Government Operations and Estimates

The House of Commons Standing Committee on Government Operations and Estimates (OGGO) met to study the Office of the Parliamentary Budget Officer’s (PBO) latest economic and fiscal outlook and a report on federal infrastructure spending. Appearing as witnesses were Jason Jacques, Interim Parliamentary Budget Officer; Kristina Grinshpoon, Director of Fiscal Analysis; Diarra Sourang, Director of Economic Analysis; and Tim Scholz, Advisor-Analyst.

Jason Jacques opened by presenting a sobering outlook, projecting modest economic growth of 1.2% this year and next, a $68.5 billion deficit for the current fiscal year, and a rising federal debt-to-GDP ratio of 42.5% that is projected to increase over the medium term. He described the fiscal path as "unsustainable" and a cause for serious concern, stating it was the first time in 30 years the PBO had tabled a report where the debt-to-GDP ratio was rising. He called on the government to present a clear plan in the upcoming budget to address the situation.

Kristina Grinshpoon noted that roughly $20 billion in spending from the Liberal Party’s election platform has not yet been included in the PBO’s outlook. She confirmed that the debt servicing ratio is increasing, meaning every dollar spent on debt interest is a dollar not spent elsewhere. She also clarified that the PBO assumed the government would collect $8 billion in tariff countermeasures over three years, but noted the government also announced support measures for affected industries.

Diarra Sourang explained that the PBO revised its outlook for nominal GDP downward by approximately $13 billion annually due to trade uncertainty and demographic challenges, which directly affects the tax base. She confirmed the PBO is not projecting a recession, only very moderate growth, and noted that the impact of government investments on growth depends on how they are delivered, with business investment having a different multiplier than transfers to households.

Tim Scholz addressed questions on trade uncertainty, stating the PBO’s baseline assumption is that trading conditions with the United States will improve from current levels but remain less favourable than in the past. He acknowledged the environment is volatile and that if conditions do not improve, it would have a direct negative impact on the economic outlook.

During the meeting, a procedural point was raised by MP Gaudreau, who noted that the PBO’s report was received only hours before the meeting and requested that future reports be provided at least 24 hours in advance to allow proper assessment.