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June 25, 2020

From: William B.P. Robson

To: Members of federal, provincial and territorial legislatures

Date: June 25, 2020

Re: COVID-19 Must Not Undermine Governments’ Fiscal Accountability

COVID-19 is hurting more than our health. It has crushed our economy. And it is straining our governing institutions. A case in point is the federal government’s refusal to table a budget.

The C.D. Howe Institute publishes an annual report on the fiscal accountability of Canada’s federal, provincial and territorial governments. Transparency about taxing, spending and borrowing is fundamental to representative government. Budget votes determine whether governments stand or fall. Legislatures must authorize spending through the estimates process. They need timely, full information to do their work.

The fiscal years of Canada’s senior governments run from April 1 to March 31. Governments that present budgets and estimates well before April 1 empower people to ask questions and let legislators cast informed votes. At the other end of the scale, governments that present after April 1 show no respect for the democratic process. By the time legislators see, let alone approve, the fiscal framework, new taxes may be in place, and money is already out the door.

Our governments’ records are mixed. Last year, the Northwest Territories, British Columbia, and Nunavut were stars – all presented their budgets simultaneously with their estimates in February (see table). Manitoba, Yukon, New Brunswick, Saskatchewan, Quebec and Nova Scotia presented their budgets and estimates in March. The federal government presented its budget in March, but its estimates only appeared in April. Among the laggards, Newfoundland and Labrador presented a budget and estimates in April, Ontario presented its budget in April and its estimates in May, Prince Edward Island presented both in June, and Alberta, which held an election last year, did not present until October.

This year started better. The Northwest Territories, British Columbia, and Nunavut again presented budgets and estimates in February, and Nova Scotia and Alberta joined them in the camp that showed respect for their legislators’ and their public’s right to see the numbers well in advance.

Yukon, Quebec and New Brunswick presented budgets and estimates in early March, and Manitoba followed later in the month. Ontario presented a fiscal update – but not a full budget – in March, and its estimates did not appear until May. Saskatchewan presented its estimates in March and last week finally presented the budget that provides the full fiscal plan. Prince Edward Island’s budget and estimates also appeared, late, last week.

It is now late-June. Newfoundland and Labrador has yet to present anything. And although the federal government presented estimates in February, it has not presented a budget. The Prime Minister promises a ‘snapshot’ early next month, but with Parliament suspended until September 21, Canadians will see no formal plan for the 2020/21 fiscal year until it is half gone – if then. For fiscal transparency and accountability, that is a massive fail.

Ottawa’s budget-less 2020/21 is doubly notable because of the sums at stake. The feds are the biggest spenders among the senior governments in normal times, and their commitments have ballooned since February.

With revenues down, their borrowing is soaring – the Parliamentary Budget Officer’s $250-billion-plus tally for the deficit at the end of April was shocking at the time, yet the final number will likely be tens of billions higher. Unprecedented increases in spending and debt are occurring with no presentation of a fiscal plan to Parliament and Canadians.

Granted, COVID-19 has made the outlook uniquely uncertain. But the Parliamentary Budget Officer is producing numbers. Budgets can present sensitivities to different scenarios. Governments can tighten their cycle for updates – Alberta presented fresh numbers in March. The United Kingdom government uses the same fiscal year we do, COVID-19 has hit it every bit as hard as it has hit us, but it presented its 2020/21 budget on time.

The five governments that presented their 2020/21 budgets and estimates early deserve credit. The three that presented in early March also get a pass. Those that presented estimates, updates and budgets later that month at least did not use COVID-19 as an excuse to do nothing. But fiscally troubled Newfoundland and Labrador deserves condemnation. And the failure of the federal government – which spends the most and should lead by example – to present, or even schedule, a budget is inexcusable.

Control over public money is fundamental to parliamentary government. COVID-19 is hurting our health and our economy. We must not let it undermine fiscal accountability as well.

William B.P. Robson is the Chief Executive Officer at the C.D. Howe Institute. 

To send a comment or leave feedback, email us at blog@cdhowe.org.

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.

A version of this memo was published in the Financial Post.