Appropriation Bill No. 1, 2025-26
Second Reading
June 25, 2025
Moved second reading of Bill C-6, An Act for granting to His Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2026.
She said: Honourable senators, I am pleased to introduce Bill C-6, appropriation act no. 1, 2025-26, which provides supply for the Main Estimates.
I’ve given a version of this speech many times now, but each time, there are new colleagues in the chamber, so I hope those of you who have heard it before will forgive me for a quick refresher on the process before I get to the details of what these estimates contain.
Appropriation bills are a fundamental part of Parliament’s annual financial cycle. A few weeks ago, the government presented its spending estimates for the coming year, but spending estimates need to be approved by Parliament, and bills like this one are the mechanism for doing so. Once approved, these funds will enable federal departments and agencies to continue delivering programs and services to Canadians.
Spending estimates generally come in four annual instalments. There are the Main Estimates, which is what this bill is about. The Main Estimates outline the bulk of planned federal spending for the coming fiscal year. However, not all expenditures can be captured in the Main Estimates for a variety of reasons. Sometimes, initiatives are still being developed at the time the Main Estimates are tabled, and in some cases, new needs arise over the course of the year.
For these purposes, the government tables supplementary estimates for Parliament’s consideration.
The Supplementary Estimates (A) are tabled in the spring. The ones for this year were tabled in early June, just a few weeks after the Main Estimates, and we’ll be dealing with those shortly in Bill C-7. The Supplementary Estimates (B) are tabled in the fall, and the Supplementary Estimates (C) are tabled in the winter, as required.
That’s why I’ve been giving this speech four times a year as long as I’ve had this job. It gets more exciting every time. However, it is fundamental to the functioning of our federal government, so I’ll turn now to some specifics about the Main Estimates for 2025-26.
These Main Estimates for this year present information on $222.9 billion in voted expenditures, meaning spending to be approved by Parliament, and $264 billion in statutory spending, meaning spending that has already been authorized through existing legislation. That comes to a total of $486.9 billion in planned budgetary expenditures for 130 organizations. This includes $294.8 billion in transfer payments to other levels of government, organizations and individuals; $143.1 billion in operating and capital expenditures; and $49.1 billion to pay interest and administrative costs on the public debt.
Overall, the total planned spending in this year’s Main Estimates represents a slight increase of $230 million over the total from last year. This increase reflects updated forecasts of statutory spending that were previously published in the 2024 Fall Economic Statement for things such as health care transfers to provinces and territories.
Obviously, since the Main Estimates cover almost all federal spending for the year, I can’t go into detail about every expenditure, but I’ll note some of the larger items.
The largest voted expenditures in the Main Estimates are proposed for the Department of National Defence, for a total of $33.9 billion. I think we all understand that we’ve entered a new era with new defence and security considerations. We need to be strong at home and prepared to assert our sovereignty, particularly in the Arctic and northern regions, and we need to be reliable, capable partners for our allies, particularly in the Euro‑Atlantic and Indo-Pacific regions. Plus, our Armed Forces remain a vital resource when Canadians are faced with natural disasters and other emergencies, as we’ve already seen this year.
Planned defence spending includes $12.3 billion to ensure the readiness of our Armed Forces; $9.5 billion for military procurement; and $4.9 billion for sustainable bases, IT systems and infrastructure.
I’ll preview now that in the Supplementary Estimates (A) I will be talking a lot about defence spending — as those of us who were at the National Finance Committee know — but we’ll deal with that in Bill C-7.
The second-largest amount proposed in these estimates is for the Department of Indigenous Services, with a total of $25.2 billion. If approved, this money will go towards important initiatives, including providing health care; building and maintaining community infrastructure; supporting First Nations Child and Family Services; and supporting ongoing work with First Nations to establish a new, more predictable and more flexible fiscal relationship with the federal government.
On a personal note, I recently had the opportunity to meet the new Minister of Indigenous Services, Minister Gull-Masty, the first Indigenous person who has taken on this role, and I congratulated her for that. I left that meeting feeling inspired by her ambition and determination, and I look forward to hearing more from her, including at what I’m sure will be numerous appearances at the Indigenous Peoples Committee, as she leads the work to implement the initiatives enabled by these investments.
The last spending bucket I’ll touch on in these estimates is the proposed $13.1 billion for the Department of Employment and Social Development, commonly known as ESDC. ESDC delivers a range of vital programs and services, including supporting seniors with basic income security, supporting unemployed workers, helping students finance post-secondary education and assisting parents who are raising young children.
The Main Estimates notably propose $107.1 million for ESDC’s Canadian Apprenticeship Strategy, which promotes skilled trades as a career option and helps Canadians discover and succeed in apprenticeship programs.
Another $64.3 million is earmarked for ESDC’s New Horizons for Seniors Program, which funds projects that engage seniors in their communities, including as mentors and volunteers.
I mention these as just a few examples of ESDC initiatives that are funded in these estimates and that can make a tangible difference in people’s lives in communities across Canada.
Finally, here are a few additional highlights in this year’s Main Estimates: $7.6 billion for veterans’ benefits; $6.3 billion for housing; and $1.9 billion for border management, with an additional $513 million for border enforcement.
Anyone who would like to examine these or other spending proposals in more detail can go to the Treasury Board website or check the transcript of recent meetings of the National Finance Committee. Our committee has been studying the estimates since they were tabled a few weeks ago, and I thank all committee members for their work.
Before I wrap up, I want to address something that’s particular to the estimates this year because of the election we had this spring. Since Parliament wasn’t sitting, the Governor General issued special warrants to fund government operations in the interim. The total amount of the two special warrants was $73.4 billion. The first was for $40.3 billion and covered the period from April 1 to May 15. The second was for $33.1 billion and provided additional supply for the period from May 16 to June 29. This spending authorized through these special warrants is included in the Main Estimates totals, and the amounts listed for each organization take this spending into account.
Colleagues, I invite you join me in supporting Bill C-6 and approving the government’s spending plans for 2025-26. As these estimates demonstrate, the government is proposing investments to meet the unique challenges and opportunities of this moment and to address Canadians’ priorities in a way that is accountable and fiscally responsible.
Thank you.
Senator Batters, do you have a question?
I have a few.
First, at the start of your speech tonight, Senator LaBoucane-Benson, you referred to the subject matter of Bill C-6, the Main Estimates, as being part of our annual fiscal cycle. Recently, we heard from Senator Marshall, the extremely capable opposition critic of this bill and many other financial bills that we have coming before this chamber, as describing certain other parts of the annual fiscal cycle as being currently missing in action.
Could you give us some insight about parts that the government has not complied with in this particular annual fiscal cycle and why it has not?
First, I agree that our critic is very capable, and I’m looking forward to hearing Senator Marshall speak.
Referring to the “missing” parts is not very specific. Could you tell me specifically what you’re asking for?
Thank you. Let’s start with the budget. Where is that? Where are many of the other borrowing documents and that sort of thing, which I’m certainly not nearly as well versed with as Senator Marshall is — I’m sure she’ll speak about those in her speech. But I am referring to those types of factors that typically go along with this annual cycle.
Thank you, senator, for the question.
With regard to the budget, we have been told by the Prime Minister that it will be coming in the fall. I think when we consider everything that is happening in the world right now, a budget in the fall would most likely be a lot more detailed. It will give us more meat on the bones in a few months, when things such as this new agreement with the EU are completed and we know what the expectations for spending will be. That’s coming in the fall.
For example, one of the things my colleague has talked about is debt servicing. Actually, what Senator Marshall has specifically asked for is a date for when the debt management strategy will be published.
The Financial Administration Act requires publication within 30 days of the start of the fiscal year. The Department of Finance is preparing a debt management strategy right now. The statutory deadline is September 26, but they are preparing it now, and it will be tabled in due course.
Other than that, the budget and the debt management — I know Senator Marshall has asked for departmental plans, which have already been published.
Next, you gave a bit of detail, referring to the Department of National Defence, or DND, section as being the biggest item in these Main Estimates at a total of $33.9 billion. You’ve provided a few brief breakdowns, but given that it’s $33.9 billion, you said you’re going to speak more about this defence spending in Bill C-7, but that is Supplementary Estimates (A). From my understanding, that’s about $9 billion; however, that’s additional spending, not the $33.9 billion. Given that it’s $33.9 billion, I would like to get more details about the types of expenditures included in that, perhaps some of the biggest parts — the military procurement, you said, is about $9 billion or so.
Could you please give us more details about that? I know many Canadians would like to hear about that. For $34 billion, they deserve to.
Thank you very much for the question.
When I look at the Department of National Defence and Canadian Armed Forces, or CAF, Departmental Plans, they have divided them into six core responsibilities. The first core responsibility is in operations. The results they are looking for are around Canadians being protected against threats, that people in distress receive effective search and rescue, Canada’s Arctic sovereignty is preserved, North America is defended against threats and the Canadian Armed Forces contribute to a more stable and peaceful world.
With that, they are looking at hiring and equipping people properly in the Armed Forces.
Core responsibility number two is about a ready force. The department will prioritize and direct defence activities to ensure that the CAF is ready to execute complex operations. This will include enhancing readiness across four key pillars: people, equipment, training and sustainment.
The third core responsibility is on the defence team. It will focus on its multi-year program to improve the ability to attract, recruit and retain its workforce; and advance efforts to build a team that supports a broad perspective of cultural and linguistic diversity, gender balance, age and other characteristics of Canadian society.
The fourth responsibility is about future force design. They want to look at defence capabilities that are designed to contain future threats, and defence and security challenges that are addressed through innovative solutions.
The fifth is on procurement capability, and the sixth is on sustainable bases, information technology systems and infrastructure.
The departmental plans provide quite a bit of detail on all six core responsibilities, and that’s where a significant amount of that money is being spent.
Thank you.
Let’s just go back, then, to the military procurement part of it. As you said, they want to make sure that our capable men and women of the Canadian Armed Forces are equipped more properly. Of that $9 billion that’s military procurement in this bill — I’m not talking about the one that you’ll be speaking about later, Bill C-7 — what types of items are we looking at for military procurement? Also, is there anything in there for fighter jets?
In core responsibility number five, procurement of capabilities, the planned expense is $9.5 billion. The planned human resources are 3,064 people. The departmental results are around defence procurement being streamlined, defence information technology acquisition is well managed and supplies are available and well managed. They’re really looking at the way they procure and are making sure that resources are used effectively and efficiently so they’re managed well.
To address these challenges, DND will develop a defence industrial strategy that will aim to ensure the CAF can secure the timely and reliable access to key capabilities while supporting the Canadian defence industry’s base.
So there is an entire full plan of procurement capabilities in the Departmental Plans, but that’s just an overview.
Some of those are details about the specific items they’re planning to procure, but I’ll move on.
Can you give us more details about what the largest items included in those special warrants were? You said the total was $73.4 billion. The first one was $40.3 billion, and the second was $33.1 billion for the most recent few months. Please tell us what the largest expenditures were out of these special warrants.
Thank you for the question.
I don’t have a breakdown in front of me of the special warrants. They were based on funds that were already approved that were needed to run the government.
As far as getting down into the details, my office would have to provide you with that. I can’t right now.
Okay. Then I would just please ask that perhaps you could include that in your third reading speech because it is $73.4 billion. Just receiving a piece of paper or having to watch hours of committee meetings — I think we’d need to know that before we’re asked to vote on $73 billion.
Honourable senators, it is now seven o’clock. Pursuant to rule 3-3(1), I am obliged to leave the chair until eight o’clock, when we will resume, unless it is your wish, honourable senators, to not see the clock.
Is it agreed to not see the clock?
Some Hon. Senators: Agreed.
Some Hon. Senators: No.
The Hon. the Speaker: I hear a “no.”
Honourable senators, leave was not granted. The sitting is, therefore, suspended, and I will leave the chair until eight o’clock.
Honourable senators, I would like to thank Senator LaBoucane-Benson for her comments. I will be doing something similar. She gave a little historical perspective on certain parts of the Main Estimates; I will go back in time a little bit when I talk about debt because we have a lot of new senators here, and I can’t say they would enjoy it, but it might help to inform them. I know that when I do stand up to speak about the estimates, many people’s eyes just glaze over.
Honourable senators, I rise to speak to Bill C-6, which is the appropriation act no. 1, 2025–26. This bill, which is supported by the 2025-26 Main Estimates, or the Blue Book, as they call it, is requesting parliamentary approval of $149 billion for the federal public administration. The 2025-26 Main Estimates document presents total spending of $488 billion for this fiscal year. Of the $488 billion, $265 billion has already received parliamentary approval through other legislation, such as the Financial Administration Act. In addition, just over $73 billion was approved by special warrants due to the 2025 general election. That leaves $149 billion left, and that’s what this bill will do — request approval for the remaining $149 billion.
I’d just like to say that in my office we do quite a thorough analysis of the bill. The bill is quite long. The appendix lists the numbers for all the government departments. We go through and cross-check the numbers, and we ensure that the Treasury Board has used their calculator in determining what goes into the bill.
The 2025-26 Main Estimates were tabled in the Senate on May 28 and referred for study to the Standing Senate Committee on National Finance on May 29.
The Main Estimates for 2025-26 outline spending of $486 billion. This is an increase of 8% when it is compared to the $449 billion outlined in last year’s Main Estimates. However, it is premature to reach a conclusion on the comparison between the Main Estimates for those two fiscal years because government will be requesting parliamentary approval for additional spending in future appropriation bills, the budget and possibly even a fiscal update. In addition, government often requests additional funding in other bills.
As an example, the Main Estimates for 2023-24 outlined $433 billion in spending, but actual expenditures for that year were $513 billion, a significant increase of $80 billion.
It is only June, and with nine months left in this fiscal year, there is still a lot of time and opportunity for the government to seek approval to spend more money.
The Main Estimates provide information only on estimated government expenditures and spending. Since there is no budget, we do not know the estimated government revenues for this year, nor is there any indication of the projected deficit. However, we do know that the revenue projections for this year of the previous government in its 2024 Fall Economic Statement are no longer valid. The new government has already indicated initiatives which will decrease revenues.
In addition, the previous government had estimated revenues of $3.3 billion to be collected this fiscal year as a result of changes to the capital gains tax. Since the capital gains tax will no longer be increased, this revenue of $3.3 billion will no longer be collected.
We can see from the 2025-26 Main Estimates that expenditures are increasing, and we know revenues are decreasing. As a result, we can expect a larger deficit for this year.
Since government plans to run a deficit this year, we can expect government to increase its borrowings. However, the debt management strategy for 2025-26 has yet to be tabled, so we do not know how much money the government plans to borrow.
Government has a legislated debt ceiling of just over $2 trillion for the federal debt and the market debt of agent Crown corporations. This limit is established under the Borrowing Authority Act. This legislation was enacted in 2017 to provide the Minister of Finance with the authority to borrow and to provide for a maximum amount of borrowing. The government cannot borrow in excess of the debt ceiling without obtaining the approval of Parliament.
The initial ceiling, established in 2017, was just over $1 trillion, so over the past eight years, the debt ceiling has doubled to just over $2 trillion. Our actual debt was $918 billion in 2015. It increased to just over $1 trillion when the Borrowing Authority Act was enacted in 2017, and it was $1.7 trillion 15 months ago. Not only has the debt ceiling doubled, but actual debt has also doubled since 2015.
The public accounts for March 31, 2024, indicate that total debt against this ceiling is $1.7 trillion. However, these are the borrowings as of 15 months ago, and we do not have any current numbers. This is one of the limitations imposed by this government — a reluctance to provide current financial information.
The debt management reports — and I want to make a distinction here; a few minutes ago, I was talking about the debt management strategy, which is forward-looking, and now I’m talking about the debt management reports, which look to the past — for March 31, 2024, and March 31, 2025, have yet to be tabled. There has been no debt management strategy tabled for 2025-26. Once again, this demonstrates the government’s reluctance to provide Canadians and parliamentarians with current financial information.
Last month, Fitch Ratings warned the federal government about getting carried away with deficit spending. It said that “Canada has experienced rapid and steep fiscal deterioration, driven by a sharply weaker economic outlook and increased government spending . . . .”
It further said:
Canada’s credit strengths offer significant headroom to weather a fiscal or economic shock, but increased structural deficits would pressure its credit profile.
The Organisation for Economic Co-operation and Development, or OECD, has already indicated that the global economy is headed for a downturn, and North America will be hardest hit. In a report released in early June, the OECD said that Canada will be one of the developed world’s hardest-hit economies this year and next. It further indicates that fiscal risks are increasing. Public debt levels are already elevated in many advanced and emerging economies, and spending pressures are rising in areas such as defence, the green transition and the aging of our population. Debt servicing costs are also increasing, putting additional pressures on public finances. Canada can certainly relate to these increased risks.
Current information on interest costs is also lacking. The Main Estimates indicate interest costs of $49 billion. However, the 2024 Fall Economic Statement projects public debt charges of $54 billion for this fiscal year, increasing to almost $70 billion by 2029-30. However, given the spending outlined in the Liberal election platform and the government’s recent Speech from the Throne, these projected interest costs are not current. As a result, I expect there will be increased debt servicing costs to finance existing and new debt, and we can expect to see these in future estimates, the budget and possibly a fall economic statement.
The Parliamentary Budget Officer, in his report on the Main Estimates, said that public debt charges have increased significantly over the last three years due to a substantial increase in the stock of public debt, combined with subsequent higher effective interest rates.
Debt servicing costs increased from $24 billion in 2014-15 to $35 billion in 2022-23, and then to $47 billion in 2023-24. Now, debt servicing costs are projected to reach $70 billion in 2029-30.
During his testimony on the Main Estimates, the Parliamentary Budget Officer told us that, in the absence of a budget, it is difficult to know the government’s forecasts with respect to revenues. He said that parliamentarians are being asked to approve funding without a plan — a long- or even medium-term plan — as to what the government plans to do beyond the Main Estimates and Supplementary Estimates (A).
I was surprised when Finance Minister Champagne said there would be no budget this year. While some may feel a budget promised this fall is a step up, I don’t agree. The budget is the government’s fiscal plan. As the Prime Minister said during the election campaign, “A plan beats no plan,” and as of now, we have no plan. To present a plan in the fall after the fiscal year is substantially over is neither helpful nor informative.
We need a budget to tell Canadians the government’s fiscal program and policy agenda for the year. It will tell us how much money the government will take from us in taxes and any other sources of revenue. Most of the government’s revenue comes from taxes on us and on businesses. A budget would also tell us how the government plans to spend our money, and how much they plan to borrow.
The government will definitely borrow billions of dollars this year, on which it will have to pay interest with our tax dollars. Those billions of dollars that the government will borrow will be repaid by our children, grandchildren and great-grandchildren. Since we as taxpayers are financing this borrowing, the government should present a budget now and tell us how much they plan to borrow and what the interest on that borrowing will be. We need a fiscal road map now.
In responding to questions regarding the decision to delay the tabling of the budget, Canada’s Auditor General told us that it is unusual to start a fiscal year without a budget, as a budget encourages global transparency. She also spoke about the need for transparency and accountability of the estimates as well as the benefits of hearings. However, she concluded her remarks by saying that the budget provides ultimate clarity for everyone.
The most reliable financial document produced by the federal government is the Public Accounts of Canada. I say that this document is the most reliable because the financial statements of the government, which are contained within the Public Accounts, are audited by the Auditor General of Canada and are therefore reliable. The Public Accounts of Canada is comprised of three volumes, and while the financial statements are audited by the Auditor General, much of the information is not. However, I still consider the information included in volumes 1, 2 and 3 to be the most reliable we have.
The problem with the Public Accounts of Canada is the government’s delay in tabling the public accounts. Although the Financial Administration Act provides for tabling by December 31 if Parliament is sitting, and even later if Parliament is not sitting, tabling the public accounts nine months after the end of the fiscal year is not helpful or useful to parliamentarians or Canadians.
Last year, for the year ending on March 31, 2024, we waited until December 17 before the government tabled the public accounts, which was Parliament’s last sitting day. There was no opportunity for discussion by the House of Commons or the Senate.
The Debt Management Report for the same fiscal year, 2023-24, has yet to be tabled. The Financial Administration Act provides for the tabling of the Debt Management Report within 30 sitting days of the tabling of the Public Accounts. Since the 2023-24 public accounts were not tabled until December 17, 30 sitting days after December 17, 2024, will be September 26, 2025 — three months from now. In other words, we can expect to receive the Debt Management Report for 2023-24 a full 18 months after the fiscal year end.
As I indicated in my opening remarks, the 2025-26 Main Estimates were referred to the Standing Senate Committee on National Finance on May 29 for study. Departmental Plans are expenditure plans for each department and agency. They describe each organization’s priorities, strategic outcomes, program, expected results and associated resource requirements. They cover a three-year period, beginning with the year indicated in the title of the report. These plans are instrumental in our review of the estimates. The government website states that the Departmental Plan, or DP, “. . . signifies the Government’s desire to enhance its accountability to Canadians through improved reporting . . . .”
The departmental plans this year were not tabled until June 18, one day before we completed our study of the Main Estimates. We need the departmental plans to help us in our study of the Main Estimates. To table these plans on June 18, one day before we completed our study, indicates — once again — the government’s reluctance to provide us with the information we need to oversee government spending.
The Department of National Defence is requesting almost $34 billion compared to $29 billion requested last year in the Main Estimates. Most of the increase is for capital expenditure — $10.9 billion this year compared to $7.2 billion last year.
Last year, during Finance Committee meetings, the Department of National Defence provided a list of the projects that were included in the $7.2 billion. This year, we do not know how the government plans to spend the $10.9 billion requested in the Main Estimates for capital projects. While department officials have committed to provide this information, we have yet to receive it.
One of the challenges faced by the Department of National Defence in the past has been in the area of procurement and the utilization of funding approved for capital acquisition, including aircraft, ships, vehicles, ammunition and other capital projects. Last year, the previous government increased its planned capital expenditures from $164 billion over 20 years to $257 billion. However, there were few details on the projects included in the $257 billion. At that time, the department indicated that projected defence spending would reach 1.76% of the GDP in 2029-30 compared to the NATO policy of 2%.
However, the Parliamentary Budget Officer, or PBO, issued a report indicating that the Department of National Defence has been challenged to spend the capital funding approved by Parliament. At that time, the PBO indicated that between 2017 and 2023, there was a cumulative shortfall of almost $12 billion between what the government actually spent on capital projects and what they had planned to spend. Supplementary Estimates (A) outlines a new spending of $9 billion, which should bring Canada’s defence spending to 2% of the GDP. I will have further comments on the Department of National Defence when I speak to Bill C-7.
The Department of Crown-Indigenous Relations and Northern Affairs is requesting $13 billion compared to last year’s Main Estimates of $10.8 billion. Almost half of the requested funding will be used to settle specific claims negotiated by Canada and/or awarded by the Specific Claims Tribunal to Indigenous groups to settle special claims. In reviewing funding requests for specific claims and settlement agreements, there are a number of challenges involved in following the money for these types of expenditures. It is not transparent.
Funding for specific claims or settlement agreements may be requested in several appropriation bills over a number of years, but the expenditure may be recorded in a different fiscal year. Unless the claims are specifically identified in the estimates documents and the public accounts along with the dollar amount, it is impossible to follow the money.
Since funding requests for claims and settlements are significant, they are frequently discussed at the Finance Committee. In a previous committee meeting about claims and settlements, the PBO told us it is concerning that the claims and settlements have increased so much. He said it raises the question as to how firmly in control the government is with respect to these claims and settlements. He went on to say that the specific claims process is very complex.
Claims and settlements represent significant amounts requested in many appropriation bills. They are recorded in the public accounts as expenditures and in many instances are included in the provision for contingent liabilities on the government’s financial statements. The problems associated with tracking the claims and settlements recently came to light when the government released the 2023-24 public accounts last December and disclosed that the deficit that year was not $40 billion, as previously thought, but was actually $61.9 billion.
Part of the explanation provided by the government for the significant increase in the deficit was $16.4 billion in Indigenous contingent liabilities, which the government said was attributable to “one-time” or “exceptional” expenses. This explanation is puzzling to me because the government has recorded increases in Indigenous contingent liabilities in previous years and certainly for amounts greater than the $16.4 billion.
For example, in the previous fiscal year — 2022-23 — the government recorded an increase of $26 billion to its contingent liabilities, which is clearly explained on pages 8 and 12 of Volume I of the 2022-23 public accounts. Other increases in Indigenous contingent liabilities have also occurred before 2022-23, so these transactions are neither one-time nor exceptional.
As I have indicated previously, the problem encountered when reviewing the Indigenous contingent liabilities is the lack of transparency in disclosing the transactions within this account.
The $16.4 billion increased the deficit last year and also increased the Indigenous contingent liabilities. Despite this increase of $16.4 billion in Indigenous contingent liabilities, at the end of the fiscal year, the Indigenous contingent liabilities had actually decreased, yet we cannot determine why — or at least I cannot, and I’ve literally spent hundreds of hours looking.
A review of lapsed funding in 2023-24 — the most recent year for which lapsed funding is available — indicates that $26.5 billion was approved for the department in 2023-24, yet they lapsed $10 billion, or 38%, of their approved funding. It raises the question as to how much of their funding was lapsed in 2024-25 and whether this is a recurring issue. I guess we will have to wait quite awhile before we find out.
The Main Estimates for 2025-26 is requesting $26 billion for consultants, which is a significant increase compared to the $19‑billion request in the 2024-25 Main Estimates.
Budget 2023 had proposed to reduce spending on consulting, other professional services and travel by roughly 15% of planned 2023-24 discretionary spending in these areas, which would result in savings of $7.1 billion over five years starting in 2023-24 and $1.7 billion ongoing. The government had committed to targeting these reductions on professional services, particularly management consulting.
While the previous government had committed to reducing the costs associated with consultants, the cost of consultants is actually increasing.
However, the Speech from the Throne stated:
. . . the government’s operating budget — has been growing by nine percent every year. The Government will introduce measures to bring it below two percent.
Based on discussions with officials from the Treasury Board of Canada Secretariat and several government departments when we reviewed the Main Estimates, there is no indication that this initiative has commenced. The 2025-26 Main Estimates are 8% higher than last year’s Main Estimates, and professional and special services being requested in the Main Estimates have increased to $26 billion from $19 billion last year.
While it’s not clear which expenditures are included in the operating budget, which will be restricted to the 2% increase, I have used the direct program expenses in The Fiscal Monitor from March 2025 to determine the magnitude of possible savings. Direct program expenses increased 8.5% in 2024-25 compared to 2023-24. If direct program expenses in 2024-25 had increased only 2% rather than the 8.5%, there would have been savings of $13 billion.
My last comments relate to Employment and Social Development Canada. The Main Estimates indicate that $8.5 billion will be paid to provinces and territories this year to support the national child care program, which was launched in 2021 at an estimated cost of $30 billion.
One of the objectives of the program was to create 250,000 new child care spaces by 2026. In its 2025 Departmental Plan, which was released last week, the department indicates that it is on track to meet the goal of creating 250,000 new spaces by 2026. However, the Fall Economic Statement, which was released in December 2024 — just six months ago — indicates that only 60,000 new spaces have been created or are in progress. Not all of the 60,000 spaces referenced have actually been created.
This is a significant discrepancy between two government documents. One states 250,000 new spaces will be created by next year, while last December, they had only created just under 60,000. This discrepancy should be resolved.
Before I conclude, I must express my disappointment with the government’s reluctance to provide us with the information we need on a timely basis in order to provide oversight of government spending.
The Main Estimates and Supplementary Estimates (A) for 2025-26 were referred to the National Finance Committee for study. The Departmental Plans for 2025-26, which explain how departments and agencies will spend this money, were not provided to us in order to assist us in our study. And we are still waiting for all of the data for the 2023-24 Departmental Results Reports.
I’ve been on the National Finance Committee for 15 years. Over the past several years, I’ve noticed the government has become more secretive and tardy in providing information which should be generally available on a timely basis. Information provided in response to questions at committee is often no longer freely given. Reports, such as the public accounts, are generally tabled late.
While the Financial Administration Act is very generous in establishing mandatory deadlines, the government held the 2023-24 public accounts until December 17 — almost nine months after the fiscal year-end.
Similarly, we are still waiting for the 2023-24 Debt Management Report — for a fiscal year that ended 15 months ago — because the wording of the Financial Administration Act is so generous that it will allow the government to hold that report for 30 sitting days after the public accounts are tabled.
My hope is that this new government will recognize the problems and remedy it so that parliamentarians can provide oversight of government spending as it was intended.
I thank my colleagues for their interest and attention. This concludes my comments on Bill C-6.
Senator Marshall, I always look forward to your comments on supply.
I have a couple of questions. Given your focus on the deficit, which I share, would you share my view that the GST should be increased?
Thank you for the question. This is something that Senator Harder and I have talked about, even recently within the last couple of months, because we were both on an initiative where we looked at the economy and different problems.
I would say that would be one option. Probably the best way to respond is the following: I would not be surprised if the government increases the GST. Of course, I’ve been working with these documents for several years now. There is intense pressure on spending. Even though the government is saying we’re going to have restraint, I don’t see it actually happening. I know people say, “Tax the rich.” Well, there are not enough rich people to come up with the big gap. That’s one of the options that the government will have to explore.
On broader issues, what’s your reaction to the notion of separating out a reporting of our fiscal framework, the operating budget and the investment portion of the budget, which seems to me to be rather smart in terms of providing Canadians with a clear sense of what we are consuming and what we are investing?
Thank you for that question. Perhaps the best way I can answer that is to say you can make numbers say anything you want. I’m deeply suspicious. Somebody was saying earlier — it might have been Senator Moncion, and I’m sorry if I put my finger on you — that the devil is in the details. I would like to see, but I’m very suspicious. I think it’s just an effort to move the numbers around to try to make them make sense, but you’re going to see the borrowings go up.
Senator Marshall, thank you for your fulsome remarks. Of course, one option Senator Harder has put on the table is increasing GST. Most good Liberals love increasing taxes, including capital gains and GST, and that’s one solution to increase the revenue flow.
Would you agree that another option would be for the government to reduce spending?
Thank you very much for that question. Yes, I think that the government needs to put more effort into reducing expenditures.
Every year, for the last several years, under the previous government — and this government also — there’s been a big initiative around how they’re going to do something to save billions of dollars. This new government even had something to that effect in its Throne Speech.
However, when we had National Finance Committee meetings, I asked the Treasury Board what direction they had given the departments to reduce these operating expenditures by 2%, and I don’t think they had even heard of the initiative because they couldn’t provide any information.
Then, as a follow-up, I asked several departments what direction they had received and whether they were doing anything to prepare for this reduction in expenditures, but when you talk to people about the appropriation bills, they kind of glaze over.
I think there is a lot of room to cut back, Senator Housakos, but the way this government spends and the way the previous government spent, I don’t have much hope that they’re going to reduce expenditures. I’m not convinced.
Since we’re talking about hypothetical questions and tax issues, I have another question for you. It’s perhaps food for thought.
Senator Housakos said that this government likes to increase taxes, so I have a suggestion. It’s a hypothetical, but it could happen. What would you think if this government were to decide that when you buy a share, there’s a tax on doing so?
Let’s say you put a 2% tax on buying shares, which would mean people who buy them would be paying taxes on the transaction. By doing that — again, this is a hypothetical — you would get revenue from people who have more money than those who cannot buy shares. It’s an idea I’d like to hear your thoughts on.
Thank you very much for the question, Senator Moncion. Are you talking about shares in publicly traded corporations?
Yes.
I would like to see an analysis of that. I’m not warm to that idea. We’re looking for more investment in Canada, and if you start taxing that, I think it would probably have a very negative impact.
I would be interested in hearing the views of the C.D. Howe Institute and various think tanks, but my initial reaction is that it would dampen what we’re trying to do. We want people to invest in Canada. I think that might be somewhat of a discouragement.
Would you take another question?
Yes.
Thank you very much. I look forward to you giving your perspective. It’s always pivotal to the work we’re going, and I learn so much from you sitting at the National Finance Committee table.
Something we’ve talked about over the years, and I can’t help but ask about again tonight, is that balance. When you break it down, what are we still missing from 2023-24? What are the cycles of what we’re reporting, and how do we make good decisions without information X, Y and Z and with all these gaps? I think about how we run businesses and our own families. We couldn’t do this.
My question to you is this: How do we balance stripping this back and saying, “Stop.” How do we see on an annual calendar what works best for reporting and getting financial information in a meaningful way that we can plan around while delaying the work of the government?
We need to pull off the layers of this onion. You know that; you’ve asked for it for years. But how do we balance that with stopping the process, to start to fix it throughout a calendar year?
Thanks very much for that question. A good place to start is for the government to start providing what they’re now required to provide on a timely basis.
One of the biggest issues with regard to the government’s financial reporting is that the entire estimates process is so confusing that anyone on the National Finance Committee must be very confused when they start getting the Main Estimates and supplementary estimates. Then they’re trying to match those up with the budget and the Public Accounts.
It’s a big initiative. I don’t think it’s going to be done during my tenure. I would say it would probably be a 10-year initiative.
A good start would be providing the information that they’re now obligated to provide, and to provide it on a timely basis.
Thank you, Senator Marshall. As always, this has been most enjoyable.
In the work your office constantly seems to be doing on financial matters, what have you uncovered regarding Old Age Security? It is a point of some contention because unlike the Canada Pension Plan, which is funded, Old Age Security is not.
Notwithstanding the clawbacks, Canadians who many would consider quite well off — couples making up to, I understand, $300,000 — are still receiving funding. That’s a massive cost to the treasury. Do you know if there are any reviews or studies under way on its impact on our budget?
Thank you very much for that question. I haven’t done any work on those sorts of expenditures.
They’re statutory, so they fall under the Main Estimates, and I don’t remember anyone even asking a question about them in the National Finance Committee, although the Parliamentary Budget Officer has mentioned them several times in his reports.
In the past, I have suggested to the National Finance Committee that we study some of these statutory expenditures, because they’re quite significant and we know very little about them.
One of the areas, though, that I did focus on in the last couple of years is around some of the payment systems for some of those programs. They are being paid out from a very old system, and the system is being replaced. You’re familiar with the issue of the Phoenix system.
Regarding the system they’re replacing over at Employment and Social Development Canada, I can’t seem to get a handle on the progress around doing so. For example, when I ask questions with regard to whether estimated costs have gone up, the finalization date and when it will be implemented, the Treasury Board refers me back to the department, then the department doesn’t answer the question, so you’re going around in a circle. The Auditor General did an audit of that area a few years ago.
With regard to the cost of the program, no, I haven’t done anything. To be honest with you, I don’t recall seeing any study on it, but it’s a good suggestion.
I’m going to move to an accounting issue. Over 25 years ago, at the encouragement of the Auditor General, the Government of Canada moved to accrual accounting. I’m having second thoughts about the wisdom of that — although I was somewhat responsible for it — in that accrual accounting in government doesn’t appropriately capture the large expenditure commitments governments make at the time they make them. Our obligations internationally — for defence, for example — are static.
Would you support me in the notion of moving away from accrual accounting to more regular accounting that governments used to do?
Senator Harder, that was a great question. The regular way the government used to do it.
No, I’m committed to the accrual. I think there are shortcomings in all of it, but I was trained in accrual; and the move to cash, I say I’m glad I’m retiring next year.
Honourable senators, I’ll say, Senator Marshall, I think you’re the only one in this room who’s glad you’re retiring next year. At least we have you assessing two budgets in the meantime thanks to the delay of this budget.
I too am going to speak to Bill C-6, the Appropriation Act, for the next federal fiscal year. Senator Marshall went quite broad and covered everything. I want to deal with a slice of that spending. I would like to start by thanking our colleagues on the National Finance Committee who spent so much time last week examining the Main Estimates and supplementary estimates.
The purpose of my speech today is to comment on the priorities of this government going forward, especially as it relates to the $8.6 billion of spending that Bill C-6 authorizes through what is, once again, known as the Department of Industry.
We estimated in our office on work from Statistics Canada about half that amount goes into what are called business innovation and growth support programs. I’m going to speak about two different types of those business innovation programs, being programs designed to make entrepreneurship more inclusive in Canada and programs specifically designed to support innovation in Canada, creating new opportunities, jobs and wealth from ideas.
Let me start with programs designed to address making entrepreneurship more inclusive. Starting in 2020, my office examined the barriers facing Black entrepreneurs when building and scaling their businesses. Our report was released in cooperation with the African Canadian Senate Group and Black business leaders in 2021. We found that Black entrepreneurs face substantial market barriers in Canada.
More recently, Senator Gerba and I collaborated to produce a report examining the success of these programs and to address the barriers that they face. These efforts reflect our ongoing focus to ensure that the government fulfills real market gaps where possible and uses private sector due diligence to do that well. Each of these reports are available on our website if you’re interested.
To this end, I was thrilled the Main Estimates included a continuation of funding for the Black Entrepreneurship Loan Fund and the Black Entrepreneurship Knowledge Hub. These programs are intended to address systemic barriers that limit access to capital and resources, mobilize diversity and talent across the country and build evidence-based policies.
Now I’d like to focus on the programs intended to drive innovation in our economy, particularly by commercializing our world-class research that we’re investing in through many different aspects of our federal government.
We examined portions of the Departmental Plans and focused primarily on expenditures and efforts intended to catalyze innovation in Canada. Successive governments, though, have developed numerous programs intended to spur innovation across Canada. We think it’s hundreds of programs that the federal government has created, in fact. Last summer, my office endeavoured to review the extent and success of these federal innovation programs, and we identified over 140 programs just in the summertime with a student. We have more work to do still I’m sure. These programs report to 28 departments and Crown corporations. We produced a discussion paper entitled Federal Programs for Business Innovation, and it’s on my website.
In short, we found a lot of reporting about funds spent, a lot of reporting about activities conducted and businesses supported, but we really struggled to find evidence that captured the actual benefits in terms of business outcomes, and that’s really concerning. We’re not alone with our concerns. The Conference Board of Canada gave Canada a C grade in their 2024 Innovation Report Card and ranked us 15 out of 20 countries despite billions in funding dedicated to promote business innovation.
Therefore, with a new Prime Minister, a new Clerk of the Privy Council and a new government, we have an opportunity to rethink how we do things. If we’re going to build the strongest economy in the G7, we have to rethink how federal government helps to catalyze innovation across our economy.
As the government prepares for the summer expenditure review and the fall budget, now is the time to identify ways to break free from outdated processes that have too often ingrained a culture of risk aversion and inertia. The motto in my office is an innovative economy needs an innovative government. Canada has not had an innovative government.
You know I talk about innovation a lot. That’s because, quite frankly, it hasn’t been a consistent priority across government. The point isn’t to be innovative for its own sake or to spend money on things that are thought to be cutting-edge. The point is to create opportunities, global competitiveness, operating efficiencies, better services, improved health and greater security for Canadians. So if we’re serious about delivering these outcomes, we need to start to measure which policies and programs have the greatest impact. This means key performance indicators, or KPIs, must be created and tracked. Yet, too often, we’ve found KPIs that are unclear, inconsistent or report on activity, like money spent or businesses involved, rather than results achieved.
In our report on the 140-plus innovation programs, we concluded that we can and must get a much bigger bang for our innovation program buck. Simply, we found key performance indicator data too often had no comparator or benchmark that could prove the investment caused a differentiated outcome. If this evidence doesn’t exist, then the funding should be redirected to programs where it does.
Let me offer a metaphor to drive this point home. We’ve all seen ads from private schools celebrating the scholarship and other post-secondary successes of their graduates, especially at this time of year. They deserve congratulations. Well done. But too many of these same schools have very challenging admission standards. So when they admit an A student and graduate an A student, it leaves me wondering how big a deal that really is.
Personally, I’d far rather support and carefully examine and replicate the schools that accept C and D students — just because I was one of them — and help someone graduate as an A student. That is transformational.
Program KPIs must show a differentiated outcome. When it comes to supporting innovation, our public funds need to be used as a catapult, not as crutches. All innovation programs must be focused on ensuring Canada’s globally competitive intellectual property is commercialized in ways that create opportunities, jobs and wealth in Canada. Today, too often, that is not the case.
Recent data from a 2024 Centre for International Governance Innovation report shows that more than half of the industry patents generated from Canadian intellectual property are foreign owned. Data from our university technology transfer offices show that revenue from the cumulative licensing of Canadian intellectual property from Canadian universities delivers only a 1.5% return on the annual research funding we give to those universities. It’s not sustainable. If we don’t get a return on investment that will ensure the sustainability and global competitiveness of our universities, we will see a cut in the funding to those universities. I think we’re seeing that now. So we need to do everything in our power to ensure that our research is owned and commercialized at home. I think that’s what a lot of these Innovation, Science and Economic Development Canada programs are intended to do, but it’s not happening.
So this requires a recalibration of how we support innovation in Canada. The good news is there are already proven programs that can turn our ideas into strategic assets.
Let me provide you with an example. We have incubator and accelerator programs that have actually been contributing to the commercialization of Canadian science, technology and innovation in Canada and are helping to create and grow businesses that are excelling in highly competitive global markets in terms of sales and investment. They’re achieving success in ways we have not seen from any existing government innovation programs offered by Innovation, Science and Economic Development Canada.
My challenge to those 28 departments offering programs intended to drive innovation is please provide the Prime Minister and the Clerk of the Privy Council with data that shows that each of your programs delivers differentiated results that are similar to the best incubators and accelerators.
Let me give you one example of what can be accomplished. The Creative Destruction Lab, or CDL, based at the Rotman School of Management at the University of Toronto is one of the best in the world. I’m far from alone, but since I spent the day there yesterday and some of our colleagues spent an afternoon there just prior to Parliament restarting, I thought we should focus on it for a second.
CDL is a unique program on a global scale. Their shared mission — born and built in, and succeeding from, Toronto — is to enhance the commercialization of science for the betterment of humankind. It has five sites in Canada and another eight across the globe.
Yesterday their global “super session” brought together hundreds of mentors and founders to Toronto from more than twenty countries, at their own expense. They were there to celebrate CDL in its excellence and some of its incredibly successful companies.
The mentors included academic experts in every field that you can imagine, from understanding the culture at the bottom of our oceans to the far reaches of space. The mentors also included entrepreneurs who had taken an idea and turned it into opportunities, high-value jobs and wealth.
When CDL started in 2012, the dream was to create $50 million in equity value. Today, CDL companies have generated over $50 billion in equity value. That is, by definition, a globally competitive key performance indicator, or KPI. It shows you are capturing market opportunity and bringing it to Canada.
CDL is not the only incubator achieving this global success. So why are we using anything less than that as a measure of success for our federal innovation support programs, especially during this time of economic and geopolitical crisis? This is where Canada has the greatest opportunity to accelerate our growth and success and obtain real value for money for the $4 billion plus being spent in these programs, as seen in our recent estimates.
We have to stop sprinkling money around. Canada can’t continue to ignore the advice of global experts and domain experts who really understand the area of science, and entrepreneurs who have already demonstrated the ability to identify and scale ideas.
We need to deeply examine every innovation support program and question why it exists. We need to lean on those programs that have the evidence demonstrating that they consistently build globally competitive businesses and are capturing the massive and growing global market opportunities that we have already proven we can capture.
Canada has been the global leading philanthropist in ideas. We invest in research and give it away. We can no longer afford this. When we invest in discovery it’s great, but others are unfortunately commercializing and creating wealth from our ideas.
We were world leaders in AI and quantum computing. We lost that lead because we failed to support the commercialization. Our innovation programs failed to support the commercialization of globally leading Canadian science in globally competitive ways.
The government is planning an expenditure review this summer. I’m hoping the Prime Minister, the new clerk and their teams are hyper-focused on rethinking how our current innovation programs create sustainable and globally competitive value for Canadians.
I’d submit the claim that programs without KPIs are not programs; they’re aspirations. And aspirations, while important, are not enough to build the strongest economy in the G7. We have an opportunity now to create generational change. Let’s not waste it. Thank you, colleagues.
Is it your pleasure, honourable senators, to adopt the motion?
All those in favour of the motion will please say “yea.”
Some Hon. Senators: Yea.
The Hon. the Speaker: All those opposed to the motion will please say “nay.”
Some Hon. Senators: Nay.
The Hon. the Speaker: In my opinion the “yeas” have it.
Is there an agreement on the bell?
Fifteen minutes.
Is leave granted?
Call in the senators for a vote at 9:10 p.m.
Honourable senators, when shall this bill be read the third time?
(On motion of Senator LaBoucane-Benson, bill placed on the Orders of the Day for third reading at the next sitting of the Senate.)
