ETHI Committee Report
If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.
CHAPTER THREE — FUNDING MODEL OPTIONS
Over the course of its hearings, the Committee was presented with a number of alternative approaches to the funding of Officers of Parliament. Essentially, four funding model options emerged from discussions with our witnesses: the Ethics Commissioner Model; the U.K. Model; the Blue Ribbon Panel Model; and the Multi-Year Formula Funding Model.
As referred to earlier in the report, the Ethics Commissioner model would have the budgets of Officers of Parliament considered by the Speaker(s) of the House of Commons and/or the Senate, who would transmit them to the President of the Treasury Board for tabling along with the government Estimates for that fiscal year. The budgets would not, therefore, be subject to vetting by the Treasury Board Secretariat or approval by the Treasury Board.
The Information Commissioner was a strong proponent of the Ethics Commissioner model. One of the reasons John Reid gave for supporting this model is that it would grant him an advocate, in the form of the Speaker, who would have an interest in his Office’s “administrative well-being.”
We have no minister, in effect, who goes before us to defend us at Treasury Board. Nominally we go through Treasury Board, through the Minister of Justice, but he is not an advocate for us. … It is important, because in the Treasury Board operation there are certain kinds of trade-offs that take place, but we have no Minister in Cabinet who basically feels that he has a responsibility to make sure we are looked after in the normal course of events. (10 February 2005)
The suitability of this model for other Officers is less clear. The Information Commissioner did acknowledge that while he prefers a simple and transparent funding mechanism that would be compatible with the nature of his Office, he does not have the same broad range of policy issues to be considered as, for example, the Privacy Commissioner. In any event, John Reid stressed that as an Officer of Parliament, his budget should be set by Parliament and not the Executive in the form of the Ministers of the Crown who sit on the Treasury Board.
The Ethics Commissioner, Bernard Shapiro, is happy with his current funding arrangement, particularly as it would be completely inappropriate, in his case, to have a government body exercising a budget decision-making function. The Commissioner was, however, cognizant of the need for some oversight or challenge mechanism to assist the Speaker of the House of Commons and to that end, he felt that his funding model should be supplemented by annual external and internal audit programs. He also suggested that a post-hoc review by the appropriate parliamentary committee would be acceptable to address any issues of accountability.
Officials from the Treasury Board Secretariat raised concerns about the Ethics Commissioner model being applied to other Officers of Parliament. In particular, they felt it lacked the necessary government input with respect to government responsibility for sound stewardship of public resources. They also raised the issue of applying this simple process to other Officers with broader mandates and larger budget implications. In those instances, issues of oversight, budget challenge, and accountability become more complex.
Officials from the Treasury Board Secretariat presented the Committee with a couple of modified versions of the Ethics Commissioner model. One modification would have the budget proposals of Officers of Parliament examined through the management machinery of Parliament, possibly through the Internal Economy review mechanisms of the House of Commons and the Senate, with the results transmitted through the Speakers’ offices to the Treasury Board for tabling with the government Estimates. This budget review process would involve parliamentary input in the form of appropriate parliamentary committees and the Treasury Board Secretariat, who would be responsible for setting broad budget parameters and for performance review.
Another variation on the Ethics Commissioner model would combine the budgets of Officers of Parliament in a larger parliamentary envelope. Estimates would then be prepared for Officers in the same manner as is currently the case for the House of Commons, the Senate and the Library of Parliament. Officials from the Treasury Board Secretariat cautioned that in extending the parliamentary envelope, provision would have to be made for budget challenge and administration machinery, and consideration would have to be taken of some legislative, and perhaps even constitutional, issues. Moreover, Professor Paul Thomas, in his submission to the Committee, felt that such an “appropriate shares” approach could be problematic during periods of budgetary restraint, when high profile offices might “out muscle” smaller, less high profile agencies.
As noted earlier in this report, for the past four years, the Auditor General has been seeking a funding mechanism that would be independent of the Treasury Board Secretariat, a department that she audits. In her quest for an alternative budget determination process, the Auditor General has put forward a number of options, one of which is modelled after the funding mechanism of the United Kingdom’s National Audit Office.
In the U.K., an all-party Commission of Parliament, created by statute, examines the proposed Estimates of the National Audit Office and tables a report to Parliament with any modifications it sees fit. Known as the Public Accounts Commission, this body is comprised of the Chair of the Committee on Public Accounts, the Leader of the House of Commons and seven other Members of Parliament appointed by the House, none of whom may be a Minister of the Crown. Commission members hold office until they either fail to run for election, are defeated in an election, or another Member of Parliament is nominated or appointed in their place. The Commission normally meets twice a year and is required to receive advice from the Committee on Public Accounts and the Treasury (the equivalent of our Department of Finance).
One of the principal concerns raised by witnesses with respect to this model is the fact that money paid out to the U.K. Comptroller and Auditor General stems directly from the Estimate laid before the House of Commons by the Commission. Our constitutional framework, however, requires that the initiation of spending resides with the Crown and Parliament’s role is limited to approving, rejecting or reducing spending proposals. Reference may be had in this regard to sections 53 and 54 of the Constitution Act, 1867.11
Officials from the Treasury Board Secretariat suggested that the U.K. model could be adapted to work within our constitutional and conventional framework for the Estimates process, perhaps in the same way as the budget process for the House, Senate and the Library of Parliament. These budgets are reviewed and determinations are made through the internal machinery of Parliament, and the Estimates are then submitted to the Treasury Board for tabling as part of the government Estimates process. The Treasury Board simply tables the budgets with the rest of the government Estimates: the budgets are not subject to scrutiny and challenge by the Treasury Board.
It was also suggested that the U.K. model could be modified by establishing an enhanced parliamentary committee that would allow for all-party membership and include both Houses of Parliament. Indeed, officials from the Treasury Board Secretariat indicated that parliamentary committees could review proposed Estimates submitted by Parliamentary Officers with government input on budget parameters and performance. The committees’ review results would then be used by the Treasury Board for the finalization of the Estimates.
In the alternative, Treasury Board Secretariat officials submitted that relevant parliamentary committees could be consulted by the Treasury Board Secretariat on budgets prepared by Officers of Parliament prior to their review and finalization through the normal Treasury Board process. It was acknowledged, however, that this approach might not alleviate the perceived conflict of interest concerns that are plaguing the current funding process.
There was also some discussion of an option whereby a parliamentary committee or committees would receive budget proposals from Officers of Parliament for review and report back its findings to the Treasury Board for tabling in Parliament as part of the government Estimates process. This would appear to be similar to some provincial funding models.12 The Official Languages Commissioner, in her appearance before the Committee, clearly favoured parliamentary scrutiny of her budget through the official languages committees in the House of Commons and the Senate:
In our case, we believe that it would be logical that issues affecting our independence or budget be submitted to the scrutiny of Parliament through the official languages committees. These committees are thoroughly familiar with the societal issues and the practical consequences of our budget proposals. (15 February 2005)
A note of caution was expressed by Professor Thomas in his submission to the Committee with respect to the use of parliamentary committees in the budget determination process for Officers of Parliament. He pointed out that where it might appear that the government is not directly involved in the process, indirect government pressure could be brought to bear on a committee in a majority government situation. Presumably, the leadership of the governing party could instruct Members of Parliament to rein in a free-spending parliamentary agency or one which was causing it political embarrassment.13
Another budget determination model proposed by the Auditor General involves the use of a panel of experts to review and to challenge the budget proposals of Officers of Parliament. The panel would report on the level and details of each Office’s Estimates to the Speakers of both the House and the Senate and to the President of the Treasury Board for tabling as part of the Parliamentary review of the Estimates process. As in the case of the Ethics Commissioner model, the Estimates would not be subject to a final vetting by the Treasury Board Secretariat or to approval by the Treasury Board.
Under the Auditor General’s proposal, the panel could be comprised of three persons; one appointed by each of the Speakers of the House of Commons and the Senate, and the third appointed by the President of the Treasury Board. The panel could meet several times annually, in line with the regular process for preparation and submission of requests for Main and Supplementary Estimates. It would meet with the Officers of Parliament, their senior financial officers, and officials from the Treasury Board Secretariat.
One of the positive elements of this model, according to the Auditor General, is that it could be implemented without statutory amendment by means of a memorandum of understanding among the Speakers, the President of the Treasury Board and the Officers of Parliament. The Privacy Commissioner also liked the fact that this approach would not require legislative change.
While terms of reference and operational modalities have yet to be defined, our Office supports the concept of creating a blue-ribbon panel. The concept of a blue-ribbon panel model is aligned with the need for independence for our Office and, doubtless — although I don’t presume to speak for them — other Officers of Parliament. It is designed to provide a well-functioning accountability and transparency regime. Also, this approach does not require legislative changes, and it is an avenue we would favour at this point in time. (10 February 2005)
On the other hand, at least two witnesses expressed concern that this proposal could be construed as a delegation of the budget-setting process away from both Parliament and the executive. Again, there could be constitutional issues if experts were given approval authority on budgetary requests. As well, issues were raised about the cost-implications of such a panel, and the extent to which one panel could deal with all the Officers of Parliament.
The Ethics Commissioner did, however, acknowledge that should it be found necessary to modify his current funding arrangement, the blue ribbon panel model could be a reasonable addition to the Ethics Commissioner model prior to the submission of the Commissioner’s budget Estimates to the Speaker of the House of Commons.
If, for whatever reasons, some further modification was deemed necessary, the Blue Ribbon Panel seems a reasonable mechanism to insert prior to the submission of our budget estimates to the Speaker. I am attracted to this alternative for three reasons: first, it maintains the independence of the Office with respect to both the legislature and the government, both of whom are subject to the ethics regimes that we administer; second, if the panel were carefully chosen, truly independent expertise and judgment could be brought to bear in advising the Speaker of the House of Commons; third, it acknowledges the value of a post-hoc review by Parliament through its committee structure.14
Indeed, officials from the Treasury Board Secretariat were agreeable to the role of a panel of experts in supporting a budget analysis process steered by Parliament and the government. It was also suggested by other witnesses that such a panel could support a parliamentary committee or work with Officers of Parliament to develop budget submissions.
MULTI-YEAR FORMULA FUNDING MODEL
The idea of a sustainable and long-term funding formula for Officers of Parliament was thoroughly canvassed by Professor Forcese in his appearance before the Committee:
The thought I had was that a multi-year formula that establishes a baseline for funding for officers, so officers aren't in the present position of being obliged to go to Treasury Board each year, distances officers from at least the perception that their activities in a given year might influence the receptivity of government to funding them fully. It grapples with the independence issue and it also grapples with the cost associated with setting up this blue-ribbon panel. (8 March 2005)
Under this model, funding would be pre-established to increase according to an objective benchmark over a fixed period of time (e.g. five years). Annual increases in funding could be based on objective criteria that are tied to the individual functions of each Officer of Parliament (e.g. the number of complaints received by the Information Commissioner). If the formula were legislated, criteria could be set out in the legislation. Indeed, consideration could be given to other criteria such as the state of the economy at the time of the proposed increase.
The potential disadvantage of the multi-year formula funding model is that a review, either by Parliament, a blue ribbon panel or the executive, would still be required to determine the initial level of funding. Subsequent reviews might also be necessary at the end of every fixed period in order to ensure that the base funding level and the established increase formula is still appropriate.
In their written submission to the Committee, officials from the Treasury Board Secretariat referred to somewhat similar models that could be adopted with respect to Officers of Parliament. For example, it was suggested that a formula funding model could be adopted whereby reference levels could be adjusted, for example, on the basis of government budget growth or restraint, or some other similar benchmark. In the alternative, a cyclical review process could be implemented that would allow for multi-year funding based on resource forecasts prepared by Officers that are validated through resource and management reviews by the Treasury Board Secretariat.
Professor Thomas, in his written submission to the Committee, also recognized the potential for indexing the spending of Officers of Parliament to some reference point (e.g. average increase in government spending, volume increase in their activity levels etc.). He did note, however, that although appearing simple in its approach, this model may have a number of shortcomings, not the least of which is the ability to find the appropriate reference point.
Finding the most appropriate reference point will be controversial and artificial. The approach substitutes calculation for deliberation and judgment. As circumstances change, the automatic nature of the formula could lead to inappropriate windfalls or shortfalls for particular agencies.15
| 11 | 53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons. 54. 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. |
| 12 | For example, in Alberta and British Columbia, the Information and Privacy Commissioners submit their annual budget proposals to a committee of the legislature for approval: in Alberta, the Select Standing Committee on Legislative Office; and in British Columbia, the Select Standing Committee on Finance and Government Services. Material provided to the Committee by the Office of the Auditor General also indicated that the majority of the provincial Auditor General statutes provide for the Audit Offices’ estimates to be given to a committee of the legislative assembly, which may make recommendations or alterations, with the revised estimates beingsubmitted to the legislative assembly for inclusion in the estimates of the province for approval by the legislature. |
| 13 | Paul Thomas, above, note 10, pp. 2-3. |
| 14 | Letter to the Clerk of the Committee, 8 March 2005. |
| 15 | Thomas, above, note 10, p. 3. |