18. Financial Procedures

The business of “Ways and Means” is the process by which the government sets out its economic policy through the presentation of a Budget and obtains parliamentary approval to raise the necessary revenues through taxation. The most important revenue-raising statutes (i.e., those which replenish the Consolidated Revenue Fund) are the Income Tax Act, the Excise Tax Act, the Excise Act and the Customs Tariff.

A principle fundamental to the Ways and Means process is the requirement that taxation originate in the House of Commons. The Constitution Act, 1867, provides that “Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons”, ^[304]  a requirement echoed in the Standing Orders of the House. ^[305] 

There are two types of Ways and Means proceedings:

• the debate on a motion to approve in general the budgetary policy of the government (the Budget presentation followed by the four-day ensuing debate); and
• the consideration of legislation (bills based on Ways and Means motions already approved by the House) which imposes a tax or other charge on the taxpayer.

A Ways and Means motion proposes that a particular financial measure be considered by the House. For a Budget, the motion seeks to approve the budgetary policy of the government; for legislation, the motion sets out the terms and conditions of the proposed measures, most notably the rates and incidence of taxation. While a Budget is normally followed by the introduction of Ways and Means bills, such bills do not have to be preceded by a Budget presentation. Generally, taxation legislation can be introduced at any time during a session; the only prerequisite being prior concurrence in a Ways and Means motion.

The Crown, on the advice of its responsible Ministers, initiates all requests to impose or increase a tax on the public and the House either grants or withholds its consent. ^[306]  A Ways and Means motion may therefore only be moved by a Minister of the Crown. Once adopted, a Ways and Means motion forestalls the passage of any amendment that would infringe on the financial initiative of the Crown. ^[307] 

Initially, the business of Ways and Means involved the consideration and authorization of measures to raise revenue and measures to appropriate, or set aside, from the Consolidated Revenue Fund, the funds approved in the Estimates by the Committee of Supply. ^[308]  Ways and Means procedures remained essentially unchanged for the first hundred years following Confederation. Measures were proposed in the form of resolutions, each of which had to be debated and adopted formally in the Committee of Ways and Means, then reported to the House. Once reported, the resolutions were read a first and second time and agreed to, before being embodied in one or more bills which then passed through the same legislative stages as other bills. ^[309] 

Over the years, the major business of Ways and Means became the consideration and adoption of resolutions emanating from the Budget speech. However, the financial statement by the Minister of Finance, and opposition responses, could hardly be termed a debate. On a designated day, the Minister of Finance would rise in the Chamber and address the House on the “financial condition of the Dominion”. Once the opposition had been given an opportunity to reply, the House would go into the Committee of Ways and Means and consider any resolutions respecting taxation or tariffs which the Minister had proposed in the Budget. At first, consideration of the Budget speech and consequential Ways and Means resolutions accounted for only a small proportion of the work of the Committee; the bulk of its time was occupied with appropriating the funds voted under Supply. Gradually, however, the financial statement evolved into a major political event. Debate on the Budget lengthened as the opposition used it both to challenge the government’s financial policy and, through the use of amendments, to draw attention to specific government actions and programs.

For many years after Confederation, the Minister of Finance followed no established procedure when presenting the Budget. Sometimes, the presentation was made on the motion for the House to resolve itself into the Committee of Supply ^[310]  and, on other occasions, while the House was sitting as the Committee of Ways and Means. ^[311]  From 1912 to 1968, the Budget statement was presented on the motion for the House to resolve itself into the Committee of Ways and Means. As with Supply, the motion for the Speaker to leave the Chair to go into the Committee of Ways and Means was debatable, amendable and not subject to time limitations. This meant that Budget proposals were debated initially on the motion to resolve into the Committee of Ways and Means, debated in the form of resolutions in the Committee, debated when the resolutions were reported to and read in the House, and debated again as bills passed through the normal legislative process. This practice was not modified until 1913, at which time the House resolved that, when the order was read to consider Ways and Means on a Thursday or a Friday, the motion for the Speaker to leave the Chair would be decided without debate or amendment.

Following changes to the Standing Orders in 1955, ^[312]  there was no longer any debate on the motion for the Speaker to leave the Chair for the House to go into the Committee of Ways and Means, except on occasions when a Budget was to be presented. In such cases, the motion, together with any amendments, could be debated for a total of eight sitting days. Any sub-amendment would be disposed of on the fifth day of debate; any amendment on the seventh. ^[313]  In the early 190s, the House further limited the Budget debate to six days, ^[314]  with the sub-amendment and amendment disposed of on the second and fourth day, respectively. Speeches, with the exception of those of the Minister of Finance, the Prime Minister, the Leader of the Opposition and the Member speaking first on behalf of the opposition, were limited to 30 minutes; the Member moving the sub-amendment could speak for 40 minutes. ^[315] 

Before the 1968 changes to the Standing Orders, tax changes could only be introduced in a Budget. Most felt this procedure was ill-suited to the modern context in which government saw fiscal policy as its prime instrument for influencing economic activity and needed the flexibility to respond quickly to changing economic conditions. ^[316] 

In 1968, the House agreed to abolish the Committee of Ways and Means, ^[317]  to do away with the Committee’s role in considering resolutions to authorize any withdrawals from the Consolidated Revenue Fund following the adoption of Supply, and to eliminate the repetitive process of debating Budget proposals initially on the motion to resolve into the Committee of Ways and Means, again in the Committee of Ways and Means, and yet again during the various stages of the bills subsequently introduced. ^[318]  Ways and Means bills, however, continued to be considered in a Committee of the Whole until 1985. ^[319] 

As a result of these changes, the Budget debate takes place on a generally worded motion respecting the budgetary policy of the government. Ways and Means motions (proposals respecting changes to government revenues) resulting from the Budget are proposed to the House once the Budget debate has concluded and are decided without debate or amendment. Detailed consideration of the proposed Ways and Means measures takes place only during the debate on the bills brought forward to implement them. ^[320] 

In 1982, the time limit for all Members speaking on the Budget motion, except the Minister of Finance, the Member speaking first on behalf of the Opposition, the Prime Minister and the Leader of the Opposition, was reduced from 30 to 20 minutes and a 10-minute period for questions and comments was set aside following each 20-minute speech. ^[321]  In 1991, the total number of sitting days allocated to the Budget debate was reduced from six to four. ^[322] 

The term “budget” derives from Budge, an anglicized form of the French word Bouge, which denotes a small bag. A 1733 satirical pamphlet, The Budget Opened, caricatures Sir Robert Walpole,then British Prime Minister and Chancellor of the Exchequer, “explaining his financial measures as a quack doctor opening a bag filled with medicines and charms”. ^[323]  The term “budget” appears to have acquired its current meaning around this time.

By tradition, the Minister of Finance annually makes a formal Budget presentation, offering a comprehensive assessment of the financial standing of the government and giving an overview of the nation’s economic condition. ^[324]  The Minister also declares if and where the burden on the taxpayer will be increased or reduced.

The Budget Speech

Whenever the government wishes to make a Budget presentation, a Minister ^[325]  will rise in the House to request that an Order of the Day be designated for this purpose; the Minister will also specify the date and time of the presentation. ^[326]  Traditionally, the Minister of Finance makes the announcement during “Oral Questions” in the House, in response to a question from a Member of the Official Opposition. ^[327]  However, a Minister may do so at any time while the House is sitting. The Minister’s announcement has been deemed to be the request that a day be designated pursuant to the requirements of the Standing Orders; no notice is required. The Order of the Day is also deemed to be an Order of the House to sit beyond the ordinary hour of daily adjournment if required. ^[328] 

At the specified time on the designated day, typically in the late afternoon after the financial markets have closed, the Speaker interrupts any proceedings then before the House, which are deemed adjourned, ^[329]  and the House proceeds to the consideration of the Order of the Day for the Budget presentation. The Minister of Finance then rises in the House to move a Ways and Means motion, “That this House approves in general the budgetary policy of the Government” ^[330]  and to deliver the Budget speech. The Minister may also table notices of Ways and Means motions setting out the various taxation and other financial measures that will be needed to implement the Budget provisions and ask that an Order of the Day be designated for the consideration of each of these motions. However, concurrence in any of these motions, or of any Ways and Means motions tabled at any other time during the session, may not be proposed until the Ways and Means proceeding on the Budget itself is completed. This is to allow the House to pronounce itself on the budgetary policy of the government before considering any taxation measures. ^[331] 

Convention dictates that taxation proposals are effective as soon as the Minister tables a notice of a Ways and Means motion, even though the government’s taxation plans have not yet been officially adopted by way of legislation. ^[332] 

Budget Secrecy

There is a long-standing tradition of keeping the contents of the Budget secret until the Minister of Finance actually presents it in the House. Respect for a Budget’s impact on financial markets has often been used as the basis of questions of privilege or points of order respecting the validity of Budget proceedings where there has been a Budget “leak”. ^[333]  However, Speakers of the Canadian House have maintained that secrecy is a matter of parliamentary convention, rather than one of privilege. ^[334]  Speaker Sauvé noted that while a breach of Budget secrecy “ … might have a very negative impact on business or on the stock market [and] might cause some people to receive revenues which they would not otherwise have been able to obtain … [it has] no impact on the privileges of a member. [It] might do harm — irrevocable in some cases — to persons or institutions, but this has nothing to do with privilege. It has to do with the conduct of a Minister in the exercise of his administrative responsibility.” ^[335]  In order that Members of Parliament and the news media are able to respond to the Budget speech, a closed-door informal session, or “lock-up”, is usually provided for Members of Parliament and the news media by Finance Department officials several hours before the actual Budget presentation in the House. ^[336]  Although questions of privilege have been raised concerning lock-ups, the Speaker has ruled that admission to lock-ups and the nature of lock-ups are not a matter for the Chair to decide. ^[337] 

Pre-Budget Consultations

With a growing emphasis on consultation, many of the Budget’s financial provisions have been discussed publicly before the Budget is ever drafted. ^[338]  Since 1994, the Standing Committee on Finance has been specifically empowered to hold “pre-budget” consultations. ^[339]  Prior to this, only the Minister and the Department of Finance had consulted with the government’s economic and social partners during the Budget preparation process. The Finance Committee already had the authority to undertake this type of consultative study. ^[340]  However, the inclusion of an explicit Standing Order for this purpose indicates the House’s willingness to receive and consider a report on the matter. Under the Standing Orders, the Committee may report the outcome of its budgetary consultations to the House up to and including the tenth sitting day prior to the last scheduled sitting day in December as provided for in the parliamentary calendar. ^[341]  Although there is no requirement for the House to do so, on each occasion that a report has been presented, either the report itself, or the subject matter of the consultations, became the object of a debate in the Chamber. The practice has been that a special “take note” debate is held under Government Orders some time before the Budget is actually presented. ^[342] 

Financial Statement

On occasion, the Minister of Finance has also made an economic statement to the House, generally referred to as a “mini-budget”. Unlike a Budget presentation, these statements were delivered without notice and did not precipitate a Budget debate. Notices of Ways and Means motions have also been tabled on these occasions. Such statements have been made in the course of debate during consideration of the Address in Reply to the Speech from the Throne, ^[343]  on a motion to adjourn the House for an emergency debate, ^[344]  during Routine Proceedings under “Statements by Ministers”, ^[345]  and on moving the motion for second reading of a borrowing authority bill. ^[346]  The rules of debate pertinent to each situation have applied. ^[347] 

The Budget Debate

At the conclusion of the Budget presentation, ^[348]  the Speaker recognizes a representative of the Official Opposition, usually the finance critic, who, after a brief speech, moves the adjournment of the debate, which is then deemed adopted. In doing so, that Member reserves the right to speak first when debate on the motion resumes at a subsequent sitting. The Speaker then adjourns the House until the next sitting day. ^[349] 

Duration of Debate

Once the Budget has been presented, the Standing Orders provide for a maximum of four additional days of debate on the Budget motion and any amendments proposed thereto. ^[350]  The four days of debate do not have to be consecutive ^[351]  and, if few Members wish to speak, the debate can be less than four days. The unused days may be added, if the House so agrees, to the number of opposition days in the same Supply period, as suggested by the Standing Orders. ^[352] 

Since the rule changes in 1955, there have been seven cases where Budget debates have not continued for the full amount of time provided for in the Standing Orders. ^[353] In 1962, the Budget was presented and Parliament was dissolved before any debate on the Budget could take place. ^[354]  The House adopted Special Orders providing for fewer days of debate in 1966 and 1969. ^[355]  Another two debates (in 1974 and 1979) were cut short when the Prime Minister sought and was granted a dissolution of Parliament after sub-amendments were adopted. ^[356]  In early 1991, when the Standing Orders required that there be six days of debate, only four days of debate were held on the Budget presented on February 26; both the amendment and the sub-amendment were negatived and debate on the main motion was not resumed before prorogation occurred in May. ^[357]  In 1993, only two days of debate took place on the Budget presented on April 26; the sub-amendment was negatived and debate on the amendment and the main motion was not resumed before dissolution occurred in September 1993. ^[358] 

Precedence of Debate

In 1955, the House established that debate on the Budget motion should be given precedence over all other orders. ^[359]  When an Order of the Day is called for resuming debate on the Budget motion, pursuant to the Standing Orders it stands as the first item of business for the sitting and no other government business may be considered during that sitting, unless the proceedings on the Budget motion are completed. ^[360] 

Length of Speeches

The Minister of Finance, the Prime Minister, the Member speaking first on behalf of the Opposition and the Leader of the Opposition have unlimited speaking time and their speeches are not followed by a 10-minute questions and comments period. ^[361]  All other Members may speak for not more than 20 minutes with their speeches subject to a 10-minute period for questions and comments. The general nature of the Budget motion allows for a wide-ranging debate, during which the rules of relevance are generally relaxed.

Disposal of Amendments and Termination of Debate

Only one amendment and one sub-amendment may be proposed to the Budget motion. ^[362]  This is contrary to the usual rules of debate where Members are permitted to move an unlimited number of amendments and sub-amendments, provided that each one has been disposed of before the next is proposed. On the first day of resumed debate on the Budget motion, the Opposition speaker who had previously moved the adjournment of the Budget debate continues with his or her speech and traditionally moves an amendment at the end of the speech. The next speaker, a Member of the next largest opposition party, typically moves a sub-amendment at the end of his or her speech. Occasionally, no sub-amendment is proposed. ^[363] There is no rule preventing the amendment or the sub-amendment from being moved on a day after the first day of resumed debate (although this has not occurred since the number of days of resumed debate was reduced to four in 1991). ^[364] 

The Standing Orders define the exact procedures to be followed for the disposal of the amendment and sub-amendment. On the second day of resumed debate, if a sub-amendment has been proposed, the Speaker will interrupt the proceedings 15 minutes before the expiry of time provided for government business to put the question to dispose of the sub-amendment. ^[365]  On the third day of resumed debate, the Speaker will interrupt the proceedings, as on the second day, and put the question on the amendment under consideration. ^[366]  Finally, on the fourth day of resumed debate, unless the debate has been previously concluded, the Speaker will likewise interrupt the proceedings to put the question on the main motion. ^[367]  During the 1970s, the main motion was frequently adopted on division, ^[368]  but since the 1980s, with one exception, ^[369]  Members have requested recorded divisions.

As with amendments moved to the Address in Reply to the Speech from the Throne, proposed amendments to the Budget motion are opportunities for expression of non-confidence in the government. On several occasions since 1930, proposed amendments to the Budget motion have been worded as explicit statements of non-confidence in the government. ^[370]  In two cases in the 1970s, the adoption of amendments was followed by the Prime Minister seeking a dissolution of Parliament. ^[371] 

The legislation required to give effect to taxation proposals, whether outlined in a Budget or initiated independently of a Budget during the course of a session, must go through a unique preliminary step in the legislative process. The House must first adopt a Ways and Means motion before a bill which imposes a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of a tax to a new class of taxpayers. Industry levies and service fees imposed by departments do not constitute charges on the people in the context of Ways and Means. ^[372]  Legislative proposals which are not intended to raise money but rather to reduce taxation need not to be preceded by a Ways and Means motion before being introduced in the House. ^[373] 

Ways and Means Motions

Before taxation legislation can be read a first time, a notice of a Ways and Means motion must first be tabled in the House by a Minister of the Crown; this may be done at any time during a sitting. ^[374]  On the day the notice is tabled or at some other time during the session, a Minister of the Crown may make a request to the Speaker that an Order of the Day be designated for the consideration of the motion at a subsequent sitting, that is, to put it on the Order Paper. ^[375]  Although there are virtually no restrictions on when a notice can be tabled, a Ways and Means motion cannot be moved during the same sitting in which the notice is tabled, ^[376]  or when the Ways and Means proceedings regarding the Budget have yet to be completed. ^[377]  When the Order of the Day is called, a Minister moves that the motion be concurred in. The motion for concurrence must then be decided immediately without debate or amendment. ^[378]  The adoption of a Ways and Means motion stands as an order of the House either to bring in a bill or bills based on the provisions of that motion or to propose an amendment or amendments to a bill then before the House. ^[379] 

Ways and Means motions can be expressed in general terms, ^[380]  or be very specific, as in the form of draft legislation. ^[381]  In either case, they establish limits on the scope — specifically tax rates and their applicability — of the legislative measures they propose. Neither the provisions of a Ways and Means bill nor any amendment subsequently proposed to the bill may exceed the limits imposed in the Ways and Means motion. In particular, they may not increase the amount of a tax or extend the incidence of a tax or the applicable tax base. ^[382]  Should this occur, either a new Ways and Means motion must be adopted authorizing the exceptions before those provisions may be considered in committee, or the offending provisions must be amended to conform to the resolution on which the bill is based. ^[383]  To proceed otherwise would infringe on the financial initiative of the Crown in taxation measures. “The terms of the Ways and Means motion are a carefully prepared expression of the financial initiative of the Crown and frequent departures from them can only invite deterioration of that most important power.” ^[384]  When a new Ways and Means motion is required, it must also be adopted rather than simply tabled. ^[385]  Should a bill be found not to conform to the provisions of a Ways and Means motion, a new motion will be required before the non-conforming provision can be considered and a decision taken. ^[386] 

A Ways and Means motion often refers to more than one legislative proposal; it can encompass more than one provision in a bill and may seek to introduce more than one bill or a bill amending more than one statute. There are essentially no procedural restrictions on the motion’s wording or content. ^[387] 

Concurrence in a Ways and Means motion constitutes an order to bring in a bill or bills based on the provisions of the motion. ^[388]  A Ways and Means bill must be “based on” but not necessarily “identical to” the provisions of its Ways and Means motion. ^[389]  Such a bill can then be read the first time and ordered to be printed, immediately after the motion is concurred in or at a subsequent sitting of the House. ^[390]  From this point on, the legislative steps for Ways and Means bills are exactly the same as those followed for other public bills. ^[391] Like all tax measures, bills imposing a charge upon the people, and thereby requiring a Ways and Means motion, must originate in the House of Commons. ^[392] 

Amendment in Committee and at Report Stage

No amendment may be proposed to the text of a bill until the bill is considered in committee. Amendments to Ways and Means bills are subject to the normal rules respecting legislation. ^[393] Amendments which exceed the scope of the motion on which the bill is based are procedurally unacceptable unless a new Ways and Means motion is concurred in prior to the amendment being moved. ^[394]  Since Ways and Means motions may only be proposed by a Minister of the Crown, and since Ministers do not usually sit on committees, any amendment exceeding the provisions of the authorizing Ways and Means motion may only be proposed and considered at report stage. If the House has concurred in the required Ways and Means motion prior to the bill reaching report stage, the Minister may put amendments on notice and they will be considered with any other report stage amendments. If the debate at report stage has begun before the required Ways and Means motion has been concurred in, the Minister will require the House’s consent to table and decide on the Ways and Means motion and to proceed to consider the amendments.

Ways and Means Bills Requiring a Royal Recommendation

If a bill based on a Ways and Means motion also contains provisions relating to government expenditure, the bill will also require a royal recommendation. ^[395]  In such cases, the House must both adopt the Ways and Means motion authorizing the government to proceed with the taxation measures, and give leave, after the normal 48-hour notice period, to introduce those spending provisions which are subject to the royal recommendation, before proceeding to the first reading of the bill. ^[396] 

In the event that the notice requirements for the royal recommendation are not met, the offending bill must be withdrawn and the order for second reading of the bill discharged and removed from the Order Paper; this would not affect the validity of any Ways and Means motion previously concurred in by the House. ^[397]