PBO’s Comments on Budget 2019

After reviewing the Budget documents, I would like to make a few observations on Budget 2019, tabled in the House of Commons on March 19, 2019.  I hope this will help parliamentarians as they prepare to debate this important document.

Budget and Estimates Alignment
First of all, the inclusion of a section that reconciles Budget 2019 expenses with the Main Estimates and Planned Estimates is welcome.  The Government began including this information in Budget 2018 and this section is an addition to the Budget Plan.  This section is of assistance to parliamentarians as they review the Estimates, scrutinize Government expenditures and challenge the Government on Budget measures.  It also assists them, as well as Canadians, as they try to better understand the complex supply process and how it relates to the Budget process.

Similarly, the inclusion in the Budget Plan of an annex that lists measures to be implemented through legislation is also a welcome addition, as it indicates what Canadians and parliamentarians can expect in the upcoming Budget Implementation Act.  Parliamentarians and stakeholders can already prepare, as a number of items could have important ramifications, notably proposed changes to federal financial sector statutes.

Issues for Parliamentarians
However, there is a high number of Budget measures for which details are yet to come, including some that will either affect thousands of individuals or have material financial impact.  For example, important details on the proposed First-time Home Buyer Incentive are still to come, notably the exact nature of support from the Canada Mortgage and Housing Corporation (CMHC).  For instance, it is not clear whether CMHC will become co-owner of houses bought through the proposed program, or whether the assistance will simply consist of a loan (with or without interest).  It is also not clear at what point will CMHC’s stake or loan have to be paid back.  These are important questions, given the program will expose the Government to liabilities of up to $1.25 billion over three years.

In addition, details surrounding the $3.9 billion of assistance to farmers in the supply managed sectors were not mentioned in the Budget.  The absence in the Budget of the source of funds for this assistance is also unusual.

Furthermore, announcing the Government’s intention to limit the use of employee stock options, with further details to be released before the summer of 2019, could lead to behavioural changes by those who expect to be affected by this measure.  The yet-to-be-released details may, however, address this possibility.

Finally, Table A2.9 contains a line summarizing the net fiscal impact of non-announced measures, which improves the Government’s bottom line.  There are legitimate reasons not to disclose some future transactions (for example, national security or commercial confidentiality), but these measures may also include discretionary Cabinet decisions that reduce expenditures, increase revenues, or a combination of both.  Given the magnitude of the amounts and their material contribution to the reduction in the Government’s deficit (over $2 billion in 2021-22), parliamentarians may wish to seek details on these measures.

For more information, please call 613-992-8026

Yves Giroux
Parliamentary Budget Officer