Financial Procedures / Governor General’s Special Warrants

Operating expenditures

June 12, 2003

Debates, pp. 7220-1

On June 5, 2003, John Williams (St. Albert) rose on a point of order to argue that the Government no longer had the authority to make ex gratia payments for the Heating Fuel Rebates Program as it had done in January 2001, when it had paid out more than $1.4 billion.^[1] He declared that the payments were still being made although spending authority provided by Governor General’s Warrant had lapsed at the end of March 2001, pursuant to section 30(2) of the Financial Administration Act. Accordingly, he asked the Speaker to reduce the relevant vote of the Main Estimates. On June 11, 2003, Elinor Caplan (Minister of National Revenue) responded that the funds for the Program had been appropriated by Parliament and placed in the Canada Customs and Revenue Agency Vote 1—Operating Expenditures through two Governor General’s Special Warrants. She argued that there was no need to reduce the Vote as the authority to carry forward unused Vote 1 appropriations into the following fiscal year was provided for under subsection 60(1) of the Canada Customs and Revenue Agency Act and these carry-forward funds were the first to be used in any subsequent fiscal year, as long as they were used for operating purposes. She also noted that these were ex gratia payments charged to Vote 1 and as such did not require specific parliamentary approval or authority.^[2]

On June 12, 2003, the Speaker delivered his ruling. He explained that Special Warrants must be approved by Parliament and that the funds obtained apply only to the year in which they are granted. He noted an exception to this practice in that appropriations for the Canada Customs and Revenue Agency are for two years, pursuant to the Canada Customs and Revenue Agency Act. He also pointed out that it was these carry-forward provisions that provided the Agency with the authority to make payments in both the 2000-01 and 2001-02 fiscal years. The Speaker also accepted the Minister’s explanation that payments made during 2002-03 and subsequent fiscal years would be ex gratia payments, which did not require specific parliamentary authority as these would be paid out using funds authorized as part of the Canada Customs and Revenue Agency Vote 1—Operating Expenditures. The Speaker ruled that the point of order was not well founded. He also expressed concern about the persistent problem experienced by Members of Parliament in obtaining complete and accurate information on spending through the estimates documents. Therefore, he suggested that committees with a special responsibility for the estimates process have a closer look at the nature of the information provided to Members by the estimates documents.

Decision of the Chair

The Speaker: I am now prepared to rule on the point of order raised on June 5, 2003, by the hon. Member for St. Albert concerning multi-year funding of the heating fuel rebate. I would like to thank the hon. Member for St. Albert for having raised this matter. I would also like to thank the hon. Minister of National Revenue for the information she provided to assist the Chair on June 11.

In raising this matter, the hon. Member for St. Albert pointed out that the Government paid out more than $1.4 billion in heating fuel rebates during January 2001. As this is a somewhat complicated case, it will be helpful to provide the House with a fairly detailed chronology of the events that have led to the raising of the procedural point before us.

The Government’s intention to make rebate payments was first announced in the budget speech made in the House on October 18, 2000. As a result of the general election held during November 2000, the Government initially funded these rebates by the use of Governor General’s Special Warrants. These Special Warrants are used exclusively to fund Government operations on an urgent basis when Parliament is dissolved. During periods of dissolution, it is impossible for the Government to apply to Parliament for the approval of funding, and Governor General’s Special Warrants provide a temporary means of overcoming this difficulty.

Members will find a more detailed account of the use of Special Warrants in House of Commons Procedure and Practice, pages 747-8.

Once Parliament meets following a general election, any Special Warrants that have been issued must be submitted to Parliament for approval. The Special Warrants in the present case were tabled in the House on February 12, 2001. It is not necessary to enter into every detail of the procedures concerning the use of Governor General Special Warrants, but I would draw the attention of hon. Members to two points in particular. First, any funds obtained by the Government through the use of such warrants must subsequently be approved by the House as part of the normal estimates process. The funds authorized by the Special Warrants on December 13, 2000 and January 9 and 23, 2001, were included in the Appropriation Act approved by the House on March 20, 2001.

Second, and this point was underlined by the hon. Member for St. Albert, the funds approved in this way apply only to the fiscal year for which they are granted. The fact that funds are provided by a Special Warrant does not exempt them from the key principle of our financial procedure that funds are allocated on an annual basis and may not be expended after the end of the fiscal year for which they are approved.

Although the initial funds were approved for the fiscal year ending on March 31, 2001, the hon. Member for St. Albert pointed out that in 2001-02, $42.2 million were disbursed for heating fuel rebates and a further $13 million during 2002-03.

At their meeting of May 12, 2003, an official of the Treasury Board indicated to the Public Accounts Committee that further payments would be made during 2003-04. The hon. Member for St. Albert noted that no legislative authority exists for the Heating Fuel Rebate Program and that the House has not been asked to approve any appropriation for that purpose since supply was passed for the fiscal year 2000-01.

An appropriation act gives authority only for a single year and is therefore not appropriate for expenditure that is meant to continue for a longer period or indefinitely. Ongoing programs must be established by particular legislative measures. Once Parliament has approved a program in this way, it then may be asked to appropriate funds on an annual basis.

At this point I would like to point out that an exception to this rule exists in the case of the Canada Customs and Revenue Agency. Section 60(1) of the Canada Customs and Revenue Agency Act reads:

Subject to subsection (4), the balance of money appropriated by Parliament for the use of the Agency that remains unexpended at the end of the fiscal year, after the adjustments referred to in section 37 of the Financial Administration Act are made, lapses at the end of the following fiscal year.

Accordingly, with respect to the Canada Customs and Revenue Agency, subject to the reservations in the Act, appropriations are for two years rather than one as is usually the case. The hon. Member for St. Albert drew … the Chair’s attention to the fact that $42.2 million was paid out in heating fuel rebates during 2001-02. Given the carry-forward provision just cited, there seems to be no reason to question the Agency’s authority to make these payments using funds originally appropriated for 2000-01.

However, the hon. Member also pointed out that in testimony before the Public Accounts Committee it was revealed that a further $13 million in rebates were made during 2002-03. Clearly, no authority existed for the carry-forward of funds from the moneys provided by the Special Warrants. Any unused funds from that appropriation lapsed on March 31, 2002. It was also indicated to the Public Accounts Committee that further payments relating to heating fuel are expected during the current fiscal year.

The hon. Minister of National Revenue indicated to the House in her statement on this issue that all of the payments made relative to heating fuel rebates were made as ex gratia payments. The Public Accounts, 2002, Vol. II, Part II at page 10.14 describe an ex gratia payment as “a discretionary payment, made as an act of benevolence in the public interest, free of any legal obligation, whether or not any value or service has been received”.

As the hon. Minister indicated, payments of this type do not require specific parliamentary authority. That is to say, they are not made as part of a legislated program, nor are they the object of a specific funding request made to Parliament. At the same time, it is quite clear that even with respect to ex gratia payments, the funds used must be properly authorized by Parliament. In the present case, the Minister has told the House that the heating fuel rebates were paid using funds authorized as part of the Canada Customs and Revenue Agency Vote 1—Operating Expenditures.

The Chair concluded that in both 2001-02 and 2002-03, the rebates were simply paid out of the Vote 1 funds, all of which had been properly authorized. No other authorization is required for payments of this type. It seems reasonable to conclude that any further payments issued during 2003-04 or subsequent years will be made on the same basis. I am therefore satisfied that the point of order of the hon. Member for St. Albert is not well founded.

However the Chair is troubled by the current case which is an example of a persistent problem that I have had occasion to comment on before, that is, the adequacy of information provided to Parliament regarding estimates. Committees have always been dependent on being provided with complete and accurate information concerning proposed public spending. In light of the size and complexity of modern Government, this is all the more true.

The Reports on Plans and Priorities and the Performance Reports that are now tabled annually were meant to provide such information. Yet difficulties persist and, some might argue, have grown even more acute. In this case, for example, to determine the source of the funds being used for the heating fuel rebate, Members had to rely on the documents tabled before Parliament. If that documentation is inadequate, then Members seeking clarification have no recourse except, as the hon. Member for St. Albert did, to raise a point of order in the House.

The hon. Minister’s statement has clarified the situation but I believe all Members would agree with the Chair that it would be preferable if Members had available to them the opportunity to obtain this information without being obliged to take up the time of the House.

It may well be that those House committees that have special responsibility for the estimates process will want to have a closer look at the nature of the information provided to Members by the estimates documents. It is, after all, hon. Members who must take a large share of the responsibility for seeing to it that they receive the information they require.