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4.2. Budget process in Parliament

The parliamentary budget process can be divided into two distinct stages: the pre-budget consultation process and the approval process. The pre-budget consultations were started during the fiscal crisis of the 1990s as a vehicle for promoting the government’s budget policy.7 Consultations begin in September or October when the government announces its budget policy themes and releases its Economic and Fiscal Update. The process ends in early December when the House of Commons Finance Committee presents its report on the pre-budget consultations.

4.2.1. The timetable for budget adoption and constraints on the budget debate in Parliament

There are no legal requirements regarding the timing of the submission of the budget by the government, nor on the adoption of the annual Appropriation Act. In practice, however, the budget is presented to Parliament about one month before the beginning of the fiscal year, several days prior to the introduction of the estimates. Following the tabling of the budget, there is a required four days of debate on the budget. After this debate, there is a confidence vote in the House of Commons on the government’s overall management of the economy.

Following the presentation by the Minister of Finance and the President of the Treasury Board, the House of Commons begins its deliberations, following procedures laid down in Standing Orders. The estimates are automatically referred to the standing committees of the House. Each standing committee examines those parts of the estimates that fall within its mandate. There is, however, no committee that co-ordinates the examination of the estimates or examines them on an aggregated level. The standing committees can call ministers, senior officials and other interested parties to appear. The committees report back to the House on the estimates before 31 May. If they have not reported, they are deemed to have reported (this was designed so that committees could not delay the parliamentary budget process).

The Standing Orders specify that 20 days be reserved for debate of the government’s expenditure proposals in full House session. Nineteen of these days are reserved for the Opposition. Although these days are fully used by the opposition, they are used not only for debate on the estimates, but also as an opportunity for general policy debate.

4.2.2. Provisional budgets

The fiscal year starts on 1st April but the main estimates are not traditionally approved until just before Parliament’s summer recess in late June. Parliament traditionally grants the government interim supply from the beginning of the

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Box 6. Canada: The budget approval process in Parliament

●Late September: House of Commons Finance Committee begins public hearings on budget policy. The pre-budget consultation process begins.

●Mid October: Minister of Finance announces the government’s broad budget policy themes to the Finance Committee and releases the government’s Economic and Fiscal Update.

●Early December: Finance Committee presents its report on pre-budget consultations.

●Late February: Minister of Finance introduces the budget and the President of the Treasury Board introduces the estimates. Standing committees begin their examination of the estimates.

●Late March: The President of the Treasury Board introduces a report on plans and priorities (RPP) for each department and agency. Parliament grants interim supply to end June.

●1st April: Start of fiscal year.

●Late May: Standing committees report on the estimates.

●Late June: Approval of the estimates.

fiscal year until the end of June. Interim supply allows the government to spend the funds necessary for its ongoing operations during this period. This procedure is inherited from the United Kingdom and has no legal basis.

4.2.3. Powers of amendment

Amendment powers, which are not specified in law, are very limited. By convention, the government has exclusive power to initiate expenditure proposals. Parliament can only approve the government’s proposals, either in full or at a reduced level of funding, or reject them altogether. Parliament is prohibited from proposing new expenditure programmes or increasing the proposed level of funding.8 The role of Parliament is further limited by the “confidence” convention: a vote on any “money bill” is considered a vote of confidence in the government. This is not enshrined in any legislation but is rather a tradition enforced through party discipline. The confidence convention is interpreted strictly, meaning that any vote on a “money bill” is a vote of confidence in the government.9

4.2.4. Approval of resources

The Constitution Act 1867 clearly states that Parliament has an exclusive legislative power on matters relating to the raising of money by any mode or system of taxation. It is therefore illegal for the executive to raise a tax or levy

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without having legislative authority from Parliament. At the federal level, all tax liabilities, credits, deductions, and exemptions are embodied in statutes (for instance, the Income Tax Act, the Customs Act, and the Excise Act). All revenues including taxes, tariffs and other money received by the federal government must be credited to the Consolidated Revenue Fund and be properly accounted for.

4.2.5. The nature, structure and duration of appropriations

The estimates aim at presenting to Parliament information in support of budgetary and non-budgetary spending authorities that will be sought through appropriation bills. These authorities are divided into two categories: voted and statutory. Voted authorities are those for which the government must seek Parliament’s approval annually through an Appropriation Act. The authority attributable to each vote appears in a schedule attached to the Appropriation Act. Once approved, the vote wording and approved amounts become the governing conditions under which specific expenditures may be made. When approved by Parliament, the relevant estimates form the basis for the annual Appropriation Act for that year, which is adopted like any other piece of legislation.

There is no statutory provision for the appropriations structure and detailed budget classification. Traditionally the main estimates are first classified according to section, which represents around 20 broad functional categories of public expenditures. For instance, sections include agriculture and agri-food, environment, finance, health, industry, national defence, transport, Canadian heritage and foreign affairs and international trade. Within sections, the estimates are further classified according to department or agency, within which various votes are included. To determine and report more accurately the impact of government revenues and expenditures on the economy, the main estimates are also classified according to 12 standard objects of expenditure, including personnel, transportation and communications, information, professional and special services, rentals, purchased repair and maintenance, acquisition of land, buildings and works, transfer payments, and public debt charges.

4.2.6. Carryover of appropriations and borrowing of future appropriations

In principle, the balance of unexpended appropriations lapses at the end of a fiscal year (FAA, Art. 37). However, the government permits the carryover of unused appropriations up to 5% for operating costs. There is also a system for carryover of unspent capital appropriations – these are approved on a case- by-case basis. The Department of Finance and the Treasury Board Secretariat add amounts equal to the carryovers to the requested funding levels from

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Parliament in the subsequent year. Annual appropriations for the Canada Customs and Revenue Agency and the Canada Parks Agency do not lapse until two years following the start of the fiscal year in which the appropriation was granted.

4.2.7. Public debt approval

Confronted with high indebtedness in the 1990s, Canada has very strict legal control over debt issuance. Part IV of the FAA is devoted exclusively to public debt. Article 43 states that no money shall be borrowed by the government except as provided by or under the FAA or any other Act of Parliament that expressly authorises the borrowing of money. In addition, no securities shall be issued by the government without the authority of Parliament. Once Parliament has provided legal authority, the FAA provides for the Governor in Council to authorise the Minister of Finance to borrow money by any means that the Minister considers appropriate (Art. 44). The Minister is thereby authorised, for example, to make portfolio shifts between different debt instruments.

4.2.8. Promulgation, veto and publication of the adopted budget

There is a legal requirement to publish all statutes, including the Appropriations Act, under the Revised Publication of Statutes Act 1985. The documents for the budget and updates are available on the Internet site of the Department of Finance.

4.2.9. Supplementary budgets (rectifying laws)

The main estimates provide funding only for programmes and activities for which there is existing parliamentary authority. Parliament may be asked in supplementary estimates, tabled later in the year, for funding for new initiatives. The supplementary estimates may contain funding for unforeseen contingencies if the budget’s reserve for funding new initiatives and contingencies is completely exhausted.

4.2.10. Budgetary implications of other bills

There is no legal provision which requires any bill having budgetary implications to be reviewed by the Cabinet or a parliamentary committee before it is approved by Parliament. It should be noted that statutory authority which Parliament has approved through other legislation does not have to be approved annually as long as the enabling legislation is effective. The enabling laws set out both the purpose of the expenditure and the terms and conditions under which it may be made. Statutory spending is included in the estimates for information only, and accounts for around 70% of the total estimates.