Mr. Speaker, I would like to start by thanking you for your acknowledgement as to some of the debate that has happened in this place about timing of points of order on the estimates and for your flexibility in hearing these points.
I also wanted to assure you that this point of order with respect to Treasury Board vote 40 speaks directly to some of the comments made earlier today about the Speaker having a role in ensuring that votes proposed in the estimates are done under the proper legal authority and that the government has authority for those votes.
I made an attempt to abbreviate this point as much as possible. As fair warning, it is probably not a short point, but I will deliver it as expeditiously as possible.
It is a well-established principle that departments may only seek spending authority for programs within their respective legal mandate. Indeed, the government recognized as much in the wording of vote 40, which says:
Authority granted to the Treasury Board to supplement in support of initiatives announced in the Budget of February 27, 2018, any appropriation for the fiscal year, including to allow for the provision of new grants or for any increase to the amount of a grant that is listed in any of the Estimates for the fiscal year, as long as the expenditures made possible are not otherwise provided for and are within the legal mandates of the departments or other organizations for which they are made.
The key phrase in this instance is “as long as the expenditures are within the legal mandate of the departments or other organizations for which they are made”. While the wording of the vote seeks to address the problem of Treasury Board potentially allocating funds to other departments for programs outside their legal mandate, it does nothing to address the problem of vote 40 itself not having any basis within the legal mandate of the Treasury Board Secretariat.
Consider the main powers and responsibilities conferred upon the Treasury Board by the Financial Administration Act that constitutes it, as stated in subsection 7(1):
The Treasury Board may act for the Queen's Privy Council for Canada on all matters relating to
(a) general administrative policy in the federal public administration;
Vote 40 clearly does not pertain to this responsibility.
(b) the organization of the federal public administration or any portion thereof...;
Vote 40 clearly does not pertain to this responsibility.
Subsection 7(1) continues:
(c) financial management including estimates, expenditures, or financial commitments, accounts, fees, or charges for the provision of services or the use of facilities, rentals, licences, leases, revenues from the disposition of property and procedures by which departments manage, record and account for revenues received or receivable from any source whatever.
I will return to this item, as I believe it warrants further discussion.
Then paragraph 7(1)(d), as abbreviated, in saying “the review of annual and longer term expenditure plans and programs of departments”, clearly does not provide any authority for a central vote like vote 40. In fact, it has arguably led to the exclusion of certain items from departmental plans.
Paragraph 7(1)(d.1) as abbreviated then refers to “the management and development by departments of lands”. That is clearly not related to vote 40.
Paragraph 7(1)(e) refers to “human resources management in the federal public administration”. Vote 40 clearly does not cover that.
Paragraph 7(1)(e.1) refers to “the terms and conditions of employment of persons appointed by the Governor in Council”. We are getting far into the weeds here, and I suggest that the other provisions in that act under that subsection will prove equally unrelated to any legal mandate for a vote like vote 40.
After even a brief review, I hope you will be satisfied, as I am, that all but one of these can quickly be discarded as a potential basis for vote 40 authority. The only one that has any prima facie possibility at all is perhaps paragraph 7(1)(c). This item gives the Treasury Board authority to act for the Queen's Privy Council for Canada on all matters relating to financial management, including estimates, expenditures, etc.
The Treasury Board's authority with respect to the estimates is exhausted by the preparation and presentation of the estimates. It does not include relieving departments of the effort involved in preparing their own new budget initiatives for approval through the estimates process. In respect of the Treasury Board's authority for expenditures and financial commitment, that also does not include relieving departments of the effort involved in preparing their new budget initiatives for approval through the estimates process.
It may include outlining the mechanisms for effecting an expenditure or making a financial commitment. It may even include detailing what is required for departments to obtain Treasury Board approval for including an item in the estimates. That is very different from Treasury Board appropriating funds for itself for programs that are not within its own mandate and then dispensing them to other departments later.
It also bears addressing that the other central votes for Treasury Board—and I believe you made some reference to them earlier—do fall within the legal mandate and do not serve as any kind of precedent for vote 40 being within the legal mandate of the Treasury Board's mandate.
I would like us to consider all of those votes to show why those votes can be argued to have a legal mandate, whereas the other ones cannot.
Vote 10, government-wide initiatives, is for the purpose of strategic management initiatives within the federal public administration, a purpose that seems to relate rather clearly to the Treasury Board's responsibility for the organization of the federal public administration or any portion thereof, etc.
Vote 20 is for public service insurance. You can refer to the wording of the vote, Mr. Speaker. I will dispense with that in order to save time. It is essentially payments for different insurance, pension, and benefit plans. You will find, Mr. Speaker, that this is consistent with its responsibility for human resources management in the federal public administration, including the determination of the terms and conditions of employment of persons employed in it, as well as its responsibilities under subsection 7.1(1) of the Financial Administration Act. I would quote it, but I will simply refer you, Mr. Speaker, to subsection 7.1(1) in the interests of time. The vote also appears to be consistent with powers granted under section 11 of the Financial Administration Act, including paragraphs 11.1(1)(c) and 11.1(1)(j), but again, instead of quoting them, in the interests of time I will leave it to you, Mr. Speaker, to consult those passages for yourself.
Another central vote under Treasury Board is vote 30, paylist requirements. Again if you refer to the wording of the vote, Mr. Speaker, you will see that this is for requirements related to parental and maternity leave, severance pay, etc. I would put it to you, Mr. Speaker, that the purposes of that central vote are also consistent with the legal mandate of the Treasury Board under the Financial Administration Act.
Vote 25 and vote 35 are the operating and capital budget carry-forward votes. These votes grant authority to Treasury Board to “supplement any other appropriation for the fiscal year by reason of the...carry forward from the previous...year”. Admittedly, the legal authority for these votes is less clear. In fact, it may be a good idea for the government operations and estimates committee to study how the funds from these votes are ultimately disbursed. Nevertheless, there are a few points worth making about these particular votes.
First, the money for these votes comes from appropriations already made by Parliament. It is not new money, but money that was already approved for some purpose, albeit a purpose that was not realized in the intended fiscal year.
Second, it is recognized in the public and private sectors that requiring a department to spend all of its appropriated funds for the year by year end can lead to a use-it-or-lose-it mentality that leads to perverse outcomes. Parliament has seen fit to allow some carry-forward in capital and operating budgets to help mitigate that effect.
Third, if the money is going to be carried forward, it makes sense to exercise some control over the money. Arguably, a repurposing of this money could be suggested with the department's own estimates and approved by Parliament at the beginning of the year instead of entrusting it to Treasury Board alone, but it has been the practice of Parliaments so far to leave that job to Treasury Board.
In summary, I am not committed to the view that the current way these votes are handled is the best way, but they nevertheless are substantially different from vote 40 in a few respects: Parliament has accepted them for some time, they help to avoid wasteful spending, and they are constituted by money that has already been approved by Parliament for a given purpose.
Finally, I would like to address the question of vote 5, the contingency vote, which some would argue does provide a precedent for this vote. I will argue to the contrary.
The wording of the vote 5 states:
— Authority granted to the Treasury Board to supplement any other appropriation
— Authority granted to the Treasury Board to provide for miscellaneous, urgent or unforeseen expenditures not otherwise provided for — including for the provision of new grants [etc.]
You can consult the wording of the vote outside the House, Mr. Speaker. I saved this vote for last because it is most like vote 40 in some ways, although there are still important differences that would defeat any attempt to invoke vote 5 as a precedent for Treasury Board vote 40.
These votes are similar in that there is no obvious authority for either of them and, unlike any of the other central votes, they both empower Treasury Board to provide for new grants without any further authorization from Parliament. To the extent that someone may want, on that basis, to say it is a precedent, it bears mentioning that this contingency fund has been roundly criticized over the years, including by the Auditor General. For example, in 2002, the Auditor General said in respect to the government contingencies vote:
In our view, this language is sufficiently broad that arguably it establishes authority for practically any payment if the funds are paid directly from the Vote without first being transferred to a departmental vote. We question whether this lack of clarity is appropriate given the increasing use of the Vote to temporarily fund grant payments.
There is more in that report, but I have now referred you to it and given a sampling of what is in it. I encourage you to consult the report in full for more information on the Auditor General's criticism of this kind of vote.
The concerns expressed about vote 5 echo concerns expressed more recently by the Parliamentary Budget Officer with respect to vote 40, so there is definitely some similarity in those criticisms. In the PBO's report, “The Government's Expenditure Plan and Main Estimates for 2018-19”, he said the following:
The Government’s approach to funding Budget 2018 initiatives provides parliamentarians with information that only marginally supports their deliberations and places fewer controls around the money it approves.
With respect to the former, virtually none of the money requested in the new Budget Implementation vote has undergone scrutiny through the standard Treasury Board Submission process, which as indicated by the Government, is to “ensure resources are directed to programs and activities that remain government priorities and achieve value for money.” With respect to the latter, it is unclear that the proposed vote wording would restrict the Government to funding each Budget 2018 measure in the amount set out in the Budget Plan for each Department and Agency, rather than changing the allocations across any initiative mentioned in Budget 2018.
In other words, to the extent that vote 5 and vote 40 are similar, they are also suspect.
Nevertheless, there is a substantial and important difference between the two. The difference is that the contingency fund has a number of criteria for disbursement: that the expenditures be miscellaneous, urgent, or unforeseen. In other words, there must be a good reason for government to dispense these pre-approved funds instead of seeking appropriations through the regular supplementary estimates process.
Notwithstanding the concerns raised by the Auditor General and committees of Parliament that the government has not always done a good job of demonstrating that expenditures out of the fund meet these criteria, it is nevertheless important that those criteria exist. Those criteria provide the rationale for ignoring the usual supply process, something which is not to be done lightly.
The contingency fund is meant to recognize, albeit imperfectly—and we may be able to improve the process—that certain things come up through the course of the year and that some flexibility is required to deal with unforeseen needs, particularly if the needs are urgent.
On January 31, 2011, the Treasury Board published guidelines for accessing the contingency vote, which begin, “Guidelines for reviewing departmental requests for access to the Government Contingencies Vote.”
The guidelines state:
Treasury Board Vote 5 serves to supplement other appropriations in order to provide the government with sufficient flexibility to meet urgent or unforeseen expenditures....
I am just giving selections from the guidelines, not the entire passage, as follows:
This authority to supplement other appropriations is provided until parliamentary approval can be obtained, as long as the expenditures are within the legal mandate of the organization. The allocation from Vote 5 is provided on a temporary basis and is to be reimbursed once parliamentary authority for the expenditure has been obtained through the approval of the Supplementary Estimates.
These criteria make it very clear that using the contingency fund to circumvent the normal supply process should be done rarely, and only in cases of exceptional need. The funding is temporary, and requires that items funded out of vote 5 appear later in the supplementary estimates—and this is important—not just as information, but also for approval. This differs from what is proposed for vote 40. The government has committed to report on allocations from vote 40 online, and I believe also perhaps in subsequent supplementary estimates, but they will not appear as votes for approval. They would only appear as information.
While the government contingency fund authorizes upfront spending, it restricts the government's ability to make use of the fund without coming to Parliament for a formal, even if retroactive, approval. This approval requirement is an important difference between vote 5 and vote 40. The fact that a valid and compelling reason must exist as to why the government has to make a payment before the next supply period may have been in a quote that I did not read for the benefit of time, but I would refer my colleagues back to those Treasury Board guidelines.
It is part and parcel of why this House pre-approves a certain sum of money under vote 5. That sense of urgency is a critical justification for Parliament approving funding for programs that have not yet been developed. One cannot develop programs for needs that are unforeseen, and if there is a demonstrable urgency to respond to an unforeseen circumstance, then the flexibility to develop and fund a program on an urgent basis is needed. It is important to note that this is completely dissimilar to what is being proposed in vote 40.
Vote 40 is a pre-approval of funding for all of the government's new budget initiatives. The government can hardly claim that the entirety of their new budget initiatives are a collection of miscellany that have no place within the normal supply process, nor can the government claim that the needs it proposes to address with its new budget initiatives are unforeseen. The budget document is a forecasting document that proposes policies to deal with problems we know of.
That is not to say that the latest budget deals with all of the important problems that we are aware of, but by definition it does not deal with unforeseen problems. If the problems were unforeseen, they would not be in the budget. If they are in the budget, then they were foreseen.
Moreover, the government cannot claim any sense of exceptional urgency for these items. These items are to be implemented over the course of the fiscal year. The government is not pretending any differently. It has been very open about the fact that most of the programs it is requesting funding for under vote 40 are not ready to go. There are a number of examples from committee that I will not share at the moment. I shared some last Friday. I would refer you to those, and would be happy to provide other examples should you wish, Mr. Speaker.
The President of the Treasury Board and his officials have been very clear that most of these programs are not ready to go. In fact, to date, only $220 million worth has actually been approved, and there is no sign that departments are expected to develop these programs with a sense of urgency.
Vote 5 offers an exception to the normal supply process for clearly defined reasons, according to clearly defined criteria. Vote 40 items do not meet these criteria, yet the government is trying to use a similar mechanism to circumvent the normal supply process.
There is one last precedent that might be invoked. I think it is important to discuss it up front. Here I refer to Treasury Board vote 35 from 2009 in the 40th Parliament. I could read the wording of the vote, but I will dispense with that in the interests of time. I would let you know, though, Mr. Speaker, that vote 35 has at least two properties that make it very different from vote 40 in 2018-19. These two things are related but distinct. In the first place, vote 35 of the 40th Parliament was a time-limited vote. The money had to be spent between April 1, 2009 and June 30, 2009. In other words, it was not meant to become and could not by inertia become a new way of appropriating funds for all of the new budget initiatives in a given year.
Second, the government had the support of the official opposition Liberals of the day for vote 35. This support was not given for the vote to become a new way of appropriating funds for new budget initiatives. Rather, that support came in the context of consensus among all parties that urgent action was needed to address the fallout of the 2008 economic crisis.
I would refer you to a few examples from Debates, Mr. Speaker, that show the importance of that criterion. The then president of the Treasury Board, the Hon. Vic Toews, said in debate with respect to vote 35 on March 24, 2009:
The plan is timely, it is targeted, and it is temporary.... Doing the right thing means responding to an unprecedented economic situation with extraordinary measures.... These are extraordinary times and we cannot wait for the normal supply period in June before giving money to some of the ready-to-go projects.
The Hon. John McCallum, speaking for the Liberals in the same debate, said:
The government has asked, through the estimates, to have this special $3 billion fund under the so-called Treasury Board vote 35. These funds would be spendable over the period April to June of this year. Liberals do not have any objection to that in principle because we acknowledge the urgency of getting money out the door.
A second Liberal MP, Shawn Murphy, said:
Because of the urgency of the matter, the government wants approval from Parliament to spend the money. Parliament has considered this. It has debated it and it has said it is a reasonable request. We will bypass the ordinary chain of accountability and allow the government to spend the $3 billion. Because of the time in which the Canadian public wants the money spent, there should be no delay.
Vote 35 was clearly conceived as an extraordinary tool to deal with an economic crisis in an urgent fashion, within a specific and clearly defined period of time. Using a similar mechanism as a routine way of appropriating funds for all new budget initiatives is in no way justified by the precedent of vote 35.
To conclude, I do not believe that the budget implementation vote is consistent with the legal mandate of the Treasury Board, nor consistent with the practices and procedures of this House with respect to supply. If Parliament's right to meaningfully oversee and authorize public expenditures is to be maintained, mechanisms such as these must not be allowed to take root. Accordingly, Mr. Speaker, I request that you order vote 40 struck from the main estimates.