Hon. Linda Frum: Minister, the Parliamentary Budget Officer says that your projected budget deficits are excessive and that you are ". . . inflating by billions of dollars the projected size of their deficits in the coming years." As one example, you're projecting a budgetary deficit of $29.4 billion this current year when the PBO says it will be closer to $20.5 billion. That's an $8.9 billion difference that has not been accounted for.
Minister, can you tell us why there is such a big difference between your numbers and the PBO's, and how you account for that difference, and can you assure us that this difference in math is not politically motivated padding done with future elections in mind?
Hon. William Morneau, P.C., M.P., Minister of Finance: Thank you, senator, for your question. It's nice to see you.
Let me step back and tell you how we got to those numbers. First of all, I can't comment on the Parliamentary Budget Officer's numbers and how they actually got them, but I can comment on how we got our numbers and exactly why we did it.
We looked at the state of the economy when we came into office, and we looked at the global growth figures that were presented to us. We saw that the IMF marked down global growth twice during the course of the period from November 4 to the time we put our budget in place. We additionally saw that the price of oil, of course, had a significant downward trend from the time we were elected to the time we were preparing our budget. We saw that those factors were likely to impact the growth of the economy and, as a result, the government's revenues.
What we also saw is that over the last three years, when we went out and got the private sector economists' forecasts for growth, they overestimated what growth would be. On average, over those last three years, they overestimated the size of the GDP for our country by $40 billion. That's the average.
What we did in looking at the growth figures, recognizing that there's a volatile exterior environment, was to mark down the expectations for growth and GDP by the same $40 billion, which was the average of what happened over the last three years. And $40 billion relates to the federal budget with about $6 billion of actual revenues to the government. I suspect that's a significant issue in the difference between those two numbers.
We didn't want to have this as a political discussion. We wanted to show Canadians clearly what the potential growth line was based on what we're seeing globally and what we've seen historically. In our budget, we wanted to be as clear as we could with respect to what the potential outcomes might be. We looked at it and decided that rather give only one path of growth, we'd show clearly in the budget what the different paths of growth might show. In those paths of growth, we show that there could be different outcomes. We expect there will be different outcomes because the measures we're putting in place will grow the economy more rapidly than would have been the case otherwise. If you follow those lines of growth, you can see that we get to a more advantageous situation.
If people read closely what we've done, they'll understand we're setting a line that we think is prudent and careful, and that we're also making investments that will allow us to grow at a more rapid rate. We expect it to put us in a positive situation not for electoral success but for Canadian success — for Canadians to do better because of those investments.