Alternative Federal Budget

Before there was a Parliamentary Budget Office, there was no way to independently assess the federal government’s economic and fiscal forecasts.

In the late-1990s, we at the Canadian Centre for Policy Alternatives (CCPA) were concerned that the Chretien government was deliberately hiding the true size of the budgetary surpluses that emerged in the wake of the Martin budget cuts.

Overly pessimistic Finance Department economic and fiscal forecasts were creating the impression that only very small surpluses could be expected, leaving little fiscal room to either reduce taxes or increase program spending.

Through our annual Alternative Federal Budget exercise, we decided to construct our own forecasts to provide what we thought would be a more accurate picture of available fiscal room.

Over the years, our projections were far more accurate than those of the Department of Finance. For example, the actual cumulative budget surpluses during 1999 to 2003-04 totaled $55.8 billion. The AFB’s cumulative estimate was right on target at $55.0 billion for this period; while the Finance Department’s cumulative estimate was just $12.4 billion.

As a result, opposition parties—whether their agenda was tax cuts or social reinvestment— pushed the government to come clean and stop hiding the surplus.

They called for an independent budget office. As an interim measure, the Commons Finance Committee hired the CCPA and others to provide independent forecasts.

We applauded when the newly elected Harper government established a Parliamentary Budget Office (PBO) with the passage of the 2006 Accountability Act.

However, the legislation was flawed, most notably by not making it an independent officer of parliament like the Auditor General. The PBO head was appointed by, to work at the pleasure of, the Prime Minister. The office's independence was further eroded by its location within the Library of Parliament.

The appointment of Kevin Page as the first Parliamentary Budget Officer turned out to be an inspired choice. Page, an experienced civil servant of extraordinary integrity, set out to create an institution that would give parliamentarians the financial information and analysis that would truly allow them to hold the executive branch (prime minister and cabinet) to account.

In the face of formidable government resistance, the PBO produced a remarkable body of work: from its assessment of the costs of the F-35s, to the financial impact of the cuts to the Canada Health Transfer and raising the age of eligibility for OAS; to its independent economic and fiscal projections. 

However, its limitations are now painfully obvious. A body under prime ministerial control cannot fulfill the intent of the Accountability Act. Major legislative changes are required.

NDP Leader Thomas Mulcair’s private member’s bill (C-476), which will be debated on second reading April 29, aims to rectify the flaws in the original legislation and give the PBO a fully independent status as an officer of parliament.

It would give the PBO the power to hire staff; require an open process for the appointment of the parliamentary budget officer; broaden its mandate to cover all aspects of the nation’s finances; strengthen its capacity to initiate its own analyses; and secure its right of timely access to government financial records.

Since private members’ bills cannot include financial measures, C-476 does not address the question of resources. Notwithstanding the accomplishments of the PBO to date, a reinforced PBO would require a bigger budget to fully carry out its mandate.

Parliament is the highest court in the land— the place where the big policy debates that shape the direction of the country are supposed to occur. These debates reflect, as they should, the competing values and priorities of government and the opposition parties.

Unless they are informed by a body of reliable and transparent financial data and analysis, parliamentarians are not able to properly to hold the government to account on public finances.

Without it, the role of parliament becomes increasingly redundant. Citizens lose trust in their government. They become disconnected from the political process. Democracy wobbles.

The PBO is an idea whose time has come. Kevin Page demonstrated the potential of the office and pushed it as far he could with the hand he was dealt.

Now is the time to take the next step in the evolution of the PBO, toward an institution that truly rebalances the power relationship between parliament and the executive.

Bill C-476 takes that step. 

Bruce Campbell is the executive director of the Canadian Centre for Policy Alternatives.