Tough Questions at Committee Nothing New for Parliamentary Budget Officer

Parliamentary Budget Officer Yves Giroux prepares to appear before the Senate Committee on Official Languages in Ottawa on June 13, 2022. Justin Tang/The Canadian Press

Parliamentary Budget Officer (PBO) Yves Giroux found himself defending his department’s work in front of a parliamentary committee on Oct. 5—and not for the first time.

He was being questioned on a PBO report that said it would take 20 years to pay back $28.2 billion in federal subsidies to Volkswagen and Stellantis for EV battery factories.

Liberal MP Ryan Turnbull was questioning Mr. Giroux on why the PBO report said it would take 20 years for the companies to pay back the money, when the government has been telling people it expects payback in under five years.

“Why would you have chosen a ... more narrow and maybe, in my view, a slightly pessimistic view of how things will turn out in the future?” asked Mr. Turnbull, who is also the parliamentary secretary to the minister of Innovation Science, and Technology.

Mr. Giroux defended his department’s work.

“I work for parliamentarians, I work for the benefit of the taxpayers,” he responded. “I don’t have a vested interest in being overly optimistic or overly pessimistic.”

There are “a lot of assumptions” in the report used by the government, he said, which “suggest that the statements that the government made to the effect that this would be paid back in less than five years are, to say the least, wildly optimistic.”

The PBO released its analysis of the subsidies to Volkswagen and Stellantis on Sept. 12.

In the last two years, the PBO has come out with report after report that has poked holes in some of the things the federal government has been telling Canadians.

Regarding Ottawa’s controversial carbon tax, for example, the federal government has insisted that most people will get back more money than they paid through Climate Action Incentive paybacks.

But in a report in March 2022, and again in an update in March 2023, the PBO disagreed.

“We estimate that most households will see a net loss, paying more in fuel charges and GST, as well as receiving lower incomes, compared to the Climate Action Incentive payments they receive and lower personal income taxes they pay,” said the 2023 report.

By 2030–2031, the report said, the cost to an average household in Alberta, for example, would be $2,773 per year, and $1,820 a year in Ontario.

The PBO came to a similar conclusion on the federal government’s Clean Fuel Regulations.

A report released in May 2023 estimated the cost at $231 per year for lower-income households, and up to $1,008 for higher-income households by 2030.

The PBO’s conclusion that the new rules are “broadly regressive” prompted a same-day statement from Climate Change and Environment Minister Steven Guilbeault, saying the report did not consider the rising cost of climate change.

“While we recognize the work of the PBO, their analysis takes the same unbalanced modelling approach as they did with the analysis of the price on pollution,” said the statement.

“We know that every tonne of carbon dioxide costs our society $261 from the costs of climate change. These costs are not taken into account.”

However, Mr. Giroux said he stood by the analysis.

“I can understand that people are not happy when we underline that government action will have repercussions, and in this case, costs, but I stand by the analysis we provided,” he said, according to the National Post.

Much the same thing happened in June 2022 over the Trans Mountain Pipeline expansion.

Ottawa bought the pipeline in 2018 for $4.4 billion and assured Canadians it would be a good investment. But by June 2022, when the cost of pipeline expansion had risen to $21.4 billion, the PBO warned that that was no longer the case.

“PBO finds that the Government’s 2018 decision to acquire, expand, operate, and eventually divest of the Trans Mountain assets will result in a net loss for the federal government,” said the analysis.

Since then, the estimated cost of the project has risen to $30.9 billion. The federal government has said there have been discussions with indigenous groups about buying into the pipeline, which is expected to be commercially operational early in 2024.

And in April 2023, the PBO warned that federal spending on employees saw record growth during the pandemic.

The report said spending jumped by 31 percent, from $46.3 billion in 2020–2021 to $60.7 billion in 2021–2022.

“This increase is due both to an expansion in the size of the public service and to higher compensation per full-time equivalent,” Mr. Giroux said in a news release, with average federal salaries jumping to $125,300 in 2021–2022.

So the questions Mr. Giroux encountered on Oct. 5 were not the first time he’s faced tough questions from government representatives—and it will likely not be the last.

“I think I’ve been quite optimistic to a large extent, in fact,” he told the committee on Oct. 5.

“The reason why we decide to use and how we decide to use certain assumptions versus others, that’s based on our professional judgment, as well as that of our peers. And also the fact that when we look at studies that are provided to the government or to parliamentarians, we also have to look at what the ultimate objective of the authors of these studies are. If they’re doing a study to promote certain interests, we have to take the assumptions that they use with a certain grain of salt.”