This site will look much better in a browser that supports web standards, but it is accessible to any browser or Internet device.

Skip to Content

Speech in Senate Chamber: Appropriation Bill No. 2, 2017-18, Bill C-53, An Act for granting to Her Majesty certain sums of money for the federal public administration for the financial year ending March 31, 2018

Honourable senators, I rise to speak to Bill C-53 Appropriation Act No. 2, 2017-18, An Act for granting to Her Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2018.  Our current supply year began on April 1, 2017 and will end on March 31, 2018.  This supply cycle dictates that every year, in March, June, and December, our two houses of parliament, the Senate and the House of Commons, will adopt the supply bills for the appropriation of the monies required by the  Federal Government of Canada to finance the public service and the public administration.  Presently, there are two appropriation bills before the Senate,  this one, Bill C-53, is based on the Main Estimates 2017-18, and the other one,  Bill C-54, is based on the Supplementary Estimates (A) 2017-18.

Honourable senators, the Government of Canada, in the person of the Honourable Scott Brison, the Treasury Board Minister, is charged with the duty to meet the Federal Government’s daunting financial obligations in its maintenance of the public service and the public administration.  Our Standing Senate Committee on National Finance, of which I am the Deputy Chair, is charged with the responsibility and high privilege of the arduous and interesting task known as the consideration of both the Main Estimates and the Supplementary Estimates (A) in their quantums, sums and votes on which the matching supply bills called the appropriation acts, are founded.  The Chairman of our Standing Senate National Finance Committee is our dear colleague Senator Percy Mockler.  Our Senate National Finance Committee’s parliamentary labours and duties are known as the “control of the public purse.”  That means that our Committee’s mandate is the study of the public finance and the public expenditure, with our eyes fixed on the accountability for public spending and the public expenditure, and the governments duty to spend monies in the amounts and for the purposes authorized by the Senate and the House of Commons and set out in the Appropriation Acts.  

Colleagues, I wish to take this opportunity to thank our Committee Chairman, a son of New Brunswick, and a fine human being, Senator Percy Mockler.  I also thank our Committee’s arduous and devoted members, Senators Woo, Pratte, Moncion, Marshall, Forest, Eaton, Andreychuk, Campbell, Day, Fraser, Oh, Eggleton and Tkachuk.  These devoted senators do great service to their Committee, to the Senate and to Canada.  I assure colleagues that the examination of the public accounts and the public finance are in good and capable hands.  I also thank Gaëtane Lemay, our Committee Clerk, and, Sylvain Fleury and Olivier Leblanc-Laurendeau, our Library analysts for their unflagging work on the national finance and the public expenditure.

Honourable senators, the history of the parliamentary concept we call the power of the control of the public purse had preoccupied British constitutional history, and the British House of Commons for centuries.  From early times, the British had made provision for the study, examination, and even audit of the public expenditure and the public accounts.  For centuries, their Commons House had laboured to bring the public finance and public spending under adequate and fitting superintendence.   Around the revolution settlement in 1689, Britain’s joint sovereigns King William III and Queen Mary had been attentive and active to achieve control over the public finance.  I shall now introduce senators to the great, British born Canadian named Alpheus Todd, who died in 1884, whose writing on parliamentary governance predates that of Erskine May, the learned Clerk of the British House of Commons.  In 1841, aged 21, Todd became the assistant librarian of the legislative assembly of the Parliament of the United Province of Canada.  Later, in 1856, at age 35, he became its chief librarian.  I note that, as he needed, Sir John A. Macdonald would consult with Todd, who was known for his knowledge and clarity of mind.  Among his copious writings on parliamentary matters, Alpheus Todd wrote on the development and control of the public finance.  In the 1889 second edition of his book Parliamentary Government in England, its Origin, Development, and Practical Operation, volume II, Todd wrote, at page 47, that:

Acts were passed in the reigns of William III and of Queen Anne, appointing commissioners of audit, by whose exertions flagrant abuses and misappropriations of public money were brought to light from time to time, and the offenders were subjected to censure and punishment, at the instigation of the Commons.

Colleagues, the public finance and the business of audit were and are not simple.  In Britain, until the late nineteenth century, their examination of their public accounts and their Treasury Department had long used what they called the “administrative audit.”  They, like Canada in the late nineteenth century had a Board of Audit and a Chairman.  Around the time of Canada’s Confederation, Britain had been moving away from the administrative audit to a superior and more complete audit, named the appropriation audit.  Alpheus Todd wrote about the administrative audit and the appropriation audit.  In his book, already cited, Todd said, at pages 48-49:

Notwithstanding its parliamentary origin and pecuniary responsibilities, the Board of Audit was undoubtedly a department of the executive government, dependent upon the Treasury for the regulation of its strength, resources, and organisation;   and as regards the examination of accounts under the administrative audit, it was likewise dependent upon the Treasury.  But by the gradual extension of the principle of the appropriation audit, the department has been elevated into a more independent position.  As soon as the main function of the auditors shall be, not to act on behalf of the Treasury as a check upon the transactions of the Treasury accountants, but on behalf of the House of Commons as a check upon the pecuniary transactions of the Treasury itself, of the other great departments  of  state, and of the executive government generally, the auditors will probably become, in fact as well as in theory, the servants of the House of Commons, and dependent upon the House, not only for guidance as to what duties they should perform,  but for the means of performing those duties efficiently. Still, it is important to remember that the Audit Office was never designed to exercise any direct control over the public expenditure.  In the words of Mr. Gladstone, ‘it is a board to ensure truth and accuracy in the accounts of the public expenditure, and might properly be termed a board of verification.’  To attempt to confer upon it coercive and controlling powers, or a right to judge of the propriety or expediency of any such expenditure, would be to transfer to it what strictly belongs to the House of Commons.  It is an auxiliary to the labours of the Standing Committee on Public Accounts that the investigations of the Audit Office are mainly important, and are capable of being made increasingly valuable.

                 

Honourable senators, in 1862, the Brits, in the person of the Great Commoner, the learned William Gladstone, Chancellor of the Exchequer, had moved the motion to establish their permanent standing committee of their House of Commons, famously known as their Public Accounts Committee.  This Committee’s work on the control of the public purse was outstanding and unmatched.  In 1866, by their new Exchequer and Audit Act, the Brits reworked their treatment of the public expenditure.  Alpheus Todd, in his book, already cited, wrote about their new approach to the public accounts and the public finance, at page 54:           

Few persons are aware of the revolution in the public accounts that has taken place under the Exchequer and Audit Act through the reports of the comptroller and auditor-general, addressed to the House of Commons.  These reports are submitted to the judgment of the Public Accounts Committee, and every irregularity which in former days would have been hidden within the walls of a department, is examined and reported on, and the financial administration of the civil department is thus subjected to public criticism.

So that if the first lord of the treasury, or a secretary of state, should order expenditure contrary to an Act of Parliament, or to the established rules of the service, or of the department over which he presides, the fact is certain to be made known to Parliament by the independent auditor in his report upon the appropriation account of the vote to which such expenditure is charged.   The lords of the treasury gratefully acknowledge the efficacy of the independent audit administered by the comptroller and auditor general, and the readiness with which the departments have accepted and thoroughly carried out the principles of the new system;  .  .  .  .  Having received from the various departments charged with the expenditure of the several supply grants of each year, accounts of the appropriation  thereof, it becomes the duty of the comptroller and auditor general to examine them on behalf of the House of Commons, for the purpose of ascertaining whether these accounts are severally supported by proper vouchers, and ordered for payment by proper authority;  that they have been accurately computed, and applied to the purposes for which the money was voted;  and that they are in accordance with statute and Treasury authority, and with the formal regulations of the particular department.  In so doing, however, the comptroller and auditor-general, if unsatisfied in regard to a particular payment, decides nothing, but merely reports his opinion to Parliament ;   it is practically  reserved to the House of Commons to decide, in doubtful cases, whether the money has or has not been expended in accordance with the intentions of Parliament.

Honourable senators, at home, our Canadian political leaders, had closely followed this outstanding work on the public accounts, the appropriation audit and on the Brits subjection of the whole of the public expenditure to the appropriation audit, and the creation of a new independent officer, the auditor general.  Canadian political leaders moved with the times and in step with these changes.  In Ottawa, in 1878, in the House of Commons, Liberal Prime Minister Alexander Mackenzie’s Liberal Government introduced their new Bill, An Act to Provide for the Better Auditing of the Public Accounts.  This statute created the position of the then new auditor general of Canada.  This statute made the auditor general a statutory officer, not an executive officer created by the prerogative powers of our sovereign monarch.  A statutory officeholder is one whose powers are limited solely to those powers expressly given to him in his statute.  No more or no less.  This officer was unlike the high officers such as the attorney general, the solicitor general, judges and copious others, who were created by the sovereign monarchs prerogative.  Some of these ancient officers hold powers from the monarch, for example, our superior court judge’s contempt of court powers.  

Honourable senators, Canada’s political leaders in Ottawa’s House of Commons, on April 4, 1878, debated their Bill, An Act to Provide for the Better Auditing of the Public Accounts.  In an exchange with Finance Minister Cartwright, Charles Tupper said, at page 1701 Commons Debates:

.  .  .  .  you are professing to give the public the security of an independent Parliamentary officer.

Charles Tupper added, at page 1702 Commons Debates:

.  .  .  .  they ought not to lose sight of the fact that they were dealing with a somewhat new question. They were appointing a Parliamentary officer in contradistinction to an executive officer. The whole scope of this legislation was to give Parliament control in contradistinction to the Government.  .  .  .  , so that the officer appointed as auditor might be independent of the Government of the day, so that he might act without being controlled,  .  .  .  .

We must recall that before 1878, the auditor general had been the deputy minister of Finance.  Canada’s leaders intended that their Commons House, not the Government, would control this new auditor general of the public accounts.  They wanted the auditor general to be beyond government control.  Edward Blake said, at page 1701 Commons Debates:

The present clause gave Parliament no additional control over the Auditor.  He wished to secure a parliamentary officer, who should have hands with which to do his work, free, to some extent, from the control of the Government of the day.

These Canadian leaders, intended that this new statutory officer, the auditor general, created by their statute of Parliament, would be a parliamentary officer, as distinct from an executive officer, created by the monarch’s prerogative.  These able Canadians intended that their House of Commons control of the public purse would be best served by an auditor general, who was not under the control of government.  As I noted earlier, this 1878 Act, An Act to Provide for the Better Auditing of the Public Accounts, was based on the British 1866 Exchequer and Audit Departments Act.

Honourable senators, I turn now to our Standing Senate Committee on National Finance’s review of the Government’s spending plan, the Main Estimates 2017-18, presented to the Senate on February 28, 2017, and referred to our Senate National Finance Committee for study on March 1, 2017.   In these Main Estimates, the  Trudeau Government is requesting that Parliament authorize $102.1 billion in spending and is forecasting $155.8 billion in statutory expenditures, for total budgetary expenditures of $257.9 billion.  Our Senate National Finance Committee heard witnesses.  I shall cite our Committee’s Second Report on the Main Estimates 2017-18.  I shall share our Committee’s study of the Main Estimates, on which Bill C-53, Appropriation Act No. 2, is founded.  I shall begin with Moody’s Investors Service and its credit rating of Canada’s six largest banks, in which Canadians hold great confidence.  Our Committee heard from Moody’s Senior Vice President, David Beattie.  Our Committee Report records his testimony, at page 7:

On 10 May 2017, Moody’s Investors Service (“Moody’s”) downgraded the credit rating of Canada’s six largest banks.  David Beattie, Senior Vice President at Moody’s, explained the organization’s decision by the fact that:   “continued  growth in Canadian consumer debt and elevated housing prices leave consumers and Canadian banks more vulnerable to downside risks facing the Canadian economy than in the past.  A challenging operating environment for these banks could lead to a deterioration in the bank’s  assets quality and increase their sensitivity to external shocks.”   

In the short run, Moody’s does not anticipate that macroeconomic conditions will improve in Canada.

According to Mr. Beattie, the current situation does not change the fact that Canadian banks still rank among the highest in the world:  “this is due to their very strong asset quality and a concentrated industry structure that gives individual banks excellent scale, efficiency and earning stability.”  

Globally, Canadian banks would be above the 90th percentile according to him.  Mr. Beattie is also reassuring about Canada’s macroeconomic profile, which he describes as “robust.”

About the credit rating downgrade of Canada’s six largest banks, our Committee Report continues, at page 8:

Given that high consumer debt was one of the two main reasons behind Moody’s decision to downgrade the credit rating of Canada’s six major banks, our committee wanted to explore this subject further.  Witnesses explained that the average Canadian household debt is about 167% of household income.  This means that the average household owes $1.67 for every dollar it brings in as salary in a year.  They added that while this ratio seems high at first glance, mortgage debt makes up two-thirds of the total average debt and is amortized over an average of 25 years.

However, household debt is up compared with the 1990s and 2000s, when average household debt was slightly under 100%.   One of the main reasons for this higher level is that interest rates have decreased, making debt more affordable.

Honourable senators, our Senate Committee also heard from Cheng Hoon Lim of the International Monetary Fund.  Our Committee Report records Ms. Lim, thus, at page 9:

According to Cheng Hoon Lim from the International Monetary Fund (IMF), “the banking system has adequate capital and liquidity buffers.”  According to her, the probability of a shock affecting the housing market in Canada remains low.  Nonetheless, the IMF had three recommendations:

1. That  measures to mitigate speculative and investment activity be tightened;

2. That federal and provincial regulators work towards greater coordination;

3. That more resources be dedicated to collect comprehensive data on real estate transactions.

 

Colleagues, our Committee also heard from departmental officials of Innovation, Science and Economic Development Canada who told us of their $69.6 million program, Connect to Innovate.  Their program will introduce broadband internet service to rural communities.  The department officials explained that their program is a public-private partnership, intended to reduce providers’ costs so that they can connect communities that do not yet have this service.

I come now to our Committee’s Report section 4, headed Department of Health.  Our Committee Report notes, at page 11:

Our committee encourages the Department of Health to continue its efforts to close the gap between Indigenous peoples and other Canadians with regard to health and access to drinking water.  To achieve this objective, our committee expects the department to:

• prioritize its activities effectively;

• establish sound performance indicators; and

• be transparent in sharing its outcomes.

 

Honourable senators, I come now to our Committee Report’s section 4.3, headed Indigenous Peoples.  It says, at page 12, that:

Indigenous health is one of the department’s priorities, and it has allocated significant funding to programs for First Nations and Inuit communities and individuals, including:

• $1.2 billion for supplementary health benefits;

• $1.1 billion for primary health care;

• $796 million for health infrastructure support for First Nations and Inuit communities.

To ensure that First Nations children have access to quality health services, the department plans to spend $138 million to introduce interim reforms related to Jordan’s Principle.  The department also plans to contribute $82 million to support the delivery of health services and programs on reserve.  An additional $25 million will go to providing immediate mental health support.  The department will also allocate $58 million to continue to fulfill Canada’s obligations under the Indian Residential Schools Settlement Agreement.

Colleagues, now to our Committee Report’s section 5, Indigenous and Northern Affairs Canada. Our Report says, at page 12, that:

Indigenous and Northern Affairs Canada  supports Indigenous peoples (First Nations, Inuit and Métis) and northerners in their efforts to improve social well-being and economic prosperity;  to develop healthier, more sustainable communities;  and to participate more fully in Canada’s political, social and economic development – to the benefit of all Canadians.                                                                                 

Our Committee Report states, at page 13, that:

Our committee encourages the department to closely monitor the construction and renovation of schools on reserve, and the construction and management of drinking water facilities.  Our committee supports the new requirement that makes federal funding for on-reserve construction and renovation projects contingent on compliance with the National Building Code.  However, it encourages the department to develop and issue the necessary performance indicators for this requirement.

Colleagues, in closing, I note that our witnesses explained that nearly 34% increase in the department’s budgetary expenditures is due to an effort to close the socio-economic gap separating Indigenous peoples from other Canadians.  There is something that is very wonderful and welcome about our increasing and robust attention to indigenous peoples.