Private Members’ Business / Financial Limitation

Royal recommendation

February 3, 2011

Debates, pp. 7650-1

On November 2, 2010, Tom Lukiwski (Parliamentary Secretary to the Leader of the Government in the House of Commons) rose on a point of order with respect to Bill C-507, An Act to amend the Financial Administration Act (federal spending power), standing in the name of Josée Beaudin (Saint-Lambert).^[1] Mr. Lukiwski argued that the Bill required a royal recommendation since it infringed upon the financial initiative of the Crown. He pointed out that, under existing statutes, direct spending in areas of provincial jurisdiction occurred when the federal Government allocated money directly to individuals, agencies or municipalities, but that Bill C-507 would allow the federal Government to transfer money directly only to the provinces. He added that Bill C-507 would change the conditions of existing payments to the provinces and make them unconditional. Finally, he maintained that the Bill provided authorization for compensation out of the Consolidated Revenue Fund to provinces that chose to opt out of federal programs in areas of provincial jurisdiction—i.e. for purposes not authorized in the statutes. The Speaker reserved his decision.

On February 3, 2011, the Speaker delivered his ruling. He stated that the relevant subsections of Bill C-507 did not enable existing appropriations to be used for a new purpose, but only affected whether the moneys appropriated were actually spent. He added that another effect of the Bill would be to allow the transfer of funds to provinces that opted out of federal programs, without there being any further conditions attached. Since those funds could be disbursed for purposes not limited to the original appropriation, the Speaker ruled that the Bill required a royal recommendation before the question could be put on it at third reading.

Decision of the Chair

The Speaker: The Chair is now prepared to rule on the point of order raised by the hon. Parliamentary Secretary to the Leader of the Government in the House of Commons on November 2, 2010, concerning the requirement for a royal recommendation for Bill C-507, An Act to amend the Financial Administration Act (federal spending power), standing in the name of the hon. Member for Saint-Lambert.

I thank the Parliamentary Secretary for having raised this important matter. In raising his point of order, the Parliamentary Secretary set out two separate grounds on which he alleged that Bill C-507 infringes the financial initiative of the Crown. First, he claimed that the Bill seeks to alter the terms and conditions of existing royal recommendations which authorize payments out of the Consolidated Revenue Fund to provinces and municipalities for various purposes. This alteration would take two different forms. Where transfers are made conditional upon provinces meeting certain federal standards, these transfers would now be unconditional. Where the federal Government provides funds to individuals, agencies or municipalities, these funds would now be transferred only to the provinces.

The Parliamentary Secretary maintained that this alteration in the way in which funds are transferred violates the terms of the existing royal recommendations on which those transfers depend.

The second cause for concern which the Parliamentary Secretary highlighted is the effect of the provisions of Bill C-507 on payments to provinces that choose to opt out of federal programs in areas of provincial jurisdiction. These payments would be authorized whenever a province did not delegate its responsibility to the federal Government in relation to a federal program in an area of provincial jurisdiction. He claimed that this would result in payments out of the Consolidated Revenue Fund for purposes not currently authorized.

The Chair has examined carefully the provisions of Bill C-507 in light of the arguments presented. The nature of the royal recommendation requirement is explained in House of Commons Procedure and Practice, Second Edition, at page 834:

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. For this reason, a royal recommendation is required not only in the case where money is being appropriated, but also in the case where the authorization to spend for a specific purpose is significantly altered. Without a royal recommendation, a bill that either increases the amount of an appropriation, or extends its objects, purposes, conditions and qualifications is inadmissible on the grounds that it infringes on the Crown’s financial initiative.

What is at issue in each case is whether the provisions of the bill introduce a new appropriation, increase an existing appropriation or entail changes to the objects, purposes, conditions and qualifications of the existing appropriations to enable these appropriations to be used for a new purpose.

Bill C-507 seeks to amend the Financial Administration Act by proposing new subsections 26.1(1) and (2) which would prevent the federal Government from making payments in respect of expenditures in areas of provincial jurisdiction unless the province concerned delegates that power to it. Proposed new subsection 26.1(3) establishes a time frame for that delegation. While it has been argued that the proposed new subsections 26.1(1), (2) and (3) would have the effect of altering the conditions under which the authorization to spend currently exists, the Chair is of a different view. These subsections in no way enable existing appropriations to be used for a new purpose. Instead, these new subsections would affect whether or not the moneys appropriated are actually spent. The appropriations themselves remain unchanged and such a consideration does not give rise to the need for a royal recommendation.

As for the second issue raised by the Parliamentary Secretary, the Chair refers hon. Members to the proposed new subsection 26.1(4) which requires that payments be made to a province that does not provide a delegation under subsection 26.1(2). In the Chair’s view the effect of this provision would be to allow the transfer of funds without there being any conditions attached. In other words, those funds could be expended for purposes not limited to, or governed by, the conditions—or purposes—of the original appropriation. Obviously, this would be a relaxation of applicable conditions, to say the least, and would necessarily constitute an infringement of the financial initiative of the Crown as the appropriated funds could be used for purposes not approved by Parliament when it made the appropriation.

On this basis, it is my ruling that Bill C-507, in its current form, requires a royal recommendation. Consequently, I will decline to put the question on third reading of the Bill in its present form unless a royal recommendation is received.

Today’s debate, however, is on the motion for second reading and this motion shall be put to a vote at the close of the second reading debate.

I thank hon. Members for their attention.