to support private, for-profit businesses apparently requiring subsidy to survive and/or grow. Of that money, $8.8 billion was dispersed in grants without even the prospect or expectation of repayment. Some dubious recipients of industrial subsidy, besides the giant car manufactures, include a bakery in Edmonton — it was given $1 million to develop gluten-free product lines of bakery items; other recipients include hot dog vendors, ice cream shops, pizzerias, and gas bars. A perusal of the list confirms numerous recipients received more than one grant, indicating that these subsidies become virtually permanent and the recipients dependent upon them. Why run your business more efficiently if Industry Canada has a program to subsidize your inefficiency?
Keynes understood that during times of recession, government spending could stimulate the economy; however, he never fully contemplated that future generations would endure reduced demand and investment due to its obligations to pay for the consumption of the previous generation. Paying back debt usually necessitates difficult and unpleasant actions, none of which are likely to improve the popularity of a government, so it is little wonder that governments rarely stop borrowing and even more infrequently pay back debt.
In 1970, all Canadian public spending (federal, provincial, and municipal) equalled 35 percent of GDP. By 1992 it had ballooned to 52 percent, but has been reduced to 41 percent currently.[11] However, the debt is growing again and is on track to do so for the foreseeable future. As a result, future generations will be forced to pay not only for the programs and services they consume; they will also be required to pay an excess of taxes to cover the debt of previous generations.
2. The Death of Fiscal Accountability
The public may feel a sense of entitlement and have an insatiable demand for government programs and services. Social-engineering bureaucrats and vote-seeking politicians might want to satisfy every craving and spend, spend, spend. But Parliament controls the purse strings. Parliament must authorize spending for the government to legally spend.
Surely Parliament, as guardian of the public purse strings, will ensure that government spending is appropriate and that taxpayers receive value for money.
However, tragically, Parliament’s oversight of public finances is almost non-existent. Concurrent to the demise of responsible government generally, Parliament has surrendered its traditional and constitutional role of providing financial oversight. With few exceptions, an emasculated Parliament provides almost no fiscal oversight; the Government of Canada spends as the Government of Canada wants to spend.
Canadians do not directly elect their governments; we elect our legislatures. If the government is not accountable to the elected Parliament, that government, by definition, is unaccountable.
For close to a hundred years, Canadian governments generally ran balanced budgets; successive finance ministers viewed the public finances as money held in trust for the Canadian people. They only spent what was necessary and balancing the budget was the norm. If a deficit was absolutely necessary, such as during the two world wars, the money was repaid in a timely manner once the exigency concluded.
Meanwhile, Parliament scrutinized all spending, department by department and line by line. As the size of government grew, though, this became an increasingly complex and time-consuming exercise. Accordingly, shortcuts were pursued to make parliamentary scrutiny more “efficient.” By the late 1960s, the system would come unwound; Parliament would surrender its most important role — guardian of the public purse strings.
In theory, and at one time in practice, Parliament would get to see the government’s spending plans as they were being tabled, in order to scrutinize said plans. The process by which departments estimate their spending plans for the coming fiscal year is appropriately called the “tabling of the estimates.” In minute detail, the estimates listed the department’s estimated or requested spending plans; each program is listed and estimated line by line. Only after Parliament had approved the estimates could the department legally spend the monies.
However, as government grew in the 1960s, the estimates became more voluminous, and Members of Parliament would get lost in a maze of lines and numbers. Scrutinizing of these detailed spending estimates would go into the dog days of summer, when MPs were thinking about the barbecue circuit and looking for an exit from Ottawa’s humidity. In the end, approving the estimates was growing too complex and time-consuming; rather than try to tackle the problem, most MPs elected to simply glance over the documents, rubber-stamping them; the process becoming little more than a formality. Eventually, government mandarins were so convinced that the estimates would be approved that they would proceed on that assumption. So the system of oversight was “reformed to make it more efficient.” In December of 1968, the House amended its standing orders. Reform resulted in the Standing Committees of the House being tasked with approving the estimates for the various departments, which fell under its jurisdiction. The committees would have to report the estimates back to the House by May 31 of each year, failing which they would be “deemed to have been reported.” The full House of Commons would then have until June 30 to vote on the main estimates. No longer would MPs have to scrutinize government spending once the kids were out of school!
For agreeing to delegate detailed scrutiny of supply to the House’s standing committees, the Opposition was granted twenty-five “supply days,” during which it would be able to move motions.
The system was breaking down, but it was not until 1972 that the demise of parliamentary oversight became complete. The end of the supply period was moved forward seven days to June 23, and Opposition supply days were reduced to twenty-two. If the estimates were not approved by the House by June 23, they would be deemed to be approved; Parliament had lost its most effective tool in holding government to account.
Under Standing Order 81(4)(a),[12] the leader of the Official Opposition may select the main estimates of two departments for consideration by the Committee of the Whole for a period not to exceed four hours. The rationale is that allowing a more selective focus on a couple of departments allows for a detailed examination.
During the Committee of the Whole, the Speaker vacates the chair and the minister of the chosen department brings officials and deputies onto the floor to assist in the answering of detailed questions. However, after the prescribed four hours has expired, the estimates are deemed approved and reported.
Moreover, whether examination of estimates occurs in the House committees or in front of the Committee of the Whole very little actual examination of numbers and spending plans occurs. Members, from all sides, prefer broad policy questions to any actual examination of the government’s spending plans.
For the last forty plus years, the spending plans for the departments of the Government of Canada have essentially been given automatic approval. Moreover, changes in internal administrative processes have allowed for more line items to be lumped together in broad categories. Line-by-line approval in the committees has been replaced by approval of a “grouping” of items. It is easy to hide spending within a broad grouping of expenditure estimates. Amalgamation of substantive line items has meant that critical information has been merged and lost, as has been financial accountability.
However, Parliament is not the only institution of oversight that has had its ability to monitor the government’s financial accountability diminished. The role of the Office of the Comptroller General was created to help rein in spending before it occurred. The mandate of the comptroller general was to assess spending approved by Parliament and ensure that there was actually enough money available to spend as Parliament had authorized. The Office of the Comptroller General was a check in the system and provided objective analysis as to whether, in fact, authorized spending was affordable and whether the government could cover its spending plans. This system was based on the understanding, commonplace in the days before serial
