Published in The Globe and Mail.
In recent years, the federal government’s fiscal management has looked increasingly slipshod. The unprecedented deficits and buildup of debt, the explosive increase in the number and cost of federal employees, and the addition of tens of billions to the spending projections in each successive budget and fiscal update are unsettling, but so, too, is the erosion of accountability in budgets and in the public accounts.
Ottawa is delivering a fall economic statement on Monday – so late that it’s barely fall any more. The government failed to deliver a budget at all in 2020 – something that had never happened before – and presented three of the four budgets since then after the April 1 beginning of the fiscal year. In the 1990s, budgets routinely appeared more than a month before the fiscal year started. Recently, Parliament seems increasingly irrelevant to the oversight of public finances.
Less noticed, but equally troubling, is the government’s worsening tendency to delay tabling the public accounts. The public accounts typically get less attention than the budget; they are about the past, not the future, and don’t trigger a vote in Parliament that can bring down a government. But they are the definitive statement of what happened during a fiscal year, and must pass scrutiny by the federal auditor-general.
In the 1990s, the auditor-general routinely signed the government’s financial statements in July – less than four months after the March 31 end of the fiscal year – and the government tabled the public accounts in September or October. Lately, the date on the auditor-general’s signature has been September or October, and the public accounts have appeared more often than not in November or December. In 2021, the government even reopened the books after the auditor-general’s sign-off, backdating some $10-billion in spending, and presenting the result on Dec. 14 – an embarrassing 258 days after the fiscal year ended.
Late reporting is troubling for many reasons. Late statements get less attention. They feel like old news, which makes media and public attention less likely, and reduces the incentive for legislators – whose job it is to ensure governments manage our money effectively – to review them. So key questions, such as why revenues didn’t match budget projections (they almost never do) or why governments spent more than they said they would (they almost always do) don’t get asked – or, if asked, don’t get answered.
Lackadaisical approaches to release dates also enable slow organization of the information. That means governments lack the numbers that would help them project revenue and spending more accurately in the following year’s budget.
Most concerning is that, in the private and not-for-profit sectors, late financial statements are a red flag. Well-managed companies and charities track their revenues and expenses closely, and can produce reliable documents for their investors and auditors in a timely way. The Ontario Securities Commission requires TMX-listed companies to file annual results no later than three months after year-end. Saskatchewan and Alberta have an end-of-June – three months after the end of their fiscal years – deadline for tabling their public accounts. But the federal government’s timing is getting worse. The gap between year-end and the auditor-general’s sign-off averaged less than four months in the late 1990s; over the past decade, the gap has grown to more than five months.
Beyond the general adverse trend in timing that has accompanied other signs the federal government is not serious about public finances, there is the specific question of what is happening now. The 2023/24 fiscal year ended more than 240 days ago. Yet the government has still not released the public accounts. Is something untoward going on?
Is the auditor-general still reviewing the financial statements at this late date? Numbers in the fiscal monitor – a Finance Department publication – suggest the government missed the target for the deficit Finance Minister Chrystia Freeland set in the 2024 budget. A recent actuarial report on the federal government’s Public Service Pension Plan proclaimed a sizable surplus in the plan. Does the government see an opportunity to pad its bottom line with some of that money?
Whatever the reasons, it is time parliamentarians and Canadians generally turned up the heat. The federal government should take all aspects of fiscal policy – the numbers themselves, the rationality of its taxes and spending, and its accountability to Parliament and Canadians – more seriously. In particular, they should release the 2024 public accounts without further delay and, we hope, allay suspicion this latest delay signifies yet another lapse in the federal government’s management of our money.
William Robson is President and CEO of the C.D. Howe Institute, where Nicholas Dahir is a research officer.
