OGGO Committee Report

DISSENTING REPORT FROM THE CONSERVATIVE PARTY OF CANADA

“With the creation of the Treasury Board Central Vote 40, Parliament was asked to provide authority to spend on many measures that were announced in Budget 2018 which had not yet gone through the scrutiny of the Treasury Board submission process. In doing so, Parliamentarians’ ability to scrutinize and oversee government spending has been reduced. Evidence suggests that these procedural changes have not accelerated the Government’s implementation of budget measures.”[1]

- Parliamentary Budget Officer

The Conservative Party of Canada (CPC) is disappointed that the final version of this report does not contain more comprehensive recommendations based on the testimony that was heard throughout the study on estimates reform. Experts provided important insights into significant gaps in the current process and processes that may deprive Parliament of the ability to review and scrutinize the government’s spending and reporting process. This study had the potential for making real and effective change to the way our government reports its spending plans to Canadians.

The estimates process is an important aspect of Parliamentary oversight, one that relies on upholding the values of openness, transparency, and accountability. The CPC proposes the following recommendations that would strengthen the estimates process and enhance transparency in government spending. This dissenting report outlines the concerns with the direction the Committee has taken in its final report, along with the CPC’s recommendations for closing the gaps in our estimates process.

ALIGNING THE ESTIMATES: FACT AND FICTION

Perhaps the most disappointing aspect of this study is the Liberal Party’s (LPC) claim of alignment between the budget and the main estimates without actually achieving alignment. Why does this matter? An alignment between these two documents would make it easier for Canadians and Parliamentarians to track government spending, and follow-through on spending commitments. Currently, the process of tracking spending requires a complex cross-referencing of all financial documents to see how and where government money is spent. It is simply unrealistic to expect the average Canadian to be able to understand these documents the way they are currently released, and as was noted during the study, Parliamentarians often don’t know how to read the documents either. In fact, the former Parliamentary Budget Officer Mr. Jean-Denis Fréchette noted that it is “…very difficult for parliamentarians to follow the money and hold the government to account for implementing its fiscal plan, as outlined in the budget.”[2] He went on to say that these challenges would be significantly reduced by “…preparing and presenting its budget and estimates concurrently and using a more consistent method of presentation.”[3]

There were recommendations made by experts and officials during the study that would help the government reach true alignment between the budget and the estimates. First, it was recommended that the government commit to a fixed budget date that would occur prior to the release of the Main Estimates. Helaina Gaspard and Kevin Page of the Institute of Fiscal Studies and Democracy have argued that “…Canada [should] table its budget in Parliament at least two months before the start of the new fiscal year and ensure its main estimates and budget are integrated.”[4] This could be achieved by having the budget approval process run in tandem with the estimates approval process, something Mr. Page and Mr. Fréchette have noted in their analyses of the budgetary process. On average, less than half of items announced in a budget will make it into the Main Estimates. Aligning these two processes would result in more items in the budget making it into the Main Estimates to receive Parliamentary Approval for allocation.[5] This would mean a more expedient and accurate reporting process.

Truly aligning these processes could require a fixed budget date to ensure that budget and estimates approvals are anticipated by departments; this would guarantee that program submissions are finished in time. The argument against fixed budget dates have been around the need for flexibility around contingencies, for example a recession or global market shock. President of the Treasury Board Scott Brison confirmed this concern, noting “there have been times, post-9/11 and different times, when in fact Finance saw fit, appropriately, to bring in a budget or a significant economic statement that contained a lot of budgetary measures….”[6]. However, the Standing Orders permit governments to request extensions to set dates in extenuating circumstances like those the President outlined. Currently with no fixed budget date, a department’s request for funding is not finished in time to be accounted for in the government’s spending plans. Numerous experts expressed their support for a fixed budget date, with many comparable international governments already undertaking the practice. In fact, a previous OGGO study on estimates reform, undertaken in 2012, presented a unanimous report that recommended implementing a fixed budget date.

Therefore, the CPC recommends:

1. That the government consider Recommendation 6 from the unanimous 2012 OGGO report on Estimates Reform which reads as follows: That, to the extent possible, the budget items for a given year are reflected in the main estimates for that same year; and therefore that the government present its budget in the House of Commons no later than February 1 of each year; that the Standing Committee on Procedure and House Affairs pursue amendments to the Standing Orders, procedure and practice of the House of Commons in order to move the date on which the main estimates are presented to the House back to a later date in March...

To date, the government as well as LPC members of the Committee, have falsely stated that they have achieved alignment through the use of a new central vote, the Budget Implementation Vote, or TB Vote 40. Despite expert testimony to the contrary, the government insists that the use of this vote has aligned the processes that have been previously discussed. This is patently false for reasons outlined in the next section of this report.

THE BUDGET IMPLEMENTATION VOTE

The Budget Implementation Vote (BIV), or TB Vote 40, is the government’s attempt at “aligning” the budget and the main estimates. Under this vote, items from table A2.11 in Budget 2018 are eligible for funding through the BIV. This is a lump-sum vote that has no limit, amounting to over $7 billion for the 2018-19 fiscal year that is under the sole discretion of the Treasury Board Secretariat to be voted on, implemented, and overseen. As well, all questions on programs included for allotment from this fund will be directed to TBS, regardless of the line department associated with the program.

In the Introduction section of the 2018-19 Main Estimates document on page I-1, it states: “The funds will be held centrally until supporting policy and program approvals are in place. Allocations will be regularly posted online and reported in Estimates documents along with allocations from other Treasury Board managed central votes.”[7] The programs in Table A2.11 have not been formally vetted or approved by Treasury Board, that is to say “due diligence” has not been done. The expectation is for Parliament to approve the unvetted programs for public funds with no accountability or assurance that the programs will meet requirements. Comparing to previous years the PBO writes “…given that the Treasury Board Secretariat vetted fewer Budget 2018 measures (13, $221 million) compared to last year (19, $994 million), there is no evident progress.”[8]  Simply put, the government’s inability to get spending out the door has rendered this attempt at “alignment” useless.

Given this is a new vote structure, the CPC believes that a thorough audit of how the vote has been used would be valuable in determining its effectiveness, and whether the trade off between reduced parliamentary oversight for alleged “alignment” has indeed been helpful in using the vote. A similar audit was performed following the use of TB Vote 35 in 2008 during the financial crisis and conducting one for the BIV would assure Canadians that the vote structure has been used appropriately and is achieving the results intended by its political masters.

The CPC believes that there are better ways to ensure the alignment of the budget and the main estimates without compromising Parliamentary oversight. Tracking the funding of the items in this vote is difficult, and unlike other programs, items within the BIV are not able to be analyzed by Parliamentarians. Since the programs are in draft phase, there are no available metrics for program delivery or success, things that other programs that have gone through the Treasury Board process contain. Kevin Page writes “[the] irony is they’re asking Parliament to write a cheque, to provide these authorities, when the executive has not scrutinized the measures”.[9]

Further, there is no spending cap on the BIV which means the government of the day can include virtually anything from the budget in future uses of the vote, undermining both the transparency and legitimacy of the government’s spending plan. The Estimates documents are meant to outline real spending by department; allowing draft items to be included means that Parliamentarians are voting on incomplete information and in many cases, budgetary measures that have no plans or expected outcomes. This does not align with value for taxpayers, and it certainly does not indicate an alignment of the budgetary and spending cycles contrary to the line of the government.

Lastly, the use of this vote does not increase transparency. The government’s commitment to publishing the monthly updates to the BIV is not legislated; there is no legal requirement for the Treasury Board to follow through on its promise. Unlike other central votes which present themselves in supplementary estimates, BIV allocations only appear by reconciling the Main Estimates, the online reporting mechanism from TBS, and the Supplementary Estimates operating budgets for TBS and the department that received funds. While there are “supplementary” tables provided outlining new allotments, they are not recorded in the official document that is tabled in the House. The Parliamentary Budget Office reported “…parliamentarians will need to judge whether the Government’s most recent efforts to align the Budget and the Estimates results in an improvement in their oversight role, and if they are willing to accept incomplete information and weaker spending controls to help the Government to expedite the implementation of Budget measures”.[10] The Opposition decidedly does not accept this trade-off.

Parliamentarians are relying on government to keep their reporting promise to be able to follow the money in the BIV. It’s worth noting that this government has promised to produce reports for numerous initiatives including Shipbuilding, Phoenix, Defence operations, Canada Post and likely many more on which they ended up reneging.

Therefore, the CPC recommends the following:

2. That, in accordance with the practice that was established in the 2018 use of a similar central vote for budget items, the Treasury Board Secretariat undertake a full audit of the programs that received allocations or approval for allocations under the Budget Implementation Vote and that the results of the audit be published as was done in 2008.
3. That the Treasury Board Secretariat remove the Budget Implementation Vote from the Estimates process.
4. That, should the government continue with the Budget Implementation Vote the Treasury Board Secretariat impose a dollar amount cap on the expenditures that can be included in it.
5. That all items approved for the allocation of central vote funds must meet a minimum threshold of due diligence from the Treasury Board Secretariat that, since a funding amount has been reached, includes a one-year projection for spending plans, projected success measures, and methodology for the use of the funds, in absence of having a completed submission.
6. That Budget items earmarked to receive funding through the Budget Implementation Vote, in accordance with the government’s Policy on Results, include the program objectives, projected measures of success, and purpose in the Departmental Plans regardless of the status of approval.
7. If at the time of approval for central vote funds, program details and expected results for a recipient program or department are not included in the departmental plans, that a program plan identical to those provided in the departmental plans be appended to subsequent estimates.
8. That the Treasury Board Secretariat endeavour to treat items falling under the Budget Implementation Vote as a transfer specifically so that items within the central vote may be directly reported by the respective department in supplementary estimates following release and approval of the main estimates.

RELIABLE AND TRANSPARENT REPORTING

Departmental plans are an important, and often overlooked, document provided by departments that outline their performance goals. Tabled as Part III of the Estimates, the Departmental Plans include indicators for major issues facing their mandates, as well as staffing and financial projections. In order to measure the success or failure of departments in meeting their goals, the Departmental Plans are compared against the Departmental Results Report released the following year which indicate met and missed targets. Reconciling these two documents shows that there are numerous problems with the way departments are recording and measuring their projections. Unfortunately, as with many of the other proposed reforms by the government, the changes to the Departmental Plans have been abject failures.

The first problem area identified has been the consistent changing of metrics to measure program and activity performance by departments. In many cases, because there is no standard process for measuring progress many areas in the departmental plans indicate “TBA” or “N/A” in their performance indicators. In many cases, these measures shift from year to year, making the data being used for program measurement unusable since they cannot be compared against previous years. The Parliamentary Budget Office has noted this discrepancy, pointing to a significant gap in the spending identified in the budget and departments’ anticipated results.[11] This is problematic for Parliamentarians and Canadians who are seeking to validate the work of the departments in question. To put this concern into context, a November report published by the Parliamentary Budget Officer found that almost 50% of all performance measures did not have results targets, and 44% had no results for the previous years to compare against. [12] The scrutiny of the Departmental Plans continues with the governments failure to include any of their budget measures in their plans, particularly since they are requesting Parliament’s approval for these measures.[13]

Without clear and accurate data to measure departmental performance, there is no way for Parliamentarians, Canadians or officials to hold Ministers or departments to account. An absence of so many measurement metrics in the 2018 departmental plans void these tabled documents of any discernable value to Parliament. Therefore, the CPC strongly encourages the government to immediately implement a standard system of measurement for program and departmental performance so that data collected for target assessment is reliable and consistent.

Therefore, the CPC recommends the following:

9. That the Treasury Board Secretariat provide the Parliamentary Budget Office with all details, including costing methodologies underpinning all items in Central Vote 40 or the Budget Implementation Vote, to ensure that Parliamentarians have confidence in the Treasury Board’s rationale in approving these items before a full program review has been completed.
10. That the Treasury Board Secretariat require that all spending details for programs included in the main estimates and supplementary estimates appear in the departmental plans, especially in cases where the funding has been approved prior to allocation.
11. That the government adopt Recommendation 2 from the unanimous 2012 OGGO report on Estimates Reform which reads as follows: That the Treasury Board of Canada Secretariat transition the estimates and related appropriations acts from the current model to a program activity model, [and] that they assist federal departments with this process...
12. That the government adopt Recommendation 7 from the unanimous 2012 OGGO report on Estimates Reform which reads as follows: That the government identify separately in the main and supplementary estimates all new funding that is included in the votes, and that it is cross-referenced to the appropriate budget source

THOUGHTS ON MOVING FORWARD

The CPC believes that future accounting must be reflective of tangible and realistic investments. The financial documents discussed throughout this study have become communications products, unreliable for realistic future spending and results measurement. It is imperative that estimates and budget documents provide Canadians with accurate and descriptive information so that they can make informed decisions on the government's spending priorities. This includes a return to accounting practices that identify that government priorities are indeed inline with real funding that can be tracked back to the source and forward to expected results. The line between government funding announcements and the public accounts must be traceable in a way that does not require expert analysis. This is the best way to remain accountable to Canadians for the hard-earned public tax dollars that are being spent by its government. The CPC calls on the government to commit to truth in accounting. The public purse is not a tool for governments to signal interest in policy areas. Rather, financial accounting should be clear, concise, and connected with real dollar figures that identify real spending.

CONCLUSION

To ensure the integrity of our financial system, the government must commit to implementing real change. This cannot be another lip-service policy announcement. There have been clear gaps in Canada’s estimates and budgetary process identified, and they must be closed. Canadians deserve to have access to clear, concise, and accurate information regarding how government is spending their tax dollars. The President of the Treasury Board stated in 2016 “[the] responsibility of Parliament and of parliamentary committees to hold government to account for government spending is essential. The current system is not designed to be understood.” It’s unclear what has changed in the two years since that committee appearance, but what is clear is that the government does not appear to want actual estimates reform. Rather, the government wants to provide band-aid solutions to serious problems and say that they fixed the system. The government spending structure is outdated, overly-complicated, and needlessly cumbersome. The CPC is hopeful that the government will internalize this report and use it to develop its reforms to the estimates process.