BILL C-44: A silent and tragic defeat for fiscal transparency in Canada
Bill C-44, the Trudeau government’s first budget implementation bill, was passed on June 22. It has rightly generated a great amount of controversy among Canada’s fiscal conservative community ever since. The reason behind such controversy is none other than the proposed creation of a Canadian infrastructure bank. Such a bank would add more bureaucratic levers to our government spending process, which could drastically endanger the ability of non-governmental organization to track government cash flows, its relationship with both domestic and foreign private investors, and its investment and spending priorities.
When the bill was first introduced, The Parliamentary Budget Officer (PBO), the main fiscal watchdog in Canada, raised concerns about the institutional complexity of such a bank, asking the government to separate the proposition into an individual bill of its own to allow both Houses to consider the subject with more detail. Despite the PBO’s concerns, the government not only decided to ignore these recommendations, but it also proposed within the same bill to radically reform the role and responsibilities of the PBO itself.
Such reforms have gone undetected among most of the media, who focus their concerns instead on the creation of the infrastructure bank. Nonetheless, such distractions are more than unfortunate to Canadians, as the changes to the PBO represent a major defeat for fiscal transparency.
Before speaking about these radical reforms, it is important to present an overview about the nature of the PBO and some of the clashes that have aroused between government and the institution. Currently, the Office of the PBO is part of the Library of Parliament. The Library is a non-partisan organization that takes care of both creating and recording the minutes of all proceedings and legislations that have place within the parliament, crown corporations or any organization that has either a legal or a fiscal relationship with government. The Office, created in 2006 is composed of less than 20 staff members with two main figures among the latter, The Parliamentary Budget Officer and the Assistant Parliamentary Budget Officer. The PBO is an officer appointed by the Governor General under the PM’s recommendation to hold office during pleasure for a renewable term of not more than five years. The PBO’s legislative mandate and powers are set out in section 79 of the Parliament of Canada Act. Within these powers, the PBO has the main mandate to “provide independent, authoritative and non-partisan financial and economic analysis.” This analysis goes from the state of the Canadian economy, the budget and government estimates to requests from a committee or parliamentarian to estimate the financial cost of any proposal for matters over which Parliament has jurisdiction.
In recent years the PBO has taken its analytical capacity to produce semi-annual assessments of the government’s current and projected fiscal position, testify at the House of Commons Finance Committee and publish analyses of other ongoing and future government expenses such as the Federal Transfers to Provinces and Territories and the Fiscal Sustainability of Canada’s National Defence Program. These reports have provided non-government organizations and private citizens with a nonpartisan analysis of government finances. However, they have also created a continued amount of tension and clashes between government and the PBO. For instance, In February 2012, the then PBO at the time, Kevin Page, released an analysis of the projected cost, over the next 70 years, of benefits to the elderly. The report concluded that those costs would rise for many years relative to GDP, then fall back very close to current levels. This report contradicted the government’s statement that Old Age Security was unsustainable.
Controversy only increased after the then Minister of Foreign Affairs, John Baird, said that Page overstepped his mandate as a PBO when he sought a legal opinion on whether the PBO was entitled to all financial and economic data from federal departments, if the information is not protected for privacy or confidentiality reasons. However, such clashes did not discouraged Page, who was removed a year after when he demanded 56 government departments to detail savings and cost reduction measures that they were undertaking under that fiscal year’s federal budget.
Multiple government departments refused to disclose the information. This led former Minister of Finance Jim Flaherty and Treasury Board President Tony Clement to state clearly that Page was once again exceeding his office’s mandate by requesting such data. After Page was replaced in 2013, the relationship between the PBO and the government remained considerably stable until recently when the PBO asked the government to separate Bill C-44 in two bills, one to be focused only on the considerable amounts of excise taxes increases (including the new excise beer tax), and the other on the creation of the already mentioned and controversial infrastructure bank.
The Bill was indeed modified to both remove some clauses from it, one of them being the beer tax escalator, which was largely ignored by the media as well. At the same time, extra components were also added to the bill. Among the additions are the mentioned reforms to the PBO which considerably jeopardize both the non-partisan independence and role of the office and its staff.
The reforms require the PBO to submit its annual work plans to the Speakers of the Senate and the House of Commons for approval, meaning that if any of the Houses do not feel comfortable with what the PBO wants to analyze, it will simply not authorize funds or documents for the Office to do so. The reforms will also take the PBO away from the Library of Parliament’s jurisdiction, making it a body under the jurisdiction the Speaker of the Senate. Both Kevin Page and the current PBO, Jean-Denis Frechette, have slammed the government for this reform.
The government has quietly not commented on the matter, and in the meantime, it has just removed the last effective institution for non-partisan fiscal transparency that remained in Canada, and has done so in a very silent fashion.