Policy
June 2, 2015

Circumventing Parliament

The much delayed and greatly anticipated April federal budget has now moved to the implementation stage, leaving pundits debating whether this recent budget is the most extreme example of the government’s dislike for parliamentary conventions and the longstanding Canadian budget-making system.

Judging from the reaction of so many observers, now might be a good time to review how budgets fit into the overall governance regime in Canada.

The budget is one of the most important “arrows in a government’s quiver” and is the most public event in the annual policymaking cycle. Typically, the annual budgetary cycle starts with a fall economic statement that sets the parameters of the fiscal framework. The economic statement is then followed typically by a February budget and the government’s spending plans that signal the beginning of the new fiscal year.

This year, due to the instability of global oil prices that had an impact on the government’s ability to estimate revenues, the Minister of Finance, in a controversial move, delayed the budget until the end of April, giving the government a better line of sight on future oil prices and also taking advantage of new revenue sources that were not available in February.

However, even with the additional time to construct the budget, the government used four very questionable actions that were designed to produce the illusion of a balanced budget and to circumvent parliamentary oversight:

1. To garner favourable reactions to individual budget items, many were leaked or announced by the government in advance of the Minister of Finance’s budget speech in the House of Commons. Since many of the announcements were staged in non-governmental settings to partisan audiences, there was no opportunity for parliamentarians to provide oversight.
2. The government employed a number of questionable ways to bolster the financial statements to achieve a balanced budget. These included selling off shares in General Motors and putting the proceeds into the consolidated revenue fund; lowering the contingency fund from $3 billion to $1 billion (a move reminiscent of Frank Underwood in House of Cards) and using the difference to bolster the income side of the ledger; using very aggressive assumptions about the future price of oil, thereby presenting a more favourable estimation of government tax revenues; and transferring the EI surplus to the consolidated revenue fund instead of using it for its intended purpose.
3. The government also announced a series of new spending programs such as $1.3 billion for the Canadian Foundation for Innovation and $1 billion for public transportation that will be funded two and three years from now. The net effect is that these costs are being committed for a future government but the current government can make the claim that it has made a significant contribution to these policy areas without actually spending any tax dollars.
4. Finally, the government severely undermined the collective bargaining system by setting a fixed target for spending cutbacks in advance of negotiations with the public service unions on sick pay benefits.

It is not as if the government did not know how to proceed. It has presented many budgets since first elected in 2006 and would be intimately familiar with budgetary conventions. Moreover, according to media reports, former Cabinet Secretary, Wayne Wouters, advised the government before the budget that Parliament needed to approve spending decisions in advance of making any specific announcements of the government’s plans.

It has become clear to most observers that the previously important role played by Parliament in approving huge omnibus budget bills has now become a minor formality with little purpose or meaning. While the role of Parliament has been declining over the past few decades, the way in which the government announced the April budget is the most persuasive evidence yet that Parliament has lost almost all of its constitutional powers to hold government to account and to approve annual spending.

Over the years, the Prime Minister has learned that the public has little interest in how government spends its money, in the role of parliamentarians, and in the accountability framework that underlies the Westminster system and protects Canadians from abusive and irresponsible governments.

PMO strategists know that the April budget has already passed into the deep memory banks of citizens at the same time as the fate of the Canadian teams in pursuit of the Stanley Cup has moved to the foreground of issues that preoccupy us.

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