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David Good
This paper begins from the premise that until Parliament increases its
ability to influence the Estimates and the supply process, real scrutiny
and accountability of government will be impossible. It reviews the record
of frustration for parliamentarians in the scrutiny of the Estimates and
suggests some reforms that might allow parliamentarians a greater role
in this area.
The Estimates are, of course, about public money. And public money talks.
It speaks to the great public purposes of society and the way governments
pursue them. It also speaks to the concerns – both real and fabricated
– of citizens, taxpayers, Members of Parliament, agents of Parliament,
and the media about the way public money is spent or misspent. Matters
of public money are filled with great promises and fraught with deep disappointments.
Most parliamentarians, expert observers, and other Canadians believe that
Parliament is not effective in holding governments accountable for how
they spend taxpayers’ money. The former House of Commons Clerk Robert Marleau
has observed that the Commons has “almost abandoned its constitutional
responsibility of supply”.1
Parliamentarians however, have not been sitting on their hands waiting
for the accountability police to round up the local suspects. Quite the
contrary, over the last few years Parliamentarians have produced some very
important, but not widely read reports. They include:
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The Business of Supply: Completing the Circle of Control, 1998
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Meaningful Scrutiny: Practical Improvements to the Estimates Process, 2003
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The Parliament We Want: Parliamentarians’ Views on Parliamentary Reform,
2003.
These reports have and are sparking discussion and debate for change. But
the problems are longstanding and appear to be getting worse. Let me briefly
review some history.
A Record of Frustration
Years ago a royal commissioner on the public service observed: “Supplies
are duly voted in the customary course, often at the end of the session
in the small hours of the night by jaded members in a tired House…”. The
resulting royal commission report concluded that parliamentary control
over the government’s proposals for expenditure was “negligible”.2 This
was 1908.
One Member of Parliament, while fully engaged in debate on supply put the
matter rather eloquently:
There is no adequate procedure by which we may put ourselves in a position
to deal intelligently with the amounts submitted to us for our approval.
Year after year, and this year again, I have heard criticism of the government
for having the estimates dealt with so late in the session and in such
large amounts. But no matter at what time they are dealt with, the weakness
I suggest would still be there. I am going to vote that this item before
us be approved by the committee, but I am not in a position to judge whether
or not the amount asked for, or an amount somewhat less, might be sufficient
to carry on adequately and properly the work of the department.3
That was 1943.
A leading student of Parliament summarized the criticisms of Parliamentarians:
“There is no part of procedure in the Canadian House of Commons which is
so universally acknowledged to be inadequate to modern needs as the control
of the House over public expenditure”.4 That was 1962 and that was W. F.
Dawson. “…the record of the Canadian House of Commons in the scrutiny of
executive expenditures is not good”.5 That was 1962 and that was Norman
Ward in his classic book, The Public Purse.
Parliamentarians have described the process of supply as “time consuming,
repetitive, and archaic” with claims that it does not permit effective
scrutiny of the Estimates, does not provide the House with the means of
organizing meaningful debate, and fails to preserve effective parliamentary
control over expenditure. 6 That was 1968, before the supply procedures
were substantially amended for the first time in over a century.
Twenty-five years after the procedures were amended, the chairpersons of
all standing committees lamented that, “…MPs in a majority Parliament have
effectively lost the power to reduce government expenditure.” They went
on to explain that, “Members are therefore making the very rational calculation
that there is no point devoting time and effort to an exercise over which
they can have no influence”.7 That was 1993 and since that time the pace
of criticism has quickened.
Two years later in 1995, the situation as reflected by J. R. Mallory was
that “from all sides the view is the same: the review of the Estimates
is often meaningless”.8 Members of Parliament reflected a profound degree
of dissatisfaction about the Estimates, describing it as: “futile attempts
to bring about change”, “not a particularly useful procedure”, and “a total
waste of time”.9
More recently, Parliamentarians have said that “the supply process is not
taken seriously, is overly politicized, and Members of Parliament do not
devote sufficient time and attention to the expenditure of public funds”.10
That was in 1998. Some Parliamentarians have admitted that “they are simply
overwhelmed” and that “the traditional notion of ‘holding government to
account’ is no longer feasible”. In their words “there are too many expenditures,
too many reports and too many departmental programs to review….”11 That
was 2003.
This is not a happy state of affairs. Underlying these criticisms by MPs,
there are also historical reasons and traditions to explain why, in parliamentary
systems of government, legislatures have played very limited roles in influencing
the budget and the Estimates. There are at least three reasons for this.12
First, dating back to the Magna Carta in 1215, the King’s own income was
co-mingled with public tax revenue. To separate the King’s money from the
public’s money and to ensure that it was spent only on authorized purposes,
Parliament devised the tactic of voting appropriations near the end of
the session after the King had already spent some of his money.
Overtime with appropriations being voted after the fiscal year was underway,
Parliament came to merely endorse spending that had already occurred.
Second, the adoption of a standing order in the British Parliament in 1706
codified a practice that exists to this day, namely, “the House shall not
accept any petition for any sum of money … unless upon recommendation of
the Crown.”13 The purpose of appropriations was to restrain the Crown and
it made no sense for the Commons to vote money that had not been requested.
Parliament was therefore barred by the standing order from initiating expenditure
and by the reality of politics from denying requested funds. Its power
over the public purse was greatly reduced.
Third, the formalization and institution in eighteenth century England
of what today we know as the budget – a comprehensive statement of revenue
and expenditure – altered the balance of financial power between government
and legislatures. Ministries of Finance became responsible for developing
the government’s budget through a reach and a process that extended to
all government departments. The result, the government knows a great deal
about what is in and behind a budget and the legislature knows very little,
with the consequence that legislators rarely acquire a deep understanding
about how public money is spent or the implications of appropriating more
or less.
What do we draw form all this? Even if we were to assume that MPs are only
half right in their self-criticisms and that our historical perspective
has been distorted through the dust and clutter of time, it is clear that
the system is crying out for change. What then can be done?
Incentives for Change
The occasion of a minority Parliamentary in Ottawa could provide an opportunity
to bring about change. Indeed, some view minority government as “the best
accountability control mechanism ever devised on paper.”14 Many of the
liberal MPs, who just over a year ago were most vocal as backbenchers about
the need to improve the supply process now occupy important positions in
Cabinet. Experienced opposition members are very active in Parliamentary
Committees, which they now control. Indeed the Estimates and the supply
process in the context of minority government provide the opportunity for
creating both “political mischief” and substantive change. The mischief
can be expected to take many forms – cutting the salary of the head of
a crown corporation, scaling back the operating expenditures of a government
agency or commission, reducing the expenditures of a departmental program
that has been drawn into question by the Auditor General. Some mischief
cannot be avoided. The trick however will be to harness the mischief to
bring about real change and not simply to score debating points and create
political embarrassment.
When it comes to accountability, the most fundamental point to remember
is this: the accountability process under our form of responsible parliamentary
government is, by design, partisan and adversarial. It assumes that there
is no technical substitute for democratic politics. In other words, public
accountability cannot simply be turned into a professional management process
of audits and performance reports of public money that simply speak to
technical, objective matters.15
The keys to reforming the Estimates and the supply process do not singularly
lie in more reports and documents (which has been the approach over the
past several decades).
The simple truth, that many find too shameful to admit is this: departments
do not prepare performance reports that will embarrass their ministers
and opposition MPs do not use departmental performance reports because
they do not embarrass the ministers.
Some argue that if independent agents produced independent performance
reports, Parliament and its Committees would more fully and responsibly
use them. Perhaps, but this begs the more fundamental question of what
is the incentive for Parliamentarians to use performance and budget information
to actually affect the contents of the Estimates. The answer, to date,
is very little. The objective therefore should not be to strengthen the
role of the independent agent of Parliament. The Auditor General, with
value for money auditing is already quite powerful. Rather it should be
to give Parliamentarians an incentive to use performance and budget information
to actually influence the contents of the Estimates.
Currently when standing committees deal with the Estimates they can reject
the Estimate, reduce it, or they can simply approve it. In majority government,
the first two options are highly unlikely. Even in minority government,
reductions in proposed expenditures have been rare and minuscule.16
As
explained earlier, Committees’ ability to influence the Estimates is further
constrained by constitutional provisions stipulating that only the Government
can introduce or recommend the appropriation of money out of public revenues.
I believe that Committees and their members would have greater incentive
to focus on the Estimates if they could propose modest reallocations, that
is, reductions to an expenditure in one area coupled with an increase in
another. How might this work? It could be accomplished through one of two
ways. One way would be for the Government to indicate with the tabling
of Estimates that it is prepared to accept, under certain conditions, limited
reallocations proposed by committees. Another way to facilitate reallocation
would be for the government to move to a single vote in the Estimates.17
A number of conditions would be important to ensure sufficient incentive
for some substantive consideration of the Estimates while avoiding excessive
political gamesmanship. I would suggest the following. The committee would
have to explain its substantive reasons and provide clear evidence for
reducing one area of expenditure and increasing another. The size of the
proposed reallocations should be limited (for example, 3% of the voted
expenditure). Committees would be restricted to reallocations within the
Estimates of the departments under their scrutiny. And finally, should
the government not wish to follow the recommendations of a Standing Committee
it would be required to provide substantive justification that matched
the committee’s own recommendations and to table a motion in the House
restoring the reduction. Some will no doubt be sceptical of this change
in the handling of the Estimates since it is a significant departure from
current practice. Therefore, it should be instituted for a time limited
period and reviewed thereafter.
In addition, there is the important matter of the confidence convention
in our Parliamentary government – for the government to continue it must
enjoy the support of a majority in the House. Some observers have emphasized
that the lack of interest in the Estimates is rooted in the confidence
convention which, as currently interpreted makes any motion to change a
vote as a potential test of the House’s confidence in the government. 18
There is, of course, good reason to treat the government’s budgetary and
expenditure policy and the process of supply as matters of confidence.
However, it should be possible for some relaxation of the confidence convention
as it applies to individual parts of the larger budget and Estimates. For
example, the government could announce in advance that it would not consider
a defeat of a particular vote to constitute a loss of confidence. Alternatively,
the government retains the discretion to identify the elements of their
expenditure proposals they consider to be crucial and therefore requiring
confidence.
Some will argue that Parliamentary committees lack the fundamental expertise
to shift money from one program to another. Others will argue that the
limited time for committee review of the Estimates is insufficient to develop
an adequate understanding of the implications of transferring resources
within a department’s budget. Information of all sorts can and is provided
to Parliamentary Committees if the demand for it is there. From my experience
nothing produces higher quality and more relevant program and budget information,
than the threat that an expenditure level might be changed. Without the
ability to actually change the expenditure of a department there is little
or no incentive for Parliamentarians to systematically demand expenditure
and program information.
Experience has indicated that when it comes to matters of the Estimates
the time worn cliché “if we build it, they will come” is wrong. Building
edifices of more information is not a necessary and sufficient condition
for improving Parliamentary scrutiny of the government’s expenditures.
Rather the new cliché should become “if they can play, they will come”.
The ability to change proposed expenditures, even in a small way, is what
is required for Parliamentarians to have incentive to more meaningfully
scrutinize departmental expenditures.
Incentive itself however may not be enough. Indeed there are two further
reasons why Parliamentarians may not spend much time on the Estimates even
with the prospects of making some modest changes. One argument centres
on the complexity of the expenditure budget and the other on whether reallocation
could ever be undertaken by a committee of members with divergent political
interests.
There is much evidence to support the view that the complexity of the expenditure
budget drives Parliamentarians even as Ministers to avoid regular in depth
scrutiny of the Estimates. A highly respected, former Deputy Minister observes:
When I was Deputy Secretary, Program Branch of the Treasury Board the spring
review of departmental program forecasts was a huge undertaking. After
staff of the branch had completed their analyses, I would sit down with
them for weeks of briefings during the course of which we made decisions
about hundreds of millions of dollars - this was a legitimate ‘A budget’,
that was not, and so on. At one point I became uncomfortable about Ministers
playing no role in what we were doing, so I organized a presentation about
how we had handled the submission of a particular department. After Treasury
Board Ministers had listened for perhaps half an hour the President said,
‘Well this all sounds pretty sensible. Now lets move to the next item on
our agenda.’ He was quite right; there was other business that had to be
attended to, and it was out of the question that Ministers would spend
weeks reviewing submissions that we had already reviewed. If Treasury Board
Ministers do not have time to get very far into the expenditure budget,
how much can we expect of Parliamentary committees? 19
Twenty years later when I was Assistant Secretary in the Program Branch,
I had a near identical experience with Treasury Board Ministers.
Whether Parliamentary Committees, consisting of diverse interests would
ever be able to reach agreement on what to cut and where to allocate it
to is a good question. Experience within government is instructive. Recall
the 14 expenditure reduction exercises that took place in the Mulroney
years. Before that the Liberals ran many “X budgets” as well. What virtually
all of these exercises had in common was an emphasis on avoiding political
controversy, so the cuts made were those that would be least visible: cut
the capital budget, defer maintenance, temporarily freeze hiring, and so
on. The 1995 “Program Review” budget was the exception that proves the
rule. It was prepared in an atmosphere of impending financial crisis, which
made politically possible the elimination of expenditures that had previously
been regarded as too sensitive. No such atmosphere prevails today. And
even if it did, it is difficult to imagine that a Parliamentary committee
composed of four parties with very divergent interests would be able to
agree on serious reallocation from one program to another. What they might
more likely agree upon would be minor, symbolic reallocations, politically
designed to bring attention to an area of particular public concern such
as gun registry or the dealings of a particular crown corporation.
The recent recommendation of the Standing Committee on Government Operations
and Estimates and the subsequent decision by Parliament to reduce the budget
of the Governor General by 10% in the first quarter of fiscal year 2004-05
indicates that Members of Parliament with divergent political interests
can reach agreement. There can be little doubt that the impetus for this
$400,000 cut was politically motivated. It was to send a signal from a
group of seemingly beleaguered MPs to the Governor General that she should
be more prudent in her public expenditures in the aftermath of extensive
publicity about her international tours and, just as important, to indicate
to the government that Parliamentarians on all sides of the House can come
together to change an expenditure level when they perceive the groundwork
of public support has been sufficiently prepared. Similarly there is little
doubt that the reduction will have an effect on the programs and operations
of the office of the Governor General. The Office of the Secretary of the
Governor General announced that it was attempting to “minimize the impact
… on Canadians” through the cancellation of a program to encourage Canadians
to nominate citizens for national honours, the cancellation of research
for an educational exhibit, the cancellation of professional training courses
for staff, the postponement of plans to modernize office equipment and
facilities, and in an ironic twist, the cancellation of the annual winter
celebration for Parliamentarians, the diplomatic corps, and the media.20
To Conclude
Allowing Parliamentary Committees to propose limited reallocations to expenditures
within the Estimates is hardly a solution to all that inflicts Parliament.
In the business of accountability and scrutiny of democratic government
there can be no single easy solutions. To be sure politics will be an important
force behind “the play” of Parliamentarians on expenditure reallocations.
In some occasions, probably most, politics will override performance. It
cannot be otherwise. But as Parliamentarians have greater incentive and
tools to affect expenditure allocations, there should be more real scrutiny
of the Estimates by Committees and hence greater effective accountability
of government expenditures. By the same token as Parliamentarians become
players and not just police they might take on a new measure of accountability
and responsibility for their own actions and inactions.
Notes
1. The Hill Times. No. 625, “Legislative Process”, February 18, 2002.
Robert Marleau was Clerk of the House of Commons from 1987 to January 2001.
2. Report of the Royal Commission on the Civil Service, Sessional Paper
No. 29a, 1908, p. 2.
3. Debates, 1943, pp. 5382-3.
4. W. F. Dawson, Procedure in the Canadian House of Commons (Toronto: University
of Toronto Press, 1962) p. 211.
5. Norman Ward, The Public Purse: A Study in Canadian Democracy (Toronto:
University of Toronto Press, 1962) p. 275.
6. See Journals, December 6, 1968, pp. 429-31.
7. Report of the Liaison Committee on Committee Effectiveness, Parliamentary
Government, No. 43, June 1993, p. 4.
8. Comments from J. R. Mallory citing a passage from the Lambert Commission
Report in First Sessional Report, Meeting No. 8, November 30, 1995, p.
8:2.
9. House of Commons, The Business of Supply: Completing the Circle of Control,
Report of the Standing Committee on Procedure and House Affairs, December
1998, p. 16.
10. Ibid.
11. Carolyn Bennett, Deborah Gray and Yves Morin, The Parliament We Want:
Parliamentarians’ Views on Parliamentary Reform, (Ottawa. Library of Parliament,
December 2003) p.13.
12. See Allen Schick, “Can National Legislatures Regain an Effective Voice
in Budget Policy?” OECD Journal of Budgeting, Vol. 2, No. 3, 2002, pp.
15-43.
13. Ibid.
14. Speech by Robert Marleau to the Symposium of the Association of Professional
Executives of the Public Service of Canada, Ottawa: October 6-7, 2004.
15. See Peter Aucoin and Mark D. Jarvis, Accountability in Democratic Governance
and Public Management: A Framework for Understanding the Canadian System,
Draft paper prepared for the Canada School of Public Service, August 2004.
16. In 1972-74, with a minority government, Parliament made two reductions
in expenditure amounting to only $20,000, a minuscule amount compared to
the overall budget. See The Business of Supply: Completing the Circle of
Control, p. 29.
17. See The Business of Supply: Completing the Circle of Control, p. 30.
18. See for example, Auditor General of Canada, Annual Report to the House
of Commons, 1993, p.19.
19. Arthur Kroeger. E-mail letter to the author, November 16, 2004.
20. Office of the Secretary to the Governor General. News Release, December
24, 2004.
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