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How Government Works PBO’s Role FMI Capital Chapter PD Day
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How Government Works PBO’s Role FMI Capital Chapter PD Day Ottawa, May 22, 2014 Mostafa Askari Assistant Parliamentary Budget Officer, Canada
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Mostafa Askari Assistant Parliamentary Budget Officer, Canada. How Government Works PBO’s Role FMI Capital Chapter PD Day. Ottawa, May 22, 2014. Outline. Why was PBO created?. How does PBO help government and parliament work better ?. What has PBO done so far?. - PowerPoint PPT Presentation
Transcript of How Government Works PBO’s Role FMI Capital Chapter PD Day
How Government WorksPBO’s Role
FMI Capital Chapter PD Day
Ottawa, May 22, 2014
Mostafa AskariAssistant Parliamentary Budget Officer, Canada
Outline
Why was PBO established?
How does PBO help Government and Parliament work better?
What has PBO done since its establishment in 2008?
Challenges
Why was PBO created?
General lack of analytical and research resources for parliament
Unexpected large budget surpluses and deficits
Cost overruns
How does PBO help government and parliament work better?
•Economic trends•Nation’s finances•Analysis of estimates•Costing of programs and legislations
Mandate
•Relevant and credible analysis•Promoting transparency in budgeting•Practical toolsStrengthening
role of parliament
•Insufficient and unhelpful information•Lack of congruity between budget and main
estimatesIdentifying weaknesses in budget process
What has PBO done so far?
•Short and medium term economic forecasts•Short and medium term fiscal forecasts
Projection
•Federal government fiscal structure•Provincial, territorial and local governments fiscal structure
Fiscal sustainability•Labour market assessments•Tax analysis•Analysis of Main and Supplementary estimates
Economic and fiscal analysis
•Cost of Afghanistan engagement•Purchase of F35 fighter jets•Costs of changes to the Criminal Code
Costing of programs and legislations
Economic outlook: growth in economic activity
2.02.1
2.72.5
1.9
1.5
0
1
2
3
4
0
1
2
3
4
2013 2014 2015 2016 2017 2018
Real GDP growth Potential GDP growth
%
Economic outlook: Impact of restraint measures
2014 2015 2016 2017 2018-0.6
-0.4
-0.2
0.0
-60
-40
-20
0
Employment (right axis)
Real GDP (left axis)
thou-sands
% of real GDP
Economic outlook: Nominal GDP
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20181,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,50090 per cent confidence70 per cent confidence50 per cent confidence
December 2013 private sector outlook
PBO balanced-risk projection
Billions of dollars
Fiscal forecast: Statement of operation
2013- 2014- 2015- 2016- 2017- 2018- 2014 2015 2016 2017 2018 2019
Budgetary revenues 268.3 280.0 297.1 310.4 320.3 332.5Program expenses 251.0 250.7 258.7 267.8 276.0 284.5Public debt charges 28.9 29.8 30.5 33.4 36.8 38.9Budgetary balance -11.6 -0.5 7.8 9.1 7.5 9.1
Federal debt 614.0 614.5 606.7 597.6 590.1 580.9
Per cent of GDPBudgetary revenues 14.3 14.4 14.6 14.6 14.5 14.6Program expenses 13.4 12.9 12.7 12.6 12.5 12.5Public debt charges 1.5 1.5 1.5 1.6 1.7 1.7Budgetary balance -0.6 0.0 0.4 0.4 0.3 0.4Federal debt 32.7 31.6 29.9 28.2 26.8 25.5
billions of dollars
Fiscal forecast: Outlook for revenues and expenses
20112012
20122013
20132014
20142015
20152016
20162017
20172018
20182019
240250260270280290300310320330340
240250260270280290300310320330340
Revenues
Total expenses20-year average growth
Budgeted
billions of dollars
Fiscal forecast: Fan chart Chance of balanced budget or better
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
-60-50-40-30-20-10
0102030405060
-60-50-40-30-20-10010203040506090 per cent confidence
70 per cent confidence50 per cent confidence
PBO balanced-risk projection
≈60% chance in 2017-18
≈70% chance in 2015-16
≈50% chance in 2014-15
≈65% chance in 2018-19billions of dollars
Fiscal forecast: Structural balance• billions of dollars
2014 2015 2016 2017 2018 20192013- 2014- 2015- 2016- 2017- 2018-
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
Budgetary balance Structural balance
Cyclical balance
Fiscal forecast: Structural balance
2013- 2014- 2015- 2016- 2017- 2018- 2014 2015 2016 2017 2018 2019
Budgetary balance -11.6 -0.5 7.8 9.1 7.5 9.1
Structural balance -4.5 4.8 8.9 5.7 2.0 3.1
Cyclical balance -7.1 -5.3 -1.1 3.4 5.5 6.0
billions of dollars
Fiscal sustainability: Demographic projection
0
5
10
15
20
25
30
35
40
45
50
55
0
1
2
3
4
5
6
1927 1947 1967 1987 2007 2027 2047 2067 2087
Old age dependency ratio(right axis)Population growth (left axis)
2012
Fiscal sustainability: federal fiscal structure
-125
-100
-75
-50
-25
0
25
50
75
100
125
-8
-6
-4
-2
0
2
4
6
8
1991 2006 2021 2036 2051 2066 2081
2012
Net debt (right axis)
Net lending (left axis)
Primary balance (left axis)
billions of dollars
Fiscal sustainability: Other levels of government fiscal structure
0
50
100
150
200
250
300
350
400
-24
-20
-16
-12
-8
-4
0
4
8
1991 2006 2021 2036 2051 2066 2081
2012
Net debt (right axis)
Primary balance (left axis)
Net lending (left axis)
billions of dollars
Fiscal sustainability: CPP/QPP fiscal structure
9.88
10.57
9.90
10.80
9.0
9.5
10.0
10.5
11.0
11.5
9.0
9.5
10.0
10.5
11.0
11.5
Canada Pension Plan Quebec Pension Plan
Steady-state contribution rate
Statutory contribution rate
Fiscal sustainability: Fiscal gap
-1.3
1.9
0.0
-2
-1
0
1
2
3
-2
-1
0
1
2
3
Federalgovernment
Other levels ofgovernment
CombinedCPP and QPP
% of real GDP
Challenges
Establishing and maintaining PBO’s credibility and independence
Access to information
Effective relationship with media
“If the House of Commons by any possibility lose the power of the control of the grants of public money, depend upon it, your very liberty will be worth very little in comparison.”
William Ewart Gladstone, 1891
