Parliamentary Budget Officer Kevin Page, the man whose reports have been politically explosive to the federal government, is standing up for his office’s track record after members of the government recently criticized him and raised questions about his personal judgment and impartiality.Mr. Page recently accepted an invitation to present his office’s latest report on fiscal sustainability at the Vancouver Island University on Oct. 11. He said he believed that the event was non-partisan, but at the last minute it was brought to his attention by a reporter with The Globe and Mail that it was organized by the university’s Young Liberals and the party’s local riding association as a party fundraiser. While working on the story, The Globe and Mail subsequently received an email from the event organizer, Mike McDowall, also vice-president of the federal Liberal association for Nanaimo-Alberni, to say that the plans had changed and that all proceeds would go to pay for costs and any other profits raised would go to the local Nanaimo food bank.
When it was revealed that the event’s proceeds were intended to raise funds for the Liberal Party, Mr. Page made his participation conditional on the funds being directed to the local food bank. As media scrutiny intensified, Mr. Page cancelled his involvement.
“In terms of going forward, this can’t happen again. We can’t afford to have this happen again,” said Mr. Page, who intends to formalize the terms and conditions for future public engagements by his office. “We must have done 100 presentations from coast to coast and we’ve never experienced anything like this before. We will never do something that’s political in nature. We just don’t.”
The Globe and Mail ran the story on Oct. 11. Headlined, “Kevin Page event raises eyebrows—and sends Liberals scrambling,” the story also quoted Finance Minister Jim Flaherty’s (Whitby-Oshawa, Ont.) director of communications, Chisolm Pothier, who described Mr. Page’s planned appearance as “deeply disappointing” and said it called into question the neutrality of his position. “One would think he would know better,” Mr. Pothier told The Globe.
The Globe and Mail story was picked up by other media and followed over the next few days.
Bill Stewart, president of the Nanaimo-Alberni federal Liberal riding association, publicly apologized for the misunderstanding in a letter to the editor on Oct. 14 in The Nanaimo News Bulletin, and said Mr. Page was “entirely blameless.”
Last week, Mr. Page said he receives several requests per month to participate in speaking engagements, and his office has always reviewed the details of invitations. In the future, he said, the PBO intends to do greater due diligence.
Before Mr. Stewart publicly addressed the controversy on Oct. 14, other members of the government began to question Mr. Page’s impartiality in scrutinizing federal fiscal management. A memo circulated through a Conservative Party mailing list declared that the Parliamentary Budget Officer needed “to explain how he came to make such a major lapse in judgment.”
“Mr. Page has hurt his ability to function as an independent official to whom all Members of Parliament can look to for support,” the memo went on to state.
Conservative MP Dean Del Mastro (Peterborough, Ont.), Parliamentary secretary to the Prime Minister, downplayed the memo’s tone in The Globe and Mail on Oct. 12, but he questioned the objectivity of the PBO reporting. He said that the PBO forecasts are made to “grab attention” and cast doubt on work done by the Finance Department.
Mr. Page said his only disappointment was having to cancel an opportunity to speak at Vancouver Island University, which is one of Canada’s newest post-secondary institutions.
“People question my judgment. Our judgment was we went to present a report on fiscal sustainability in an open, non-partisan event at a university, and then we found out it was something different,” Mr. Page explained last week in a wide-ranging interview with The Hill Times. “I think that judgment was solid. As soon as we found out that someone had done something without our knowledge and beyond our control, we immediately acted to correct it. I think again, that shows good judgment.”
The real issue of judgment, said Mr. Page, is in the government’s failure to publicly report on Canada’s long-term fiscal sustainability since pledging to do so in 2007. At 36 per cent of GDP, Canada boasts one of the lowest debt-to-GDP ratios in the OECD, and the lowest among G7 nations—a point of pride for the federal government. However, the country’s public debt accounted for only 25 per cent of GDP in 2007. According to the PBO’s latest report, governments at all levels will face some very tough decisions if they’re going to reverse the trend of debt outpacing GDP growth.
Media scrutiny of Mr. Page’s apparent participation in a Liberal fundraiser has overshadowed the PBO’s 2011 Fiscal Sustainability Report, released at the end of September. According to the report, federal and provincial governments would need to permanently free up $46-billion (2.7 per cent of GDP) through some combination of spending cuts and tax increases if Canada is to remain fiscally sustainable.
The report cites Canada’s aging population as a leading factor in projected fiscal unsustainability. An increasing number of Canadians retiring puts “downward pressure” on revenues, and “upward pressure” on the social services provided to seniors. In other words, costs are rising, revenues are declining, and federal and provincial governments need to begin addressing the problem now if Canada is to avoid the structural debt problems that the EU and U.S. already face today.
This is the first year that Canada’s baby boomers begin to enter retirement age. According to Statistics Canada, roughly 14 per cent of the population is currently over the age of 65, but that share is expected rise to 25 per cent in the next 20 years.
“This is not one of these issues where you don’t have to worry about it because it’s way down the road,” said Mr. Page. “This is the stuff you have to start making decisions on now. Negotiating health care expenditures, future equalization, future expenditures for social transfers. If these are long-term accords, you have to have this analysis on the table.”
Mr. Page speculated that his office’s latest report has implications for federal-provincial transfer negotiations, and it’s made Ottawa uneasy. The rapid increase in the percentage of seniors in the coming decades is expected to be especially strenuous on the health-care system, and the health transfer payments from the federal government to the provinces and territories will be revisited when the Canadian Health Accord expires in 2014.
There is a rivalry between the Parliamentary Budget Office and the Finance Department.
In September, an article by Bill Curry of The Globe and Mail found that the Finance Department’s deficit/surplus projections were more accurate than the PBO’s in nine out of 15 forecasts—a record that Mr. Flaherty is aware of.
“His analysis has not been as strong as the analysis by the Department of Finance the majority of the time,” Mr. Flaherty told media after an appearance before the Senate Committee on National Finance last week. “Some of his assumptions have not been accurate. I’m always concerned about accuracy.”
Mr. Flaherty said the Parliamentary Budget Officer “performs an important function,” but he would not comment on whether or not he believed Mr. Page was partisan, as had been insinuated in Conservative circles in previous weeks, when asked by The Hill Times last week.
Mr. Flaherty also acknowledged the difficult decisions presented by Mr. Page’s long-term report, but turned the attention to the government’s “medium-term plan to get back to a balanced budget,” a plan which Mr. Flaherty said that he is satisfied with.
While headlines may have given the edge to the Finance Department, the details of The Globe report found that between 2008 and 2011 the average margin of error in Finance Department forecasts was $12.6-billion, while the average margin of error for PBO forecasts was $13.2-billion. The size of the errors is due to the instability caused by the recession in 2009-10 and 2010-11. The difference in the respective averages amounts to $600-million—a negligible figure when forecasting budgets in excess of $270-billion.
Moreover, providing a second set of numbers to the Finance Department’s short and mid-term budget forecasting has become only half of the PBO’s work. Since becoming the Canada’s first Parliamentary budget officer in 2008, Mr. Page’s office, with a current staff of 12 and an annual budget of $2.8-million, has produced explosive reports on the cost of Canada’s military involvement in Afghanistan, the costs of buying new F-35 fighter jets, the funding requirements for First Nations schools, and the impact of financial support for the automotive sector during the last recession.
“When we originally took the job, we thought we’d be a second data point, but in some cases we’ve almost become the only data point, so I think that’s created friction,” Mr. Page observed. “We always think we have the easier job in many ways, whereas Parliamentarians have to make priorities and take policy directions. We provide some numbers, some context around the decision-making. While that’s important, they still have the tougher job.”
“To look at the record of Mr. Page, I think it would be difficult for the government to criticize him about his performance,” said NDP leadership hopeful Paul Dewar (Ottawa Centre, Ont.), who recounted the importance of the 2008 PBO’s cost assessment on the Afghan war. “He had actually given us something, where the government had given us nothing. It’s rich for the government to say Mr. Page is a little off, or he’s not up to the job, when something as substantive as the war, they couldn’t give us any numbers at all.”
Mr. Dewar called the recent criticisms of Mr. Page’s impartiality by the government “disingenuous,” and said that any discrepancies between the two agencies’ estimates could be easily attributed to the PBO having less resources, and less access to information.
Last fall, Mr. Dewar introduced a private member’s bill, the Strengthening Fiscal Transparency Act, to make the Parliamentary budget office an independent officer of Parliament. The position is currently classified as an employee of the Library of Parliament. The amendment would have given Mr. Page and future Parliament Budget Officers greater discretion and independence. It would have also extended the term of future officers from five years to seven years, and established a selection process that would involve all recognized party leaders from both Houses of Parliament.
That bill died on the Order Paper when the election was called in the spring, but Mr. Dewar said that his colleague and potential leadership challenger Peggy Nash (Parkdale-High Park, Ont.) was considering reintroducing the legislation when she is given the opportunity to introduce a private member’s bill.
“The office itself requires strengthening. This is to avoid this kind of attack from government,” said Mr. Dewar. “We wanted someone who was going to give us the goods, and that’s what the office was about. What ended up happening is that when the office was set up, it was actually not given full independence, that’s why it’s important and why I put the bill forward before.”
For Mr. Page, the politic fall-out from his work comes with the territory.
“I think the PBO represents a bit of a change for the town. I don’t think everyone anticipated how this would unfold,” Mr. Page told The Hill Times. “Ironically, when this started the criticism was from opposition members questioning how I could possibly be unbiased if I was appointed by the Prime Minister and had worked for the Prime Minister before. I still haven’t lost sight of that.”
Origin
Source: Hill Times
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