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In April of 2013, the auditor general reported that the federal government had lost track of $3.1 billion devoted to combating terrorism.[14] Between 2001 and 2009, the federal government allocated $12.9 billion across thirty-five departments and agencies with some aspect of public security in their mandate. But the AG reported that only $9.8 billion could be identified as having been properly spent. There was no allegation that the money was stolen or misappropriated, but 25 percent of the monies allocated could not be traced. Some was no doubt moved to other priority areas, while some was likely simply not spent since it was not allocated within the timeframe of the approved budget window.
The auditor general stated that the departments and agencies were required by law to report to the Treasury Board Secretariat on how the money was spent; but when the AG asked to see the reports, they were advised that they had not been prepared as required. Although most of the money was eventually traced, the fact that such a large amount of money could go missing shows what can happen when Parliament allows line items to be bundled together in the estimates: a breakdown in financial accountability.
Another recent example of the consequences of diminished financial oversight is the $2.5 million in advertising for the non-existent 2013 Canada Job Grant.[15] In this instance, the government continued to shill for this co-sponsored training program long after every province had refused to participate. Although no program existed, the government spent millions of dollars touting its supposed efforts in this area. Beyond that, government advertising generally is now in excess of $100 million annually. Much of it is ineffective, containing little valuable information; instead, it is often filled with little more than blatant partisan messaging.
A larger boondoggle was revealed on April 11, 2011, when it was reported that the federal government misinformed Parliament to win approval for a $50 million G8 fund that lavished money on dubious “security” projects in several Conservative ridings, including that of Treasury Board President Tony Clement. Auditor General Sheila Fraser reported that the process by which the fund was approved “may have been illegal.”[16]
And of course there was the Sponsorship Scandal, when for six years money was transferred to Liberal-friendly advertising agencies without competitive bids and sometimes without any actual work being done. The auditor general called the practice “scandalous” and “appalling.” Sheila Fraser concluded that $100 million was paid to a variety of Quebec communications agencies and that the program was designed to generate commissions for these agencies rather than produce any work of value for Canadians.
But the worst example of a lack of financial accountability occurred in 2000, when an internal audit at Human Resources discovered that $1 billion in employment program grants could not be traced.[17] There was no paper trail to determine if the money was properly spent or if the promised jobs were created.
As the above examples painfully illustrate, although audits are invaluable in reconstructing a scandal, boondoggle, or misappropriation, they obviously cannot prevent misspending. Regardless, the Office of the Auditor General is essential in determining if proper accounts are being kept, if money is spent for the purpose stipulated by Parliament, if effective spending controls are in place, and if generally accepted accounting principles are being followed.
The value of the auditor general’s reports is in how the government reacts and improves financial reporting. But as an after-the-fact evaluator, the AG does not and cannot exercise control over real-time spending. Only Parliament can do this; unfortunately, as the case below demonstrates, its ability to do so has been emasculated.
Perhaps the lowest point in the devolution of responsible government and financial oversight in Canada occurred in the spring of 2011. For the first time in Canada, indeed, for the first time in the entire British Commonwealth, a government was about to be held in contempt of Parliament.
The sad story began the previous October; the Finance Committee had requested estimates for a number of big-ticket government projects. The cost of acquiring F-35 fighter jets, the forgone revenue of corporate tax cuts, the costs associated with hosting the G20 summit and various crime bills, were all on the committee’s radar. The 40th Parliament was a minority Parliament; as a result, the Conservatives had five voting members on each committee, compared to three Liberals, two Bloc Québécois, and one NDP member, for a total of six combined opposition votes. Accordingly, the production motion passed; for four months, the government procrastinated, eventually only offering partial answers. The majority of the committee then found the government in contempt of Parliament for not complying with a motion of a standing committee of the House of Commons. Thereafter, then–Liberal Leader Michael Ignatieff used one of his supply days, mentioned earlier, to move a motion of non-confidence in the government.
A vote of non-confidence, according to the Leader of the Official Opposition, would confirm our commitment to parliamentary democracy and its fundamental principles. The chief principle that had been compromised was the government’s obligation to “provide Members of the House with the information they need in order to hold the government accountable to the people of Canada.” In an impressive speech defending responsible government, Ignatieff stated that “when Government fails in this most elementary task of democratic freedom, it is the duty of the Members of the House to bring the government down.”[18]
The motion of non-confidence came to a vote in late March of 2011. The motion carried by a vote of 165 to 145, predictably breaking entirely on party lines. As a fiscal conservative, I am now embarrassed by my vote of “nay,” but drunk on the daily diet of “partisan, coalition-conspiracy” Kool-Aid, I certainly did not feel ashamed at the time.
In kicking off his campaign, the Liberal leader claimed that the Canadian people will “have the opportunity to replace an arrogant government with one that respects democracy.”
For being the leader of the first government, not only in Canadian history, but in the history of the entire British Commonwealth, to have been found in contempt of Parliament, the Canadian electorate “punished” the prime minister by electing 166 Conservative MPs, giving Stephen Harper his long-desired majority government. Responsible government was actually borne out: lose the confidence of the House and it is necessary to either resign or seek a fresh mandate from the electorate. But financial oversight was now a distant memory. A minority government could withhold relevant financial information, be found in contempt of Parliament, lose the confidence of the House, and then be returned with a majority!
With the check and balance of financial scrutiny diluted beyond repair, safeguards against irresponsible spending have been severely compromised. The emasculation of the comptroller general and the practice of deeming estimates approved on June 23, rather than actually vetting them, has resulted in the destruction of parliamentary oversight, overspending, and the death of financial accountability. The events leading to the election in the spring of 2011 confirmed that a government can ignore legitimate parliamentary requests with complete impunity.
In the forty-five years since Canada starting disassembling financial oversight, spending has increased in both good and bad economic times, resulting in growing deficits and accumulated debt. With an accumulated debt of over $600 billion dollars — a debt that is growing by $49 million every day — we will be paying for these bad decisions and this deficient financial oversight for generations.
3.
Federal-Provincial Cost Sharing: There is Only One Taxpayer
Long before I left the Conservative caucus, I had developed a reputation for fiscal hawkishness. I believe that taxpayers are entitled to expect that their governments, at all levels, spend their tax dollars prudently.
In times of fiscal restraint, this kind of prudence requires carefully prioritizing projects and ensuring that those funded are done so on a cost-efficient basis to ensure that taxpayers receive value for money. Spending only where necessary invariably requires an examination of responsibility for the proposed project. Is it something that could be better managed, or funded, by the private sector? Is it a matter that could be better undertaken by the non-profit, charitable, or philanthropic sectors? And, most critically, once a project is indeed deemed to be for the public good and therefore ought to involve public financing, what