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THE BUSINESS OF SUPPLY
COMPLETING THE
CIRCLE OF CONTROL
PREFACE
On 7 June 1995, the House of Commons adopted a motion to the effect that
The Standing Committee on Procedure and House Affairs be instructed to undertake a comprehensive review of the business of supply, with particular attention to the reform of the Estimates and the processes and mechanisms by which the House and its committees may consider and dispose of them.1To fulfil these instructions, the Committee created a Sub-Committee on the Business of Supply (the Sub-Committee). In accordance with the Order of Reference from the House of Commons dated 7 June 1995, and with the Committee's decision of 22 June 1995, the Sub-Committee began hearing witnesses on 28 September 1995. A list of witnesses isappended. (Appendix I)
Pursuant to its instructions, the Sub-Committee initially issued two reports. The first, presented to the Committee on 5 December 1995 (One Hundred and Seventh Report to the House, tabled on December 7, 1995), reported that the Committee had no objections to a change to the operating expenditures vote proposed by Treasury Board Secretariat. The Committee presented its second report to the Committee on 12 December 1995 (One Hundred and Tenth Report tabled and adopted by the House on December 13, 1995). In this report, the Committee gave its conditional endorsement to the tabling of revised Part III documents for six departments on a trial basis for the 1996-97 fiscal year.
When Parliament was prorogued in February 1996, the Sub-Committee ceased to exist. On 16 April 1996, the Committee adopted a motion to create a new Sub-Committee on the Business of Supply. The new Sub-Committee was given instructions identical to those provided to its predecessor. In addition, evidence taken by its predecessor during the First Session of the current Parliament was deemed adduced by the Sub-Committee in the present session. A list of witnesses heard by the Sub-Committee during the Second Session of the current Parliament is appended. (Appendix II)
The Sub-Committee presented two further reports on 18 June 1996. The first (Committee's Twenty-Third Report to the House which was tabled on June 19, 1996 and adopted on June 20, 1996) and endorsed a proposal by Treasury Board Secretariat that 16 departments produce performance reports evaluating how well they had fulfilled their functions during the current fiscal year. These reports, which are to be tabled in the fall, are being produced on a trial basis; they will complement the sections of the Estimates documents that relate to future departmental plans and priorities. It is hoped that the reports will enable standing committees to assess subsequent departmental Estimates on the basis of immediate past performance. In its report, the Committee also endorsed Treasury Board's proposal to introduce "In-Year Updates" on a pilot basis. These documents would contain information intended to complement the Supplementary Estimates. The second report (Committee's Twenty-Fourth Report, tabled in the House on June 19, 1996) set forth the principles that have guided the Sub-Committee's work and established the broad outlines for this Final Report.
Before proceeding, the Committee wishes to acknowledge the considerable amount of thought and time devoted by our predecessors to finding ways of improving the way Parliament reviews and grants supply. The shortcomings of the current process are not newly discovered; some of our most valuable assistance came from parliamentary veterans who had recognised the need for better procedures some time ago. If our proposals are adopted, it will be in part because of two advantages that our predecessors did not have. The first, as we shall explain more fully below, is the present circumstances are propitious for change. The second is the invaluable gift of their wisdom and experience.
We also wish to thank our colleagues serving in the current Parliament who took the time, in the midst of heavy schedules, to assist us in our work. A number of committee chairs met with the Sub-Committee to discuss the supply process from their perspective and to offer suggestions for improvement. Their help was particularly valuable in shaping the conclusions and recommendations contained in this Report. In addition, the Committee offers its thanks to those Members of Parliament who responded to a questionnaire sent to them by the Sub-Committee. Their answers were also most helpful and have been incorporated into many of this Report's observations and recommendations.
I. INTRODUCTION
A. Guiding Principles
The established procedures for handling supply in the House of Commons are based on two fundamental principles. If it is to continue with its activities, Government must have some assurance that its requests for funds be answered by certain fixed dates. Parliament, on the other hand, must be assured reasonable opportunity to examine these requests before they are granted. The first principle recognizes the need for an efficient, smoothly functioning government, the second the importance of accountability, a central tenet of parliamentary democracy.In conducting its examination of the business of supply, the Sub-Committee has kept these two principles and the balance that must be achieved between them, constantly in mind. From the Sub-Committee's perspective, the need for accountability is paramount, yet this need is regrettably not well-served by current arrangements.
One of the witnesses, the Honourable Senator John B. Stewart, confirmed this assessment when he informed the Sub-Committee that the main reason for the introduction of the current supply procedures had been to make the House of Commons function more smoothly, not to enable a better examination of the Government's proposed expenditures. (First Session, Meeting No. 3, October 19, 1995) Another witness, Mr. Peter Dobell, Director of the Parliamentary Centre, reported that, of the aspirations set for the current procedures, all but one ' Government's ability to get supply approved by a fixed date ' had failed. (First Session, Meeting No. 3, October 19, 1995)
Our democratic system of government pays a tremendous price for this gain in efficiency. It is reassuring to know that government and the vast array of services it provides can continue to function free of interruption, yet it is enormously troubling ' to say the least ' that the vast sums of money spent by government are subjected to only perfunctory parliamentary scrutiny. Canadians deserve far better than this from their Parliament.
Holding Government accountable ranks among the principal roles that Parliament is expected to perform in our democratic system. The business of supply ' the process by which Parliament reviews the future spending plans of Government and either approves or rejects them ' constitutes a major vehicle through which Parliament ought to fulfil this role. For it is only through a meticulous, public examination of how much Government plans to spend, and for what purposes, that informed judgements can be made as to whether those purposes are worthy, have been achieved, and were worth the cost.
Parliamentary oversight of Government expenditure does not mean that Parliament should be the principal architect of expenditure policies; that role properly belongs to Government. Instead, we mean parliamentary oversight in the sense of being able to influence the "volume and pattern" of Government expenditure.2 Students of Parliament have described parliamentary oversight as influence, not direct power, advice, not command, criticism, not obstruction, scrutiny, not initiative and publicity, not secrecy.3 The Sub-Committee was thus troubled to learn from a witness that Canada's Parliament is "among those which exercise the least influence on expenditure". (First Session, Meeting No. 3, October 19, 1995, p. 3:11) Another witness reminded the Sub-Committee that Parliament is but one actor in a larger circle of control that surrounds the financial activities of government. One of the Sub-Committee's goals, therefore, became to reaffirm Parliament's position within that circle and restore meaning to the concept of parliamentary oversight over expenditure.
Accordingly, in conducting its work, the Sub-Committee was guided first by Parliament's duty to hold Government accountable and oversee its expenditures. Specifically, it looked at how these obligations could be better met through improvements to the process surrounding the business of supply. The other objectives flowed from this. The Sub-Committee therefore sought ways to facilitate greater participation of Members of Parliament in the business of supply, especially through examination of the Estimates. This has prompted it to consider enhanced authority, incentives, and support for committees with regard to their study of expenditure. The Sub-Committee concluded that the broad range of financial information presented to Parliament needs to be expanded to allow review of the full extent of the government's financial activities.
The Committee is also acutely aware ' as are so many Canadians ' of the difficult fiscal environment in which contemporary government is forced to operate. This calls for hard choices as to where government will allocate its scarce resources. If this is to be done intelligently and successfully, it will require a decision-making process that engages rather than excludes and that has the potential to forge consensus. It will also necessitate greater transparency so that Canadians can see ' and in some cases more directly engage in ' the expenditure decisions that are being taken in their name.
One of Parliament's most important roles is to legitimize government policy; an awareness of this fact strengthened our emphasis on enhancing the ability of Members of Parliament to participate in the supply process. Members, as one witness pointed out, possess a wealth of skills and experience: these valuable assets must be exploited to improve the fiscal health of our country. Members also form a crucial link between the federal government and the public to whom they are responsible for ensuring the best use of resources. By providing Members of Parliament more opportunities, incentives, and support surrounding their work on supply, the Committee believes that the relationship between them and those they serve will be enhanced. This can, in turn, only serve to improve public faith in the institution of Parliament and further reinforce the legitimacy of the laws and policies it produces.
At times during our meetings with witnesses, we were told that government departments and public servants often find the experience of dealing with committees on the Estimates frustrating. On occasion, Members appear to be unaware of departmental efforts to deliver services within tight budgets and of the difficult decisions that must be made when plans and priorities are hammered out. Lack of comprehension regarding departmental objectives and programmes further add to the problem. The Sub-Committee believes that this situation can be improved ' dramatically improved. Changes that are already taking place combined with our recommendations and suggestions will, if adopted, allow Members to use the skills they already possess to become full contributors to the expenditure planning and management process. As consequence, departments will begin to receive input from committees that will be not only critical in nature, but constructive as well.
Because both our fiscal problems and many government programmes are long-term in nature, the review of plans and expenditures must be conducted from a long-term perspective. Consequently, we have also taken into account the need for Parliamentarians to exert greater influence on expenditures beyond the immediate fiscal year. Lastly, we believe that the desire on the part of many Canadians to be better informed about the expenditure plans of their federal government calls for a supply process that is transparent and comprehensible, as well as effective and efficient.
In searching for ways in which Parliament could improve its performance with respect to the supply process, the Sub-Committee was guided by a set of criteria developed by Senator Stewart in 19774 and modified by the Sub-Committee. According to these, the supply process should enable Members of Parliament to:
- Obtain an understanding of the operation of the various departments,
branches, and agencies and also obtain adequate explanations of the
policies being followed by them, the goals they are trying to attain, and the
costs involved. As well, future trends that will have an impact on how
departments and agencies operate and the issues they may have to address
need to be taken into consideration. Collectively, all of this information must
be available to Members of Parliament if they are to hold departments and
agencies truly accountable;
- Examine publicly both the operation and policies of departments and agencies and how well they accord with information contained in the Estimates;
- Discuss publicly from time to time the performance of the ministers and their departments in the formulation, implementation, and administration of policy;
- Test from time to time whether or not ... the government retains the confidence of the House;
- See the entire panorama of public expenditure, both statutory and budgetary. Past initiatives and ongoing programmes have to be subject to some form of public scrutiny and review on a periodic basis to ensure current validity and value to taxpayers; and
- Have some input into the coming fiscal year's budget early in the process.
B. A Glossary of Terms
One of the Committee's most important objectives is to achieve greater clarity and understanding with respect to the business of supply. Canadians from all walks of life need to know what their Parliament and their elected representatives are doing when they scrutinize the future spending plans of government. This understanding forms the bedrock upon which accountability rests.Terms used to describe processes can be confusing. The Committee is therefore providing the following glossary of terms5 and have included a discussion of the origin and evolution of the process as the second section of this Report.
Appropriation: A sum of money allocated by Parliament for a specific purpose outlined in the Government's spending estimates.
Appropriation bill/supply bill: A bill to authorize government expenditures, introduced in the House following concurrence in the Main or Supplementary Estimates or interim supply. An appropriation bill can only be introduced by a Minister.
Budget: The Government's statement of its fiscal, economic and social policies. It is usually presented once a year, although there is no requirement for this.
Business of supply: The process by which the Government submits its projected annual expenditures for parliamentary approval. It includes consideration of the Main and Supplementary Estimates, interim supply, motions to restore or reinstate items in the Estimates, appropriation bills, and motions debated on allotted days.
Estimates: The Main Estimates consisting of departmental expenditure plans, tabled annually, and Supplementary Estimates, tabled as required. Consideration of the Estimates is a major component of the business of supply.
Fiscal year: The 12-month period, from 1 April to 31 March, used by the Government for budgetary and accounting purposes.
Interim supply: Funds approved by Parliament to cover Government expenditures for the period from 1 April to 23 June of each fiscal year, pending approval of the Main Estimates in June. Amounts in the motion for interim supply are expressed in twelfths (ordinarily, three-twelfths) of the amounts in the Main Estimates.
Main Estimates: A series of Government documents providing a breakdown of the planned spending for the coming fiscal year. Because of their blue covers, the Main Estimates are commonly known as the "Blue Book."
Money bill: A public bill authorizing Government expenditures or imposing a tax. It can only be introduced in the House of Commons by a Minister.
Standing Orders: The collection of the permanent written rules adopted by the House to govern its proceedings.
Statutory item: An item, included in the Estimates for information purposes only, for which legislative approval already exists.
Supplementary Estimates: An expenditure plan introduced to provide funds to the Government to meet new or increased costs. The Government may introduce as many sets of Supplementary Estimates in a given year as it deems necessary.
Supply day/allotted day/opposition day: A day reserved for the discussion of the business of supply, the actual topic of debate being chosen by a Member in opposition except for the last allotted day for the period ending 23 June. There are 20 allotted days distributed among the three supply periods in the year; a maximum of eight are put to a vote and proceedings on the remainder are deemed to have expired at the ordinary hour of daily adjournment.
Supply motion: Any motion, including an opposition motion on an allotted [supply] day, moved under the continuing order of the day for the consideration of supply. Supply motions for concurrence in the Estimates give rise to appropriation bills.
Supply period: One of three periods into which the year is divided for the purpose of the consideration of supply. The 20 allotted [supply] days are divided among the supply periods, which end, respectively, on 10 December, 26 March and 23 June.
Vote: An individual item of the Estimates indicating the amount of money required by the Government for a particular programme or function.
II. THE ORIGIN AND EVOLUTION OF THE BUSINESS OF SUPPLY
The current process for dealing with the business of supply in the Canadian House of Commons has developed and evolved over the years. Its origins can be traced to British parliamentary history, and, in particular, the system in place in Great Britain at the time of Confederation in 1867. The parliamentary procedures remained essentially unchanged until 1968, when the current procedures were adopted, with minor refinements and changes since that time.Parliamentary control over Government expenditures is a fundamental tenet of the parliamentary system. The responsibility for governing rests with the Government, but the funds to enable it to do so must be voted by Parliament.
A common criticism of the supply process is that it is not taken seriously, that it is overly politicized, and that Members of Parliament do not devote sufficient time and attention to the expenditure of public funds. The changes made over the years seem to have been in response to such concerns. Other concerns are the conflicting interests of the Government and opposition Members, the competing goals of effective control and predictability, and the fact that time in the House is limited. All these interests and concerns have to be balanced, and it is not clear that the appropriate balance has yet been struck.
This section will briefly review the development of the supply process in the Canadian House of Commons from 1867 to the present, showing how the process has changed and evolved to its current state.
A. General Background
Parliament's financial proceedings can be separated into two distinct categories: the business of supply, which is the means of authorizing Government expenditures for various programmes and services, and the business of ways and means, which is the process that allows the Government to raise revenues, usually by the imposition of taxes, to pay for these expenditures.The principles underlying Canadian financial procedures have their roots in the parliamentary system of government in Great Britain and in the history of the financial relationship between the Crown and Parliament. The concept that the Crown requests funds and Parliament grants them is central to the whole system of revenue and expenditure.
In medieval England, the Sovereign was expected to meet all public expenses out of his own revenues. As the operation of government grew and the ability of the Crown to meet these expenses diminished, the Sovereign was obliged to summon a council to discuss what aid should be given to the Crown.
During the seventeenth and eighteenth centuries, the Crown's raising and spending of public money were closely connected. A request to the Commons that a sum of money be supplied for a particular purpose generally entailed a request for a new or renewed tax. The statute that authorized the tax also authorized the expenditure of the moneys so collected - or up to a certain amount - for a specified purpose.
The close coupling of taxing and spending continued until the late eighteenth century. Pursuant to a rule made in 1667, the requests from the Crown for money, in estimated amounts for specified purposes, were considered by the Members sitting as a committee of the whole House. Once they had concluded the supply phase of their work, the Members, again sitting as a committee of the whole House, considered the "ways and means" that had been recommended for raising the money required. The work of one committee - the Committee of Supply - thus led directly to the work of another - the Committee of Ways and Means. Only after the latter committee had come to its decision would a bill - a single bill - be introduced to enable the Crown to raise money in the way that had been approved by the Committee on Ways and Means, and to spend that money, or part of it, for the purpose that had been approved by the Committee on Supply.
The direct connection between particular expenditures and particular revenues was broken when the establishment of the Consolidated Revenue Fund in 1787 abolished the necessity of matching a particular expenditure with a specified revenue.
The Committee of Supply continued to consider the proposals of the Crown for estimated sums to be expended for specified purposes. The Committee on Ways and Means would look to the Consolidated Revenue Fund to pay for the approved expenditures, and thus a new kind of bill was developed, a bill to appropriate from the Fund the specified amounts required for specified purposes. At the same time the replenishment of the Consolidated Revenue Fund was accomplished by means of taxation bills. Two separate kinds of business thus emerged: first, the business of supply, which resulted in the passing of appropriation bills, and second, the substantial ways and means business, which emerged as taxation bills. The ways and means phase between the business of supply and the introduction of the consequent bill appropriating money from the Fund was merely a formality.
As John B. Stewart explained, though the task of governing belongs to the Crown, the Government cannot continue to provide its many services unless it is given the necessary resources. Taxes and other revenues are collected by the Government, and deposited in the Consolidated Revenue Fund. The House of Commons, however, is not willing to sanction the withdrawal or use of these funds unless the Crown specifies the particular purposes for which the money is needed and estimates the amounts required. After the House has agreed that the Crown may spend money up to stated limits for specified purposes, it passes an appropriation bill, which, when enacted, sets aside portions of the Consolidated Revenue Fund for these purposes. The bill merely appropriates; it does not require the Crown to spend all or any part of the money. Moreover, this kind of appropriation is always made with a time limit; the authorization given by an appropriation ordinarily expires at the end of the fiscal year.6
Parliament provides the Crown with money in two principal ways: first by appropriation Acts to maintain the machinery and activities of the Crown from year to year; and, second, by statutes that establish certain programmes of payments, and which are not voted upon by Parliament on an annual basis. If an enabling statute gives authorization for funds to be made available for a programme or activity, no annual supply vote is required. Nowadays, the moneys required to meet statutory obligations far exceed the amounts involved in the annual estimates.
This is the general background and theory of Parliament's control over the purse strings. As Stewart has noted:
Given the very distinctive nature of money business - in which in fact, although not in form, the king billed the Commons - it was natural that the House of Commons should develop special procedures, procedures quite distinct from those used in the preparation of ordinary bills, for dealing with the Crown's requests for money.7With respect to the annual supply process, Stewart has also noted: "...[W]hile other government bills relate to changes in the law, and are dealt with one by one and on their several merits, the business of supply relates to the conduct and maintenance of the government itself. Therefore, this business gives the Members an unrestricted opportunity to examine the performance by the ministers of all their duties under both the common law and statutes."8 It has also been said that Parliament does not grant supply until the opposition has had an opportunity to demonstrate why it should be refused. The business of supply affords Members their best opportunity to examine the spending side of the government's fiscal policy.
B. Confederation
When Canada was founded in 1867, it was the intention that the new country would have a constitution similar in principle to that of the United Kingdom. The essentials of the relationship between Crown and Parliament were therefore set out in the Constitution Act, 1867, and the Canadian House of Commons undertook to model its procedures for ways and means business and for supply business as closely as possible after the example of the British House.The basic pattern of money business had been carried over to the pre-Confederation provinces of Canada, and subsequently to the Canadian Parliament at the time of Confederation. The Constitution Act, 1867 created a Consolidated Revenue Fund, and it provided that, except for certain payments, that Fund "shall be appropriated by the Parliament of Canada, for the Public Service." It was also provided that the House of Commons, rather than the Senate, was to play the preeminent role in financial matters: section 53 provided "Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons." The rule of the British House of Commons with regard to the initiation of expenditure only by the Crown was also made constitutional: "It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed."
Among the first steps of the Canadian House of Commons was the adoption of a standing order providing that tax measures and spending measures were to be dealt with first in committees of the whole House. This order, modelled after the British standing order then in force, read as follows:
If any Motion be made in the House for any public Aid or Charge upon the people, the consideration and debate thereof may not be presently entered upon, but shall be adjourned till such further day as The House shall think fit to appoint, and then it shall be referred to a Committee of the Whole House, before any Resolution or Vote of The House do pass thereupon.This standing order applied to both taxation and expenditure.
Supply was and is one of the most important roles of Parliament. The basic structure adopted at the time of Confederation has continued, despite various procedural changes.
During the Speech from the Throne at the start of each session, the Governor General traditionally tells the House: "You will be asked to appropriate the funds required to carry on the services and expenditures authorized by Parliament." As a result, the House adopts a motion at its earliest convenience, pursuant to Standing Order 81(1), which generally reads as follows: "That this House at its next sitting consider the business of Supply." This is the mechanism by which a continuing order is inserted under Government Orders on the Order Paper to deal with supply. In other words, the House orders that the business of Supply will be on its agenda for every sitting of the session from then on. This basic procedure has existed since shortly after Confederation, and continues today.
In general, financial matters were to be given full consideration in committee and in the House. The rules provided specifically that whenever the government found it necessary to incur a public expenditure, the Crown had first to bring forward a recommendation, and that all financial matters had to be considered in committee as a preliminary to legislation. Writing in 1916, Sir John George Bourinot said:
The cardinal principle, which underlies all parliamentary rules and constitutional provisions with respect to money grants and public taxes is this - when burthens are to be imposed on the people, every opportunity must be given for free and frequent discussion, so that Parliament may not, by sudden and hasty votes, incur any expenses, or be induced to approve of measures, which may entail heavy and lasting burthens upon the country. Hence it is ordered that the Crown must come down with a recommendation whenever the government finds it necessary to incur a public expenditure, and that there should be full consideration of the matter in committee and in the House, so that no Member may be forced to come to a hasty decision, but that every one may have abundant opportunities afforded him of stating his reasons for supporting or opposing the proposed grant.9As noted above, the procedures regarding supply remained basically unchanged for a hundred years after Confederation. They consisted of two principal steps prior to the consideration of legislation: the process of entering into the Committee of Supply and the study of spending proposals in that Committee.
The Committee of Supply was established by motion at the beginning of a session. The Estimates were tabled by message from the Governor General, and the Minister of Finance moved that they be referred to the Committee of Supply. When the Order of the Day was read for the House to resolve itself into the Committee of Supply, the Speaker put the question "That I do now leave the Chair." This initiated the first major phase of supply proceedings - the opportunity for Members to debate and, if they chose, to move amendments. The long-established tradition that redress of grievances be considered before the granting of Supply was used by the opposition Members as a means of raising issues, and putting pressure on the Government by postponing supply.
According to Bourinot, only one amendment could be moved to the proposal "ThatMr. Speaker do now leave the Chair." If that amendment was negatived, a discussion of other questions could be raised but no other motion could be proposed. If the amendment were withdrawn, however, another amendment would be submitted. The ordinary rules of debate were applicable. It was not the practice to give notice of the amendments to be moved.10
John Stewart has written that the result of this procedure - especially after 1906 - was that "the Members often got into the Committee of Supply only very late in the day, and sometimes not at all. In other words, the principle of `grievance before supply' was taken so seriously, and the Members found that they had so much about which to grieve, that consideration of the estimates was pushed aside as secondary. Then at the very end of the sessions the estimates would be rushed through at a few long sittings."11
The second phase of the supply proceedings was the consideration of items in the Committee. Each resolution specifying the amount of an estimate was formally proposed from the Chair as a distinct question. Amendments were possible and no time limits were placed on debate. The characteristic pattern that developed was for each department to have an item entitled "general administrative vote," the calling of which in supply provided the basis for a general discussion of departmental policies. Once past this, the Committee took up further items in the Estimates.
When the Order of the Day was read for reporting the resolutions agreed to by the Committee, a formal motion for their first reading was proposed. The motion was never debated or amended. If the House agreed, each resolution was read separately a second time, and the Speaker then put the question for concurrence in each resolution. Both debate and amendment had to be relevant to the resolution.12
The final and formal stage of supply proceedings involved the Committee of Ways and Means. When all the estimates had passed the Committee of Supply, the Minister of Finance moved a motion for the House to resolve itself into the Committee of Ways and Means to consider the formal resolutions for granting certain sums out of the Consolidated Revenue Fund. The resolutions were reported and agreed to by the House, after which the appropriation bill founded upon them was introduced and often passed two or more stages in the same day.13
Following passage in the House, the appropriation bill was sent to the Senate for passage,14 after which it was returned to the House. When the Governor General had summoned the Commons to prorogue Parliament, the Speaker took the bill to the Senate for Royal Assent. Unlike other bills, appropriation bills are presented to the Governor General (or his or her deputy) by the Speaker of the House, in the following words:
May it please Your Excellency:
The Commons of Canada have voted certain supplies required to enable the Government to defray the expenses of the public service.
In the name of the Commons, I present to Your Excellency the following bill(s): ...
To which bill(s) I humbly request Your Excellency's assent.
C. Procedural Amendments prior to 1968
There were frequent criticisms of the lack of effective procedures for examining and controlling expenditures, but no changes were made to the written rules until 1913. At that time, the Prime Minister introduced a motion to amend then Rule 17 of the Standing Orders by adding three separate sections. The third of these was to enable the House to consider items in Committee of Supply on at least two days of the week. Thus, on Thursday and Friday, the Speaker would leave the Chair without a motion if the business ordered for that sitting was supply business (or ways and means business). The Committee of Supply, however, was not allowed to consider any proposed vote unless it had first been referred to it on one of the other days of the week. In other words, as John Stewart has noted, "every vote had to be entered into consideration on a day when the opposition or any private member could mount an attack on the government in relation to its conduct or policy in the field (or fields) to which the votes to be entered that day related."15 This effectively reduced the number of opportunities for moving amendments to the supply motion.These changes were adopted after a long and bitter debate, in part because the amendments also introduced the notion of closure to the Canadian House of Commons. As Stewart notes, this new arrangement (a) retained the constitutional right of the Members to state and publicize their grievances, great or small, before they dealt with the Crown's requests for money, but (b) assured that the Crown's requests for money would be considered on at least two days of the week.16
In 1925, a special committee was established to consider revisions to all the Standing Orders. During debate on the motion to appoint the committee, Members expressed concern regarding parliamentary control over public expenditure, the study of estimates in committee, and the rules applying to amendments to motions that the Speaker leave the Chair for the House to revolve into the Committees of Supply or Ways and Means. The special committee's recommendation - that only one amendment to the motion for the Speaker to leave the Chair could be made, and that the amendment itself could be amended - was repeated by another special committee and was finally adopted by the House in 1927.17
Throughout the Second World War, there was continued criticism that large sums of money were being spent each year with very little detailed parliamentary scrutiny. There were, however, no procedural changes until the 1950s. W.F. Dawson noted that between 1927 and 1955, the House largely ignored supply procedure.``Suggestions were made which would have limited the length of speeches in committee, and would have sent more estimates to smaller committees. Nothing, however, was accomplished in these years, although both the Government and opposition were dissatisfied."18
In January 1955, a special committee was appointed to consider the procedures of the House, and, by adopting its Second Report in July 1955, the House agreed to changes in the Standing Orders with respect to supply proceedings. A new Standing Order provided for a minimum of six motions to go into the Committee of Supply and allowed a two-day debate on each.19 The new rules also included a procedure to refer estimates to standing or special committees. These estimates would be withdrawn from the Committee of Supply and, upon report from the standing or special committee, would again stand referred to the Committee of Supply.
In 1921, and again during the 1925 debate on the motion to establish a special committee, it had been suggested that estimates be considered by standing committees where they could receive more careful scrutiny. Governments were, however, loath to accept the proposal. The issue of referring estimates to standing committees was revived in 1930, 1933 and 1936. Finally, in February 1955, more than 30 years after the idea was first put forward as a motion, the House agreed to establish a Committee on Estimates. Initially, it appeared to be only a smaller version of a Committee of Supply, and lacked the authority to send for persons, papers and records. In 1958, the House amended its Standing Orders to make it a standing committee rather than a special committee, and to give it the usual powers. Beginning in 1962, however, no further estimates were sent to the Committee, and with the reorganization of the committee system in 1965, it disappeared.
Until 1965, the consideration of individual votes in Committee operated without any time limit. In the 1960-61 session, the business of supply required 77 days, and in 1965-66, it required 90. Governments recognized that they could not afford to have so much of every session consumed by the supply process and in 1965 the Liberal government succeeded in obtaining opposition agreement to a rule change that allowed 36 days for supply, excepting motions and all supplementary estimates. As one commentator noted at the time, "To many MPs the application of time limitations means the loss of effective financial control by the House of Commons because henceforth Ministers could simply wait for the efflux of time to get their estimates passed."20
In April 1967, the House agreed to temporary changes to supply procedures. Among the most important changes were those limiting to four the number of occasions on which the motion could be called for the Speaker to leave the Chair for the House to go into the Committee of Supply, allotting no more than 38 days to Supply during the session, and clearly defining the business of supply.
D. 1968 Amendments
By 1962, W.F. Dawson was writing: "There is no part of procedure in the Canadian House of Commons which is so universally acknowledged to be inadequate to modern needs as the control of the House over public expenditure."21 He referred to the "inadequacy of Committee of Supply as a forum of debate on detailed expenditures, and the inability of Members of the House to perform their scrutinizing functions properly."22 Criticism of the Committee of Supply included the fact that it was too large, that it tended to be dominated by a few Members, that its discussions were often ineffectual and tedious, and that only Ministers and Parliamentary Secretaries could answer questions.Significant changes to the supply process came mainly as a result of the overall pressure of business on the House of Commons: governments increasingly found it difficult to fit all their legislative proposals into a session of normal length. Beginning in 1963 a series of special committees were appointed to overhaul the procedures and rules of the House. Their work culminated in a committee report in December 1968 which stated: "Among the most time consuming, repetitive and archaic procedures inherited by the Canadian Parliament are those relating to the business of supply."23
In December 1968, the House of Commons adopted the Fourth and Fifth Reports of a Special Procedure Committee, thereby agreeing to substantial changes in the way it dealt with the major aspects of financial proceedings.24 The Committee found that the traditional supply procedures were irrelevant to the realities of present day government. The Special Committee claimed that they did not permit an effective scrutiny of the Estimates, did not provide the House with the means of organizing meaningful debate on prearranged subjects, had failed to preserve effective parliamentary control over expenditures and had failed to guarantee an expeditious decision on appropriation bills. The basic premise of the Committee's recommendations was that detailed scrutiny of estimates could be done more efficiently in the standing committees of the House, which were to be reorganized and upgraded in importance, rather than the Committee of Supply.
The new Standing Orders adopted in December 1968 accepted the basic approach and details of the Special Committee's recommendations. Among the principal changes were the following:
- The new Standing Orders divided the parliamentary session into three periods ending on 10 December, 26 March and 30 June for the purposes of Supply.
- All estimates were referred to standing committees on or before 1 March and reported back to the House by 31 May.
- Twenty-five days were designated as "allotted" days, apportioned over the three new supply periods, during each of which two of the motions could be votable motions of non-confidence in the government. These allotted days also became known as "opposition" or "Supply" days.
- Any unused days from the Address in Reply and Budget Debates could be added to the number of allotted days.
- The business of supply was accorded precedence over all other government business if the sitting was to count as an allotted day.
- Time limits were set for speakers on allotted days.
- Supply resolutions and bills based thereon were to be disposed of by the House by the end of the specific supply period at the latest.
The transfer of estimates to the committees saved the time of the House for other business. At the same time, there were problems and dissatisfaction with the new procedures. Many opposition Members felt that they had surrendered too much by accepting the reforms. Since the Government will eventually receive funds, there was a feeling that it had become unresponsive to opposition complaints and queries.
E. Post-1968 Procedural Changes
Since the 1968 overhaul of the supply process, there have been a number of refinements and other changes.In March 1975, the House concurred in the Second Report of the Standing Committee on Procedure and Organization, which recommended a provisional standing order on supply proceedings whereby selected items in the estimates could be examined by a Committee of the Whole. With respect to the use of allotted days, it recommended that opposition Members should have the option of calling selected items in the estimates before a Committee of the Whole for debate, possible amendment, and eventual decision. This method of proceeding was used on nine occasions in 1975 and 1976, but the experiment was not renewed after the end of the Second Session of the Thirtieth Parliament.
In 1982, changes were made to the Standing Orders to provide for 48-hours notice if a recorded division on an opposition motion was to take place on a Friday. The 20-minute limit for each new speaker now applied to all Members without exception and the rule was amended to provide for a 10-minute question and comment period after each speech.
In 1985, the Standing Orders were further amended by removing the "no-confidence" reference, in accordance with the recommendation of the Special Committee on Reform of the House of Commons (the McGrath Committee).
In February 1986, provision was made for the Leader of the opposition, after notice, to extend the consideration of the Main Estimates for a named department or agency in the relevant standing committee for an additional 10 sitting days. At the same time, it was provided that on the last allotted day in the supply period ending 30 June, the motion to concur in the Main Estimates would be the subject of debate, with a provision to extend the debate beyond the normal hour of adjournment.
In June 1987, the House agreed to a number of minor technical amendments to the Standing Orders governing supply.
In 1991, a number of changes were made to the Standing Orders. The number of allotted days in a normal year was reduced from 25 to 20, as a result of a change in the House calendar which meant that there were fewer sitting days. For each week that the House is recessed beyond the time provided for in the calendar, the Speaker is directed to reduce the number of allotted days proportionately. By the same token, for every five days that the session is extended, one opposition day is to be added. The number of votable allotted days in a Supply period has been reduced from four to three, provided that no more than eight opposition motions are voted on during the allotted 20 opposition days.
A number of changes were made to Standing Order 81 in February 1994. First, it was provided that in any calendar day, no more than one-fifth of all allotted days would fall on a Wednesday, and not more than one-fifth on a Friday. The sitting hours on Wednesday are shorter because caucus meetings are held in the morning, while on Fridays as many Members want or need to be home in their ridings. The discretion of government to determine when an allotted day is to be held is somewhat limited by this change.
In addition, standing committees were empowered to consider and report on the future fiscal year's expenditure plans and priorities of the departments and agencies whose Main Estimates are before them. Any report on expenditure plans and priorities must be made to the House up to and including the last normal sitting day in June. In the debate on the amendments to the Standing Orders, the Honourable Herb Gray, the Government House Leader, explained this change as follows:
The Estimates are complex and difficult to analyse and are, for constitutional reasons, difficult to change. In addition, their consideration is subject to a rigorous timetable. ... As a result, the examination of the Main Estimates has become rather cursory and there has been no focus for parliamentary debate on government spending before its spending priorities are actually set.25According to Mr. Gray, committee review of expenditure plans would enable "[t]he House ... [to] have the opportunity to provide the government and the public with its views on expenditure priorities before the Estimates for the next fiscal year are prepared rather than being put in the difficult position of having to deal with what amounts to almost a fait accompli when the estimates are finally tabled."26
III. NEW PROCEDURES: NEED AND OPPORTUNITY
The current procedures used by the House of Commons for reviewing and approving supply are no longer appropriate and are in need of reform. Several factors, some of them long-standing and others more recent, provide the impetus for renewal. Collectively, they constitute a persuasive argument that changing the way in which the House deals with the business of supply is both possible and an imperative that cannot be ignored for much longer.
A. Criticism of the Current Procedures
As noted in the introduction and the preceding section, observations about the shortcomings inherent in the current supply procedures are not new. However, such criticisms provide a useful point of departure and help establish the need for change. The following summary demonstrates that criticism is widespread and that the need for renewal is recognized by most.
1. Previous Parliamentary Study
In 1982, two Members of Parliament, the Honourable Ronald Huntington andClaude-André Lachance, prepared a report on the supply process for the Special Committee on Standing Orders and Procedure (Lefebvre Committee). In this report (entitled: Accountability: Closing the Loop), they noted that because Parliament lacked the resources to conduct an adequate examination of the Government's expenditure proposals, "in the present circumstances, Parliamentarians cannot properly discharge their constitutional responsibilities in this regard.''27 In 1985, the Special Committee on Reform of the House of Commons (the McGrath Committee, which built on the work of the Lefebvre Committee) reported on the powers, procedures, practices, organization and facilities of the House. On the recommendation of the McGrath Committee, the Estimates were henceforth referred automatically to the newly reformed standing committees and the Part III Estimates documents (providing greater detail of departmental programmes being financed) were introduced. Frustrations regarding supply remained, however.Toward the close of the previous (34th) Parliament, the Liaison Committee (composed of the chairs of all standing committees) issued a report on committee effectiveness. The committee observed that:
As a result of the 1968 decision to transfer estimates from Committee of the Whole to standing committees, Canadian MPs in a majority Parliament have effectively lost the power to reduce government expenditure. Members are therefore making the very rational calculation that there is no point devoting time and effort to an exercise over which they can have no influence.28According to the Liaison Committee, very few standing committees were reporting back on their review of the Estimates. In 1989, 20 standing committees had held a total of 128.1 meetings on the Estimates but produced only three reports. In 1990, the same number of committees held a total of 48.5 meetings to examine the Estimates but produced no reports. In 1991, 25 standing committees held 60 meetings to deal with the Estimates; only one report was produced.29 The Liaison Committee described the decline in attention devoted to the Estimates by standing committees as "dramatic":
Committees are indicating by the decisions they take when they schedule meetings that they see little point in committing precious time to reviewing estimates that will not be modified as long as the Government has a majority.30The Liaison Committee reported that the decision by committees not to report the Estimates was now a "virtually unanimous" practice, and called spending time looking at the Estimates in committee "a pointless exercise." As noted below (under the section of this report that deals with committees), this record has not improved.
2. Comments from Witnesses
Most of the witnesses acknowledged that the current supply process is not working adequately (although reasons given varied). Dr. J.R. Mallory cited a passage from the Lambert Committee Report to the effect that "From all sides the view is the same: the review of the Estimates is often meaningless." (First Session, Meeting No. 8, November 30, 1995, p. 8:2) Mr. Peter Dobell was equally direct in his assessment, testifying that the review of the Estimates is not something that "gives much feeling of pride to Members of Parliament." (First Session, Meeting No. 3, October 19, 1995, p. 3:11) Mr. Claude-André Lachance, a former Member of Parliament, echoed these sentiments, telling us that he had always been "frustrated with the process of looking at the Estimates as being basically an exercise in futility." (First Session, Meeting No. 6, November 23, 1995, p. 6:4) Finally, Dr. Paul Thomas wrote the Sub-Committee that the House of Commons and its Members had been relegated to a role in the financial processes of government that is "very marginal." Other observations made by witnesses confirmed these views and are referred to from time to time, and in greater detail, throughout this Report.
3. Responses from Current Members of Parliament
A survey was circulated to serving Members of Parliament in order that this report would reflect their views and preferences. Members were asked to comment on the current supply process within the committee context. Their responses consistently indicated a profound degree of dissatisfaction. Members used such expressions as "a cursory review," "futile attempts to bring about change," "not a particularly useful procedure," and "a total waste of time," to describe the current process. A general sense of frustration was pervasive: in a typical comment one Member lamented that there is "not much we can do."
B. Changes in the Government's Expenditure Management System
As Dr. C.E.S. Franks informed the Sub-Committee, the Estimates and the supply process in Parliament are only a very small part of a larger process. This process has two components: one is internal to government; the other is external and involves Parliament. As Dr. Franks indicated, all the stages of the financial cycle of government are interrelated. Thus, a major change in the structure and operation of one of these stages is sure to influence the others.Major adjustments are being made to the internal, government side of the financial cycle. These changes are intended to help government address new fiscal realities and are described, in detail, in a variety of sources.31 Some of the changes, however, could affect the parliamentary side of the process and deserve mention.
The expenditure management system will place a new emphasis on the ongoing review of programmes, and new initiatives will be funded by reallocating moneys from programmes no longer considered as priorities. Departments are being required to operate on the basis of business plans that reflect targets established by the Budget and government priorities. At the same time, an effort is underway to give Ministers and departments more flexibility to shift resources within approved limits. More attention is to be devoted to improving the measurement and reporting of results produced by programmes and departments. This information is to be made available to Ministers, Parliamentarians and the public. The intention is to aid decision-making and facilitate accountability. Finally, departments are being required to produce documents setting forth their plans and priorities for the Estimates year and the next two planning years (Departmental plans). The Departmental plans are being provided to standing committees at the same time as they review the Estimates. Committees are able to study and report on the documents, thus offering them an opportunity to influence expenditure plans beyond the immediate fiscal year.
C. The Improved Reporting to Parliament Project
One particularly important change to the government's expenditure management system involves new ways of reporting information to Parliament. In March 1996, six Departments (Agriculture and Agri-Food Canada; Fisheries and Oceans; Indian and Northern Affairs Canada; Natural Resources Canada; Revenue Canada; and Transport Canada) issued re-designed Part III Estimates on a pilot basis. This effort, which was endorsed by the Committee (see Preface), promises to make available information on departmental activities, expenditures, and plans in ways that will facilitate use and comprehension. Progress of the pilot project has been such that it has been enlarged to cover a total of 16 departments and agencies, a move endorsed by the Committee in its Twenty-Third Report of the Second Session, 35th Parliament. Additional proposals to replace Part III documents with separate information on departmental plans and performance, and to provide this information in the spring and the fall, respectively, also show promise and have received the support of the Committee. If the goals of this project are achieved, committees will be able to examine and report on departmental expenditure plans in the spring. Then, in the fall, departments will submit reports on their performance in delivering major programmes and policies.
D. Changes to the Standing Orders
The new expenditure management system and the reformed Estimates documents emphasize that plans and priorities that extend beyond the upcoming financial year. Accordingly, a change made to the Standing Orders in February 1994 gave committees the authority to examine and report on the future fiscal plans of the departments and agencies that relate to their mandates. This change offers committees an opportunity to influence future expenditures, a potential that previously was not so clearly available to them.Collectively, implementation of the changes above should, in theory, make it easier for Parliamentarians and standing committees to participate in the government's financial cycle and should do much to relieve the frustrations experienced by those who feel that Parliament has been marginalized. The result may also be a context conducive to an examination of how the House and its committees receive, consider, and dispose of information related to the granting of supply. The tools are being provided; it remains to be determined how best they may be employed.
E. The Needs and Expectations of Canadians
The fifth factor is more profound and pressing than the others: the expectations and requirements of Canadians, both as taxpayers and as citizens. Debt and deficits, the fewer resources available to governments, debate as to how these resources should be best applied, and over the proper role for Government, all figure prominently in the public discourse of the day. Canadians expect that their Parliament will play a central role in these debates: giving the issues a thorough public airing; exploring alternative policy options, holding Government and its bureaucracy accountable, educating the public while respecting and representing its views and concerns, and at the end of the day, being at the table when the difficult choices are made.Recent surveys show, however, that Canadians are questioning the capacity of their Parliament to fulfil these expectations. In 1993, for example, a Gallup Poll showed that only 16 percent of those questioned indicated that they had a great deal of respect for the House of Commons, a dramatic decrease from the 38 percent who had expressed the same opinion 14 years earlier.32 Thus, decisive steps must be taken to restore the confidence of Canadians in their House of Commons. Improvements to the procedures surrounding the business of supply must be integral to this effort.
IV. COMPLETING THE CIRCLE:
NEW PROCEDURES FOR THE BUSINESS OF
SUPPLY
The preceding section demonstrates the presence of conditions favouring new
approaches to the business of supply. There is a consensus among Parliamentarians and
students of Parliament that the current procedures leave a great deal to be desired. At the
same time, Government has made significant changes to its expenditure management
system and the reporting of financial information to Parliament, paving the way to a more
thorough review of supply. Canadians, for their part, expect Parliament to make full use of
these new opportunities. The Sub-Committee's challenge has been to identify ways in
which this might be accomplished.
After listening to the witnesses and having thought about and discussed the supply process in all of its facets, the Sub-Committee and the Committee are convinced that the key to improvement lies in several areas. A combination of adjustments to the committee structure, new tools, better incentives, improved reporting of financial information to Parliament, and a willingness on the part of committees and their members to take full advantage of new opportunities will, we are convinced, result in a scrutiny of government expenditures that is thorough and productive.
A. The Role of Standing Committees
Since 1968, the Estimates have been examined by the standing committees of the House. This still represents the most efficient means of subjecting the Government's requests for supply to the detailed scrutiny required. However, the evidence clearly shows that in recent years standing committees have been devoting little effort to this aspect of their duties. In 1990-91, committees held a total of 101.5 meetings on the Estimates: none of them reported back to the House. In 1991-92, the number of meetings fell to 20; one report was issued. In 1992-93 and 1993-94, 59 and 48.8 meetings were held respectively; the outcome for each fiscal year was the same ' one report back to the House.33 To put this into perspective, committees held a total of 467 meetings for the period 1993-94 and issued 82 reports. The 48.8 meetings on the Estimates represent 10.5 percent of the total meetings held: the one report represents less than 1 percent of the reports issued during this period. When it is seen that the House voted almost $49 billions in appropriations for this period34, the inadequacy of committee study of the Estimates becomes depressingly obvious.One of the witnesses, Dr. Franks, expressed doubts that changes to the committee system or to the techniques used by committees to examine the Estimates would result in any improvement. Although we understand this view, the Committee does not entirely share it. Yes, there are constraints that limit committee effectiveness, but these need not be completely debilitating. The Committee believes that there are ways in which committee study of the Estimates can be made more effective and are confident that the following suggestions will produce positive results.
1. New Structures
a. A Committee to Monitor and Review the Estimates and Supply Process
The study of the estimates and supply processes was motivated by the desire to achieve three very closely interrelated objectives: enhanced participation of individual Members of the House in the work on the estimates and supply; strengthened ability of the House to hold Government to account; and better scrutiny of the proposed expenditures of Government. To attain these objectives the Committee, together with the witnesses, consider that change is desirable in several areas. Undoubtedly, some of the changes proposed are more crucial in obtaining the desired results than others. The Committee is convinced, however, that altering one or two aspects of the process will result in partial improvement only. What the Committee seeks is a process, each of whose parts function in harmony to attain collectively goals that are presently eluding Parliament. The Committee therefore begins by focusing on possible improvements to the role of standing committees in the estimates and supply processes.Under current arrangements, Estimates are automatically referred to the standing committees with the appropriate departmental mandate. Although the logic involved is sound, the results have been disappointing. The record demonstrates beyond doubt that standing committees have devoted little time to studying the Estimates and even less to reporting back to the House on them. Some witnesses suggested that assigning the Estimates to committees already burdened with other business may in part explain why so little is accomplished. As such, they asserted, departmental Estimates have to compete with a variety of pressing issues for committee attention, and thus do not get the thorough consideration they deserve. Thus, the Sub-Committee began by examining the way in which standing committee study of the Estimates is structured in order to determine if changes might produce improvements. Other sources of this lack of thorough scrutiny involve the absence of incentives and the application of the confidence convention under conditions of majority government and are dealt with further on in our report.
Witnesses who felt that the problem of inadequate scrutiny was in part a structural one suggested a single committee be created whose only responsibility would be to receive, review, and report on the Estimates of all departments and agencies. Advocates of this approach had much to say in its favour. Mr. Peter Dobell said that such a committee would not be distracted by other kinds of business and would attract Members with a specific interest in administration. Mr. Claude-André Lachance argued that such a committee would be able to develop an overall sense of government financial expenditure (what he called the "forty-thousand-foot view"). In his words, such a committee would
take ... all the Estimates and do ... with those Estimates what Cabinet does for the Estimates ... look at the total picture and ... begin to think its way through in terms of what the overall priorities of the government are ... [and] evaluate those priorities... (First Session, Meeting No. 6, November 23, 1995, p. 6:11, 6:12)Mr. Lachance went even further, arguing that this committee would free other standing committees to focus on their real responsibilities, to "deal with what it is delegated to deal with in depth." (First Session, Meeting No. 6, November 23, 1995, p. 6:5) The existence of a single Estimates Committee would, in his view, cause Parliament to become more relevant, the supply process more effective and partisanship less pronounced. Dr. Paul Thomas, also supportive of the idea in his written submission, proposing that the new committee be chaired by a Member from the opposition and served by a permanent staff.
Some particularly compelling evidence favouring this option came from New Zealand's High Commissioner to Canada, the Honourable Maurice McTigue. As a former Minister in his country's government and with the benefit of eight years of service in New Zealand's House of Representatives, the High Commissioner has direct knowledge of how a single Estimates committee works.
Like the House of Commons, the House of Representatives does much of its work through select [standing] committees, however, appropriation bills (which contain the Estimates) are all referred to a Finance and Expenditure Committee. This committee then has the choice of either examining individual departmental estimates itself or, of allocating them to the appropriate select committee. When the latter course is followed, the Finance and Expenditure Committee may provide advice and instruction to the select committees which, after completing their examination, report back to it. The Committee may ask for further study, especially if the estimates involved concern high-risk, high-cost activities. In following this procedure, New Zealand's Finance and Expenditure Committee manages to take the "forty-thousand-foot view" advocated by Mr. Lachance while not rendering the work involved too burdensome.
Other witnesses were less enthusiastic. Dr. Mallory claimed that there would not be enough members on a single committee to deal with all of the subjects requiring its attention. Dr. Lindquist was also doubtful, and instead proposed a committee to study the quality of the Estimates. Dr. Franks agreed that it would be an advantage to have one committee with the clear responsibility for handling Estimates but said that examination of the Estimates would thereby be divorced from the standing committees' ongoing scrutiny of departments. A similar concern was expressed by the Auditor General, who argued that having standing committees review Estimates "makes it easier to reconcile policy direction and budgetary objectives." (First Session, Meeting No. 3, October 19, 1995,p. 3:10) "There is a certain rationale," he cautioned, "that might be lost if you split off completely the budgetary review of the other considerations." (First Session, Meeting No. 3, October 19, 1995, p. 3:10)
Following careful consideration, the Sub-Committee found merit in the views of all of its witnesses, views that reflect important concerns that must be taken into account. It is evident, however, that exclusive reliance on one committee to study the Estimates would bring with it new, quite unacceptable drawbacks. These drawbacks were clearly outlined by witnesses who spoke against the creation of a single committee. In particular, we were in absolute agreement with those who pointed out that standing committees possess knowledge of departmental operations and mandates vital to an informed study of the estimates. Study of the estimates, in turn, can result in more effective committee work on other aspects of departmental activities. In this way, committees can discern the links between policy objectives and expenditure. As the Auditor General told the Sub-Committee, referral of the Estimates to standing committees makes it easier to reconcile policy direction, and budgetary objectives. It would be unwise to discard these advantages.
On the other hand, almost thirty years of experience with the current system has not produced the thorough scrutiny that the Estimates deserve. The Committee is therefore convinced that a compromise between the status quo and a single-committee approach can be achieved that would be capable of solving many of the problems associated with committee review of the estimates without abandoning many of the benefits that exist under current arrangements.
Based on careful deliberations, the Committee believes that the best approach would be to establish a committee whose principal task would be to review the supply and Estimates process and assist standing committees as they review the Estimates. This new committee should be designated the Standing Committee on the Estimates (hereafter, the Estimates Committee), reflecting its chief preoccupation. Under this approach the principal responsibility for reviewing and reporting on departmental estimates would remain with the standing committees while a new committee would oversee and coordinate the process complement - not assume or duplicate - their estimates responsibilities.
To be more specific, the Committee proposes that the new Committee be given, as its principal responsibility, the task of reviewing the Estimates and supply process and recommending improvements to it. In this respect, the Committee would carry on the work of the Sub-Committee on the Business of Supply which has reviewed the Estimates and supply process and received proposals for its amelioration. The Sub-Committee, together with a parliamentary working group, has also served as a forum for parliamentary review of the processes surrounding departmental plans and a pilot project to develop departmental performance reports. As well, it has examined and reported on proposed changes to the votes in the Estimates. All of the evidence suggests that these changes are in evolution and may continue for the next two or three years; the Government, for example, has announced its intention to move to full accrual accounting in the immediate future, a change that may affect the Estimates and supply process. With major reforms still on the horizon, it is our strong conviction that a committee of the House represent and defend the interests of the House of Commons and Parliamentarians by exercising continuing oversight of the supply and Estimates process. Giving this important task to a full committee of the House would give this matter the profile and importance which it deserves. The Committee is also interested in generating an ongoing review of the work of standing committees on the Estimates referred to them; this task should be made explicit in the new committee's mandate. The Committee therefore recommends:
That the Standing Orders be amended to create a Standing Committee on the Estimates with a mandate to monitor and review the Estimates and supply process and related matters, and the work of the standing committees on the Estimates referred to them.
If the work of the Estimates Committee is to contribute meaningfully to the overall improvement to the Estimates and supply process, the House must be regularly made aware of the Committee's deliberations, conclusions, and recommendations. Accordingly, the new committee's mandate should require it to report to the House on at least an annual basis. These reports could include observations on the functioning of the supply and Estimates process, and recommendations aimed at enhancing incentives, removing irritants, and generally strengthening the House of Commons' role in this area. Accordingly, the Committee recommends:
That the Standing Committee on the Estimates be specifically empowered to report to the House on the Estimates and supply process on at least an annual basis.
b. The Relationship between an Estimates Committee and Other Standing Committees
There is a second function that the proposed committee could perform that would fit well with its principal responsibilities while clearly establishing its relationship with other standing committees. That role would consist of actively supporting the efforts of other standing committees as they examine the Estimates that are before them. This support could be provided in three ways; through the Estimates Committee's own reviews of certain estimates or aspects thereof, by furnishing advice on the Estimates process, and by acting as an advocate on the committees' behalf for improvements to the Estimates process.There are two areas in which the proposed committee could play a direct role in the examination of the Estimates. The first involves instances in which a standing committee might be unable, for whatever reason, to conduct a review of the Estimates referred to it. A combination of better information and incentives should make this unlikely. However, in the event that such cases do occur, the Estimates Committee should be able to take steps to ensure that the Estimates in question are given adequate scrutiny. This should take place only as a last resort and at the request of the committee bearing primary responsibility. The Estimates Committee should make the final determination as to whether or not to act on such requests.
The second form of review could focus on proposed expenditures that involve several departments. One committee Chair pointed out that standing committee review of departmental estimates often does not coincide with the full range of government activities in a given programme area. We have also observed that in a number of instances, major programmes are delivered by more than one department. As well, some very broad areas of expenditure that affect all of government - for example, information technology - are not the subject of adequate parliamentary scrutiny. The examination of the Estimates, departmental plans and pilot performance reports of single departments as currently structured under the Estimates process does not seem adequate in these cases. In such instances, an Estimates Committee could - with the agreement and cooperation of the appropriate standing committees, or at their request - assume the responsibility for reviewing proposed expenditure on a programme basis. The cooperation of the appropriate standing committees would then provide the Estimates Committee with access to the specialized knowledge of departmental programmes and activities necessary for a review of this kind. The Committee therefore thinks it both desirable and feasible that the Estimates Committee review proposed expenditures on a programme basis, when a programme is delivered by more than one department. The Committee accordingly recommends:
That the Standing Committee on the Estimates be authorized to undertake reviews of certain Estimates, issues involving government-wide expenditure, and proposed expenditures on a programme basis when more than one department or agency is responsible for delivery when desirable, with the agreement, support, and cooperation of the appropriate standing committees.
The second way in which the Standing Committee on the Estimates could support the work of standing committees with regard to the Estimates would be by supplying advice and general information on the process. The Committee notes, for example, that in New Zealand, the Finance and Expenditure Committee assists select committees by preparing questionnaires that are submitted to departments in conjunction with study of the Estimates. In the case of the new proposed committee, the Committee foresees that it will accumulate expertise and knowledge that could be of use to standing committees. The Committee therefore recommends:
That upon request, the Standing Committee on the Estimates provide advice, support, and information to standing committees engaged in the review of the Estimates.
Finally, it is the Committee's intention that the new committee be perceived by standing committees as a vehicle for improving the Estimates process. One way of ensuring that standing committees adopt this perception is by encouraging them to communicate their concerns about the content and form of the Estimates and the process involved in their preparation and review to the Estimates Committee. The Committee therefore recommends:
That standing committees, when reporting on the Estimates, report to the House any concerns they may have regarding the format of the Estimates or the Estimates process, and any such reports to be deemed permanently referred to the Standing Committee on the Estimates.
c. Crown Corporations
Some of the witnesses expressed a concern that the planned expenditures of Crown corporations were not receiving adequate parliamentary scrutiny and recommended that the Sub-Committee devote particular attention to this issue.The federal government relies on several forms of organization to deliver its programmes and services. Departments are one form of organization and Crown agencies, distinguished from departments by their greater degree of autonomy from both Government and Parliament, are a second. Crown corporations fall under the general category of Crown agencies. Each Crown corporation is a legally distinct entity that is wholly owned by the Crown and managed by a board of directors.
Under the terms Part X of the Financial Administration Act, Crown corporations are accountable to Parliament through the appropriate Minister. Accordingly, when Crown corporations are to be accorded funding out of the Consolidated Revenue Fund, the request for such funding is listed under the appropriate Minister's department in Part II of the Estimates. Crown corporations (and certain exempt agencies) do not submit Part III Estimates. Instead, most Crown corporations are required by the Financial Administration Act to table summaries of their corporate plans and operating and capital budgets.
Total appropriations for Crown corporations are substantial, with $4.1 billions forecast for this purpose for the 1997-98 fiscal year.35 During the 1994-95, 27 Crown corporations received $4,588 million in budgetary appropriations. Of these 27 entities, five corporations received 81 percent of the total appropriations.36
While this is not the place for an in-depth discussion of the funding of Crown corporations, it can be argued that due to their complexity and expense, the appropriations destined to these agencies warrant closer parliamentary scrutiny than they currently receive.
Some witnesses suggested that the responsibility for reviewing parliamentary appropriations to Crown corporations should be assigned to a single committee, in much the same manner that a single committee would review all departmental estimates. This step was advocated, in particular, by the Honourable Ronald Huntington, who referred us to a report that he and fellow former Member of Parliament Claude-André Lachance had written in 1982 on Parliament's role in holding Government accountable.37 The authors recommended that one committee be given the responsibility of receiving the annual reports of all Crown corporations, that it be able to refer these reports to the appropriate standing committees; and that it be able to investigate the mandate and conduct of Crown corporations and examine their executives and boards of directors.38
Earlier, concern was expressed that an Estimates Committee not diminish the primary role of committees in the examination of the Estimates. This same concern applies equally to the scrutiny of Crown corporations; these entities are far too numerous, too diverse in terms of structure and mandate, and too complex to lend themselves to the oversight of one committee alone. Clearly, the principal responsibility for the oversight of Crown corporations must remain with the appropriate standing committees. The Committee also notes that the Auditor General is now responsible for auditing the accounts of Crown corporations and that the annual report on Crown corporations (that replaced volume III of the Public Accounts of Canada in 1992) tabled by the President of Treasury Board is automatically referred to the Standing Committee on Public Accounts. The Committee is concerned, however, about the adequacy of the current mechanisms used by Crown corporations to report information on proposed expenditures to Parliament; these mechanisms require regular review to ensure that Parliament's needs are being met fully. The Committee therefore recommends:
That the Standing Committee on the Estimates be authorized to undertake periodic reviews of the mechanisms used by Crown corporations to report to Parliament and the adequacy of the means by which they receive appropriations from Parliament.
Furthermore, the Committee believes that the need exists for a macro-level review of the role, mandates, activities, and financial management of Crown corporations, especially as they relate to requests for, and use of, parliamentary appropriations. This is a role that could be undertaken by the Estimates Committee. Accordingly, the Committee recommends:
That the Standing Committee on the Estimates be authorized to undertake, with the agreement, cooperation and participation of the appropriate standing committees, periodic reviews of the role, mandate, expenditures, and expenditure regimes, either collectively or individually, of Crown corporations within the structure of the Canadian federal government.
The proposal, however, constitutes only a partial answer to the need perceived by some of the witnesses for enhanced parliamentary scrutiny of Crown corporations. The other necessary element is the quality of the work done by standing committees in this regard. Accordingly, the Committee urges standing committees with the mandate to review Crown corporations to take the concerns expressed by some of the witnesses into account.
d. Overall Government Expenditures: The Forty-Thousand-Foot View
The Committee agrees with some of the witnesses who asserted that current circumstances do not help Parliamentarians to develop a better understanding of government expenditure in its entirety. As one of the Chairs told the Sub-Committee, his committee's big problem is that "we really don't see the whole picture of anything." (Second Session, Meeting No. 4, June 3, 1996, p. 4:5)Witnesses proposed two ways of developing this kind of awareness. Some argued that a single committee with the exclusive mandate to review the Estimates of all departments and agencies could achieve this goal. The Committee rejects this approach. Other witnesses suggested that an Estimates Committee be given an enlarged mandate encompassing the entire range of the federal government's financial activities. This step would roughly approximate the situation in New Zealand. In that country, the Finance and Expenditure Committee shoulders more than just the responsibility for the Estimates: it examines broad issues of public expenditure and reviews the Crown's annual financial statements, draft financial legislation, and the reports of the Auditor General.
In the Canadian House of Commons, many of these functions are currently divided between the Standing Committee on Finance and the Standing Committee on Public Accounts. The Standing Committee on Finance is responsible for examining the economic and financial policies and legislation of government. In the past, this work has included review of such issues as tax reform, monetary policy and financial institutions. For its part, the Standing Committee on Public Accounts reviews the completed expenditures of government. In conjunction with this mandate, this Committee receives the Public Accounts of Canada, the annual financial statement of the government's financial transactions over the past fiscal year. The Committee also reviews and reports on the reports of the Auditor General. If the advice of some witnesses were adopted, the mandates of these committees - including that of the proposed Estimates Committee - would be combined under a new committee.
The Committee also cannot agree to this proposal. It is clear that the duties and attendant workloads of standing committees on Finance and Public Accounts are considerable and require a full commitment of time and attention from their members. The Committee is far from convinced that anything would be gained from merging them; on the contrary, much would be lost. Thus, upon careful reflection, the Committee has determined that it would not be wise to merge the responsibilities of these two major committees and to fold them into a new committee that also would assume principal responsibility for the Estimates.
However, the Committee believes that there is a way of obtaining the "forty-thousand-foot view" of government financial activities and expenditures while atthe same time ensuring that potential overlap and duplication - and the potential for friction - between financial-area committees is kept to a minimum.
The answer lies in directing the Estimates Committee to coordinate its activities with other financial-sector committees and to meet jointly with them - as per the authority already granted standing committees under Standing Order 108.(1)(a) - to review areas of collective interest and concern. The Committee therefore recommends:
That the Standing Committee on the Estimates coordinate its activities with the Standing Committee on Finance and the Standing Committee on Public Accounts and, that from time to time, and when appropriate, it sit jointly with either or both of these committees to examine such broad issues as government-wide expenditure and revenue generation.
Proposed Standing Committee on the Estimates
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e. Televised Proceedings
The mandate of the proposed committee would be an extremely important one. The goals set for it involve focusing the attention, not only of Parliament but of a much wider community as well, on the Estimates and on the processes surrounding their preparation and review. In order to enhance the Estimates Committee's ability to achieve this goal, it is the Committee's belief that its activities should be as accessible as possible to Members of Parliament and the general public. Accordingly, the Committee recommends:That the Standing Committee on the Estimates be given a permanent mandate to televise its proceedings.
f. Staff Resources
A frequent suggestion during the Sub-Committee's hearings, was for committees to have the support of expert staff during the period that the Estimates are under review. Mr. Dobell, Director of the Parliamentary Centre, asserted that substantial staff resources are essential. With regard to the Estimates, committees will need expert support in the field of financial management. (First Session, Meeting No. 3, October 19, 1995) The Honourable Ronald Huntington agreed, stating that "it's not minimal committee assistance that you need, it's of a sizable magnitude." Another witness told the Sub-Committee that "Parliament doesn't have the resources to stand up to the enormous resources of government." The Committee believes that this must change.The most effective way of addressing this problem would be by assigning a small, permanent research staff to the Estimates Committee. Members of this staff should have backgrounds in public finance and financial management. While work for the Estimates Committee would be its principal preoccupation, this staff could also serve as a source of advice for other standing committees and individual Members with regard to the Estimates. The Committee therefore recommends:
That the Standing Committee on the Estimates be provided with a small, permanent, dedicated research staff.
g. Assessment of the Proposed Committee's Mandate and Performance
The Committee is aware that in recommending the creation of an Estimates Committee with the mandate set forth above, it is venturing into uncharted territory. The proposed committee would be given responsibilities quite different from those associated with existing standing committees. It would bear little resemblance either to New Zealand's Finance and Expenditure Committee or to the Estimates Committee that previously existed in our own House of Commons. As a consequence, it is difficult to predict exactly how the proposed committee will function in practice. There are no assurances that it will be able to fulfil its basic mandate to support standing committees in their estimates work and to promote further improvement to the supply process equipped with the tools we recommend it be given. Experience and the passage of time alone will show whether the proposed committee has a useful contribution to make to the Estimates and supply processes.Some members of the Sub-Committee have reservations regarding the creation of a Standing Committee on the Estimates. Concerns were expressed that the formation of such a committee would not solve the fundamental problems and frustrations associated with current study of the Estimates. Furthermore, some worries were expressed that an Estimates Committee might duplicate the work already being preformed by existing standing committees and Members might not show an interest in serving on it. Our recommendations have attempted to address these matters. Effort will be required, however, to ensure that these concerns do not materialize and that the new committee achieves its objectives and performs a useful role.
There is one other issue of great importance that the Committee wishes to draw attention to. During the Sub-Committee's meetings, discussions occurred on the desirability of having a Member of the opposition chair the proposed Estimates Committee. Opinions on this question were equally divided. Those who favoured this option argued that an opposition Member would be best suited to defending the interests of all Members of Parliament with respect to the Estimates and Supply. They drew a parallel between the new committee and the Standing Committee on Public Accounts, chaired since 1958 by an opposition Member. It was noted that this committee has functioned reasonably well and that its Chair must be conscious of the need to work cooperatively with all committee members. On the other hand, those who did not support this option asserted that it was not advisable at this time. The Estimates, they pointed out, are directly related to the major policies of Government: Parliament's role is to scrutinize and criticize these policies - not to be their principal architect. Since no consensus was possible on this issue, the Sub-Committee decided to flag it as a matter of concern that should be examined in depth during a subsequent review of the Estimates Committee. In the meantime, the possibility of naming an opposition Member as Chair is one which could be seriously considered when it comes time to establish the new committee.
The Committee therefore thinks it prudent that at a certain point, the mandate and performance of the proposed committee be assessed to determine whether or not it is meeting the expectations established for it. Such a review would either confirm the committee's utility, allow for adjustments to be made, or lead to its dissolution if its goals were not being met. Accordingly, the Committee recommends:
That the mandate, objectives, and effectiveness of the Standing Committee on the Estimates be subject to review no later than two supply cycles after the Committee's inception.
h. The Basic Costs Associated with the Creation of a Single Estimates Committee
Further on in this Report, the Committee urges standing committees to take into consideration the costs associated with implementation of policies they propose and, where possible, to include a discussion of these costs in the reports that they table. It is appropriate, therefore, that we include a basic estimate of the costs involved in the creation and maintenance of a Standing Committee on the Estimates.39During the fiscal year 1995-96, the latest period for which information is available, standing committees spent a total of $1,179,662.40 Of the standing committees, the Finance Committee spent the most, approximately $188,557, or 13.82 percent of total committee expenditures. The lowest costs were incurred by the Standing Committees on Public Accounts, Natural Resources, and the Liaison Committee which spent $3,174.00, $3,301.00, and $1,211.00, respectively.
Of its expenditures, the Standing Committee on Finance spent the greatest portion on travel ($124,859.00) and expert witnesses ($34,041.00). These expenditures are in keeping with the Committee's mandate which, in particular, authorizes it to conduct pre-Budget hearings. Of the committees expending the least during this period, the Standing Committee on Public Accounts is most similar in terms of its mandate and responsibilities to the proposed committee on the Estimates. There are two fundamental sources of this similarity, both of them determined by mandates which produce a certain pattern of expenditure.
The Public Accounts Committee is given the task of reviewing government expenditure on a retrospective basis. In conducting its business, the Standing Committee hears from two categories of witness: senior public servants and the Auditor General of Canada. These witnesses are located in Ottawa and, as a consequence, travel expenses are not incurred. As public servants, their appearance as witnesses comes at no cost to the Committee.
The Committee does not envisage any necessity for the proposed Standing Committee on the Estimates to travel outside Ottawa. The mandate that is proposed for this committee would involve the investigation of internal government practices and the review of the activities of other standing committees as they relate to the Estimates. Furthermore, as a consequence of this focus, it is highly probable that most witnesses would come from government departments and agencies. The Committee foresees, for example, that officials from Treasury Board Secretariat, the Department of Finance, and perhaps from the Office of the Auditor General, would make regular appearances before the Committee. As is the case for the Public Accounts Committee, these appearances would entail no additional costs to the Standing Committee on the Estimates.
At the same time, however, there is the distinct possibility that the proposed committee, because of the complex and highly technical aspects of the issues under its mandate, might require the assistance of expert witnesses from time to time. Some of these witnesses would undoubtedly come from outside the national capital region and thus would need to have their travel expenses paid for by the committee. Since the advice and assistance of other experts might only be available through contract, funds for this purpose would have to be made available as well.
In 1995-96, 19 out of 20 standing committees paid a total of $381,651 for expenses incurred by witnesses. The average spent by the committees for this purpose was approximately $20,087. Using a generous interpretation of what the Estimates Committee would need in terms of assistance from witnesses from outside the national capital region, the Committee believes that an amount representing the average expenditure made by committees should be estimated for this purpose.
During the same fiscal year, only six committees engaged the services of consultants, for a total expenditure of $147,761. The average expenditure was approximately $24,626. Once more, using a generous interpretation of what the committee's needs would likely be suggests that the average expenditure would be required for the purpose of hiring outside consultants.
Combining these amounts and adding them to the expenditures for fiscal year 1995-96 made by the committee most similar to the proposed one - the Standing Committee on Public Accounts (with its expenditures for witness expenses of $2,067 factored out) - produces basic estimated expenditures for the Estimates Committee of approximately $52,706.00.
This estimate is based on arbitrary calculations and is quite basic. It does not include, for example, other costs that committees usually incur such as the cost of simultaneous translation during meetings and other support services. However, the Committee thinks that the figure produced represents the basic maximum amount likely to be needed. It is important, in the Committee's view, not to underestimate the committee's requirements during its first year of operation. Furthermore, although generous, the amount identified forecasts expenditures for the Estimates Committee that would be roughly in the middle of standing committees' spending during 1995-96, or about one quarter spent by the Standing Committee on Finance. Given its responsibilities, the expenditures calculated for the Estimates Committee are, the Committee believes, quite modest.
The Committee hastens to add that the Estimates Committee need not spend all of this amount and that in all probability it will not. Consequently, as experience with the committee grows, its budgets can be adjusted accordingly; reductions in the future are therefore a reasonable expectation.
i. Committee Membership
Several of the witnesses stressed the importance of having committee members with both an interest in, and knowledge of, the departments and agencies whose Estimates they are reviewing.Knowledgeable and motivated committee members are essential for the effective review of departmental Estimates. Transient membership, while it may afford an opportunity for more Members to develop a broad understanding of the workings of government and public policy, defeats this capacity. New committee members, as some Chairs indicated to us, do not always have the understanding of a department and its mandate necessary to review its Estimates.
The Committee believes that if changes in committee composition must be made, consideration should be given to maintaining a level of expertise. The Committee therefore recommends:
That if or when some rotation of committee membership must take place, the need to maintain a workable level of expertise on committees be taken into account.
Members of Parliament must respond to numerous obligations, many of them pressing and many of them occurring simultaneously. The practice of allowing substitutes to sit on committees while regular members are occupied elsewhere has developed in recognition of this basic fact of parliamentary life. While substitution is a necessary irritant in terms of a committee's normal functioning, the Committee believes that it should be avoided while the Estimates are under review. As witnesses have noted, knowledge of a department or agency is essential if committee members are to fulfil their responsibilities adequately. In addition, the careful avoidance of substitutions while the Estimates are being reviewed would send a powerful message to Members that this aspect of committee work is seen as crucially important by party leadership. Accordingly, the Committee recommends:
That every effort be made to avoid the practice of substituting members on committees while committees are engaged in the study of the Estimates.
2. New Tools
A consistent theme running throughout Members' responses to the questionnaire was the need to influence expenditure in a more meaningful way. The Committee sympathizes with these desires. If committees are going to do a better job of examining the Estimates, they need more opportunities to influence expenditure, more authority, and better information. Once improvements have been made, committees should be able to bring new attitudes and approaches to their study of the Estimates.Currently, when standing committees deal with the Estimates, they may reject the Estimate, they may reduce it, or they may simply approve it. When the Government holds a majority of seats in the House, the first two options are highly unlikely. Even when minority governments are in office, reductions in proposed expenditure have been rare and minuscule.41 Committees' ability to influence the Estimates is further constrained by constitutional provisions stipulating that only the Crown (i.e. the Government) may introduce or recommend the appropriation of money out of public revenues. As a consequence, committees may not increase a vote or modify its intent by changing its purpose.
The result of these constraints, ' whether they arise from political or constitutional considerations, ' has been to discourage many committees and their members from taking any action at all with respect to the Estimates.
The Committee believes that new opportunities to influence expenditure plans ' some newly available and others which we will propose ' will eliminate these frustrations to a significant extent.
a. The Ability to Reallocate Funds
Some of the witnesses suggested that committees and their members might focus more attention on the Estimates if they could propose reallocations - reductions to an expenditure in one area coupled with an increase in another. According to one witness, this might be facilitated were departments to move to a single vote in the Estimates. If this happens, Mr. Peter Dobell indicated that:
It could be said that shifting expenditure from one activity or one programme to another would not involve an increase in expenditure ... [and could] be coupled with a decision to make a corresponding reduction in other programmes. (First Session, MeetingNo. 3, October 19, 1995, p. 3:15)The Clerk of the House pointed out that there may be another way of accomplishing the same goal without having to change the structure of the votes in the Estimates. He stated that the Government could, if it wished, indicate that it was prepared to accept reallocations proposed by committees. According to Mr. Marleau:
[reallocations] would require the consent of the Crown ... either by doing it up front on the tabling of the Estimates or doing it through the final supply process where the Minister might bring a motion forward saying we agree with the committee to go this route and that route. (First Session, Meeting No. 1, September 28, 1995, p. 1:15)Some might argue that, since Section 54 of the Constitution Act, 1867, repeated as Standing Order 79(1) requires a Royal Recommendation for any vote, bill, or resolution containing financial provisions, committees would be effectively blocked from making any proposal to increase spending on a given activity. As the Special Committee on Reform of the House of Commons (McGrath Committee) pointed out, however, the Constitution specifies only that a Royal Recommendation must be signified if a vote, bill, or resolution containing financial provisions is to be adopted or passed. As a result of amendments to the Standing Orders, a Royal Recommendation is no longer required to be brought forward at the beginning of the process but may be provided later. Therefore, a government could, if it wished, accept a committee proposal to increase spending on a particular programme or activity accompanied by an equivalent reduction in another area, and secure Royal Recommendation for it prior to its adoption by the House.
In light of the evidence given by the witnesses, the Committee believes that allowing standing committees an opportunity to propose some reallocations is feasible. A change of this nature, even if modest in scope, could provide the additional incentive required to restore the interest of Members in the Estimates and Supply process.
The Committee therefore, suggests that standing committees be able to propose reallocations in the following way. On the basis of careful examination of the estimates referred to it, an examination that includes close consultation with the Minister(s) and/or departmental officials, a standing committee could decide to reduce a vote within its estimates - a power that committees already have. Having made a reduction, the standing committee could subsequently propose a reallocation to another vote in its estimates. Such proposed reallocations could not, in the aggregate, exceed the reductions made by the committee. Furthermore, because this authority would represent a significant departure from current circumstances, the Committee proposes that such proposed increases be kept to within 5 percent of the given vote's original amount.
It is important to point out that under the Committee's suggestion, standing committees would have the opportunity to propose reallocations only to estimates that are referred to them. Some standing committees receive the estimates of more than one department or agency; it is equally important to point out that these committees would be restricted to proposing reallocations within the Estimates of the departments under their scrutiny - not from one department to another.
Having considered the matter carefully, the Committee accordingly recommends:
That standing committees studying the Estimates be permitted to report to the House proposing the reallocation of up to a maximum of 5 percent within each of the Estimates referred to them.
The authority to propose reallocations would be a powerful new tool that should be used sparingly and cautiously by committees. It is important that such proposals be based on evidence that is clear, accurate, and compelling. Committees, in other words, should be obliged to support their proposals fully. The Committee therefore recommends:
That standing committees, when they propose the reallocation of funds, justify their proposals with evidence that is clear and supportable.
Once a committee had proposed a reallocation, it would be up to Government to determine whether it was favourable to such a measure. Since such reallocations would involve increasing expenditure in a given area, a Government agreeable to a reallocation would have to signify its consent by bringing in a modified Royal Recommendation to cover the increase. The Committee therefore recommends:
That the Standing Orders be amended in order to give Government the option of bringing in a modified Royal Recommendation to cover a reallocation proposed by a standing committee.
Under the Committee's proposals, a Government that did not wish to follow the recommendations of a Standing Committee regarding reallocation could simply not bring in a Royal Recommendation to cover it. In addition, it would have to table a motion restoring the reductions that had been made. However, it is the Committee's belief that when standing committees make proposals of this sort, these proposals must be accorded serious consideration. Acceptance of such proposals obviously would require no additional explanation beyond that already provided in a committee's report. Rejection by Government, however, should extend beyond a simple refusal and include justifications that match committees' own arguments in terms of clarity and precision. Furthermore, when a Government refuses a committee's proposed reallocation, or wishes to vary its proposals, it should do so on a timely basis in order to give Parliamentarians a sufficient opportunity to understand the reasoning behind Government's decision. The Committee therefore recommends:
That when Government rejects or varies committee proposals that funds be reallocated, it table the reasons no later than two parliamentary sitting days before the last allotted day of the supply period in question.
In making the above recommendation, the Committee hastens to add that Government will have to respect this requirement by ensuring that when it designates allotted days, they fall as close as possible to the end of a supply period.
The Committee also wishes to note that some amendments may have to be made to Standing Order 109 (which committees may invoke in order to oblige Government to table comprehensive responses to their reports within 150 days of tabling) in order to accommodate this change.
A number of important concerns were raised by witnesses with regard to giving committees the authority to propose reallocations; these concerns deserve a response. Committee Chairs, as well as many of those who responded to the questionnaire, pointed out that committees lack the fundamental expertise to shift moneys from one programme area to another. Some argued, furthermore, that the time available for committees to review the Estimates is not sufficient to develop an understanding of the full implications of transferring resources within a department's budget. In the words of a witness, the end result would be "utter chaos."
These concerns are reasonable. They do not, however, take into account the availability of better information nor could they anticipate the impact of changes proposed in this report. The Committee is convinced that a combination of improved information supplied on a more timely basis and better support should enable committees to propose reallocations that are effective and that make good sense. If this turns out not to be the case, Governments would still retain the discretion to deny committee proposals. In addition, the Committee has recommended that a limit be placed on the amounts that could be proposed for reallocation. Any remaining fears that committees would use this new opportunity unwisely or without good cause should be minimized by these steps.
The Committee has some reservations of its own, however, that have not been entirely resolved. For example, although the Committee supports the idea that some limit be established on the amount that standing committees can propose to reallocate, it is aware that the limit chosen - 5 percent - is arbitrary in nature. Furthermore, it is clear that what the Committee is proposing marks a significant departure from the manner in which the House and its committees have traditionally dealt with the Estimates. As is the case with all new measures, there can be no absolute certainty regarding how effective this one will be nor can we foresee any of the unintended consequences that may attend it. It would be wise, therefore, to review the proposed changes to the Standing Orders after a certain amount of time in order to determine whether they should be retained or modified. Accordingly, the Committee recommends:
That changes to the Standing Orders permitting standing committees to propose reallocations be subject to review on the expiry of two supply cycles.
b. The Ability to Consider plans and Performance Separately
To improve the information provided to Parliament, it has been proposed that two separate sets of information be provided for committees to review and report on. The first set of documents would deal with departmental plans and priorities and would be tabled in the spring. The second set would address performance, or how well plans and priorities have been executed, and would be tabled in the fall. The two sets should complement one another and serve as a basis upon which to assess the subsequent expenditure plans of departments, available in the spring. This approach began on a trial basis with re-designed Part III Estimates documents in the spring of 1996 and pilot performance documents, tabled in October 1996.By taking this step, the Government is fulfilling the advice first given 17 years ago by the Royal Commission on Financial Management and Accountability (Lambert Commission) that departmental performance reports be presented to Parliament in the fall. The Commissioners wrote that these reports
would become the primary account of departmental and agency performance and would provide Parliament and its standing committees with manageable, complete, and relevant information on which to base performance reviews of the standard that Canadian taxpayers have a right to expect.42Review of these reports, the Commissioners added, would allow departmental Estimates to be assessed against past performance in a logical and timely way.
The notion of providing two sets of information ' one focused on proposed expenditure and plans, the other on past performance ' is as valid now as when the Lambert Commission reported its conclusions. Dr. Mallory told the Sub-Committee that adopting this approach would give committees two opportunities to look at performance in relation to plans. This proposal, he said, is "well worth trying;" the fall review could provide "an opportunity for creating greater accountability and much better evaluation of performance." (First Session, Meeting No. 8, November 30, 1995, p. 8:3) If Government pays attention to the reports emerging from this review, committees' views might be reflected in future policies. Assistant Auditor General Maria Barrados agreed. She told the Sub-Committee that, if done properly, the availability of performance reports
should increase the ability of Parliament both to know what is being accomplished for the dollars and authorities granted to government and to be able effectively to challenge government plans for future priorities and spending plans. (First Session, Meeting No. 3, October 19, 1995, p. 3:3)The Committee is in agreement and in the Committee's Twenty-Third Report to the House (Second Session, 35th Parliament) to the House in June 1996, has formally endorsed the pilot project to supply Parliament with reports on departmental performance. The Committee feels that this measure promises to deliver the benefits cited by the witnesses and believes that all involved ' Government, departments, and Parliamentarians ' must do their utmost to ensure that it succeeds. The President of Treasury Board tabled pilot Performance Reports for sixteen departments and agencies in the House of Commons on 31 October 1996. Standing committees should review these reports carefully and report them back to the House. They should also use these reports in conjunction with their study of departmental estimates and plans in the spring. If this potential is fulfilled, the Committee is convinced that accountability will be considerably strengthened. The Committee therefore recommends:
That standing committees make full use of information on departmental plans and performance in conjunction with their study of the Estimates.
The Committee has some concerns, however, about the tabling date of performance documents in the House. The Committee acknowledges that presentation of this information well in advance of when it has previously been made available represents an important improvement. Nevertheless, standing committees must have as much opportunity as possible to review performance thoroughly and to report their views before final adjustments are made to the Main Estimates. In this way there will be some assurance that committee review of performance will be of high quality and can make a meaningful contribution to the Estimates. The Committee first expressed these concerns in its report tabled in June 1996 in which it endorsed pilot performance reports. In that report the Committee stated that "to be of maximum use to Parliamentarians, performance reports should be tabled earlier in the fall, preferably before the end of September." This is a view that we still hold. Accordingly, the Committee recommends:
That reports on departmental peformance be tabled in the House for automatic referral to the appropriate standing committees no later than 1 October.
c. The Ability to Consider Alternative Directions
One of the comments that appeared most frequently in the responses to the questionnaire was that committee members frequently lack sufficient knowledge to assess detailed expenditure proposals. Although the Committee has some sympathy with this point of view, it firmly believes that the new format for the Estimates combined with an emphasis on departmental plans and priorities should give committees the basic tools they need to assess planned expenditures. Committees should also be further assisted in their work on the Estimates once the pilot project on performance reporting is completed and the process made a permanent one. Added to the information that is already available, such as the reports of the Auditor General, and the detailed knowledge of departmental operations acquired through service on a standing committee, Members should have information that is timely, relevant, and more than adequate to the tasks they are asked to perform.When these factors are taken into account, it is apparent that committee members will have the potential to make a significant contribution to the departmental planning process. Indeed, as the Committee understands it, one of the principal objectives of having committees review departmental plans is to obtain their views and possibly incorporate them into the subsequent planning cycle.
To this end, and in order to facilitate constructive dialogue between departments and committees, the Committee believes that it would be useful for departments to do more than simply provide committees with a monolithic set of priorities and the plans drawn up to address them. Such an approach is not only severely limited but carries with it the unmistakable ' if unintentional ' implication of fait accompli, of plans already decided upon. Committees will quite understandably feel less inclined to give these plans the attention they warrant if they suspect that they are cast in stone. As an alternative, the Committee proposes that when departments bring their plans for the future to standing committees, they indicate ' for the period beyond the immediate fiscal year ' a range of challenges facing them together with a variety of directions that could be taken in order to address them. Committees could then be asked to respond, not just to immediate plans or priorities, but to future directions. Adopting this approach would generate a number of significant benefits.
Exposure to a range of challenges would give committees an insight into the realities that departments expect to confront and a meaningful opportunity to contribute to departmental efforts to deal with those realities. A review of the options would also offer Members and departmental officials an opportunity to work together in an atmosphere of cooperation in order to achieve common goals. As Dr. Mallory told the Sub-Committee:
A mutual interest in dealing honestly with the administration of a programme between the officials who administer it and the members of a parliamentary committee who were trying to eviscerate it and find out what's going on inside, could be a mutually beneficial process. (First Session, Meeting No. 8, November 30, 1995, p. 8:16)The Committee is convinced that departments and agencies would also gain some benefit from this approach. Parliamentary committees and their members represent a source of expertise on public policy matters as well as an important bridge linking governing institutions to the needs, expectations, and preferences of citizens. Thus, by informing committees of future challenges, departments and agencies would be availing themselves of a valuable resource that could assist them in their work.
Alternative directions need to be framed within the context of a rapidly evolving society and economy if they are to have any relevance at all. Internal departmental planning ought to be closely linked with anticipated future trends and forecasts extending beyond the three-year period formally established for plans documents. This information, whenever possible, should also be provided to committees.
One respondent to the questionnaire told the Sub-Committee that committees "should play a major role in helping to determine priorities." The Committee agrees and believe that the option of providing committees with an array of challenges and alternative directions is one that should be tried. The Committee therefore recommends:
That when they present their annual plans documents, departments and agencies inform committees of alternative directions, including forecasts of the challenges that departments and agencies expect to confront in the future, beyond the upcoming fiscal year for consideration.
Obtaining the views and preferences of committees regarding planning choices should, in itself, be enormously useful to departments and the Committee expects them to approach the process in that spirit. However, committees should, if they desire, do more than just react to suggestions put forward by departments; they should use their knowledge and experience to present options of their own for consideration. In so doing, they would enrich public discourse, stir debate, and perhaps offer departments solutions that they had not considered. Therefore, the Committee recommends:
That committees be encouraged to put forward alternative future directions for consideration, both during meetings with departmental officials and in their reports on departmental plans.
d. The Ability to Assess New Programme Proposals
As indicated, committees are being provided with new information and new opportunities to influence future expenditure plans. Departmental plans covering periods of up to three years into the future are being provided at the same time as tabling of the Estimates. In addition, a pilot project is underway to produce reports on departmental performance in the fall.The availability of appropriate information on performance should, the Committee is convinced, allow for a more effective scrutiny of the Estimates for the coming fiscal year. The Committee is concerned, however, that this kind of information will be only marginally useful when departments and agencies propose expenditure on new programmes for which past experience is either not relevant or non-existent. How, in such an instance, is a standing committee to judge whether it ought to grant approval for appropriation?
Treasury Board guidelines call for the development of evaluation frameworks when new programmes are being designed and implemented. These frameworks outline what an evaluation is likely to entail and describe the information and data that are to be collected prior to and during the evaluation. In other words, the frameworks set out the criteria that will be used to assess how well a new programme has functioned. Ideally, they will also include clear statements of the purposes of the programme so that its results can be measured.
In the absence of information on past performance, the Committee believes that the evaluation frameworks for new programmes can assist committees make informed judgements when they review the Estimates. The availability of such frameworks could establish what a programme is expected to achieve and the basis upon which its performance will be measured. They would also serve as a commitment against which subsequent performance reports could be assessed. Lastly, the availability of these frameworks would permit committees to see the criteria upon which they will be evaluated - and to comment upon those criteria. Accordingly, the Committee recommends:
That the evaluation frameworks for all new programmes be provided to standing committees, either in the Part IIIs of the Estimates, or in the information supplied when legislation initiating new programmes is being reviewed.
The Committee is aware that evaluations of both new and existing programmes are continually taking place within the public service. The President of Treasury Board makes the results of these evaluation public in an Annual Report to the House of Commons that focuses on results, performance, and accountability. While this is useful, the Committee believes that the utility of these evaluations would be enhanced were they to be included in departmental performance documents. In addition, the Committee believes that committees need to know whether the evaluations themselves are on schedule in terms of data collection and attaining the benchmarks set for them. The Committee therefore recommends:
That performance documents include status reports on ongoing evaluations conducted on new and existing programmes, including those involving statutory expenditure, as well as reports on evaluations that have been completed. These reports should include references to the progress of the evaluation process itself.
e. Long-Term Review of Existing Programmes
Currently, when the House of Commons and its standing committees examine the Main Estimates, the principal focus is on the coming fiscal year, which begins on 1 April and ends on 31 March of the following calendar year. Although this approach satisfies legal requirements and matches departmental operational cycles, there are circumstances which require a further look into the future.One such circumstance relates to the statutory programme expenditures referred to below. Several witnesses recommended ongoing scrutiny of programmes that would extend beyond the limits imposed by the fiscal year. Dr. Franks, for example, recommended a three-year horizon, stating:
Something like that would direct people a little beyond the near future and into the longer-term implications of programmes so that it would be possible to exercise a better control over where the real problems are....(First Session, Meeting No. 8, November 30, 1995, p. 8:6)Dr. Paul Thomas made similar arguments, indicating that "programme review could be conducted on the basis of a longer-term, cyclical and selective approach." He recommended a five-year cycle. Finally, Mr. Dobell pointed out that adopting a long-term approach would reduce partisanship and permit all Members to make their own judgements about programmes.
The Committee notes that opportunities for this kind of examination have been opened up to standing committees by Standing Order 81(7), which enables committees to consider and report upon the expenditure plans and priorities of departments and agencies for future years when the Main Estimates are being dealt with. In addition, Standing Order 108(2)(c) mandates standing committees to review and report on the "immediate, medium and long-term expenditure plans and the effectiveness of implementation of same" of and by the departments they oversee. However, the focus is on expenditure plans, not programmes that are already in place. In a series of recommendations that appear below, the Committee will call on government to open up statutory expenditure programmes for thorough and regular review: amendments to the Standing Orders should be made in order to facilitate this review. The Committee believes, therefore, that opportunities for the long-term examination of existing programmes and programme spending need to be made more explicit. The Committee therefore recommends:
That standing committees be given the explicit authority to undertake cyclical reviews of, and reports on, broad areas of existing programmes and programme spending.
The Sub-Committee discussed whether the length of these cycles should be specified. Since consensus was not forthcoming, the Committee suggests this issue be given further consideration by the proposed Estimates Committee.
Apart from programme spending, the Committee is of the view that the long-term expenditure plans and priorities of departments and agencies deserve thorough consideration now possible due to changes in the Standing Orders and the availability of plans documents and other material. Accordingly, the Committee urges all standing committees not to allow this new authority to go unexercised and to pursue with diligence the challenge that it represents.
f. The Reporting Deadlines for the Departmental plans Documents
The Committee believes that the availability of departmental plans and the ability of standing committees to review and report on them will give Parliament significantly more influence over future expenditure. As Mrs. Maria Barrados of the Office of the Auditor General told the Sub-Committee,
Committee reports [on the departmental plans] would provide the basis for a government response and could be an effective way for committees to influence and be seen to be influencing the preparation of the next year's Estimates. (First Session, Meeting No. 3, October 19, 1995, p. 3:4)A number of witnesses, however, expressed the concern that committees were not being given enough time to review and report on these documents. Mrs. Barrados told the Sub-Committee that her Office is "concerned that committees may not have had enough time available to hold hearings and agree to a report prior to the summer recess."(First Session, Meeting No. 3, October 19, 1995, p. 3:3-4) Mr. Peter Dobell raised similar concerns, stating that "the June deadline for reporting [on departmental plans] renders the process unworkable." (First Session, Meeting No. 3, October 19, 1995, p. 3:13-14) Both Mrs. Barrados and Mr. Dobell recommended that committees be given an extended reporting deadline for the departmental plans.
Although the arguments brought forward by these two witnesses made initial sense, there is a very good reason why the reporting date for plans documents should not be altered. As previously indicated, the availability of these documents and committees' ability to report on them constitute an important new avenue through which Parliament can influence future expenditure plans and priorities. If committee reports on these documents are to have any influence at all, it is vital that they be submitted at a time when their potential impact will be at its greatest. That time is at the end of June when Cabinet meets to begin consideration of the Budget for the coming fiscal year. Shifting the reporting date to the early autumn would mean missing this opportunity and reducing the relevance of committee reports on departmental plans.
The Committee also believes that with the improved reporting of financial information to Parliament and the enhanced support to committees proposed below, there will be no valid reason for missing the established reporting date for departmental plans. Therefore, the Committee does not recommend any change to the current arrangement.
g. The Reporting Deadlines for the Main Estimates
The Standing Orders require committees to report back on the Estimates by 31 May; in the absence of a report, the committees are deemed to have reported anyway. At least one Chair argued that the deadline for reporting back to the House ought to be extended. The current deadline exists because it has been determined that the Government should have its Main Estimates approved and the corresponding supply voted by the end of June. This Chair argued for greater flexibility, saying that committees are "not going to change the Estimates anyway." In the meantime, if more time was available, committees could identify issues in the Estimates that they could bring to the attention of Ministers.Interesting as the Committee finds the suggestion to extend the reporting date, it does not think it should be implemented at this time. The Government deserves to have sufficient assurance that it will have, within a reasonable time, the necessary approval to make expenditure. Approval by the House is, as many have noted, a central feature of our parliamentary system. It constitutes a right of Parliament which needs to be protected constantly from any encroachment. Setting the reporting date ahead would in effect mean that formal approval for expenditure would not be received until a significant proportion of that expenditure had already taken place. Although Parliament can vote Interim Supply to cover this period, the Committee feel that beyond a certain point, such measures are not desirable and could weaken the degree of scrutiny. In addition, parliamentary summer recesses must be taken into account; although committees can meet during this period, the likelihood of concentrated scrutiny is reduced. It is important that Parliament deal with supply before it rises for summer recess. Since sufficient time ' approximately three months ' already exists for study of the Estimates, it is the committees' responsibility to use that time responsibly. Accordingly, the Committee endorses the retention of the current reporting date for the Main Estimates.
3. New Incentives
Creating a separate committee to focus on the Estimates and giving committees enhanced authority are not sufficient, in themselves, to produce better scrutiny of the Estimates. If this goal is to be achieved, standing committees and Members have to be provided with additional incentives.
a. Consideration of Committee Reports on plans and Performance
If Committees are to be encouraged to report on departmental plans and performance documents, they will have to have some assurance that their observations and recommendations will not be ignored. To some extent, committees can obtain this assurance by requesting that Government table comprehensive responses to their reports within 150 days, as permitted by Standing Order 109. In the past, however, the term "comprehensive" has been loosely interpreted and committees have not always received the full response they have desired. The Committee therefore believes that some additional measures could be implemented to ensure that reports on plans and performance be accorded the serious treatment they deserve.As a result of recent changes to the Standing Orders, the Standing Committee on Finance is now authorized to hold pre-Budget consultations in the fall. These consultations and the Finance Committee's report on them have now become important components of the budgetary process. The Committee believes that committees could be encouraged to report on departmental plans if consideration of these reports might be made a part of the pre-Budget consultation exercise. The Committee therefore recommends:
That Standing Order 83.1 be amended by adding a sub-section to the effect that if the Standing Committee on Finance decides to hold a pre-Budget consultation, it take into account the reports of standing committees on departmental plans as part of this process.
If, when the Standing Committee on Finance holds pre-Budget consultations, the reports of standing committees on plans and priorities should form more than simple items of evidence included in the Committee's examination. Particular attention should also be devoted to any report on the issue prepared by the new Standing Committee on the Estimates. In order to ensure that these reports are given the attention they deserve, the Committee believes that it is imperative that the chair of the Estimates Committee and the Chairs of committees reporting on plans be invited to appear as witnesses before the Finance Committee. This would give the reports added visibility and provide an incentive to the committees that do the work of preparing them. The Committee therefore recommends:
That, as part of its pre-Budget consultations, the Standing Committee on Finance give priority to inviting chairs of standing committees, and the chair of the new Standing Committee on the Estimates in particular, to appear before it as witnesses to present views contained in committee reports on departmental plans.
Furthermore, the Committee thinks that it would be useful if these reports were to receive some additional response in the supporting documents that accompany the Budget itself. In his first Budget, the Minister of Finance included a response to the pre-Budget consultations that he had conducted. This document, entitled Facing Choices Together, could serve as a model for the Minister's response to committee reports on departmental plans. A response from the ministerial level, within the context of the Budget, would demonstrate that the work done by committees on departmental plans is taken seriously. The Committee therefore recommends:
That the Minister of Finance include a response to standing committee reports on departmental plans in the supporting documents that accompany the Budget.
In addition to the Government's comprehensive responses to committee reports on plans and performance, the Committee believes that it would be helpful for departments to include responses to previous reports within the framework of their plans and performance documents. This would produce two benefits. Such inclusion would serve as a reference point for the departments in orienting future plans. In terms of performance, departments would be obliged to show the adjustments (if any) that had been made in response to previous committee recommendations. Above all, departments would be compelled to treat committee input seriously. For their part, committees would be able to match their previous recommendations against actual plans and to criticize those plans accordingly. In some instances, they would also receive a tangible demonstration of that their previous reports had had an impact. The Committee therefore recommends:
That as part of their plans and performance documents, departments and agencies regularly include a reference to previous committee reports on past plans and performance, or to any committee report to Parliament, with specific attention devoted to steps taken in response to the views of Members of Parliament as expressed in standing committees.
Lastly, the Committee wishes to remind committees that the most tangible government response to reports on departmental plans will be found in the Budget and Estimates for subsequent fiscal years. It is in these documents that committees will discover, in concrete terms, exactly what government intends to do in response to their concerns.
b. A Higher Profile for Review of the Estimates
During the Sub-Committee's hearings, a current Member of Parliament with extensive experience in the House, pointed out that all of the changes being made will be "for naught if we can't re-interest the media in paying attention to the good works of Members of Parliament in this kind of area." He indicated that lack of media attention to the business of supply was one of the contributing elements to the general absence of rewards for Members who work on the Estimates.Lack of attention from the media has an additional effect, other than depriving Members of Parliament of an incentive for work on the Estimates. For most Canadians, information about what their Parliament and governments do comes from their radios, televisions, and newspapers. Absence of this information is particularly regrettable when it concerns the efforts of Parliament to influence government expenditure.
While there is little that can or should be done to compel better coverage of work on the Estimates, there is at least one step that could be taken to facilitate it. There is currently one committee room that is equipped for televised coverage of meetings. Broadcasts of proceedings in this room have the potential of reaching wide audiences and permit Canadians to see ' without intermediaries ' the work being done on their behalf. In addition, the tapes of broadcasts from this room are available to the media and could be used in conjunction with coverage of the Estimates. Accordingly, the Committe thinks that it is highly desirable that standing committees make use of this facility for at least one of their meetings on the Estimates. The Committee therefore recommends:
That when standing committees review the Estimates, they endeavour to hold at least one meeting in a room with television facilities.
In order to highlight the Estimates process, to better inform citizens of what that process entails, and to engage the public in the process itself, it would be useful to encourage public participation in committee meetings on the Estimates. As it stands, this already occurs from time to time, but the general tendency is for committees to hear from Ministers and senior departmental officials exclusively when studying the Estimates.
Committees should do more to encourage the participation of groups and individuals from outside government in the process. Such involvement would assist committees in their deliberations, would potentially attract more media coverage, and focus public attention on this vital aspect of Parliament's work. The Committee therefore recommends:
That when standing committees review the Estimates and departmental plans, they should endeavour to invite interested groups or members of the public to either appear before them as witnesses or to present them with submissions outlining their views on departmental estimates, plans, and performance.
4. New Approaches
A key to improving the work on the Estimates done by standing committees lies on how they approach the task. Too often, as the Committee has noted, committees have considered that other duties are more pressing. Study of the Estimates has been relegated to the margins or not done at all.While the Committee understands that the present situation discourages committees from subjecting Estimates to the scrutiny they deserve, this is being improved. Better information is being provided and coupled with the potential to influence expenditures beyond the impending fiscal year. Thus roadblocks will be replaced with new tools and opportunities that, if used properly, promise to re-invigorate the role of committees in the supply process.
That being said, however, committees must also bring new approaches to bear upon their work on the Estimates. Governments, as well, must show greater willingness to incorporate the suggestions and recommendations of committees with regard to the policy and expenditure frameworks.
a. Reporting on Departmental plans and Performance Documents
At various points in this report, the Committee has drawn attention to committees' new authority to examine and report on the future expenditure plans and priorities of departments. the Committee has also observed that committees have yet to fully exploit this opportunity and made several recommendations that will, if implemented, provide incentives to counter this tendency.If used, this new authority could reduce frustrations over the inability to change the upcoming fiscal year's Estimates as it would allow some say on future expenditure plans. It is worth remembering that committee reports on future expenditure plans and priorities are similar to other reports in that the Government can be asked to provide a comprehensive response within 150 days of tabling. Such responses ' negative or positive ' could constitute benchmarks against which future actions could be measured. Thus, committee scrutiny of, and reports on, the plans documents constitute a potentially powerful way of enforcing accountability. This is a tool that deserves to be used.
Consequently, the Committee urges committees to make use of this authority, as provided them by Standing Order 81(7). As Assistant Auditor General Maria Barrados told us, "[i]n the absence of effective committee scrutiny [of plans and performance documents] the reforms are unlikely to result in the hoped for benefits to Parliament." (First Session, Meeting No. 3, October 19, 1995, p. 3:4, 3:5) A similar observation was made byMr. Jean-Pierre Boisclair of the Canadian Comprehensive Auditing Foundation who said that
the most important thing of all is that if you want to receive this kind of information [on plans and performance], the only way that management is going to do it is if they have a sense that it's being used and that there's a value attached to it. Nobody likes to waste their time reporting information that doesn't get used. (Second Session, Meeting No. 6, June 13, 1996, p. 6:5)The Committee agrees wholeheartedly with these witnesses: if this tool is not used, doubt is cast on all other reforms.
b. Linking Policy to Expenditure
In the course of their work, standing committees review legislation authorizing departments and agencies to engage in new activities. In addition, as a consequence of hearings on certain issues, committees make proposals of their own, calling upon Government to take certain courses of action. Often, these actions are taken without full reference to the costs involved or the impact upon the government's finances as a whole.The reverse is also the case; that is, when committees examine the Estimates, they do not always make the link between the amounts they are being asked to approve and the policy objectives that the spending is meant to secure.
Greater emphasis is now being placed on the achievement of goals and outcomes in the Estimates material presented to Parliament. Furthermore, moves are under way to provide Parliamentarians with performance information that should, if prepared correctly, demonstrate what has been achieved with appropriations voted in the previous fiscal year. This kind of financial reporting should allow committees to make the link between expenditure and policy when the Estimates are reviewed.
The linkage between legislative review and policy proposals, and expenditure is one that committees themselves must strive to make. Achieving this objective will not depend on a change in the rules, but a change in approach attitudes. The Committee therefore calls upon committees to devote more consideration to the costs involved in executing certain legislative changes or in appealing to Government to implement changes in policy. The Committee also calls upon committees to make it a regular practice to include a discussion of the estimated costs in reports recommending changes to legislation or the adoption of new policies. In this way, committees will develop a greater appreciation of the financial implications of their day-to-day work, an appreciation that should also inform their scrutiny of the Estimates.
c. Knowing and Applying the Rules
Improved committee work on the Estimates depends on better structure and procedure, enhanced powers, better information, and new attitudes. It also requires a better understanding of the rules surrounding the supply process. One witness, Senator John Stewart, argued that there is nothing fundamentally wrong with current procedures and another, Dr. Mallory, stated that "with knowledge and experience, even the present system would work better and Members would feel less frustration and helplessness." (First Session, Meeting No. 8, November 11, 1995, p. 8:2)The Committee agrees that a better knowledge of the rules, whether changed or not, is essential to more effective scrutiny of the Estimates. The Committee therefore urges colleagues in the House to develop a better awareness of the rules of supply.
In some instances this should promote the exercise of existing powers, for example, committees' power to reduce estimates. This power, if exercised, might prompt greater interest in the Estimates among Members. As Senator Stewart commented, "Members would be much more attentive if they could propose particular reductions in the Estimates." (First Session, Meeting No. 3, October 19, 1995, p. 3:24)
d. The Greater Use of Dissenting Reports
The Committee notes that nothing prevents opposition Members on committees (or indeed, any committee member) from issuing a dissenting report when the Estimates are reported back to the House. The same applies equally to reports on plans and performance. This ability is stated in explicit terms by Standing Order 108.(1)(a) which reads (in part) as follows:
Standing committees shall be severally empowered to examine and enquire into all such matters as may be referred to them by the House, to report from time to time and to print a brief appendix to any report ... containing such opinions or recommendations, dissenting from the report or supplementary to it, as may be proposed by committee members....Since the Estimates and plans and performance documents fall within the category of matters referred to standing committees for examination and report, dissenting reports are permissible. The Honourable Maurice McTigue informed the Sub-Committee that, in New Zealand,
The opposition may produce a minority report as a result of the examination of the Estimates, recommending significant changes. That report is tabled in Parliament at the same time as the majority report. (Second Session, Meeting No. 3, May 30, 1996,p. 3:13)He went on to say that, although this is not a common procedure, it is still used "reasonably frequently."
While the ability to issue dissenting reports on the Estimates also exists in our Parliament, it is very rarely used. The Committee accordingly urges all Members to make greater use of this authority in order to make known dissenting views on departmental Estimates, plans and priorities, and past performance.
e. Adopting Approaches Used by Other Committees
Despite the constraints imposed by convention and existing procedural realities, some committees have managed to conduct meaningful examinations of the Estimates assigned to them. This point was made quite forcibly by the Auditor General, who told the Sub-Committee:
Certain committees have been able to work as a coherent committee where it's seen more as an alliance between Parliamentarians .... trying to get through the bureaucracy and the language and get through to the real issues. (First Session, Meeting No. 3, October 19, 1995, p. 3:9)During the meeting with committee chairs, the Sub-Committee was impressed by the innovative approaches used by committees to further their understanding of the Estimates and to review them in a thorough manner:
- Briefing sessions on the layout and content of the Estimates with the
departmental officials who drafted them;
- Selecting one aspect or element of a department's activities and concentrating on it during the Estimates process;
- Taking a sectorial approach to a department's Estimates by holding separate meetings on each activity with the appropriate departmental officials, in turn; and
- Hearing from outside witnesses with an interest in the department's activities.
f. Seeing the Estimates as the End of the Process
At the moment, most Members and committees see the tabling of the Estimates as the beginning of the process. This is in marked contrast to the way in which the government's financial management system works and the way in which the Estimates are perceived by those who prepare them.With the changes taking place in how financial information is reported to Parliament and the stress being placed on outcomes and performance, the Committee thinks Members and committees would find it helpful to view the Estimates as the end of the process from a parliamentary perspective as well. Even more important, if committees make use of their new power and report on the future plans and priorities of departments and agencies, it will then be up to the Government to respond. One of the most important manifestations of this response will be found in the Estimates for the upcoming fiscal year. As a consequence, committees will have to review the Estimates, not only on the basis of past performance, but on the basis of how well they take into account committee input on future plans and priorities. To make this transition, we call upon committees to view the Estimates as the end, and not just the beginning, of the supply cycle.
V. IMPROVED SUPPORT FOR COMMITTEES AND MEMBERS
A number of the witnesses suggested that if standing committees are to do a better job scrutinizing the Estimates, they must have a level of expert support that will allow them to do this. Above, the Committee recommended that the proposed Estimates Committee be given staff resources that could also be placed at the disposal of other committees. There are other measures that could be taken.
A. The Role of the Office of the Auditor General
One of the issues that arose during the Sub-Committee's discussions with witnesses was whether or not the Office of the Auditor General should assist committees in their examination of the Estimates. The Auditor General indicated that his Office is already available to help Members and committees in discussing past audits of departments, information that he said can be useful in examining the Estimates. His office does not participate in committee hearings when the Estimates are under study, however.The Sub-Committee listened with a great deal of interest as New Zealand's High Commissioner described the role of his country's Auditor General in assisting committees in studying the Estimates. In New Zealand, the Auditor goes through all the departmental estimates and reports the findings to the appropriate committees. When a committee begins its hearings on the Estimates, the Auditor, who is usually the first witness to appear, raises concerns about the Estimates and points to areas where the committee might focus its attention. Mr. McTigue told the Sub-Committee that the Auditor's participation in the process is "extremely helpful."
Canada's Auditor General, like New Zealand's, is a servant of Parliament, not the Government in office. The work of the incumbent is supported by the Office of the Auditor General, an entity which arguably is the best source of independent knowledge on the financial activities of government. In this report, the Committee has referred often to the observations provided by the Office. Other standing committees also recognize the important contribution that the Office can make to their work: in 1994-95, for example, the Office of the Auditor General was asked to appear as a witness at 49 committee hearings, including those of the Standing Committee on Public Accounts. The work of the Office is sustained by an annual appropriation from Parliament, which for fiscal year 1996-97 amounts to just under $49 million.43
However, although the Committee is impressed by the extent of New Zealand's Auditor General's participation in the estimates process, the Committee is not convinced that Canada's Auditor General should be required to do the same thing. The principal reservation concerns the additional work and costs the Office of the Auditor General would be required to shoulder. At a time of scarce resources, funds allocated to the Office would be better directed to ensuring that government departments and agencies receive the audit attention that they need. This, the Committee believes, is the best way of ensuring that the needs of Parliament are well served.
At the same time, however, the Committee does wish to draw attention to the usefulness of the Auditor General's work when it is applied to studying the Estimates. The reports of the Auditor General ' now being issued on a periodic basis, rather than only once a year ' can provide invaluable information to committees, especially if they take past performance into account when reviewing requests for future allocations. As the Auditor General testified, he and his officials are already available to appear before committees to discuss past audit work in the context of the Estimates. Accordingly, the Committee urges standing committees to make good use of this resource.
The utility of the Auditor General's reports with respect to committee study of Estimates, plans, and performance documents could be further enhanced. As it currently stands, committees can invite the Auditor General to appear before them when an agency or department under their mandate is the subject of an audit. The more usual procedure, however, is for the Standing Committee on Public Accounts to take on the principal responsibility for reviewing and reporting on the Auditor General's reports. This is as it should be, and the Committee does not wish to see any change in this respect. However, there is a close link between the Auditor General's report and its recommendations, and reports on performance.
Performance reports contain one potential drawback: they are self-assessments. As such, the temptation to report only the good news and to downplay difficulties or shortcomings is ever present. This drawback could be offset substantially were the documents to contain references to the Auditor General's reports listing, in summary, audit findings, recommendations, and actions taken by the department in response. This kind of reporting should become a regular feature of both performance and plans documents. The Committee therefore recommends:
That departments and agencies include in their plans and performance documents specific references to outstanding issues contained in the reports and audits of their activities conducted by the Auditor General of Canada. These references should include a list of the recommendations made by the Auditor General, a list of recommendations made by the Standing Committee on Public Accounts (when appropriate), and a brief but detailed discussion of the actions taken in response as well as the results achieved as a consequence.
B. Information on the Estimates and Supply Process
The Sub-Committee was interested in Dr. Mallory's comments to the effect that
one of the problems with Members as individuals and member of as part of a committee is that they suffer not from a lack of information but from information overload and part of the information overload is because you don't really quite understand what its significance is. (First Session, Meeting No. 8, November 30, 1995, p. 8:15)While the Committee thinks that some of these problems will be addressed through improved financial reporting to Parliament, the problem of information overload and how to decipher it is an issue that we wish to bring particular attention to.
Members of Parliament, as mentioned, are called upon to fulfil many obligations; the time available to them to master the complexities of the supply and Estimates processes is limited. A Member who replied to our survey suspected that "there is not a great deal of understanding among Members about what exactly is the purpose of MPs considering the Estimates." This lack of understanding of the content, purpose, and significance of the Estimates hinders scrutiny considerably. The Committee suggested above that Members make more of an effort to learn the rules of the supply and estimates processes. But Members ought to be helped to do this by being provided with information on the Estimates and supply processes in a concise format keyed to their needs. The Committee accordingly recommends:
That Treasury Board Secretariat prepare, in consultation with Members of Parliament and chairs of standing committees, a concise, comprehensive information package on the Estimates and supply process and government financial management generally for the use of Members.
The Committee also approves a suggestion that information on how to use financial information be included in the introduction to Estimates documents. Therefore, the Committee recommends:
That all documents providing financial information to Parliament, including Part IIIs of the Estimates and the proposed plans and performance documents, include a concise introductory statement on their content and use.
Finally, the Committee notes that, as part of their review of the Estimates some standing committees call for explanations from the departmental officials responsible for preparing the Part III documents. Committee members thus have an opportunity to resolve ambiguities and develop an appreciation for the decision-making process resulting in the Estimates. It also, in the Committee's view, ought to provide departmental officials with the opportunity to familiarize themselves with the needs and expectations of Parliamentarians.
VI. THE SCOPE OF PARLIAMENTARY FINANCIAL REVIEW
Although the principal focus of the Sub-Committee's work has been the procedures and mechanisms used by the House of Commons to deal with supply, it has also been concerned with the extent of the financial information provided to Members and committees. There are some broad similarities between the information needs of Members of Parliament and those of members of boards of directors who must make important decisions regarding the direction to be taken by the entities they oversee. Directors insist on a having a full array of all the pertinent information before deciding on courses of action. They also require this information in order to hold senior managers or officials accountable for their performance. The information needs of Parliamentarians are essentially no different.In a chapter of his 1992 report dealing with information for Parliament, the Auditor General commented:
The business of government is complex and the instruments it uses are varied, only some of which are reflected through annual spending. Parliament should expect and receive a regular accounting of the exercise of the entire business of government....44Sub-Committee members were concerned to discover the extent to which relevant information on the financial activities of government can be lacking. The Auditor General of Canada, who has a long-standing interest in the information needs of Parliament, told the Sub-Committee that the Estimates, "with their focus on spending alone, [do] not provide a complete picture of all the activities of a department." (First Session, Meeting No. 3, October 19, 1995, p. 3:1)
A. Statutory Expenditures
Of the billions of dollars spent each year by the federal government, only a small portion receives annual parliamentary scrutiny and approval. The remaining expenditures are consumed by permanent programmes that Parliament has already approved and for which it has provided appropriations for through legislation. These are known as statutory programmes and that portion of annual government spending devoted to them is known as "statutory expenditure." Some of the most costly activities of the federal government fall into this category: transfers to the provinces and individuals for such programmes as child support and pensions, equalization, health and education, and the government's debt management program.Statutory spending has grown rapidly during the post-war period to the point where it represents the vast bulk of annual federal government expenditure. In 1993, the Auditor General reported that between 1962 and 1991, statutory programmes grew from $3.1 billions to $93.0 billions, or from 46 to 66 percent of total expenditures. This form of expenditure continues to grow. For the 1996-97 fiscal year, the government estimates that out of a total expenditure of $157 billions, $111.7 billions ' approximately 71 percent ' will be statutory. This expenditure, to repeat, will not be reviewed or voted on by Parliament during the fiscal year in which it occurs: it is included in the Main Estimates for information purposes only.
In its 1979 Report, the Lambert Commission asserted that:
responsible financial planning requires that the continuing merit of these commitments [contained in the legislation establishing statutory expenditures] and their related costs be subject to regular examination. If this does not occur, the ability of Parliament and the Government to control expenditures is diminished...45It is a matter of considerable concern to the Committee that this aspect of government expenditure receives no regular scrutiny. The consequence is that most annual government spending, particularly that which is important from a policy perspective, receives insufficient attention from Parliament. As Senator Stewart commented, once statutory expenditures are removed from total annual expenditure, a lot of the remainder relates to "housekeeping measures" only. (First Session, Meeting No. 3, October 19, 1995, p. 3:27) Another witness, the Honourable Ronald Huntington, told the Sub-Committee that Parliament was not fulfilling its duty with respect to statutory programmes and expenditures, which currently are "not being reviewed properly and looked at." (First Session, Meeting No. 6, November 23, 1995 p. 6:11) Parliament, Dr. Franks pointed out, "has no direct control" in this area. (First Session, Meeting No. 8, November 30, 1995, p. 8:5)
The Committee believes that it is of critical importance that steps be taken to subject statutory expenditures to scrutiny on a regular basis. Government should take the lead in this respect by announcing that it will open up such areas to parliamentary review. This would restore parliamentary oversight to a major area of government spending and help determine whether or not many of these programmes are continuing to meet their goals. The Lambert Commission proposed that there be a review, conducted over a ten-year period, of all statutes underlying statutory expenditures; the Committee endorses this approach. Accordingly, the Committee recommends:
That the Government establish a schedule for the review, preferably over the next ten years, of all existing underlying statutes that affect the size of statutory expenditures.
That the Government, in accordance with the schedule that has been established, submit the statutes underlying statutory expenditure to the appropriate standing committees for review and report back to the House of Commons.
The ensuing review of statutory expenditure will be complex and will involve the participation of many committees. It is important that this work be done with diligence and produce results that are constructive and of good quality. To ensure that this occurs, the Committee believes that the new Estimates Committee must be intimately involved in coordinating and supporting the review. The Committee therefore recommends:
That the Standing Committee on the Estimates coordinate and support the review by standing committees of the underlying statutes that support statutory expenditures, that it review the reports produced, and report its own conclusions.
The Committee is concerned that committees might not have the information they need in order to conduct a thorough study of these statutory expenditures. This kind of information should be available in the form of programme evaluations, as called for by Treasury Board policies. These evaluations are supposed to determine whether programmes are relevant, are meeting their objectives within budget, and are cost-effective. The Auditor General, however, has reported that much of the evaluation effort
is directed to smaller activities and toward operational questions, with the result that reliable evaluation findings on major government programmes and activities are not always available in a timely manner.46In the same report, he went on to write that his Office
found that evaluation did not consistently produce timely and relevant studies important ... to provide ... Parliament with accountability information on major expenditures.47In his most recent review of evaluation in the federal government, the Auditor General observed that although the coverage of evaluation for major expenditure programmes has improved,
evaluations in departments and agencies generally focus on programme components and issues that matter more to departmental managers than to Parliament ... [and] do not always provide needed information on matters of broad government policy and broad expenditure allocation and are not always useful for accountability.48The House of Commons Standing Committee on Public Accounts, the Senate Standing Committee on National Finance, the Office of the Auditor General, and individual Members of the House have, from time to time, asked that programme evaluations be improved, especially in areas of major expenditure. The Committee adds its voice to theirs in recommending:
That the Government take all possible measures to improve the quality of programme evaluations conducted in areas involving major statutory expenditure and to ensure that these evaluations are provided in a timely manner to committees reviewing statutory programmes. In particular, evaluations must articulate the public policy objectives, address the question of whether or not these objectives are being met, whether the programme is being efficiently managed, and whether there are alternative means of meeting the same policy objectives.
The Committee has recommended that a ten-year schedule be drawn up for initial review of all statutory programmes and below, the Committee will recommend that these programmes be subject to regular, cyclical review from now on. However, the Committee is concerned that if problems surface with regard to a statutory programme, that the appropriate standing committee be seized of this information on a timely basis. In order to address this need, the Committee has suggested, in a previous recommendation, that departmental performance documents contain status reports on ongoing evaluations of new and existing programmes, including those involving statutory expenditures.
To ensure that all future statutes triggering statutory expenditure are reviewed, such a requirement could be imbedded in the statutes themselves. This would allow important statutory programmes to continue while subjecting them to regular review by Parliament. Some statutes already contain such a provision, and the Committee thinks it desirable that all future legislation involving statutory expenditure should as well. The Committee therefore recommends:
That all legislation for new statutory programmes contain a provision for parliamentary review at a minimum of five years following their introduction and on a cyclical basis thereafter.
B. Tax Expenditures
An important area of government financial activity not fully included in the financial information reviewed by Parliament is tax expenditures, which are used by government to pursue a variety of economic and social policy objectives. Tax expenditures result from special provisions in the Income Tax Act and can take the form of tax exemptions, deferrals, credits, deductions or reduced rates. Whatever their form, they represent a considerable amount of money not collected by the federal Treasury. In his 1992 annual report, for example, the Auditor General cited an estimate that in 1985, tax expenditures amounted to $28 billions annually.49Tax expenditures represent more than just uncollected revenue: they also represent large amounts of de facto government expenditure. As former Auditor General KennethM. Dye once reported, tax expenditures by the federal government are "a huge hidden financial budget in the financial affairs of Canada."50
The use of tax expenditures as an instrument for achieving government policy is not at issue here; however, under the general principle that a dollar not collected represents a dollar spent, the Committee believes that this type of expenditure must be subject to parliamentary scrutiny. Such massive forms of expenditure should not be "hidden" from the people of Canada or their Parliament.
Recently, the Department of Finance has begun to publish information on tax expenditures and announced its intention to do so on an annual basis.51 This is a welcome step in the right direction. However, there is nothing that obliges the department to publish this information or make it available at a certain specified time of the year. The timely availability of this kind of information is too important to allow its publication to depend on the good intentions of the department or Government. Therefore, the Committee recommends:
That there be a requirement written into statute that the Department of Finance prepare a report on tax expenditures for each fiscal year and that this report be laid before the House of Commons by the Minister of Finance on or before 31 December following the end of that fiscal year.
Furthermore, the Committee recommends:
That the annual information on tax expenditures be provided in a format that lends itself to use by standing committees in their examination of the Estimates and should include specific references to the nature and amounts of these expenditures and an articulation of their public policy goals.
It is also the Sub-Committee's intent that tax expenditures collectively receive the same sort of regular review that we are advocating be applied to programme expenditure. The Committee therefore recommends:
That there be a thorough review based on a schedule established by Government, and conducted on a periodic basis thereafter, of all tax expenditures focusing on whether they are meeting the public policy objectives that have been established for them, on whether they are being efficiently managed, and whether there are alternative means of meeting these policy objectives.
Finally, while the annual report on tax expenditures is subject to review by the Standing Committee on Finance, we urge Members to become familiar with this document and to use it in conjunction with study of departmental plans and Estimates.
C. Loan Guarantees
Loan guarantees are another mechanism used by governments to finance certain policy objectives. Government often uses them to encourage the private sector to provide the financing for projects thought to be in the public interest. Government makes no direct expenditure of its own, but underwrites the risk assumed by the lender, should the borrower default on the loan. These guarantees are listed annually in the Public Accounts of Canada under the section that deals with contingent liabilities.52 Again, while the Committee passes no judgement on the wisdom of using such an instrument, it is important to realize that loan guarantees expose the government to liabilities that are oftensubstantial. In 1991, for example, the Auditor General estimated that potential liabilities stemming from loan guarantees amounted to approximately $8 billions.53
Although loan guarantees expose government to risk, there is certainly no reason to believe that all, or even a substantial portion, of these potential liabilities will ever materialize, provided this risk is adequately managed. It is also important to note that Parliament must provide broad authorization to departments, through legislation, to offer loan guarantees. If a loan is defaulted on, government must get Parliament's approval to cover the loss through the Supplementary Estimates. It is the Committee's view, however, that Parliament should be provided with full information on the risks involved in the guarantees that have been provided. Undoubtedly, these risks will often be high: if they were not, private-sector financing would be readily available. But because it is the Government of Canada ' and ultimately Canadian taxpayers ' who will be asked to underwrite the costs of defaulted loans, risks must be known in advance. Therefore, the Committee recommends:
That those departments and agencies authorized to provide loan guarantees include, in their Estimates, summary information on the status of all their outstanding loan guarantees, the potential liabilities they represent, explicit statements of the policy goals such loans are meant to achieve, and whether there are alternative means of meeting these policy objectives.
D. Net vs Gross Amounts
One of the Sub-Committee's witnesses, Dr. C.E.S. Franks, drew the Sub-Committee's attention to the practice of vote-netting. Except in certain well-defined circumstances, he told the Sub-Committee that Parliament should vote gross rather than net amounts.Under the practice of vote-netting, certain departments and agencies are able to generate non-tax revenues and use these funds to reduce costs of providing a good or a service. When a department is authorized to vote net, its anticipated non-tax revenues are listed in Part II and Part III of the Estimates. This amount is then subtracted, or "netted out" from the department's expenditures for the upcoming fiscal year. It is this net figure that subsequently appears in the departments vote and approved by Parliament in the appropriation acts. The amounts contained in the Estimates and subsequently approved by Parliament are generally net rather than gross amounts. This practice, according to the Auditor General,
allows departments to reduce their gross expenditure requests to Parliament by using the revenues they collect to offset spending.54A number of controls are in place that establish the framework within which vote netting occurs. The general authority to vote net was granted by Parliament in section 29.1(2)(a) of the Financial Administration Act. Authorities more specific to departments and agencies engaging in this practice are sometimes contained in the legislation establishing them. Further authority is granted by Parliament each year in the wording of the votes contained in the Main Estimates. In addition, departments and agencies who wish to vote net must satisfy a number of criteria established by Treasury Board Secretariat. Among other things, these criteria specify that revenues generated by a programme must be used to over the costs of producing it, not to cross-subsidize other activities. Any deviation from forecast revenue or expenditures necessitates a review by Treasury Board Secretariat. Treasury Board policies anticipate that revenues and expenditures will fluctuate according to demand. As a consequence, variances in projected revenues should not have an impact on a department's requirements from the Consolidated Revenue Fund. If it were to have such an impact, the department in question would have request additional appropriations from Parliament in the Supplementary Estimates. Lastly, Treasury Board sets the maximum amount of revenue that may be spent.
The objectives behind vote-netting are laudable from an administrative perspective. In theory, this practice should encourage increased cost effectiveness, better use of resources, improved responsiveness to departmental clients, and good business practices within departments. These are all goals which the Committee supports and wishes to see attained.
However, despite the limits that are in place to govern this practice, the Committee has concerns about the implications it has for parliamentary scrutiny and control of government expenditure. Revenues received by departments are credited to their votes and are shown in the Estimates. The House then votes on the estimated total departmental expenditure minus revenues (i.e. net expenditure). This procedure, the Committee argues, means that the appropriation granted to a department is not truly reflective of the actual pattern of expenditure. As the Lambert Commission observed, as a result of vote-netting Parliament has "yielded control over some sources of non-tax revenue and expenditures."55 The Commission argued, as well, that:
Since Parliament votes only net expenditures, the vote-netting practice allows departments to make expenditures beyond the amount approved by Parliament.56Simply put, in those instances in which vote-netting takes place, Parliament only approves allocations from the Consolidated Revenue Fund rather than global departmental expenditure. The Committee believes, however, that Parliament should be interested in more than just the amounts coming out of the Consolidated Revenue Fund; it should also be concerned about the full extent of departmental activity, and government expenditure and intervention in the economy. While vote-netting does not completely hide this intervention, it obscures it and detracts Parliament's attention. To the extent that this is not desirable and to the extent that Parliament should scrutinize the whole of government expenditure - and the details of revenue generating activity that takes place outside taxation - , the practice of vote-netting is questionable.
The issue, however, is a complex one that deserves to be dealt with in depth. The benefits and drawbacks of this practice need to be fully understood and other ways of approaching the need for Parliamentary control in this area examined closely. The Committee notes, for example, that in the United Kingdom, Parliament is able to approve both net and gross expenditure due to the wording of its appropriation acts. This is an option that deserves to be studied for use in our own Parliament.
Regrettably, the Sub-Committee's work has not left sufficient time to explore this vital issue to the degree required to reach firm conclusions. The Committee firmly believes, however, that this is an issue that needs to be taken up and resolved in an expedient manner by a standing committee of the House. The Committee therefore recommends:
That the Standing Committee on the Estimates review the practice of vote-netting within the context of the Parliamentary financial control framework on an urgent basis and that this issue be resolved prior to the tabling of the Estimates for fiscal year 1999-2000.
There is, however, one aspect of vote-netting that the Committee feels can be subject to immediate improvement. As mentioned, when the revenues that are netted out of the vote either exceed or fall short of projections, it is assumed that costs will rise or fall in tandem. As a result, there should be no impact on the appropriations sought from Parliament. Nevertheless, the Committee thinks it important that when such variations occur, Parliament be informed. Currently, when revenues exceed projections and result in actual net expenditures that are lower than forecast, this information is contained in the Main Estimates. However, the Committee thinks that Parliament should be informed even when net expenditures are not directly affected by variations, particularly in those cases in which revenue trends indicate that there will be a shortfall. Accordingly, the Committee recommends:
That when trends indicate that revenues credited to departmental votes will either exceed or fall below forecasts, this information, together with explanations, be provided to Parliament in the Supplementary Estimates tabled during the supply period ending March 26.
At the same time, the Committee also believes that Parliament should continue to be made aware of the revenues that departments and agencies are receiving outside the appropriations that they are granted by Parliament. The Committee therefore recommends:
That departmental revenues continue to be listed, along with their sources, in the Estimates documents.
The Committee urges standing committees to take these revenues into account when they review the Estimates of the departments and agencies that they oversee.
E. The Vote Structure and Information on Capital and Operating Expenditures
The issue of gross vs net amounts brings up the subject of the vote structure. Changes are currently underway that may have an effect on the way in which Parliament is asked to authorize annual expenditure. For example, the Government indicated in the 1995 and 1996 Budgets that it intends to adopt full accrual accounting for the capitalization of physical assets and accounting of tax revenues. In March 1996, the Minister of Finance specified that the Government intends to change its accounting for capital assets, beginning the transition to full accrual accounting, starting in 1997-98. On 15 November 1996, pilot "in-year" updates intended to complement the Supplementary Estimates were tabled in the House as part of this effort.While the principal affect of this change will be on the way that Government accounts for past expenditure (as listed in the Public Accounts), there may be an impact on the way it forecasts its future expenditures in the Estimates and on the way the House of Commons votes these expenditures in the form of Appropriation Acts.
The nature and implications of these changes - especially as they relate to the way in which Parliament votes supply - needs to be explored fully. For its part, the Committee has concerns about a related area; the way in which Parliament is provided information on multi-year capital and operating expenditures and about the threshold (the current level is set at $100 million) at which a major capital project becomes a Crown project. The Committee understands that a study of these matters is currently under way within Treasury Board Secretariat. The Committee believes that Parliament needs to be engaged in this process. The best way for this to occur is by placing a requirement on Treasury Board Secretariat that it keep Parliament informed of its work on this issue. No changes to the vote structure should be made without parliamentary review and approval. The Committee therefore recommends:
That Treasury Board Secretariat report the implications and any possible recommendations of its study on the vote and control structure to the new Standing Committee on the Estimates prior to any changes being made.
Furthermore, the Committee recommends:
That the Standing Committee on the Estimates examine the information supplied to Parliament on capital and operating expenditures.
VII. SUPPLY DAYS
One of the most important principles underlying the business of supply is that Parliament does not grant the Government supply until the opposition has had an opportunity to show why the request should be rejected. When supply was moved off the floor of the House and into committee, supply or "allotted" days ' days on which the House debates the business of supply ' were established in order to provide that opportunity.While Government designates which days are to be supply days, the opposition parties choose the topic for debate. Here, the range of choices is considerable; motions may deal with any matter falling within the jurisdiction of the Parliament of Canada. According to the Standing Orders, a maximum of three of these motions may be designated as votable during a given supply period. It is the opposition's prerogative to choose which motions will come to a vote.
According to the witnesses, supply days have been a disappointment. Dr. Franks, for example, told the Sub-Committee that they are useless and do not do what they were intended to do. Mr. Marleau stated that in his experience, one would be "hard pressed to find a single one of those [supply] days when the subject under the rubric of supply focused on the Estimates."(1:7) To say that supply days have fallen short of expectations, however, does not constitute sufficient argument for their abolition. Dr. Thomas claims that supply days should be retained in order to ensure that the opposition has the opportunity to challenge the Government and to allow it to set a small part of the agenda of Parliament.
While the Committee heartily agrees with Dr. Thomas that supply days must be retained, the Committee does not see any solution to the disappointment expressed by other witnesses. The Committee notes, as well, that although supply days currently fail to focus Parliament's attention on supply, they have evolved to serve other, quite valid, purposes. It is therefore crucial, in our view, that opposition parties be given complete flexibility in determining the topics for debate and the subjects for eventual votes during supply days. It is the opposition's responsibility, and its responsibility alone, to ensure that these opportunities are used wisely: after all, the Government's performance in the House is not the only one that is subject to the judgement of the people of Canada. Lastly, the Committee notes that Standing Order 81(13) already indicates that supply days "may be used for the purpose of considering reports from standing committees relating to the consideration of the estimates therein." This is an opportunity that opposition parties may wish to make fuller use of in the future.
VIII. THE ACCOUNTABILITY OF MINISTERS AND DEPUTY MINISTERS
Committees considering the Estimates may call the appropriate Minister, departmental or agency officials, or other interested parties to appear before them as witnesses. To develop a thorough understanding of the Estimates before them, they must, in particular, have the assistance of Ministers and their public servants. Senior public servants and committee members alike, however, have occasionally found it difficult to distinguish between administrative issues - the jurisdiction of the public servant - and policy questions, which are the Ministers' responsibility. As one of the witnesses, Peter Dobell, has written, this often results in situations in which
many officials have responded cautiously to requests for information from MPs which have been addressed to them in committee meetings.57As a result, committee members do not get the information they need. Furthermore, an opportunity for collaboration between them and committee members is frustrated. As Dr. Mallory suggested, committees working with officials in a cooperative, rather than confrontational, manner could produce results that are of benefit to all concerned.
Changes now taking place, coupled with the Committee's recommendations, if adopted, should lead to committees' reviewing departments and programmes on a more cyclical basis and thus will intensify contact between public servants and committees.Dr. Thomas suggests that the issue of whether deputy ministers should be held directly and personally accountable for the economy, efficiency and effectiveness of programme operations will then come increasingly to the fore. According to the Honourable Maurice McTigue, in New Zealand, where many of the elements of this approach are already in place, this issue does arise.
Though, as Dr. Thomas argues, it is not always easy to make neat distinctions between administration and policy, we agree that there must be some guidance provided for Members and public servants alike when the latter appear before committees. Such guidelines would clear up any ambiguities surrounding the kinds of issues that committees can explore with senior departmental officials and pave the way to a constructive relationship. The Committee therefore recommends:
That Treasury Board Secretariat develop a set of guidelines to be used by senior public servants when appearing before standing committees of the House of Commons with regard to the Estimates, and departmental plans and performance reports, and that those guidelines be made available to committee members.
Furthermore, because the Committee believes that it is essential that the needs of Members be taken into account when these guidelines are drawn up, we recommend:
That, as part of the process of drafting a set of guidelines for senior public servants appearing before committees to discuss Estimates, plans and performance reports, Treasury Board Secretariat consult with Members of Parliament.
The Committee also recommends:
That when the guidelines for senior public servants have been developed, they be submitted to the Standing Committee on the Estimates for study and endorsement.
IX. THE CONFIDENCE CONVENTION AND THE BUSINESS OF SUPPLY
A defining feature of our parliamentary system is that the executive, or Cabinet, that forms Government is a part of, and responsible to - rather than separate from - the elected legislature. In this respect, Government can be said to emerge from the House of Commons. In order to attain and maintain its status, it must enjoy the support of a majority of Members sitting in the House. If this support cannot be sustained in crucial areas of policy, then the Government cannot continue in office. Not written into any statute or Standing Order of the House, this is commonly known as the "confidence convention."If the House were composed of non-aligned individual Members whose support for the executive was based purely on its performance and had to be regularly confirmed, this arrangement might lend itself to parliamentary supremacy in terms of the control of expenditure. In the nineteenth century, however, an expanding franchise and the increasingly important role of competitive elections in forming governments prompted the emergence of disciplined political parties. This produced a situation in which majority Governments can, through the exercise of party discipline, dominate Parliament.
Many see the combination of the confidence convention and strong party discipline as a principal reason for the weak scrutiny of Government expenditure currently exercised by the Canadian House of Commons. For example, in his 1993 report to the House of Commons, the Auditor General stated:
One major reason for ... [the] apparent lack of interest [in the Estimates] lies in the impact of the confidence convention, which, as currently interpreted, makes any motion to change a vote in the Estimates a potential test of the House's confidence in the government.58This observation was echoed by Dr. Thomas, who wrote that "because changes to the Estimates ... were regarded as votes of no confidence, parliamentary influence on the broad patterns and details of spending has been minimal."
Although none of the witnesses disputed the notion that the confidence convention is a powerful influence on a majority Government's ability to have its Estimates adopted without significant alteration, no one proposed that the status quo be fundamentally changed. The Clerk of the House stated that it was up to Government to set the terms under which confidence would be tested. He added that "the issue of confidence is not one of parliamentary procedure." (First Session, Meeting No. 1, September 28, 1995, p. 1:5) Mr. Claude-André Lachance was even more blunt, arguing:
Confidence is in the eye of the beholder. It's not constitutional. It's not even a procedural matter except in a very narrow sense. Confidence is not a matter of the rules of the House. Confidence is a matter of party discipline and that's a political issue, not a procedural issue. (First Session, Meeting No. 6, November 23, 1995, p. 6:7)Although the Committee recognizes that the application of the confidence convention puts real constraints on the ability of the House to oversee the supply process, we do not believe that those constraints are insurmountable. Furthermore, the Committee sees no way that the confidence convention can be eliminated from this aspect of the work of Parliament without fundamentally changing our system of government. The Committee agrees with witnesses who argued that budgetary and expenditure policy constitute the very core of a Government's policy agenda: if this aspect of policy fails to win Parliament's approval, clearly Government has lost the confidence of the House and must resign. AsMr. Robert Marleau, the Clerk of the House, told us:
If it's the financial programme of the Government for the fiscal year that is before the House and it fails, it's very hard for the Government to argue that [it can continue in office]. In that relationship where the Crown recommends and the House approves it's pretty obvious and politically you could not survive that situation. (First Session, Meeting No. 1, September 28, 1995, p. 1:14)The Honourable Maurice McTigue indicated that in New Zealand, whose Parliament operates on principles similar to our own, votes on budget matters are also considered to be confidence issues:
In a Westminster system, it's really built around whether or not the Parliament has confidence in the Government being able to govern. An integral part of that is the authority to spend. If you take that authority away from the Government then you are really saying that no longer does Parliament have confidence in the Government and its proposals. So it's always a very serious issue that you're going to materially change policy that a Government has brought down inside a budget. (Second Session, Meeting No. 3, May 30, 1996, p. 3:13)Furthermore, in our view, it is absolutely essential that the voting of supply be considered a matter of confidence if Parliament's supremacy is to mean anything at all. This point was made forcefully by the late Dr. Eugene Forsey, who wrote that the resignation of a Government following a defeat on supply represented "the inexorable rule of our constitution" because
unless denial of supply by Parliament forces resignation or dissolution, Parliament has no means of enforcing its control of the Executive Government [Cabinet].59Moreover, it is not the confidence convention per se that renders the supply process an empty exercise: indeed, this tradition is key to making parliamentary scrutiny meaningful. The difficulty lies instead in the application of confidence within the context of party discipline and majority Government, thus making the outcome of votes on supply are a foregone conclusion. Party discipline is a feature of contemporary responsible government, however, and one that, as witnesses indicated, no change to the rules can alter. Furthermore, as Mr. Dobell pointed out, Governments' use of party discipline to induce their Members to support the Estimates is so "ingrained in the Canadian political culture," that no change is foreseeable, except when minority governments hold office. While a softening of attitude towards the application of discipline and the confidence convention might be desirable in some respects, we agree with witnesses that these are matters for Governments - and we will include parties - to determine.
The Committee also must reiterate that a combination of existing authorities, new instruments for reporting financial information, and new opportunities for committees to influence the future expenditures of departments and agencies, can overcome some of the frustrations that are currently felt. In his testimony, the Auditor General reminded the Sub-Committee of this possibility. He told the Sub-Committee that, in his opinion:
The proposals by government to modify the expenditure management system, ..., are intended to overcome some of these frustrations [associated with the application of the confidence convention]. (First Session, Meeting No. 3, October 19, 1995, p. 3:7)The Committee therefore, concludes that there is good reason to treat the larger issue of a Government's budgetary and expenditure policy as a matter of confidence and argue that this convention must remain solidly in place.
The Committee also believes, however, that some relaxation of the confidence convention as it applies to individual elements of that larger policy is warranted. The Committee therefore, proposes the following measures.
While it would be difficult and unwise to remove the application of the confidence convention from the process of granting supply, it might be possible to relax this convention so as to allow Members an opportunity to reduce certain expenditures. The Government would merely have to announce in advance that it would not consider a defeat of a particular vote to constitute a loss of confidence. To underline this assertion and to satisfy the need to demonstrate continued confidence, the government could follow up such a defeat with a formal vote of confidence. In its final report, the Special Committee on Reform of the House of Commons (the McGrath Committee) observed:
While a defeat on supply is a serious matter, elimination or reduction of an estimate can be accepted. If a government wishes, it can designate a succeeding vote as test of confidence, whether directly or on some procedural or collateral motion.60This approach is not as radical or as innovative as it might seem. Indeed, similar courses of action have been followed by previous Canadian governments without disrupting parliamentary traditions or norms. In 1968, for example, the Government led by the Right Honourable Lester Pearson was narrowly defeated on third reading of an act to amend the Income Tax Act. Several days afterward, Mr. Pearson moved a motion stating that the House did not consider that the defeat constituted a vote of non-confidence. Following debate, the motion was adopted. Therefore, were Governments to announce that they would accept defeats on certain elements of supply and follow those defeats with formal votes testing confidence, they would not be breaking new ground but merely affirming what has already happened in practice under similar circumstances.
This approach promises several advantages. Governments would retain the discretion to identify the elements of their its expenditure proposals they consider to be crucial and therefore requiring confidence. Confidence would remain, to use Mr. Marleau's expression, "in the eye of the Government." (First Session, Meeting No. 1, September 28, 1995) At the same time, by relaxing confidence with regard to certain items of supply, Governments would free their Members to vote according to their individual judgement. Members thus freed would be in a position to defeat or reduce an item of supply (or retain it) and would thus gain some meaningful influence. Giving Parliamentarians the final say would encourage them to take the supply process much more seriously and would produce, the Committee believe, better overall scrutiny of all Estimates and supply measures, as well as improving the confidence of Canadians in the effectiveness of their House of Commons.
There is another approach that might be employed in order to avoid the application of the confidence convention to votes in the House on supply. Essentially, this approach would consist of a Government's acceptance of expenditure reductions recommended by committees before the House votes an appropriation. This could occur in two ways.
The Committee proposed above that Governments adopt the practice of indicating willingness to accept reallocations within votes proposed by standing committees. The Committee adds to this a second proposition: that Governments announce that they will consider accepting reductions to certain Estimates made by standing committees ' without the presence of a reallocation of an equal amount to another activity. One of the witnesses, Mr. Dobell, touched on this possibility during his testimony. He told the Sub-Committee that:
If the committee changes the Estimates and reduces them, it goes to the House. Unless the Government decides to seek to reverse that decision, and that motion is defeated in the House, in effect a committee decision to reduce the estimates has occurred without the question of the confidence in government being raised. (First Session, MeetingNo. 3, October 19, 1995, p. 3:13)The solution, therefore, lies in Governments formally accepting this possibility, thus avoiding the issue of confidence. The benefits of this approach would be substantial. Committees would be given an opportunity to make a significant contribution to the content of the Estimates, while Governments would still retain the discretion to accept or reject the Estimates as amended by committee. In the case of rejection, Governments could present the Estimates in their original form to the House for approval. If, instead, the amendments were accepted by a Government, they could be presented to the House as the Government's own, thus avoiding the possibility that the issue of confidence might arise.
In closing, the Committee wishes to emphasize its desire that Government invoke confidence as rarely as possible with respect to supply. As indicated frequently throughout the report, it is essential that Members of Parliament be given every opportunity to participate in the supply process in a way that is meaningful. Government, we believe, can do a great deal to accomodate this participation by relaxing the application of confidence in this vital area of Parliament's work. The Committee therefore recommends:
That Government invoke confidence sparingly with respect to supply, and in particular, on allotted days when motions before the House are not directly related to supply and in those instances in which standing committees propose reductions to their Estimates.
X. PARLIAMENTARY ATTITUDES TOWARDS SUPPLY AND EXPENDITURE
In the course of our examination of the business of supply, the Sub-Committee heard much about the cultural changes underway in the public service that involve shifts in attitudes regarding what departments do, how they do it, and who is to assume responsibility. The effort involves what many refer to as a "cultural change" in the public service and is not characterized by simplicity or ease. From the evidence we have seen, however, progress is being made.The Committee believes that the House and its Members need to embark on a cultural change of their own with regards to the Estimates and Supply processes. As remarked frequently throughout our report, barriers to more effective and meaningful participation in this vital aspect of the work of Parliament are coming down. The only one that remains - and it is a substantial one - is a set of parliamentary attitudes towards supply that have accumulated over many years. This barrier too must come down if the other reforms are to have any impact at all.
When he appeared before the Sub-Committee, New Zealand's High Commissioner was invited to state his criteria for good debate on the Estimates. Mr. McTigue responded that
the debate [must] be on the substance rather than the frivolities and we have too much that's on the frivolities and not enough on the substance. (Second Session, MeetingNo. 3, May 30, 1996, p. 3:6)The fact that he did not know of a Parliament where substance won out over frivolity, in terms of debates on the Estimates, was of little comfort.
What matters most is that Members of the House, to the fullest extent possible, make use of the mechanisms that are available to assist them in doing their job of holding Government accountable. This approach must also apply to new rules and mechanisms. As the Government House Leader, the Honourable Herb Gray, told the House when he introduced major changes to the Standing Orders on 7 February 1994,
Changing the rules of the House does not alone bring about its revitalization. It is the extent to which the new procedures are used that will make the difference.61The Committee thoroughly agrees with these comments; throughout this report, the Committee has appealed to Members and committees to make fuller use of existing procedures and new opportunities in order to exercise improved oversight over government expenditures. Even with the current system (as modified by recent amendments) alone ' a new approach attitude to supply ' would, the Committee is convinced, result in better scrutiny. At a time when public confidence in Parliament is stretched thin, Members of Parliament have an obligation to demonstrate their faith in it and to prove, through their hard work and dedication, that it can work. Parliament is, to a large extent, what we as Members make of it. This applies equally to the supply process which has been designed by us and by our predecessors to ensure that we can extract accountability from Government. The tools are available; it only remains to use them. As one of the witnesses, Mr. Jean-Pierre Boisclair of the Canadian Comprehensive Auditing Foundation, told the Sub-Committee, leadership must come from Parliament if the mechanisms of accountability are going to work.
XI. CONCLUSION
The power to grant or refuse supply is among Parliament's most important mechanisms. Through the judicious use of this authority, Parliament can extract accountability from Governments on behalf of the electorate. Governments are required to make public the broad details of their expenditure plans for the approaching fiscal year. These plans are then subject to parliamentary scrutiny, a process whereby Governments must explain and justify their spending proposals and demonstrate that they are in accordance with legislative authorities granted by Parliament. Parliament must then decide whether or not to approve the appropriations requested.The authority to grant or refuse supply carries with it a tremendous responsibility. Parliament is the creation of the electorate which endows the institution with its trust. Parliament is thus the guardian of the public interest and the steward of public finances. With the expansion of government activities and the attendant growth of public-sector expenditures, its obligation has intensified. In a difficult economic climate, with the burden of mounting government debt, the resources available have become scarcer and more precious and the decisions about their allocation more challenging and contentious. In these circumstances, Parliament is called upon to resist any erosion of its authority and to exercise that authority to its fullest extent, while ensuring that the mechanisms for doing so are effective.
During the immediate past, however, Parliament has not exercised its authority fully with respect to supply. We have identified two causes. One is located in the rules and structures, which do not facilitate ' and sometimes even unintentionally hinder ' conscientious scrutiny of proposed expenditure. The second is in the attitude of Parliamentarians, who, discouraged by the disincentives generated by inappropriate rules and structures, concentrate on other matters.
The Committee does not believe that these barriers, formidable as they are, are beyond the power of Parliament and its Members to remove. Parliament is the master of its own rules and internal structures, and can therefore change them if they are not seen to be working. Attitudes, as argued above, can also be changed.
It is thus the Committee's firm conviction that the suggestions and recommendations in this report will enable Parliament to honour its obligations. At a time when many have expressed doubts about the efficacy and relevancy of the institution, the Committee is convinced that these steps can help restore public confidence in Parliament. In addition, they will harness the expertise and ability of its Members and allow them to employ their skills to encourage and promote better use of government expenditures. Finally, these changes will enhance Parliament's ability to hold Government accountable and will thus in no small measure contribute to the democratic health of our society. Members of this current Parliament, many of them elected to serve for the first time, arrived determined to effect real change to the way in which the House conducts its business. The Committee's proposals build on existing parliamentary traditions while at the same time allowing Members to fulfil their determination to better serve the interests of citizens, taxpayers, and the country as a whole.
1 Extract from the Journals of the House of Commons, 7 June 1995.
2 Michael Ryle, "Supply and Other Financial Procedure," S.A. Walkland, ed., The House of Commons in the Twentieth Century, Oxford University Press, Oxford, 1979, p. 343.
3 Study of Parliament Group (United Kingdom), cited in ibid., p. 343.
4 Senator John B. Stewart, The Canadian House of Commons: Procedures and Reform, McGill-Queen's University Press, Montreal, 1977, p. 114.
5 These definitions are excerpted from A Glossary of Parliamentary Procedure, House of Commons, Canada, 1992.
6 See Stewart, p. 109.
7 Ibid., p. 97-98.
8 Ibid., p. 113.
9 Sir John George Bourinot, Parliamentary Procedure and Practice in the Dominion of Canada, Fourth Edition, Edited by Thomas Barnard Flint, Canada Law Book Company, Toronto, 1916, p. 404-405.
10 See Bourinot, p. 420-421.
11 Stewart, p. 115-116.
12 See Bourinot (1916), p. 433-439.
13 See ibid., p. 440-443.
14 See ibid., p. 443-446.
15 Stewart (1977), p. 116.
16 Ibid., p. 116.
17 W.F. Dawson, Procedure in the Canadian House of Commons, University of Toronto Press, Toronto, 1962,p. 213-214.
18 Ibid., p. 214-215.
19 Stewart (1977), p. 116-118.
20 Ibid. For criticisms of the supply procedures prior to 1965, see also Stewart, p. 118. Each of the six motions became the occasion for what generally amounted to a non-confidence amendment. There were also problems with timing, notice and scheduling.
21 Dawson, (1962), p. 211.
22 Ibid.
23 Special Committee on Procedure, Third Report, 6 December 1968, p. 429-430.
24 House of Commons, Journals, 20 December 1968, p. 554-579.
25 House of Commons, Debates, 7 February 1994, p. 962.
26 Ibid.
27 The Honourable Ron Huntington and Claude-André Lachance, Accountability: Closing the Loop, Prepared for the House of Commons Special Committee on Standing Orders and Procedure, Ottawa, 1982, p. 3-4.
28 Report of the Liaison Committee on Committee Effectiveness, Parliamentary Government, No. 43, June 1993,p. 4.
29 Ibid., p. 8.
30 Ibid., p. 8.
31 See, for example, Government of Canada, Main Estimates, 1995-96, Part I, Chapter 5, "The Expenditure Management System of the Government of Canada."
32 Gallup Canada Inc., The Gallup Poll, 1 February 1993. Other surveys have produced similar results.
33 Data supplied by the Committees Directorate of the House of Commons.
34 The actual figure was $49,904,505,000 under the authorities voted in the Main Estimates for 1993-94.
35 President of the Treasury Board, 1995 Annual Report to Parliament: Crown Corporations and Other Corporate Interests in Canada, December 1995, p. 7.
36 Ibid, p. 9.
37 Huntington and Lachance, 1982.
38 Ibid, p. 11-12.
39 Note: This estimate does not include the costs of research staff.
40 This amount and the others that follow does not take into account the costs of standing joint committees which, for fiscal year 1995-96, amounted to an additional $181,381. All statistics cited here are taken from the annual report of the Committees and Parliamentary Associations Directorate (Activities and Expenditures Annual Report 1995/1996, June 1996) to the House of Commons.
41 For example, in 1972-74, when a minority government was in power, Parliament made two reductions in expenditure that amounted to approximately $20,000, an inconsequential amount compared to the billions of dollars in total government spending.
42 Canada, Royal Commission on Financial Management and Accountability, Final Report, March 1979, p. 108.
43 The Office of the Auditor General, 1996-97 Estimates, Part III, p. 7. The exact amount is $48,988,000.00
44 Report of the Auditor General of Canada to the House of Commons, 1992, 6.2.
45 Royal Commission on Financial Management and Accountability, 1979, p. 101.
46 Report of the Auditor General of Canada to the House of Commons, 1993, 8.82.
47 Ibid., 8.83.
48 Report of the Auditor General to the House of Commons, May 1996, 3.30.
49 Report of the Auditor General of Canada to the House of Commons, 1992, p. 167.
50 Report of the Auditor General of Canada to the House of Commons, 1984, p. 1.
51 Canada, Department of Finance, Government of Canada: Tax Expenditures.
52 A contingent liability is defined as a potential liability which may become an actual liability when one or more future events occur or fail to occur.
53 Auditor General (1992), p. 167.
54 Ibid., p. 167.
55 Royal Commission on Financial Management and Accountability, 1979, p. 103.
56 Ibid., p. 103
57 Peter Dobell, "Parliament and the Estimates," Parliamentary Government, No. 45, January 1994, p. 4.
58 The Auditor General's Annual Report to the House of Commons, 1993, paragraph 1.22, p. 19.
59 Eugene A. Forsey and G.C. Eglington, The Question of Confidence in Responsible Government, Ottawa, 1985,p. 36.
60 Canada, House of Commons, Report of the Special Committee on Reform of the House of Commons, (the McGrath Committee), June 1985, p. 9.
61 Canada, House of Commons, Debates, 7 February 1994, p. 959.
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