“Revenue and spending routinely exceed the amounts approved by legislators, and by astonishing amounts..."
April 11, 2016 – Canada’s federal, provincial and territorial governments have cumulatively spent $69 billion more than budgeted over the past 15 years, according to a new C.D. Howe Institute report. In “Controlling the Public Purse: The Fiscal Accountability of Canada’s Senior Governments,” authors Colin Busby and William B.P. Robson grade the performance of governments in hitting their budget targets and the transparency and reliability of their financial reports.
“Revenue and spending routinely exceed the amounts approved by legislators, and by astonishing amounts,” remarked Robson. “Failures of accountability have major real-world consequences.”
The dominant theme of the 15-year period reviewed by the report is major overshoots of budget targets. Cumulatively, Canada’s federal, provincial and territorial governments spent some $69 billion more than projected, with the Prairie provinces and the territories showing the biggest over-runs relative to the size of their budgets. Over the same period, revenues overshot budget projections by an even larger amount: $118 billion. See below for the Institute’s Pinocchio Index.
The authors grade the quality of financial reporting by asking whether an intelligent and motivated non-expert – a citizen, taxpayer or legislator – could find valid consolidated numbers for revenue and spending in the budget each government presents at the beginning of the year, and in the financial statements released with its public accounts at the end of the year. The top presentation marks go to Alberta and Saskatchewan, with Ontario not far behind. British Columbia and New Brunswick also earn high marks for consistent and clear presentations, but auditor reservations push them out of the top tier. The federal government provides reliable numbers, but its budgets do not display them prominently, and the spending estimates members of parliament review are on an incompatible basis of accounting. See below for the National Scorecard.
“Legislators and Canadians generally should insist on better financial information from governments, and use that information to hold governments to a higher standard when it comes to hitting their budget targets,” commented Busby.
Over the 15 years, the authors note that the financial reporting of Canada’s senior governments has generally improved. They also note a trend toward smaller overshoots. The report includes suggestions, such as more thorough scrutiny by legislative committees, that could hold governments to better account for their fiscal performance in the future.
Click here for the full report.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For more information contact: Colin Busby, Associate Director, Research; William B.P. Robson, President and CEO, C.D. Howe Institute: 416-865-1904 or email: kmurphy@cdhowe.org.