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Budget Implementation Bill, 2017, No. 1—Third Reading

Budget Implementation Bill, 2017, No. 1—Third Reading

Budget Implementation Bill, 2017, No. 1—Third Reading

Budget Implementation Bill, 2017, No. 1—Third Reading

Published on 21 June 2017
Hansard and Statements by Senator Joseph Day

Hon. Joseph A. Day (Leader of the Senate Liberals):

Honourable senators, let me begin my remarks with respect to third reading of Bill C-44, budget implementation, by congratulating the sponsor again.

I was very pleased, Senator Woo, that you indicated that the government isn’t finished with this bill and that work will continue. Perhaps we can give you a few things to take back to the government that would suggest further work.

I was also pleased to see Senator Smith, my former colleague on National Finance, get excited about finance matters. There are now two of us here that get excited about these matters.

Senator Smith: Those are similar to the speeches you used to give.

Senator Day: That’s right.

Honourable senators, I spoke at length previously with respect to three items in this bill. One was the escalator issue. The second was the user fee part of the bill and, coincidently, escalation within the user fees. The third was the borrowing authority. I pointed out that there is a golden thread through those three items that is important for us to keep in mind, namely that each one of them, in its own way, takes away power and responsibility of parliamentarians to oversee government expenditure, to act in the interest of the people of Canada to protect the public purse. That was with respect to each of the three, and I explained my concern.

With the escalator, which Senator Marshall has picked up on, I appreciate the amendment. I was pleased to support the amendment yesterday and will continue to support it because I think it’s a very important aspect of that issue of protecting the role of parliamentarians. If we don’t make these amendments and these provisions pass quickly through the house, we would slowly be eroding the traditional role of parliamentarians. I suggest that is not in the best interest of Canada or the people of Canada.

I regret to say that some of my concerns with respect to user fees and borrowing — although we’ve talked about it since the speech I gave at second reading a week and a half ago — I have seen no movement on the part of the government to be inclined to deal with those two items. At the end of my speech today, I intend to make suggestions as to how we might handle these concerns.

We are aware, all of us, of the challenges we face in the Senate whenever we see problems in a budget bill.

Unquestionably, we have the power to amend or even defeat budget bills from the other place. That has been long established. There was a report in 1918 that outlined the role of the Senate in that regard. It has been a long established right. Indeed, it was confirmed by our Speaker just last week in his ruling.

However, we all know that it is always controversial if and when we choose to exercise that power. Government may like and value Senate amendments in theory, but they rarely are so appreciative when amendments are actually proposed and passed to their bills, particularly at this time, just before the summer break.

But we do have a job to do, honourable senators, and that’s one of the themes of my comments today. We in the Senate have a job to do, and we mustn’t shy away from doing it.

Let me be clear. I do understand and I have sympathy for those who are reluctant to propose or support amendments to a budget bill. Indeed, there are a number of provisions in this omnibus budget bill that I find very troubling but I’m prepared to accept. There are many others that I haven’t even had a chance to get to and develop and understand in such an extensive omnibus budget bill, but I’m prepared to accept them and take the government at its word in relation to these items.

However, there is an issue that I cannot let pass, and that has to do with the provisions of Part 4, which, you’ll recall, “Various Measures.” There are the fiscal matters at the front end, the first three parts of the bill, and then Part 4, all other matters. We’re in one of those other matters — Division 2. “Public Debt” is the heading.

Honourable colleagues, those provisions go to the very core of what Parliament is all about, going back literally hundreds of years to the very origin of our parliamentary system, namely the power of the purse. I cannot, in good conscience, let these provisions pass in their current form without comment.

There are three very closely related issues that I believe urgently need to be corrected.

First is the absolutely critical repeal of section 43.1 of the Financial Administration Act. As I described in detail last week in my speech, 10 years ago, in 2007, Parliament passed an omnibus budget bill that contained a two-line clause that amended the Financial Administration Act. Two lines buried in a very extensive bill. This special new clause, section 43.1, allowed cabinet to authorize the government to borrow money, with no need to come to Parliament for prior approval — no need whatsoever.

This clause was revolutionary, colleagues. It undid Parliament’s authority over government borrowing, authority that had existed literally for centuries and indeed has its roots in the Magna Carta, signed at Runnymede on another June day — June 15, 1215, to be exact — more than 800 years ago.

As I explained last week, parliamentarians did not knowingly give up this critically important power. Quite simply, no one noticed the clause. There was a lot of discussion after it was passed, with people saying, “What happened? Why aren’t there any borrowing bills coming to the House of Commons or the Senate anymore?” They did not know they had given up that power.

It is a highly controversial two-sentence portion of an omnibus budget bill.

So this clause was missed by members of both houses until after the bill had actually been passed. Four of us here in the Senate then realized what had happened and tried through repeated private members’ bills to have the authority over borrowing restored, but without success. All of the bills died on the Order Paper. We are experiencing that situation again today, where many of us will learn that many bills we’d really like to see passed will be dying on the Order Paper.

We were very pleased when the Liberal Party promised in the last election that they: “. . . will require the government to receive Parliament’s approval on borrowing plans.” That was one of the important aspects of a platform that resulted in the Liberal Party getting elected in the last election. That’s what they promised, and then the 2016 Budget Implementation Act contained a clause we thought was meeting that promise.

In 2016, a clause that repealed this offending section 43.1 of the Financial Administration Act appeared in the Budget Implementation Act 2016. Minister Morneau appeared here in the Senate and effusively thanked honourable senators for the work we had done and assured us that the requirement of Parliament’s approval was being restored. We passed the budget bill with that understanding.

That was the second assurance we received, honourable senators. But this did not happen.

The Finance Minister confirmed this was the case when he appeared last week before the National Finance Committee. Listen to his words:

On process, a question was raised as to why the government didn’t declare the provision in force in 2016. Our objective from the start was to link the full framework, which was still in progress, to the budget process in the updated budget numbers. In other words, we needed two steps in the process. First step, the government amended the Financial Administration Act in 2016 to reinstate parliamentary approval, and second step, we are coming to you —

— coming to parliamentarians —

— with a borrowing authority act —

— which appeared a year later in this budget implementation bill, Bill C-44 —

— which defines what Parliament will need to approve based on current budget figures.

If you followed that, it’s an attempt to explain why the promise to take away this authority to borrow without parliamentary consultation and approval was never declared in force. We were shocked when we learned that; never proclaimed and never brought into force. Why? Because it was considered by the government a process matter that had to be coordinated with something that came about a year later, notwithstanding the minister being in this chamber and saying, “Thank you very much for doing this,” and “We’ve got to correct it.”

The two-step process, honourable senators, sounds like the old two-step, but we are now at the second of these two steps with Bill C-44: We are passing the borrowing authority act. So I assume the government is now prepared to finally declare in force the clause that we passed in last year’s budget, a year ago. It’s easy to do, honourable senators. The coming-into-force clause for this division of Bill C-44 already links the coming into force of the new borrowing authority act to bring into force another provision in the same division of last year’s act — and that was referred to by Senator Smith. Let me explain.

Last year, the government explained there were circumstances when it may be called upon to quickly spend unanticipated large sums of money. They would need to borrow to do that. These include extraordinary circumstances such as a natural disaster or financial crisis. In these situations, it may not be feasible to obtain quickly Parliament’s approval by way of a bill that would need to be passed in both houses. This, honourable senators, is completely understandable, and this was provided for in clause 183 of last year’s budget bill, which Senator Smith has referred to.

This clause, however, was never brought into force either. Clause 182, which dealt with eliminating that complete right to borrow without consultation with parliamentarians, and clause 183, dealing with extraordinary situations, neither one had been brought into force. Presumably they didn’t really need clause 183, the extraordinary power, because they had all the power they would ever want in section 43.1 of the Financial Administration Act, which never got removed.

The government has had all the power it needs to borrow money and continues to, until we do something about it in this bill or otherwise.

Bill C-44 states that clause 183, which was just referred to, will enter into force with Bill C-44 coming into force. That is clause 183, but what about clause 182, which cancelled the very offensive, earlier 10-year-old clause of no restrictions whatsoever? No reference is made to that particular clause that was never declared into force.

So I was surprised that this coming-into-force clause in Bill C- 44 referred only to clause 183 and not to 182 as well, which repeals the terrible section 43.1. In other words, it would bring into force the exceptions but not the critical repeal of the provisions that specifically removed parliamentary authority.

Is there something that I’m missing in all of this? I’m sure this must have been an oversight by the government.

Accordingly, I will be proposing that steps have to be taken by this chamber that will fulfil what the minister told us was the government’s intention, namely, to bring into force the clause that Parliament passed last year. The will of Parliament was expressed in the passing of that clause, repealing section 43.1. It should come into force at the same time that the new borrowing authority comes into force.

However, that alone is not sufficient to fulfil the government’s election promise. Perhaps I can go on and spend a little time on that.

As I said last week, I was concerned to see the proposed section 3 of this new borrowing authority act, which is an act within Bill C-44, the budget implementation act. Proposed section 3 would appear to do the same thing as the original section 43.1. However, there’s a new section 3 in the borrowing authority act that appears to do the same thing: the government can borrow money without the need to come to Parliament for authorization for the borrowing.

I’m sure, given the minister’s statement and the election promise, that this is not the government’s intention. Indeed, the minister was clear, most recently in his appearance before the National Finance Committee last week, when he stated that “. . . Parliament will be more empowered than ever before with the borrowing authority legislation that we are proposing.”

Well, if we just did away with all of these steps over the last two years, and went back to the situation 10 years ago in 2007 and required a borrowing authority act each time the government wanted to borrow more money, that would have solved the problem. So that is the standard by which we must measure the government today. The minister said that parliamentarians would be “more empowered than ever.”

You can see the schedule at the back of Bill C-44 that we’re dealing with here today. There’s a list that shows you that for each year the government needed funds there was a borrowing authority act. They would bring it in and say, “We need this amount of money to reach our objectives for the year, so please authorize that the same way you’ve authorized the activity.”

Returning again to the testimony of the Minister of Finance before our National Finance Committee, he said:

Ten years ago, Parliament’s authority was revoked by the previous government, and it was left solely to cabinet. We’re keeping our promise by empowering Parliament once again with the authority to approve the funding requirement of the government.

That is very clear, colleagues. This government intends by this new act to restore Parliament’s power to at least what it was before 2007. However, as I detailed in my speech last week, section 3 of this borrowing authority act in Bill C-44 does not do that. Section 3, as currently drafted, would actually allow cabinet to authorize the government to borrow money without the need to come to Parliament first. There’s no mention in this section of parliamentary approval, no mention at all. And, accordingly, I am most disturbed to see that particular provision, section 3, in this legislation.

Finally, the third issue or the third problem that I promised to outline for you. Many of us were surprised to see that the new borrowing authority act would only require reports to Parliament once every three years on the total amount of money borrowed by the government during those three years. Previously it was on an annual basis through borrowing authority bills. With respect, that is simply too long a period. Indeed, it would take us beyond the next election and into perhaps another government to find out what the last government did in borrowing, and then what will we be able to do about it? That is far too long a period, honourable senators. I believe there should be annual reporting.

This change to annual reporting would have a secondary effect, in cases where the government is to be allowed to borrow money without parliamentary authorization. These include where the government would be faced with extraordinary circumstances, such as a natural disaster or financial crisis as I referred to earlier. In last year’s budget bill, we set out careful parameters around those exceptional circumstances. The government would be permitted to borrow without Parliament’s authorization provided it reported after the fact to Parliament as quickly as possible, and specifically in the budget last year it said 30 days.

Now if we approve this legislation in Bill C-44, honourable senators, it will be three years — three years — before we learn about this extraordinary expense.

As I mentioned, since the government never declared the exception set out in last year’s budget bill in force, the reporting clause was not brought into force either. Now Bill C-44 would finally declare the exception provisions in force, but notably it ignores Parliament’s legislated reporting requirement. It just ignores it. It doesn’t say anything about it. It would not come into force. Instead, that reporting on emergency borrowing would take, if everything stays the same, three years for us to learn what had been done.

So instead of tabling the report in Parliament within a month, Canadians would have to wait three years for the information. That is simply not acceptable and is not providing any opportunity for parliamentary oversight.

Honourable senators, Canadians deserve better. Of course this flies in the face of what Parliament mandated when it granted the exceptions last year and passed the legislation. But if we change the basic three-year reporting requirement on borrowing to reports that would have to be presented to Parliament every year, these so-called emergency borrowings would also have to be reported every year, so at least we could hear from the government every year as to what they’ve borrowed.

Colleagues, these are limited, focused amendments that I believe could significantly improve the bill and could significantly improve the relationship between cabinet, government, Parliament and our role.

As I described, far from going against an election commitment, these would implement a critical election commitment by the government. The Deputy Government Representative in the Senate has argued here in another context that, “. . . it is not legitimate for us to vote against an electoral promise . . . .” I do not and would not go that far, but turning it around, I think the Government Representative team would have to agree that it is absolutely legitimate for us to vote to uphold and implement an electoral promise that the people of Canada voted for, even if that means amending a budget bill.

Some Hon. Senators: Hear, hear!

Senator Day: Most important, honourable senators, if these changes were implemented, they would restore Parliament’s critical authority over government borrowing.

Colleagues, Parliament’s power of the purse goes to the very core of the parliamentary institution. We lost it in a clause buried in an omnibus bill 10 years ago. I’m now proposing that we reclaim it. The borrowing authority act as proposed by the government unfortunately does not restore this authority to Parliament.

Honourable senators, there are a number of ways we can do that reclaiming. We can propose an amendment here today to make the changes. I’ve thought long and hard about it. My view is that if we make this statement — that’s why I went into so much detail to outline what I believe has to be done — after consultation with a significant number of outside advisers, I believe — the comments will have been made; the government can proceed, or we could consider a separate piece of legislation in the fall if the government doesn’t act on these recommendations from the Senate.

In any event, honourable senators, I assure you that the long memory of the Senate will continue.

Senator Cools: It’s a good memory too, very good.

Senator Day: We will be there for the people of Canada; they can be assured of that. We will ensure that this critical issue is not forgotten.


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