Second reading of Bill S-204, An Act to amend the Financial Administration Act (borrowing of money)Published on 4 February 2016 Hansard and Statements by Senator Wilfred Moore (retired)
Hon. Wilfred P. Moore:
Honourable senators, I rise today to speak to Bill S- 204, An Act to amend the Financial Administration Act (borrowing of money). Senators will know that this bill is today in its fifth iteration and, hopefully, final form for your sake and mine.
I believe everyone in this chamber is familiar with this issue, which was first presented here by our former colleague the Honourable Senator Lowell Murray. In 2007, the government of the day introduced their budget implementation act, which came in the form of an omnibus bill, composed of 134 pages, with 14 parts and 154 clauses. It contained some issues which were the subject of some acrimonious debate at the time, including the Atlantic Accord, changes to the equalization program and many more.
Clause 43.1 entitled: “The Power to Borrow,” stated:
The Governor in Council may authorize the Minister to borrow money on behalf of Her Majesty in right of Canada.
That clause removed a power held by our Parliament since the start. It took away the people’s power to hold their government to account where it matters most: through the public purse.
You know, senators, at its core this issue dates back to Runnymede and the formation and foundation of our parliamentary system. Borrowing authority is perhaps the most powerful tool a parliament possesses, and it has been removed.
There are several issues here which are cause for concern. The intent of that section and the manner in which it was introduced was, to my mind, “buried” in a budget bill, as it really had very little to do with the budget.
I believe omnibus bills to be a direct affront to the manner in which Canadians expect us to do their business in Parliament. When a budget bill arrives here with a title which ends with the words “and other measures,” it surely means that the bill is meant to be much more sweeping than what, in retrospect, was just a simple budget bill. And it was not just the previous government only which used such measures.
I raised a point of order with our former colleague and dear friend our late Speaker Pierre Claude Nolin in December of 2014 regarding Bill C-43, another budget bill, another omnibus bill and, this time, coming in at 478 pages. Senator Nolin returned a ruling which did not ban the use of omnibus bills but did suggest methods for dealing with them, methods which he felt warranted changes to the Rules of the Senate in order to study these massive pieces of legislation to the best of our abilities.
I still feel that both houses were taken advantage of inasmuch as the change effected in clause 43.1 was not something which should have been a “throw-in” in a budget bill. That clause should have come to us in the form of an independent bill, to stand or fall on its own merits. That it appeared as a clause in a 143-page document speaks to something else.
As Dr. Lori Turnbull stated during study in committee:
It is not about purposeful deception; it is about knowing how much time and how many resources MPs and senators have to review legislation and for everybody to have the same assumptions about how broad a scope a piece of legislation is going to take.
Senator Murray was blunt with regard to the Department of Finance in his assessment of what occurred. He said:
This thing was slipped in there quietly while our attention was focused on other major matters. It was slipped in and slipped by us. Honourable senators, let us get this straight. That is exactly the tactic that the authors of this amendment intended. Slip it in there when their attention is diverted by other important matters and we will get it through . . .
In any case, the House of Commons and the Senate both missed it, and here we are, six years later, and I am still talking about it. In any case, that’s the “how” — how it happened, by stealth.
The borrowing authority bill is a money bill, and a money bill needs to be debated before Parliament. The government, prior to 2007, was required to seek the permission of Parliament for any funds over and above existing funding and the non-lapsing funding limit of $4 billion. Post-2007, we see a government which faces no such scrutiny and no such accountability.
The borrowing authority bill would also be considered as a money bill, a vote of confidence in the government. A confidence vote is a fairly strong means of accountability that doesn’t exist now.
The other aspect of the fiscal process which has disappeared due to the removal of the Borrowing Authority Act is the element of context for Parliament. Pre-2007, the budget was tabled before or with the borrowing bill. Spending and borrowing are part of the same cycle. We learned last time through this process that the Senate held up the borrowing authority bill in 1985 because there was no budget tabled. How can you borrow without having an approved spending plan? Why should you be able to spend when you have not sought the approval to borrow?
The Department of Finance’s arguments for making this fundamental change in how our Parliament functions are probably succinctly summed up in one word: expediency. In cutting Parliament out of the loop, Finance need not worry about that pesky problem of oversight. The money is borrowed and spent long before we know about it.
We have been told that the Borrowing Authority Act had to be removed to allow for borrowing by three Crown corporations, that somehow borrowing on behalf of the three corporations should trump the ability of Parliament to authorize it. Why should the people of Canada not debate borrowing by Crown corporations?
Finance tells us that this enabled the government to inject billions of dollars into financial institutions during the financial crisis of 2008, the so-called “Great Recession.” Well, Canadians woke up owing billions of dollars more and with no idea how it happened. Does that sound like accountability?
Parliament should have been recalled to debate this matter. The government should have sought the consent of Parliament to borrow so much on behalf of Canadians. And Parliament could have done this quite readily. This was a two-week process in which the people’s representatives should have had a hand. They should have been a part of the solution, which would have added to faith in our institutions. Instead, they were bypassed and cut out of the loop.
I will outline some of the other so-called reasons put forth by Finance as justification for removing borrowing authority from Parliament, and I will attempt to explain how I do not think the arguments hold water.
Number one, they said that the present borrowing authority regime has provided for a more efficient, flexible, responsive and prudent financial management and greater transparency and accountability.
Honourable senators, Parliament is more than capable of responding to a crisis. The ability to recall both houses in 24 hours exists in the Standing Orders of the House of Commons and in the Rules of the Senate.
There can be no greater transparency than Parliament. Legislation in the form of a borrowing authority bill for members to debate is the ultimate accountability.
Number two, Finance says the current regime introduced enhanced disclosure requirements on anticipated borrowing and planned uses of funds. Through the Debt Management Strategy, which is included in the budget and is debated and voted on by members of the House of Commons each year, this information forms the basis for the submission the Minister of Finance makes to the Governor-in-Council on borrowing authority.
Frankly, senators, these enhanced disclosure requirements could be maintained, while still bringing a borrowing bill to Parliament.
Number three, in addition to the Debt Management Strategy, the government is required to publish a Debt Management Report. This report provides a reconciliation of the projections in the Debt Management Strategy, and what was actually required by the government. This information, like the Debt Management Strategy, is available to Canadians and parliamentarians. Under the current system, the Debt Management Report is required to be published within 30 days of the release of that year’s public accounts, 15 days less than under the previous process.
Well, the Debt Management Report existed prior to 2007 and is tabled after the fact in Parliament. There is no reason why this report could not be tabled in Parliament at the same time as a borrowing authority bill.
Number four, Finance said that governments have attempted to find a borrowing authority process that balances the need for parliamentary oversight with the requirement for efficiency and flexibility.
The last time changes were made to the process of borrowing authority was in 1975 when the Standing Orders were changed to allow for an independent debate in a borrowing authority bill, not to remove Parliamentary oversight.
There is nothing appropriate about allowing the executive to borrow at will without the consent of the people of Canada in the form of their Parliament.
The removal of Parliament’s oversight role in borrowing does not make for a balanced system. The pendulum swings too far to the executive and away from Parliament, to a situation where there is imbalance.
Efficiency and flexibility do not trump the role of Parliament, which we heard is flexible and efficient enough to have dealt with borrowing authority for the past 140-plus years.
The current government has launched an effort to put more control into the hands of Parliament through empowering its MPs to have a more comprehensive level of oversight.
This effort is clearly set out in the platform of the Liberal Party in the 2015 general election under the heading “We will provide better oversight of taxpayer dollars.” I quote:
Canadians understand the importance of saving, spending, and borrowing responsibly. Our government should hold itself to the same standard.
We will change Parliament’s financial processes so that government accounting is more consistent and clear. We will ensure accounting consistency between the Estimates and the Public Accounts, provide costing analysis for all proposed legislation, and require the government to receive Parliament’s approval on borrowing plans.
The current government also plans to run large deficits for the foreseeable future which will require large borrowing. I suggest this would be a very good time to allow Parliament to debate the government’s borrowing and spending plans in the form of a borrowing authority bill.
I am hoping that we can restore Parliament’s supremacy and create a more accountable government for Canadians. This nation survived two world wars, the Great Depression, two referenda and countless other national emergencies while still bringing in a borrowing authority bill to keep the government accountable to its people.
I wonder what it says about us currently that we do not have the same faith in our own Parliament to shepherd our nation through hard times.
I hope that you will share my faith in our Parliament and restore its full power of oversight by passing this bill.
Some Hon. Senators: Hear, hear!