Proceedings of the Standing Senate Committee on
Issue 27 - Sixteenth Report of the Committee
Monday, July 18, 2005
The Standing Senate Committee on National Finance has the honour to present its
Your Committee, to which was referred Bill C-48, An Act to authorize the Minister of Finance to make certain
payments, has in obedience to the Order of Reference of Wednesday, July 6, 2005, examined the said Bill and now
reports the same without amendment, but with observations, which are appended to this report.
DONALD H. OLIVER
Appendix to the Sixteenth Report
of the Standing Senate Committee on National Finance on
Bill C-48, An Act to authorize the Minister of Finance to make certain payments
At its meeting of Tuesday, July 12, 2005 the Committee agreed, on division, to adopt Bill C-48 without amendment.
The Committee also agreed to allow the observations of a minority on the Committee, namely the Conservative
Senators, to be appended to the Committee's report.
The following observations do not reflect the unanimous observations of the Committee.
ON BILL C-48
In February of this year the minority Liberal Government tabled its budget. As usual the budget was the product of
long working hours by both government officials and bureaucrats from a variety of departments. In an unprecedented
move, however, a few months later, Bill C-48 was presented as a result of an agreement between the Liberals and the
Conservative members of the Senate Committee on National Finance strongly oppose the structure of C-48 as it
does not provide the transparency and accountability required from a budget bill. Canadians deserve better financial
management from their government.
C-48 spends $4.5 billion on various policy areas, but with little or no detail as to the programs that will be resourced
when the money designated actually flows.
Bill C-48 authorizes funding in a wide variety of areas — post-secondary education, housing, the environment,
public transit, and foreign aid — but with no details on how this spending will be allocated. Government officials
questioned during the Committee's hearings on C-48 were also unable to provide details. The Parliamentary Secretary
to the Minister of Finance, Mr. John McKay, commented on this lack of detail when he noted in his testimony before
us that: ``I anticipate some concerns will be raised about the fact that there is not specific detail that one would anticipate
in a budget.''
Lack of specifics in a budget bill is contrary not only to our own parliamentary tradition, but to the traditions both
practiced and aspired to by democracies the world over. As one of our witnesses, former Deputy Finance Minister
Stanley Hartt noted in his submission to the committee:
...prudence, and Parliamentary practice, should dictate that the House and the Senate appropriate moneys when
programs have been thought through and developed, when program parameters exist that can be set before the legislators
whose control of the public purse is paramount and who are entitled to know what spending they are actually approving,
and not merely be required to rely on a list of fine-sounding objectives.
NO ROLE FOR PARLIAMENT
What the government is asking the Committee to do is to pass a bill that authorizes the spending of billions of
dollars of taxpayers money without offering Canadians either details or a plan on how that money will be spent, and
without offering Parliament any information through which it can hold the government accountable. Again in the
words of Mr. Hartt:
...senators should be alarmed at the precedent that Bill C-48 sets for the manner in which legislators are invited to use
or, in this case, I think, fail to use the traditional power of Parliament to control public spending. Those powers were hard-
won. We did not shed any blood in this country over them, but our forbears in Britain, whose parliamentary system we
inherited did. The supremacy of Parliament on spending matters is a very valuable tradition that we should not be so casual
The Comptroller General of Canada, testified that C-48 represents a prudent approach to fiscal management in that
the $4.5 billion would be spent out of surplus over a two year period only if there is a $2 billion surplus in each year.
However, this leaves those who may be counting on the money in a constant state of uncertainty about whether they
will get the money until the surplus is actually announced (sometime in the Fall of 2006 ). As the Chair of the
Committee noted, rather than allowing ministers and government officials time to plan their various programs it may
instead raise false expectations. Needless to say, that would only have to occur once, before planning for what may
never happen would be abandoned by those same officials and ministers.
The view of the Comptroller General was contradicted by the Parliamentary Secretary to the Minister of Finance,
who noted in his testimony: I do not want to be too crass about it, but if I was a department anticipating receiving money,
I would not be booking this money until I know that [$2 billion] surplus was in place.
Conservative Senators are not impressed by the argument that at least by C-48 Parliament had a say in what areas
future surplus monies would be spent. It is argued that this was preferable to a situation where Cabinet may spend the
surplus on anything it likes without consulting Parliament. Conservative Senators disagree. Even with the passage of
C-48 there is nothing stopping Cabinet from spending money as it sees fit. Bill C-48, requires asking Parliament to
approve spending for which there is no oversight and which the government can spend according to its own whims,
after which it can argue Parliament approved it, at least in general terms. This does not amount to an improvement in
the expenditure process.
Some Senators argued that that there would be ample time for Parliamentary committees to scrutinize the spending
in the five months between the time the fiscal year ends on March 31 and the time in which the actual amount of
surplus is determined in the Fall. But clearly this would be scrutiny after the fact, as it would take place during the
review of supplementary estimates. As Mr. Peter Devries from the Department of Finance told us:
Once these agreements are in place and the payments are made, they will show up in supplementary estimates as a
statutory program for information purposes, but of course the committees involved in reviewing those supplementary
estimates can then ask any question of the minister or officials involved with respect to more details on those programs
The November 2006-2007 Supplementary Estimates will be tabled more than six months after the end of the fiscal
year, and two months after the books have been closed and the surplus will have been known with certainty. The
money designated under Bill C-48 will have been spent — Mr. Devries told us that the government would be issuing
cheques sometime in September or October of 2006. As Mr. Hartt described the process in his testimony: ``In other
words the money is blown; now we are going to be told, because people are nice and they will show up and sit in this chair,
how it was blown.''
WHERE WAS THE FINANCE MINISTER?
Because of its brevity, and due to its lack of detail, we are of the opinion that this so-called budget bill is little more
than hastily prepared legislation designed to do little else than prop up a minority government, as even the Minister of
Finance has implied. We are convinced that government protestations otherwise, are merely an attempt, in the words
of one of our witnesses to make a silk purse out of a sow's ear.
Conservative Senators are concerned that this Bill was developed without the Finance Minister — the Chief
Financial Officer of Canada — directly involved in the negotiations that led to it being drafted and tabled in the Other
Place. As well, he failed to appear before this Committee to defend the legislation.
In fact, the Finance Minister criticized aspects of the deal on the morning of the day it was announced by the Prime
Minister. The Minister of Finance was quoted in the press that day as criticizing the removal of corporate tax cuts,
only to tell this Committee during its hearings on C-43 that he had a hand in the deal, in that he was in close
consultation with the Prime Minister and the Government House Leader on a day-to-day basis leading up to the
agreement with the NDP. Yet, according to his Parliamentary Secretary the Finance Minister never discussed the
substance of the NDP-Liberal agreement with him in those crucial days. Conservative members were disappointed that
the Minister did not appear before the Committee on C-48 to clarify his role in this budget bill.
We are also concerned that the genesis of Bill C-48 sets a dangerous precedent as it means budget bills can be
developed without direct involvement of the Finance Minister. Even the Parliamentary Secretary of the Minister of
Finance acknowledged that ``My involvement was after the fact.''
HOW WILL THE MONEY BE SPENT?
The bill asks for $1.6 billion for affordable housing including housing for Aboriginal Canadians. Yet there is
nothing in the bill that identifies how this money will be spent to benefit Aboriginal Canadians. Money is directed at a
problem area without identifying how it can be spent more effectively.
The same is true in the area of foreign aid, a term which may mean development assistance, but that, at the same
time, is so wide open that it could refer to military support for foreign powers. Bill C-48 designates half a billion dollars
to foreign aid, with absolutely no information as to how it is to be delivered, to whom it is to be delivered, who will
manage the funds once they are delivered, and to what positive end. As David Stewart Patterson, of the Canadian
Council of Chief Executives testified:
...it is also important to recognize that the best way to achieve some of these goals does not necessarily involve public
spending....there is broad consensus, and you heard it in some of the G8 discussions over the past week, that the most
effective thing Canada and other industrialized countries can do to help the poorest farmers in the least developed countries
is to free up agricultural trade through the WTO. None of that kind of looking at alternatives in terms of the best way to
meet these policy goals is addressed in the rather brief text of this bill.
Much the same could be said about the money designated for the environment, for housing and for education (the
latter two of which happen to be largely a provincial jurisdiction).
WHERE IS THE ACCOUNABILITY?
Government officials who appeared before the Committee explained that the expenditures in the bill will be
statutory. However, most statutory spending is carried out based on strict guidelines already set out in law. For
example the Employment Insurance Act sets out specific rules for benefit levels and eligibility, while transfers to
provinces and territories are made based on a set formula. There are no specific guidelines to govern any payments
made pursuant to C-48. Parliament will have no say, as these guidelines will be set away from the gaze of
Parliamentarians. This is not, as Mr. Patterson told us, sound public policy.
The bill allows the government to create or acquire unspecified corporations while providing no legislative guidance
as to the accountability and governance of those corporations. This is an invitation to the kind of misuse and abuse of
funds that led to Adscam, only Bill C-48 involves much more money.
We oppose this bill for many reasons. But ultimately we oppose it because in exercising one Parliamentary
prerogative — to vote for a bill — the effect is to remove from our hands another Parliamentary prerogative, the ability
to effectively scrutinize government spending. This we cannot support. If it is irresponsible for the government to
introduce legislation of this nature, we feel that it would be just as irresponsible to support such legislation.