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The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

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The As, Bs, Cs and Ds of Financial Transparency by Canada’s Senior Governments

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May 1, 2018 – Canada’s senior governments tax and spend a lot, but don’t consistently tell us what they are doing, says a new report from the C.D. Howe Institute. In “The Numbers Game: Rating the Fiscal Accountability of Canada’s Senior Governments,” authors William B.P. Robson and Farah Omran grade the transparency and reliability of the federal, provincial and territorial governments’ financial reports and propose easy steps to improve them.

 “Canadians need to be able to monitor and influence how their government manage public funds,” said Robson. “The quality and timeliness of budgets and financial statements – and therefore their usefulness to legislators, taxpayers and citizens – could help them.”

The report focuses on the relevance, accessibility, timeliness and reliability of governments’ key financial reports: their budgets, the estimates their legislatures vote to authorize spending, and the audited financial statements they publish after year-end. The authors assess whether a motivated but non-expert reader could make sense of them. The 2018 scorecard puts Prince Edward Island (D) and The Northwest Territories (D+) near the bottom of the rankings.

Ontario, a good performer in the past, dropped to a C this year. The difference between what Ontario presents for total expenditures and what the Ontario Auditor General demands amounts to $1.4 billion, or 1 percent of spending. Quebec (C+) and British Columbia (B-) also had problems with their auditors.

“A key aim of this annual survey is to encourage further progress,” said Robson. “Compared to previous years, Canada’s federal, provincial and territorial governments provide better financial information than they used to.”

Both Alberta (A+), an outstanding performer for the past two years, and New Brunswick (A+), show what is possible if Canadians demand better fiscal accountability from their governments. New Brunswick’s grade has improved, thanks to better accounting for its public-sector pension plans, and a clean audit.

The federal government provides reliable numbers, but buries them deep in its budget, and the spending estimates members of parliament review are on an incompatible basis of accounting.

The authors propose several policy solutions to improve the transparency of public finances in Canada:

  • Public accounts should reflect public sector accounting standards;
  • Budgets should match public accounts;
  • Estimates should match budgets, in presentation and timing;
  • Key numbers must be accessible and recognizable;
  • Budgets should appear before the fiscal year starts;
  • Year-end results must be timely.

“Governments play massive roles in Canada’s economy and in Canadians’ lives,” concluded Omran. “We need transparency and accountability in fiscal policy as much as we need it anywhere.”

Click here for the full report.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

For more information, contact: William B.P. Robson, President and CEO, or Maria Mikey, Communications Coordinator at the C.D. Howe Institute, at 416-865-1904 or mmikey@cdhowe.org.

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© 2018 C.D. Howe Institute. All Rights Reserved.

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© 2018 C.D. Howe Institute. All Rights Reserved.