Last week, Mr. Page called on the feds to produce findings that Old Age Security is unsustainable after renewed attacks on his credibility by Finance Minister Jim Flaherty (Whitby-Oshawa, Ont.), and he has turned his attention to producing a cost analysis of the federal government’s controversial omnibus crime bill.
Mr. Flaherty recently blasted the PBO’s OAS report for contradicting the office’s fall 2011 Fiscal Sustainability Report, while members of the opposition have used it as fodder in charging the government with manufacturing a crisis over the sustainability of Canada’s pension system.
Last week, Mr. Page responded to criticisms in an open letter to Parliamentarians. The four-page letter details the PBO’s methodology in analysing fiscal sustainability and challenges the government to improve the transparency and accountability of its own budget process.
Mr. Page concludes the letter by calling on the federal government to publicly release its estimates and assumptions for fiscal forecasting, and follow through on its promise in the 2007 budget to provide “a comprehensive fiscal sustainability and intergenerational report” and delivers “a broad analysis of current and future demographic changes and the implication of these changes for Canada’s long-run economic and fiscal outlook.”
The reason for the apparent contradiction between the PBO’s fall 2011 Fiscal Sustainability Report and latest analysis of OAS, said Mr. Page, is the “major decision” on the Canada Health Transfer announced by Mr. Flaherty on Dec. 19.
“This was a major offloading to the provinces with a stroke of the pen, with no major policy paper, which made the feds fiscally sustainable by definition,” Mr. Page explained last week in an interview with The Hill Times.
The PBO’s fall 2011 Fiscal Sustainability Report stated that because of demographic and economic trends “the current federal and provincial-territorial fiscal structure is not sustainable.”
Fiscal unsustainability is characterized by the growth in debt outpacing the growth in GDP. The PBO report estimated that “permanent and immediate fiscal actions—either through increased taxes or reduced program spending, or some combination of both—amounting to 2.7 per cent of GDP annually” were needed to return the federal government to long-term fiscal sustainability.
But with Mr. Flaherty’s December announcement on the Canada Health Transfer, transfers from the federal government to the provinces and territories will increase based on a three-year rolling average of nominal GDP growth beginning in 2017-2018. Health transfers currently increase at a rate of 6 per cent annually. PBO analysis of the change in the CHT escalator estimated that the change would reduce the escalator below four per cent between 2017 and 2024, and transfer $30-billion in health care costs to provincial and territorial coffers.
“We just updated our work,” Mr. Page explained. “There was nothing new in the latest paper on Old Age Security. The big transition after our second 2011 fiscal sustainability report was the Canada Health Transfer decision.”
Members of the government wasted no time in pouncing on the apparent contradiction.
“Last February, he told the Finance Committee of the House of Commons that we have a structural deficit in Canada. And you know why? Because of demographic changes, and today he puts out a report saying just the opposite,” an irate Mr. Flaherty told media after Question Period following the OAS report’s Feb. 8 release. “Unbelievable, unreliable, incredible.”
Mr. Page denied that his office’s work was unreliable, pointing to the Canada Health Transfer announcement.
“Two out of three ain’t bad. Unbelievable and incredible—I take that as a compliment” Mr. Page said in response. “Why create a budget office and ask for independent analysis right in the legislation if you don’t even want it?”
Last week the Prime Minister’s Parliamentary Secretary Dean Del Mastro (Peterborough, Ont.) tweeted about a column in The Globe and Mail by Neil Reynolds that was critical of the PBO’s work. In the column, Mr. Reynolds describes the PBO’s work as “shaky,” and says the “flip-flop” on OAS supports the Finance Minister’s charge that Mr. Page’s work is unreliable. However, the column makes no mention of the significant changes made by the government to the Canada Health Transfer.
It’s the latest round in an ongoing dispute between Mr. Page’s office, which is mandated to provide independent economic analysis to Members of Parliament, and members of the government who have had their official positions challenged by the PBO’s work.
Last fall Mr. Page got into some hot water when The Globe and Mail reported that he was set to speak at a Young Liberals event at Vancouver Island University. Mr. Page cancelled his appearance when he became aware that it was a partisan event. The Liberals later apologized for not informing Mr. Page that it was a politically partisan fundraiser, but the optics of the Parliamentary budget officer agreeing to attend an event to raise money for an opposition party led members of the government to question his integrity as an independent servant of parliament.
Since taking on a five-year term as Canada’s first Parliamentary budget officer in 2008, Mr. Page has persistently challenged the government to improve its transparency when it comes to economic forecasting and program costing.
While the government has refused to release costing estimates for many of its signature programs and pieces of legislation, including the procurement of the F-35 fighter jets, G8 and G20 security costs, and OAS reform, the PBO has produced unflattering independent costing analysis on these programs with limited cooperation from federal departments. Last spring, the PBO pegged the cost of procuring and maintaining 65 F-35s at $30-billion—a figure that may increase as other countries scale back or cancel their own procurements. Prior to the 2010 G8/G20 summits in Muskoka and Toronto, Mr. Page’s office estimated that combined security costs for the three-days of meetings would exceed $930-million. Under his leadership, the PBO is now undertaking a cost analysis of the omnibus crime bill, C-10.
Public Safety Minister Vic Toews (Provencher, Man.) and Justice Minister Rob Nicholson (Niagara Falls, Ont.) failed to provide a price tag for Bill C-10 when they appeared before the Justice Committee Oct. 6, 2011. The ministers reported to the committee that minimum sentencing would cost $78.6-million over five years, without providing documentation.
“They’ve released no forward looking estimates on fiscal sustainability, and the only thing we’ve got to support the decision on OAS was that the number of recipients is going to go up a lot,” said Mr. Page of the government’s recent overtures to reform OAS. “Well, it’s gone up a lot since I’ve been in the public service. Over the past 30 years it’s more than doubled.”
It could be a long time before the PBO gets a look at Finance’s in-house numbers. Last week The Hill Times contacted Mr. Flaherty’s office for a response to Mr. Page’s calls for the Finance Department’s long-term fiscal sustainability projections. Mr. Flaherty’s press secretary reiterated a Jan. 17th statement that the government was focused on “a balanced budget in the medium term and that we have long-term, stable, solid fiscal realities in Canada,” but would not comment directly on Mr. Page’s comments.
While he’s been accused of intentionally contradicting the government on costing and economic analysis, Mr. Page insisted that he is not becoming increasingly feisty as he enters the final year of his tenure as Parliamentary budget officer.
“We’ve had feisty times. In 2008, we released Afghanistan costing and we released our first set of numbers saying there was a recession and deficit. A week later Minister Flaherty and the Prime Minister released a statement denying that there was going to be a recession or deficit,” Mr. Page recalled. “We’ve always tried to be fearless in terms of tackling difficult issues.”
According to an internal Treasury Board memo obtained through an access to information request filed by journalist Ken Rubin, the PBO requests for information were overwhelming federal bureaucrats.
The memo, which was in preparation for a Feb. 15, 2011 meeting between then-Treasury Board President Stockwell Day and Mr. Page, notes that PBO standing committee appearances tended to lead to large requests for information.
“The PBO is increasingly using standing committees to make requests and information from central agencies and departments because of his greater information entitlements,” the memo’s author observes. “[T]he Standing Committee on Finance (FINA) passed a motion requesting a heavy volume of baseline and incremental costing information for a variety of legislative amendments …. If this trend continues, the production of these documents will increasingly become an issue for all committees and departments.”
In camera committee proceedings have become routine in the nine months since the Conservatives formed a majority government. Conservative MPs have used their majority presence on standing committees to bar the public from committee votes on opposition motions and witness lists. The Finance Committee held seven hearings in camera during its pre-budget consultations in the final weeks of 2011, while the last four meetings of the Public Accounts Committee have been closed to the public. With the exception of a Feb. 14 meeting to discuss committee business, the Procedure and House Affairs Committee has been in camera since Nov. 29, 2011.
Mr. Page said that he has not received many requests to appear before committee of late, but is regularly contacted by Members of Parliament requesting fiscal data and economic analysis.
“The Operations and Estimates committee actually wants to look at estimates now, and I think they’re frustrated. They think that they should be doing a better job of scrutinizing estimates and they need more information,” Mr. Page noted, pointing out that the government’s lack of openness on its costing has made his office the go-to source for fiscal data that MPs are unable to get from the government.
“To the extent that the public service is complaining, you’re not going to get any sympathy from me,” Mr. Page said of the Treasury Board memo. “At the end of the day, the power of the purse in a responsible Westminster government rests with the House of Commons. They have to have the information before they vote.”
Original Article
Source: hill times
Author: Chris Plecash
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