Borrowing Authority
Borrowing powers are needed by the
government to cover any shortfall between its revenues and its expenditures. The
government borrows principally by issuing treasury bills, marketable bonds and
Canada Savings Bonds, on domestic and foreign markets. The Financial
Administration Act states: “No money shall be borrowed or security
issued by or on behalf of Her Majesty without the authority of
Parliament”, [292]
and the authority to borrow sufficient new money to cover estimated financial
requirements, together with a margin for contingencies, is normally sought and
granted early on in the financial cycle for each new fiscal
year. [293]
These
requests refer to new authority to borrow, since the Financial Administration
Act already authorizes borrowing for the purpose of refinancing maturing
debt. [294]
Unused
borrowing authority lapses at the end of a fiscal year and must be replaced by
new authority.
The government borrows when there is a
shortfall between its expenditures, as authorized by Parliament in the Main and
Supplementary Estimates and in Interim Supply, and its revenues, whose projected
levels are also approved by Parliament. Prior to 1975, it was the custom to
include requests for borrowing authority in one of the first appropriation or
Supply bills of a new fiscal year. Where circumstances necessitated increasing
the level of borrowing authority, the increases were sought by way of subsequent
appropriation bills, such as appropriation bills enacting Supplementary
Estimates or Interim Supply. The primary justification for including new
borrowing authority in an appropriation act was the contention that borrowing
powers to cover any shortfall between revenues and expenditures should be
authorized relatively automatically, given that both the shortfall and the
borrowing requirements were a consequence of actions already approved by
Parliament.
The 1968 changes to Supply procedures made
the inclusion of borrowing authority in appropriation bills
problematic. [295]
The
revised process usually offered no opportunity for Members to debate the
borrowing provisions; the borrowing clause was not part of the Estimates, which
were discussed in standing committees, and the Supply bills containing the
borrowing clauses were generally passed without debate. In 1975, the Speaker
ordered a borrowing clause struck from a Supply bill related to Supplementary
Estimates on the grounds that, under the rules, its inclusion in a Supply bill
based on Supplementary Estimates virtually precluded discussion of the borrowing
provisions. [296]
Later, in 1981, the Speaker found no objection to including a request for
borrowing authority in a tax bill based on a Ways and Means motion, provided
that the government also gave the regular 48 hours’ notice for the
introduction of a bill in order to cover the borrowing
provisions. [297]
Borrowing authority is now sought by way of
a bill which follows the normal legislative process, with the exception that
debate at second reading is limited to a maximum of two sitting
days. [298]
The recent practice has been for the government
to introduce borrowing authority legislation, if required, either when the
Budget is presented or shortly
thereafter. [299]
In
theory, if additional borrowing requirements are needed to deal with unforeseen
circumstances, then a Supplementary Borrowing Authority Bill would be
introduced.