1. Expenditure Forecasting Presentation to the GNPBO June 2016

2. What is the Purpose of Forecasting? Identifying likely impacts on operating statement, balance sheet and cash flows (sovereign borrowing) Budgeting Estimating effects on macro-economy Analysing micro policy effects of spending Economic Policy Ensuring legislators can scrutinize and challenge proposals from the executive Parliamentary Accountability

3. Methodology Depends on Purpose Validating assumptions used in government’s forecasts “Is this reasonable”? Accountability Small structural models based on key independent variables “How much will it cost”? Fiscal Forecasting Ensuring legislators can scrutinize and challenge proposals from the executive “What is the impact on the macro and micro-economy”? Economic Analysis

4. PBO’s Expenditure Forecast Source: Parliamentary Budget Office, Finance Canada

5. Elderly Benefits $ billions

6. Elderly Benefits 65+, Canadian Citizens Who Benefits? $570 per month Indexed to Inflation Adjusted for years lived in Canada (40 for maximum pension) Means-tested (multiple phase out rates) How Much?

7. Elderly Benefits Data RequirementsData Sources Population 65+National Statistical Agency Inflation forecastPBO Forecast Years of residenceNo public source of micro-data Income distribution for 65+ National Statistical Agency micro-simulation model

8. Elderly Benefits $ billions

9. Employment Insurance $ billions

10. Employment Insurance Workers in labour force that pay premiums Who Benefits? Maximum of $524 per week Indexed to Average Weekly Manufacturing Wage Adjusted for actual wage earned How Much?

11. Employment Insurance Data RequirementsData Sources Working Age PopulationNational Statistical Agency Employment RatePBO Forecast Number Eligible for ProgramPBO Forecast InflationPBO Forecast

12. Employment Insurance $ billions

13. New Children’s Benefits Parents of children under the age of 18 Who Benefits? Maximum of $6400 per year for each child under the age of 6 Maximum of $5400 per year for each child under the age of 18 Means-tested (multiple phase out rates) Family-size tested (phase out rates depend on family size) How Much?

14. Children’s Benefits Data RequirementsData Sources Population under < 18National Statistical Agency Distribution of Children Among Households National Statistical Agency Household Incomes National Statistical Agency micro-simulation model

15. Children’s Benefits $ billions

16. Bottom Lines The approach taken depends on the characteristics of the program Most other jurisdictions have similar programs and are often willing to share advice and expertise Data and resources are always key constraints

17. THANK YOU! Contact Information: Jason Jacques Director: Fiscal Analysis jason.jacques@parl.gc.ca