Proceedings of the Standing Senate Committee on National Finance
Issue 18 - Evidence
OTTAWA, Wednesday, February 5, 1997
The Standing Senate Committee on National Finance, to which was referred Bill C-270, to amend the Financial Administration Act (session of Parliament), met this day at 5:15 p.m. to give consideration to the bill.
Senator David Tkachuk (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I should like to acknowledge for the record the committee's receipt of responses from Mr. George Thomson, Deputy Minister of Justice, to questions asked by members of this committee during his appearance on October 23, 1996. These responses were distributed to members.
I should also acknowledge the committee's receipt of responses from the Department of Human Resources Development to questions asked by members on September 25, 1996. The report of the Canada-U.S. Unemployment Gap Conference, only recently available, was distributed to members on January 24, 1997.
This is our first meeting to examine Bill C-270, to amend the Financial Administration Act.
With us today are Mr. Peter Milliken, Member of Parliament, and Mr. David Miller, assistant secretary of the Expenditure Management Sector Program Branch of the Treasury Board.
Mr. Milliken, please proceed.
Mr. Peter Milliken, Member of Parliament, Deputy Chairman of the Committee of the Whole: Mr. Chairman, this bill is simple in purpose. It is designed to prevent the use of special Governor General's warrants between sessions of Parliament. In other words, it is designed such that the warrants could be used during an election campaign and its immediate aftermath but not between sessions.
In my view and in the view of some others in the house, this part of the Financial Administration Act was included to permit a government, in cases of emergency, to help itself to funds in the Treasury when Parliament was not sitting.
In the days when Parliament sat for three or four months a year, from January to April, or January until June as it gradually extended, it made sense to have a power to allow the government to spend money that had not been authorized for emergency purposes by recourse to these Governor General's special warrants.
In the last 20 years, Parliament has been sitting more or less continually throughout the year. We do not end sessions until the day before a new one begins, so we are never without a Parliament which is available to sit. In light of those changes and in light of experiences in other countries, it is worth removing the right of the Crown to help itself to the Treasury by use of these warrants when Parliament is available to be called and should be called to vote supply.
This bill is intended to enhance the powers of Parliament by ensuring that, at least between sessions, once a Parliament has begun, the House of Commons and the Senate must be called together in order for supply to be voted. If they are not so called, the government will run out of money, at least on the votable parts of the estimates. That is the purpose of the bill.
We spent a fair bit of time on the bill in the other place and in committee. We made extensive changes to the original draft of the bill. We believe we have come up with wording that covers the situation. I would be pleased to answer any questions that you have in respect of the bill. It is a simple bill but its import is of some significance in terms of enhancing the powers of Parliament.
Senator Stratton: From reading the documentation on this, we are virtually the only country which has had this unique condition since Confederation. Why not eliminate it?
Mr. Milliken: We considered that. It is understandable that, when Parliament is dissolved for an election or for a period of time when it is not reasonable to expect Parliament to be recalled to vote supply, there could be emergencies and the government might need access to public funds.
There is a strong argument to be made with respect to the contingency estimate that is contained in the Estimates and that is voted as part of the Estimates. The government has considerable leeway to spend a substantial sum. My recollection is that it is approximately $350 million. Certainly, the government could presumably survive on that unless some catastrophe occurred.
However, under this provision, the government could continue to use these warrants from the date of dissolution until a period 60 days after the date fixed for the return of the writ. It gives a reasonable period of time for their use. I note that, on the sixtieth day, a warrant could be issued that would extend some time into the future and allow for Parliament to be recalled some time after 60 days. There is a gap here. However, it then cannot be used again. We have abolished it at least between sessions, which has happened before and, in my view, should not happen. We have cleared that up.
There is an argument to be made for getting rid of them altogether, but I am not sure that we would win the support of the president of the Treasury Board if we did that. There is some concern about this, but there would be much more concern if we tried to abolish it.
Senator Stratton: My curiosity was peaked by the fact that neither Australia nor the British Isles have this type of provision. How do they manage?
Senator Lavoie-Roux: We are not talking about those countries, though.
Senator Stratton: I understand that, but they have essentially the same election system as us. How do they manage?
Mr. Milliken: I cannot speak about the Australian experience, but I can about the British.
Their election campaign is considerably shorter than our 36 days. My recollection is that it is 30 days. They have a convention of rapid turnover. Within a day or two of the election, the old government is gone and the new one is in place. That is not our experience. Our government will sometimes hang on for several weeks before there is a turnover and the new government is sworn in.
They also have a tradition of Parliament meeting shortly after an election for the dispatch of business, which is not always our experience.
More importantly, they have a tradition that, when an election is about to be called, the house will pass supply and vote it before the election is called. That has not been our tradition.
They perhaps have not had as many minority governments as we have.
Forcing the abolition of the use of special warrants on the House would create a situation where a government might be in a position where it wants to go to the people but it cannot because it does not have supply. It could not then govern without it during our relatively long election campaign periods and during our normal process of changing cabinets after the election if there were a change in government. This leaves the convenience factor in place for election periods only.
Senator Lavoie-Roux: Let us say a request for $100 million is made of the Governor General. Since this will happen when Parliament is not sitting, who will make inquiries as to what use is to be made of that amount? What kind of control is in place?
Mr. David Miller, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada: Treasury Board secretariat carefully reviews the expenditure requirements. They are then signed by the ministers, either those going out or the new ministers who have been appointed at a time when Parliament has not yet reconvened.
As to the items which are normally covered in the special warrants, approximately 70 per cent of the amount is for statutory expenditures and, as such, are not affected by this. The remaining 30 per cent is for what we call regular business. Although the words used are "urgently required," it usually pays for items such as the government's regular phone bills or the salaries of public servants. Those are the kinds of items that are normally included in a special warrant.
We have been very careful to ensure that those amounts are reviewed and measured against the requirements normally tabled in a Main Estimates document which has not received full supply. In previous years, the Governor General has sat down with representatives of the Treasury Board secretariat and gone over, in detail, what is included in the warrant. We perform a normal scrutiny, but it is done at the bureaucratic level.
Senator Lavoie-Roux: When and how is it reported to the House of Commons and the Senate when they resume?
Mr. Miller: Our requirement is that the use of warrants be reported to Parliament as soon as possible after Parliament reconvenes. Traditionally, within one or two days of that occurring, we have introduced a report dealing with the use of special warrants.
Senator Lavoie-Roux: Is it always reported?
Mr. Miller: It is always reported.
Senator Lavoie-Roux: Let us say an election is to be held on June 9 this year, and the government has sufficient funds up to June 9. However, then there would be 36 days during which Parliament would not be sitting. When would a request for money be made?
Mr. Miller: Under our normal process, at the beginning of April we ask Parliament to approve an interim supply bill. Normally, that would cover three-twelfths of the entire year. Traditionally, that has allowed Parliament sufficient spending until the end of June, at which time we would again go through our normal supply process. If an election were called after interim supply had been approved but before full supply -- in other words, the entire amount of the Main Estimates is approved at the end of June -- departments would start to run out of money at the end of June. They would not have sufficient funds to meet July payrolls.
Under the new bill, special warrants would be used during July and August if Parliament resumed in September. That would carry us through.
Senator Lavoie-Roux: It could be even longer if Parliament did not reconvene in September.
Mr. Miller: The date of the return for the writs could be June 20 or, perhaps, one week after the election date, which is my recollection of when it normally occurs. It will be one week or 10 days after. That day will be fixed for the return of the writs. The government could continue to use warrants for 60 days thereafter. That would take us to about August 20. On the last day, a warrant could be issued. Based on past practice, that would cover another 45 days, which would take us to the end of September.
Parliament would have to be recalled in September, and I suspect the government would want to recall Parliament earlier in September than the date scheduled -- usually the second week -- to allow time for supply to be voted, assuming the main supply had not been voted before Parliament was dissolved for the election.
Senator Lavoie-Roux: To what date can this period be extended? A cabinet may not be formed for, say, a couple of weeks or one month after an election. Can this period be stretched?
Mr. Miller: The bill specifies 60 days from the date of the return of the writs. No further warrants can be issued after that time.
Senator Lavoie-Roux: There is a limit of 60 days?
Mr. Miller: Yes, from the return of the writ.
Senator Stratton: Yes, seven to 10 days after the election.
Mr. Miller: Yes.
[Translation]
Senator Rizzuto: If I understand correctly, it is to make things easier for the new government elected to office and to enable it to continue to administer. That in fact leads me to my next question: How did things work before this bill when there was a change of government?
[English]
Mr. Miller: There have been different scenarios but under normal circumstances, if full supply has not been passed -- and that will happen if an election is called during the spring -- then warrants would be issued on a recurring basis of 30 days until Parliament is reconvened. The last warrant would take us to a point where Parliament would be sitting and could approve supply.
If we knew the date, we could do it in 30-day lumps, or one month at a time, until Parliament resumes.
If an election were called in the fall and a full supply had already been issued, then we would not normally require special warrants. They would not be used at all. This bill covers the situation where an election is called before supply for a fiscal year has been approved.
[Translation]
Senator Rizzuto: So if the election is held on June 9, as Senator Lavoie-Roux suggested earlier, under this bill the new government could administer its affairs for 60 days without using current means, that is every 30 days. In fact, the purpose is to make it easier for the new government to administer affairs without being obliged to look for money.
Mr. Milliken: That is what Mr. Miller wanted to indicate to us, that is if the election is held in June for example and Parliament does not sit until October, there will be difficulties. It is important to understand that if a government decides on the dates of an election, without this supply legislation being adopted, we will have a problem with the date on which the new Parliament is to begin. The proposed legislation must probably be enforced for 100 days before elections or less than that if you want the legislation to be adopted without the agreements of the Opposition, but it is possible to arrange something with the Opposition to have legislation adopted very quickly at the beginning of the new Parliament.
[English]
Senator Cools: Mr. Milliken, I should like to welcome you to our Senate committee. It is always nice to have you as a witness.
This particular subject matter is one that has proven vexatious for some time. At the outset, I should like to say that I have not yet had a opportunity to give the issue and the bill the attention it deserves. I have been preoccupied with another bill.
This committee should welcome all and any attempts to uphold the right of Parliament to control public expenditure and to hold ministers and cabinet responsible at all times for public expenditure.
Are you aware that this particular committee conducted a fairly significant study on this very subject matter some years ago? If so, is your bill consistent with what the committee recommended at that time? Our researcher should pull out some of that information.
Mr. Milliken: I am aware that various witnesses were called during the hearings in April of 1991.
I have read some of the testimony given before this committee in relation to the use of warrants. I believe that in 1991 your committee was dealing with amendments to the Financial Administration Act, the act that this bill seeks to amend. I did not know it was a study on this particular aspect. I have read some of that material.
Whether this complies with all your committee's recommendations, I do not know, however Senator Stewart, who is certainly something of a constitutional expert in matters surrounding voting supply is aware of this bill. I do not want to put words in his mouth, but he certainly supports its intent.
Senator Cools: Would he support the bill?
Mr. Milliken: He would support the bill. I have not questioned him on the details of the 60-day provision and you would certainly want to speak to him on that. He would be a excellent witnesses. He is knowledgeable in this field. In fact, much of his material is most helpful on the subject.
Senator Cools: For those who did not sit on this committee many years ago, at one point, the committee was concerned that Parliament may be adjourned with the intention of cabinet using Governor General's special warrants. This committee was quite vexed at that concept. Perhaps the committee should review what took place during those hearings.
I remember testimony from the then president of the Treasury Board when some of us, perhaps even myself, put a question as to what were the amounts of money that cabinet would withdraw from the treasury using Governor General's special warrants. I believe the minister's response was that there was no limit.
The subject matter is somewhat cryptic and arcane, but I believe it is something the committee must carefully consider. If this bill is consonant with the concerns I have on this subject matter, I would be happy to support it. However, as I said, I believe the our previous committee proceedings on this subject matter should be distributed to senators so that we can give this bill the kind of attention and consideration it deserves.
Senator Forest: What issues were addressed in the debate in the House of Commons in arriving at the 60-day figure?
Mr. Milliken: Some members said that 30 days would be adequate, some said that 60 would do, and some suggested that 90 would be more reasonable. We compromised at 60.
Ultimately, the bill received unanimous agreement in committee and unanimous agreement to go through report stage at third reading in the house without debate. That was partly because I had become a deputy speaker and I could not speak on it. I asked if members would agree to this being done, and they did. The bill was passed without my having to put it in someone else's name.
Senator Forest: Were any concerns voiced regarding the 60 days?
Mr. Milliken: No. They were in agreement on that. The Reform Party would have preferred 30, based on the committee discussions, but I think they recognized that 60 was reasonable in the circumstances, and they left it at that.
The main purpose of the bill, as I introduced it, was to stop the use of warrants between sessions of Parliament. It will achieve that goal. It allows for some liberties around an election but I do not think that was of great concern to members. The concern was that there be a reasonable limit so that Parliament could not avoid meeting for months and months, particularly at certain times of the year. We felt we were reasonably protected.
Senator Forest: What amounts would normally be required within this period of time?
Mr. Milliken: As Mr. Miller indicated in his testimony, it depends on the time frame. If main supply has already been voted in June, I presume you would only need to use the special warrants for additional moneys that had not been voted. It would be peanuts. Supplementary Estimates are not usually large, assuming there was proper planning in the preparation of the Estimates. You would only need them to cover Supplementary Estimates, and only for that portion that would apply until Parliament resumed. Assuming supply had been voted in June, and an election was called any time after that, up until, say, March 1 of the following year, these would not involve very much money. However, after March 1 there might be difficulties because you would require the interim supply for the new financial year. An election call in March would inevitably result in the use of these warrants in a major way on April 1 so that the government would have money for April and May. The amounts would be substantial because no supply would have been voted for that period. It depends on those factors.
Senator Stratton: At the end of a session and just before an election, the Main Estimates are passed. Is that the normal situation?
Mr. Milliken: No. Our Estimates are passed on a fixed schedule of dates. There are three supply periods. Supplementary Estimates are normally passed in December. There is a second date in March when final Supplementary Estimates are passed and interim supply is voted for the next financial year, for three months starting on April 1. Then, sometime before June 30, but on a date in June, main supply is normally voted for the entire financial year. There are a specific number of supply days allotted in the house. Once those debates have taken place on those days, there is an automatic vote.
Senator Stratton: Have you considered what would happen in the situation where you had a minority government which fell apart before the main supply was passed, and an election was called and another minority government was the result, and it was just as divisive as the previous one -- that is, the reasons exist as they did in the defeat of the minority government?
Mr. Milliken: In my view, that is a fact of political life. We had minority governments before we had the supply system back in the sixties. The house had to vote supply when it was sitting because this procedure was only available when Parliament was not sitting, even under the existing law. I think you will find that the parties made deals to pass supply. After the election in April of 1963 Parliament was recalled and it had to vote supply. There was no automatic vote on a specified day. Debates had to be held and the opposition had the right to hold it up -- and they did. Civil servants were not paid and unemployment cheques did not go out because of delays in getting the supply bill through. Since we now have fixed dates, we no longer have those problems -- unless your chamber holds up the bill. Some argue that a real weakness in our system is that we have given up too much control by this process.
The parties were forced into a position where, in order to run the government and avoid disappointing the taxpayers, they had to make a deal and get the bills through. I anticipate that would happen in a minority situation.
The bill forces government to meet Parliament. I think that is important, whether it is a minority government or not. Once the government has initiated that process, then they must get supply voted and send the bill to the Senate. That principle is what we are trying to legislate. I am sure there will be times when it is inconvenient, but if other countries can do it, surely we can. We have allowed a fair band of opportunity here for use of the warrants over this 60-day period following the date of the writ.
Obviously, an election campaign can be longer than the minimum period specified in the act, which is 36 days. Technically, a government could dissolve Parliament and call an election months after, so these could be used over quite a long period. I am assuming there would be no abuse of that kind.
The Chairman: Are there any other questions? What is the wish of the committee?
Senator Cools: I think Mr. Milliken has some good intentions. I would like to hear a few more witnesses on the subject, and some names immediately spring to mind. I think the committee should explore the issues in more depth. Perhaps Mr. Milliken could suggest which witnesses we should call. I am very supportive of the initiative of compelling a government to meet Parliament.
Senator Kelly: I do not disagree with Senator Cools, but we must acknowledge that this is a meaningful move in the right direction.
Senator Cools: Absolutely.
Senator Kelly: Does Senator Cools have any witnesses in mind?
Senator Cools: Yes. This committee used to have a researcher named Jeff Greenberg who studied this subject matter in depth. I believe the committee should hear from him. It seems to me that we are supportive of the initiative, but I think we should give it more consideration.
Senator Forest: Are there any particular concerns that Senator Cools would want witnesses to address?
Senator Cools: Yes, I think we should address some of the issues that were raised before. I would like a bit more clarification on Senator Stratton's question concerning the application of this to minority governments. Solutions to that question may have been found, but I would like to hear a bit more. It is a complex matter.
[Translation]
Senator Rizzuto: If there are no further questions, I support Senator Kelly's proposal, and we could call witnesses and hear them on this subject at another time. At the moment, it is important to move quickly and waste as little time as possible in adopting this bill. I would even propose that the bill be reported and returned without amendments to the Senate.
[English]
The Chairman: Are you moving that motion?
Senator Rizzuto: Yes.
Senator Lavoie-Roux: We have not had time to discuss this yet.
Senator Cools: We should discuss it.
Senator Lavoie-Roux: I agree with Senator Rizzuto that we should not use witnesses to delay matters.
The Chairman: There is a motion before the committee.
Senator Lavoie-Roux: I have not had an opportunity to respond to Senator Cools' proposal.
The Chairman: Please understand, Senator Lavoie-Roux, that Senator Rizzuto and not I moved the motion.
Do you wish to withdraw your motion, Senator Rizzuto, in order to allow some discussion to take place, or do you wish to allow the discussion to take place while the motion is on the floor?
[Translation]
Senator Rizzuto: Yes, I am willing to withdraw it. I said that if there were no other questions, I would make the motion, but if there are other questions, we should take the time needed to deal with them. I do not agree with going out and looking for further witnesses whom we do not yet know, just for the sake of elaboration on the question. If committee members have other questions they wish to ask, we should take the necessary time to do so, but if there are no other questions then the bill should be returned to the Senate unamended.
[English]
Senator Lavoie-Roux: Senator Cools proposes that we hear from someone who has studied this matter in depth. If we hear from only one witness, that would not delay matters unduly. I could be satisfied with the bill as it is, but it may be worthwhile to hear from someone with some expertise in this area. The bill could still be passed quickly.
Senator Stratton: I would not want to suggest that the other place has not done its homework. My concern is that we put a historical perspective on this. We have before us a straightforward bill. It describes clearly what happens when governments change.
However, we are presupposing a normal situation. Something in the back of my mind is asking "what if?" The "what ifs" have not been addressed. Someone should give the historical perspective. If it takes only one witness to provide that, I would support it.
Senator Cools: In dealing with the area of the Governor General's powers, we should take some care.
The Chairman: Perhaps we could have another meeting on this next Wednesday.
Senator Lavoie-Roux: I wish to make it clear that there is no intent to delay matters unduly. We only want to get all the information we can reasonable get, and then we will pass the bill swiftly.
Senator Cools: Much good will has been expressed here. Perhaps we should have at least one more meeting to consider the historical development of the whole issue, as well as to give some of the problems a modern day context. A few years ago we fought some tough battles on these issues. We should be judicious.
[Translation]
Senator Rizzuto: Mr. Chairman, as I said, I want to take all the time needed to ensure that the bill has been properly considered. However, I think that everyone realizes that the bill is quite straightforward and understood by everyone here. But in order to show our willingness to take all the time needed, I would agree to the committee being convened next week and a witness being called. However, I do not want the process to be prolonged simply because we are trying to discover things. Everyone clearly appreciates that the bill is quite straightforward and necessary to our parliamentary system. Therefore, if the majority of committee members want there to be another meeting, I would agree, but I would have preferred us to conclude today. But I would agree if the majority of committee members want another meeting next Wednesday.
[English]
The Chairman: This is one of the few times in my life as a chairman that I agree with everyone. If a witness is available to give us a historical perspective and to put that perspective into a modern context, we should hear that witness.
I will ask the clerk to check to look into this and get back to you.
The committee adjourned.