could request, you could ask for additional information on where that borrowing is coming from. We can also provide additional information or any supplementary information on our blog post.
Senator Gignac: According to the new paper that you released on December 15, you mentioned it looked more like four years rather than three years. Usually, it’s based on three years, but you referenced that maybe this increase is so significant that it looks like it covers four fiscal years rather than three.
Ms. Grinshpoon: The borrowing is until 2028-29. That’s the date they requested. The government is anticipating that what they have asked for would be sufficient until 2028-29, including a buffer in there as well.
Senator Gignac: That’s my reading, too. It creates a significant buffer. If anything happens in the coming year or two, they could come back to us.
Ms. Grinshpoon: There is $141 billion —
Senator Gignac: So it’s not the first time? That happened during the pandemic as well?
Ms. Grinshpoon: There is usually a buffer when they set the borrowing amount, yes.
Senator Gignac: I am shifting topics now, but it’s related to financial viability. You have released a report — correct me if I’m wrong, but I think it was in mid-December as well — about the sustainability of public finance.
In the budget for 2022-2024, you mentioned that the government has a lot of manoeuvering room to spend. But that manoeuvering room is gone now with Budget 2025, defined as maintaining, over the long term, a stable debt-to-GDP ratio. If they want to maintain the debt-to-GDP ratio as stable over the next 25 years, all the manoeuvering room that you have posted in 2022-24 will be gone. Is that a correct reading?
Ms. Grinshpoon: In our report, we essentially took the government’s budget numbers and calculated the fiscal gap. We did show that there is very little fiscal gap remaining. As you said previously, they had a lot more fiscal room before, but Budget 2025 used a lot of that fiscal room. Now they have a lot less fiscal room to manoeuver.
Senator Gignac: I tried to reconcile, Mr. Chair, the statement from Mr. Pierre Leblanc on the conference call regarding the briefing of the new bill coming regarding the rebate of GST. They mentioned the government has manoeuvering room to allow the $3 billion this year and the $12 billion over the next five years. He mentioned that Canada has manoeuvering room for that and that they have a good financial situation.
I couldn’t agree or disagree. I think I could easily agree regarding the debt-to-GDP ratio. What is your reading? Could the government afford to go ahead with this new fiscal spending without putting our agency rating at risk? Is the debt-to-GDP ratio the best ratio to use, or is it better to use another ratio to compare with other OECD countries? I am just trying to assess whether the government is in a good financial situation. You are independent as the PBO, so I’m curious to have your interpretation of that.
[Translation]
Mr. Jacques: As Kristina said, based on our calculations, the federal government still has $4 billion worth of official room each year should it want to increase spending or implement revenue reduction measures. What is proposed in Bill C-19 represents about $2 billion a year, and there is still enough room for that.
Given the situation the federal government finds itself in, especially in the context where rating agencies are looking at Canada’s economy and debt level, it is always important to look at the big picture rather than just focusing on the federal government, because you also have to take the provinces into consideration. We also have to look at Canadians, because the level of debt per Canadian is the highest of the G7 countries. The interest rate paid per Canadian family is also the highest of the G7 countries. The business debt rate is the second highest.
Yes, it’s important to focus on what happened with the federal government, but it’s even more important to take into consideration the debt level across the country, because ultimately, we, the 41 million Canadian citizens, are responsible for the management of that debt.
Senator Gignac: Thank you.
Senator Dalphond: That was an excellent question from Senator Gignac. It covered some of the questions I had. I’d like to go further.
The chart at the end of your report shows that the leeway has been used, but you’re saying there’s still $4 billion worth of room left, including the $2 billion that will go to the provisions of Bill C-19. That will leave barely $2 billion from previous years before the debt exceeds the debt-to-GDP ratio that we don’t want to increase.
Are we putting ourselves in a situation where, let’s say there were issues with the renewal of the agreement with the Americans and there was a major immediate crisis, we would no longer have any room left?
Mr. Jacques: That’s a very good question. I have to say that’s the former federal government’s fiscal anchor; instead, the current government has decided to abandon this debt-to-GDP ratio fiscal anchor.
Senator Dalphond: They’ve abandoned the previous financial anchor.
Mr. Jacques: That’s right. Budget 2025 is a discussion with parliamentarians, for the most part.
There’s nothing magical about the debt-to-GDP ratio. We don’t think the most important element is the current situation, but rather the emerging trend and the ability of the federal government to react to the geopolitical shocks we’ve experienced, such as the current situation with the United States and customs tariffs. More debt equals less resilience for the Canadian economy and a reduced ability to react to shocks. I think it’s always important for economists to maintain a capacity to react to future shocks. That’s still the case.
Finally, I think I need to highlight the common threads with your colleague’s questions about delay. In terms of the debt-to-GDP ratio, there’s the debt, and there’s the GDP. The Government of Canada’s economic policy objective, as outlined in Budget 2025, is to increase the productivity growth rate of the Canadian economy by investing more. In theory, it should work, but there is still the issue of the government’s ability — and, therefore, for all Canadians — to implement these investments. That’s why we track the numbers every day.
Senator Dalphond: The leeway, then, is limited, and should there be a GDP contraction, we would have to automatically increase the debt ratio to keep offering the announced programs, which means the 41% would go up.
[English]
At the end of the day, Canada is one of the most indebted countries in the G7. Will that increase our record regarding that picture?
[Translation]
Mr. Jacques: The Government of Canada is not about to go bankrupt. There’s no risk of that at the moment. It has nothing to do with the current ratio; it’s more about trends.
Compared to previous years, the situation is much more difficult for the federal government, the provinces and Canadians, because of the financial context. We can also see this trend when we look at the other data provided for each family. That’s why, more than ever, we need to focus closely on every dollar spent and every dollar of revenue, because that revenue comes from Canadians.
Senator Dalphond: You conducted another study on returns of investment. The multiples that came out are very interesting in the private sector, with 4%, 6% and 8% in research and development. In the infrastructure and housing sector, the ratios are between 2% and 3%.
Most of the spending increases in the budget are not for the private sector; they’re for quasi-governmental sectors, such as those mentioned earlier. Are we wrong not to invest more directly into sectors that have multiples of six and eight?
Ms. Sourang: There’s a distinction to be made between these multiples and economic multipliers. Sectors such as infrastructure and residential investment, for example, have a larger economic multiplier, which means that they affect the economy or GDP more significantly than other types of investments, such as household consumer spending.
Senator Dalphond: Thank you.
[English]
Senator MacAdam: Thank you for being here.
Regarding the government’s new Capital Budgeting Framework, you have shared your view numerous times that the government’s definition of capital investments is overly expansive. Now the IMF’s 2025 report on Canada indicates that:
The new capital-budgeting framework is a welcome step toward sharpening the focus on productive investment, but further refinement is needed.
Do you have any indication of whether the government intends to modify your definitions in the Capital Budgeting Framework? Have you had any feedback or information on that?
Mr. Jacques: No, we haven’t. Based upon the number of times the International Monetary Fund is quoted in Budget 2025, it appears as if the government takes the IMF’s recommendations very seriously.
Senator MacAdam: We’ll have to wait and see.
Switching to the expenditure review, a number of questions were already asked. You did an interview with CTV recently. CRA was highlighted as one of the organizations that didn’t provide all the information you requested. Did you get everything you expected to get from the CRA in the end?
Mr. Jacques: We did.
Senator MacAdam: Okay. You indicated that you were able to substantiate approximately 80% of the plan with regard to the information you received from all the entities. Is it still 80%? I’m trying to get a sense of the additional work that you have to do.
Mr. Jacques: We’re a little above 80%. In the note, and as part of the testimony that we provided to a committee in the other house last week, we indicated the number was 80%.
Some additional information has been provided, most notably from the Canada Revenue Agency and also Parks Canada. We’re a little above 80%. We’re not at 100% yet. We’re still going through it. As you can imagine, it’s a substantial amount of information, so we’re still reviewing it.
Senator MacAdam: Thank you. I wanted to get more information on the responses from departments and agencies on the assessments that they completed on service levels, or the impact on service levels. You talked about this earlier. I wanted some clarity.
When you ask these entities for information on the impact on service level, are you looking for the existence of an assessment that they completed, or do you do any work on the assessments that they complete?
Mr. Jacques: We do not. We do not undertake a review or an analysis of the plans provided by the government around managing service-level impacts.
Again, at this point, we’re focused more on the fiscal side. The fiscal side is for deputy ministers of departments, who have a legal responsibility under the Financial Administration Act, to have a system of internal control in place in their departments when they sign off on the responses provided to our office, saying, for example, “We can cut 15% of our budget and there will be lower, limited service-level impacts.” We take that at face value.
Deputy ministers are serious people. They are familiar with their legal accountabilities. At this point, we haven’t seen a need to go into it. That said, it’s something that we will be following as the government starts to implement.
Step one for us is to assess, based upon the numbers that were in the budget, if there is anything underneath the hood. There appears to be. We’re not at 100%, but we’re close.
Step two is to follow the implementation and to see, once the details are actually provided and parliamentarians and the public can see what the plans are, is everybody willing to go ahead with it once the plans see the light of day?
Senator MacAdam: My other questions were asked. Thank you.
[Translation]
Senator Hébert: Thank you for being here today.
I’ll pick up where my colleague, Senator Galvez, left off on a topic that she discussed with you earlier. You said that you would provide an analysis of the rates of return on investment in the various components identified. This would indeed be something quite useful for us.
In your report on investments, you discuss the fact that you based your cost-sharing ratios on less optimistic assumptions. In the same vein, do you foresee, in this report or in the upcoming analysis, different scenarios that are more optimistic, more pessimistic or more conservative? If we take, for example, measures such as accelerated depreciation, we know that this will depend a great deal on companies’ responses. We know that they haven’t always been at the level that we had hoped for in the past. The same applies to support for research and development or housing construction.
Could you give us this analysis of the return on investments, this time based on the different possible scenarios that could arise, particularly in the current environment of uncertainty?
Mr. Jacques: Yes. With a motion from the committee to carry out this type of analysis, we would be pleased to do so. This Thursday, we’ll be publishing an analysis with a few scenarios, including the Government of Canada’s targets for reaching the NATO goal of 5% of GDP. We can certainly prepare scenarios.
Senator Hébert: Perfect. It would be a good idea. We’ll get back to you on that. My second question is as follows. In terms of expenditures, I understand that you asked the departments and agencies that you consulted to give you workforce figures. Do the figures in your report include what we call total compensation or total labour costs? I’ll give you an example. I think that you were already asked, Mr. Jacques, to provide an analysis of the expenses related to insurance costs.
Are these labour-related expenses included in the amounts provided, or are only salaries and benefits included in the amounts provided in your table?
Mr. Jacques: In the requests for information that we submitted to the departments, we didn’t ask specific questions about compensation details. At the same time, we have this type of data and we’re assessing it. In terms of the analysis that you referred to, we’re in the process of preparing it. It will be part of the analysis of our next economic and fiscal forecasts.
Senator Hébert: Thank you.
[English]
Senator Pupatello: I have one question regarding the Buy Canadian Policy. This budget is different. I’m not sure there has been another budget that expressly says how to spend, not just how much, and, in addition, where it’s accounted for, so there’s a difference in the capital and definition. That’s a bit new for this budget.
I’m curious: If you can track the success of the spending where it has been identified for Buy Canadian, do you need a motion to do that kind of an analysis to see if that, in fact, happens? Then you would identify where it isn’t and why it isn’t.
Mr. Jacques: With the data we currently have at our disposal, it would not be easy to track that. Thinking less about Buy Canadian and other types of spending, so other spending mandates provided by the government, and thinking more, for example, of Indigenous spending, there is nothing that we currently have that would allow us to do that. It’s an interesting question, though.
With a motion —
Senator Pupatello: Then the money that comes from the federal government through this budget that leverages other levels of government funding would, I’m assuming, also require Buy Canadian, regardless of whether that province has also enacted that, and some have. Some are already doing that. Then, because the government is going into the municipal and regional levels to match or hand over the money for them to spend, that also hooks that spend into Buy Canadian. How would you track that given you are looking at where it’s landing? It’s not just an amount when it comes to capital, for example; you’re getting into the policy of it. In this case, how do you track how it’s spent?
Mr. Jacques: Given that it’s a new policy, as a first step, I would use the economic and fiscal model we currently have in place. Some variables we track as part of the economic model include how much of public sector or government spending, consumption and investment draws upon the Canadian economy versus how much flows outside it. If there is a meaningful impact as a result of this policy across the entire Canadian economy, we should see those numbers change. There should be an inflection point, so in the data that is being pulled together from Statistics Canada, we should see that historical trend based upon what we’ve seen in the past and where we are in the economy, and there should be some sort of inflection point.
Senator Pupatello: But we have a shrinking economy. It is going to be a net figure as opposed to knowing that spend is actually causing an internal spend.
Mr. Jacques: I understand you on that.
Senator Pupatello: It’s too macro, I think, in that way.
Mr. Jacques: We could start with that. The first-best breakdown, if you have infinite time and money, is to do a detailed bottom-up analysis, and, of course, my colleagues at Public Services and Procurement Canada are probably now feeling a little bit sick as I say this. However, we could ask them to share the detailed data as part of the implementation or their real-time evaluation of the policy. We would love to look at it. We would need a motion from the committee because it is very much on the fringe of our mandate. It’s moving into ex post evaluation, which is something that would probably fit better in the Auditor General’s mandate rather than ours.
As a first-best, part of all the investment activity that the government has highlighted in Budget 2025, the government believes and has used public language saying that we are at an inflection point. What we have seen in the past around the amount of investment in the economy as a result of federal, provincial and other activity is going to change, so we’re going to see growth rates in investment tilt upward, productivity increase, GDP or growth increase and standards of living increase in turn. That’s something we are following carefully to see if what will happen over the next 6, 12 or 18 months will be different than what we have seen in the past. That’s something we can certainly highlight in our upcoming economic and fiscal outlook for you.
Senator Pupatello: — motion, chair. Thank you.
The Chair: We will have a couple of motions. They have been noted, and we will discuss them at the next meeting.
[Translation]
I have a question about the workforce reduction. You seem to have had difficulty obtaining information on the workforce. However, at the same time, Treasury Board prepared a table where we can track the development of reductions or notices of reductions.
If we look at the table, we can see, for example, that on January 30, 21,181 non-executives and only 882 executives were notified that a position was affected or likely to be affected. When we look at the number of positions affected by the reduction, we see 15,755 non-executives and only 642 executives. There appears to be a proportion problem when it comes to the reduction for executives versus non-executives. It seems that front-line positions are being cut more than executive positions. Have you noticed this? There has been an increase in the workforce in recent years, but there have also been salary increases. There are percentages allocated each year, but there are also classifications.
We received this information in response to my question about the number of executives earning more than $150,000 in 2021 and 2025. We were told that, in the EX-01 category, five executives earned $150,000 or more in 2021, and 2,978 did so in 2025. In the EX-02 category, six executives earned $150,000 or more in 2021, and 1,935 did so in 2025.
So, clearly, management costs have increased in terms of both workforce and salaries. If we want to operate efficiently, I’m surprised to see that so few executives are affected compared to unionized front-line employees. Have you noticed this? Have I misread something? Do you intend to look into this further?
Mr. Jacques: We saw the figures published by the Treasury Board Secretariat last week. I should note that they published “positions” instead of “full-time equivalents.”
It isn’t clear that some people work part time, not equivalent time. I imagine that most of the management employees work full time. This is noteworthy to us. When I saw this, I immediately had some questions. The 2025 budget included figures published by the Government of Canada stating that the government planned to reduce the workforce by 16,000 full-time equivalents during this fiscal year. For our figures, we asked the same question. We have nearly 13,000 positions. With the Treasury Board Secretariat data, the number is much higher than this. I realized that these were people rather than full-time equivalents. These figures are intertwined.
I can also say — and I said this last week before another committee in the other place — that the Treasury Board Secretariat informed all deputy ministers — and this includes our organization — of the reduction in executive positions in the public service. In general, there was a request to reduce the number of executive positions in each department by 12% overall. There was also an incredibly detailed notice, which I had never seen before, regarding the number of executive positions at a certain level and the expectations regarding the levels of responsibility. That was also something new.
The Chair: What we can clearly see in the figures published . . . Normally, we try to reduce the number of layers in management to ensure fairly direct access between the front line and the decision-maker. This isn’t reflected in the figures. Perhaps this will change as a result of the directives that you referred to. At the moment, based on the current results, the process seems to be targeting front-line employees rather than executives.
Mr. Jacques: Based on your current figures and the official figures published, yes. It’s necessary to show greater transparency so that we can work with the same figures and get more clarity. In my opinion, perhaps your questions should be directed to the President of the Treasury Board and the person responsible for managing human resources policies for the Government of Canada. They seem to have plans.
The Chair: We’ll certainly ask that question. Thank you. They have the question. If they listen, I imagine that they’ll have the answer. We’re finished. In the interest of fairness, I cut Senator Forest off sooner than everyone else. Senator, you had less time and you had a second question. With your permission, honourable senators, I’ll ask Senator Forest to proceed with his second question. Everyone else had six or seven minutes, and you had four minutes.
Senator Forest: Thank you for your generosity. The overall goal is to reduce the federal public service to 330,000 employees by 2028–2029. When we look at the significant increase in the public service in recent years, in addition to the increase in budgets for consultants, do you think that we can achieve this goal with a minimal impact on our services? I’m thinking in particular of the Canada Revenue Agency and the services that issue passports and visas. It seems to me that something is wrong.
Mr. Jacques: We’ll see. The data that we’ve now obtained from the 82 departments clearly shows that the overall impact will be minimal or negligible. We’ve already said in the past — I think that it was to your committee — that, when it comes to cuts and reductions, it’s absurd to simply reduce the number of people or the number of consultants and to believe that the same level of activity can be maintained, barring a miracle of technology.
In all likelihood, as we’ve seen in the past, something will give way. It’s important for us to maintain transparency, especially for your committee, so that you can study the budget plans in detail. If there really is a plan to implement, over the next five years, $60 billion in cuts that will have a minimal impact across Canada, that’s fine. However, the Government of Canada must put the plan on the table.
The Chair: I would like to thank Mr. Jacques and his colleagues. It’s a pleasure to have you here. We appreciate your availability and your detailed answers to our questions. We’re grateful to you. We wish you a happy February and a wonderful spring. We hope to see you again in the same position, without the word “interim” in your title.
(The committee continued in camera.)