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William Robson and Nicholas Dahir – How to Get Better 2025 Budgets from Federal and Provincial Governments
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Page Title: | William Robson and Nicholas Dahir – How to Get Better 2025 Budgets from Federal and Provincial Governments – C.D. Howe Institute |
Article Title: | William Robson and Nicholas Dahir – How to Get Better 2025 Budgets from Federal and Provincial Governments |
URL: | https://cdhowe.org/publication/william-robson-and-nicholas-dahir-how-to-get-better-2025-budgets-from-federal-and-provincial-governments/ |
Published Date: | January 3, 2025 |
Accessed Date: | February 9, 2025 |
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Published in The Globe and Mail.
Canada’s federal, provincial and territorial governments are gearing up for another year’s budgets, which inevitably feature clashes over taxation and spending priorities. Some principles, though, should unite everyone, including the need for government budgets to be accessible, timely and reliable.
The C.D. Howe Institute’s annual report card on Canada’s senior governments makes no judgments about their fiscal priorities. It is about how well their budgets and financial statements present the numbers, and as the report reveals, too many governments come up short.
Budgets are statements of priorities and tools for accountability. Citizens and legislators deserve a clear picture of governments’ plans, and how results compared to those plans. Budgets that bury the key numbers dozens or even hundreds of pages deep, that do not show changes from the recent past and hide contingency reserves do not provide that picture.
The numbers need to be reliable, capturing everything the government controls. Excluding parts of programs, such as health care in the case of Nova Scotia, or types of expense, such as the federal government’s moving of pension costs below the line, presents a misleadingly partial picture.
Newfoundland and Labrador, Manitoba, Saskatchewan and British Columbia present their key numbers within the first 10 pages of their budgets, making them hard to miss. The financial statements of all provinces and territories present their consolidated numbers early, clearly and on a single page. Canada’s senior governments should adopt this practice for their budgets as well.
Budgets are also more meaningful when they compare the current year’s plan to both the most recent financial statements and the projected results for the year about to end. This practice allows readers to answer straightforward questions such as: How much more do we plan to spend this year compared to recent year?
The answer to that question should be obvious when looking at the budget. Yet half of Canada’s senior governments do not include the latest actual results. They should follow the example of Ontario and the territorial governments, whose budgets are far more useful for containing this information.
Governments could also handle uncertainty more transparently. Unrealistic revenue and expense forecasts undermine the credibility of budget projections and risk readers dismissing them as irrelevant.
Governments that include explicit contingency reserves, as Prince Edward Island and Quebec do, are much more transparent. When reserves are modestly sized, clearly labelled and explained in the budget documents, they provide more insight for the reader about how their government is handling the uncertainty inherent in budgeting. Nine of Canada’s 14 senior governments present explicit contingency reserves; the remaining five should follow suit.
Timeliness is also critical. Senior governments’ fiscal years run from April 1 to March 31. Budgets should appear long enough before the year begins to give legislators time to review them – and the accompanying estimates that show specific programs requiring a vote. Budgets presented after the fiscal year has begun, when money is raised and spent without proper parliamentary oversight, violate a fundamental principle of representative government.
Timely federal budgets are particularly important because provinces rely on them when making their plans, and municipalities, in turn, rely on provincial plans. Provincial legislation requires Alberta to present its budget in February – a deadline it regularly achieves – while New Brunswick has historically delivered its budget in January. If they can do it, so can all of Canada’s senior governments.
As budget preparation for 2025 gets under way, governments in Canada should adopt the best practices from each other and from their own year-end financial statements. Timely, clear and transparent budgets are not only achievable, but also inexpensive to implement.
Examples are already out there, and adopting these improvements would strengthen public trust, encourage civic engagement and promote better fiscal management.
William Robson serves as President and CEO of the C.D. Howe Institute, where Nicholas Dahir is a research officer.
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