Miiii~Review

PARLIAMENTARY REVIEW OFTHE SPENDING ESTIMATES

PeterBergEconomicsDivision

21March 1989

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ResearchBibliothèquedu Parlement ranc

The Research Branch of the Library of Parliament worksexclusively for Parliament, conducting research and providinginformation for Committees and Members of the Senate and theHouse of Commons. This service is extended without partisanbias in such forms as Reports, Background Papers and issueReviews. Research Officers in the Branch are also available forpersonal consultation in their respective fields of expertise.

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UBRARY OF PARLIAMENT .

BIBLIOTHEQUE DU PARLEMENT.

PMLIAVENTARYREVIEWOF THE SPENDING ESTIMATES

Ear’y each year, the government tables ~iI the • House ofConmions a set of documents known as the Main Estimates. These annualexpenditure budget documents provide detailed information to Parliament onproposed spending on the government’s programs in the upcoming fiscalyear. This paper provides an overview of Parliament’s scrutiny of theseestimates and underlines the importance of such a review.

THE PROCESSOF REVIEW

The process of developing the government’s spending pro-posals for a given fiscal year begins with the drawing-up of a multi-yearexpenditure plan more than a year prior to the presentation of theseproposals in the form of Main Estimates. As its name suggests, this planoutlines the desired level of government spending over a period of severalyears. Within this framework, the policies and programs of governmentdepartments and agencies are developed and the cost of the programsestimated. In the fall of the year preceding the fiscal period inquestion, the individual departments update their niulti-year plans, Ihichare reviewed by Treasury Board in order to establish departmental resourcelevels. These updates, approved by Cabinet, form the basis of the upcomingfiscal year’s Main Estimates, which are tabled by the President of theTreasury Board in the House of Commons.

Once prflEnted in’the House; all ~estirnatesare referred tothe relevant Standing Committees for detailed examination. For example,proposed spending by Transport Canada would be examined by the Standing

Committee on Transportation; that for Health and Welfare by the HealthCommittee and so on. This review mechanism provides a public forum in

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which Ministers must defend the government’s policies, operations and

spending p’ans to Committees which are likely to be we11~versed in depart~-

mental activities. The Committees have until the end of May of each year

to review the Estimatesand report back to the full Chamber0 If there has

been no examination of a particular program, the corresponding budgeted

amount, or spending vote, is deemed to have been accepted0Concurrent~Iy with the review of the Estimates by the House

Committees, the Senate also reviews the government’s spending plans,

normally through its Standing Committee on National Finance.

The Constitution Act, 1982 stipulates that spending by the

federal government must first be authorized by Parliament, Once the

Standing Committees have reported to the House, a general debate on govern~

ment policy and departmental operations is normally conducted in the days

allotted to the “business of supply.” These days, not necessarily consecu~

tive, are allocated as follows: thirteen in June, five in the fall , and

seven before the end of the fiscal year, As soon as the given expenditures

have been approved in the House, an appropriation bill is introduced to

enable the government to spend the specified funds, After clearing both

the House and the Senate, the appropriation is given Royal Assent and

released through a Warrant signed by the Governor General.

Since the Appropriation Act is not passed before June and

since the fiscal year begins on 1 April, an Interim Supply appropriation

must be passed, normally in March, to provide the government with operating

funds. The initial Appropriation Act provides for interim spending in the

amount of three~.twelfths of the voted amounts identified in the Main

Estimates. This is followed in June by the previously~~~mentioned main

appropriation bill.

Although Parliament approves only annual appropriations,

information on statutory appropriations, or those governed by specific Acts

of Parliament and/or not requiring annual consent, is also contained in the

Main Estimates documents, In this way, Members can scrutinize all aspects

of government spending.

While the Main Estimates contain the major estimates of

government expenditures, Supplementary Estimates are also tabled during

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subsequent periods of the Parliamentary Calendar. These support programsannounced after • the Main Estimates were tabled, or changes in exi stingprograms. They are normally tabled in Movember and March subsequent to

Treasury Board review, and are,. as in the case of the Main Estimates,subject to committee scrutiny and ultimate parl i amentary approval . The useof Supplementary Estimates provides for flexibility in the expenditurebudgetary process and enables revisions, almost always upward, to be madeto estimates which may have been formulated up to a year and a half prior

to the date of parl i amentary approval.

OBJECTIVE OF PMLIAMEMTMY REVIEW

The control which Parliament exerts over federal governmentspending is mdi rect . • Standing Coimnittees cannot realistical ly reconinendchanges in the amounts listed under the spending votes. While they cantheoretically suggest reductions in budgets, these could be interpreted by

th! governmint as motions of non-confidence. Therefore, in practice theMain Estimates are always approved unaltered. Review of the Estimates isa public examination of financial options, not a detailed defence ofproposed expenditures.

. While sceptics naturally question the need for a spendingreview process that can make no cuts or incr!ases, there are two importantreasons why such scrutiny should continue. One is that the mere fact thata given Committee might. review an Estimate during the normal three-monthMwindo~,M causes the departments/agencies to be more conscientious in theirfinancial planning. Departmental officials are usually anxious to avoid

public accusations of incompetence, and thus will attempt to ensure thatthe necessary infàrmation is presented correctly.

More Important! ~it• has ben some . time ~ipce the Estimateswere presented as merely a list of departmental inputs such as salaries,

capital expenditures and the like. A significant evolution has occurredrecently in keeping with the shift in public accounting away from financialprobity and towards the achievement of “value for money.” Standing

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committees now have a valuable opportunity to hold the departments/agenciesaccountabl e for the resul ts which thei r programs are expected to achieve.While they cannot exercise control over the amounts of money to be spent,they can question the effectiveness which the government claims for theinitiative in question, the efficiency with which the program isadministered, and any policy issues relevant to the departmental operationsunder review. . ... . . . . .: : . •.

. Given that the Committees have been restructured to matchdepartmental organization more closely, it is a reasonable expectation thata pool of interested and informed talent will materialize within certain

Committees. This specialization, combined with solid research on therelevant program’s operations and effectiveness, can go a long way towardsensuring a sound analysis of the spending plans of the government.

... Certainly, there is room for much improvement, given thatparl iamentary . scrutiny has traditionally been characteri zed by attempts toexplore items of potential pol itical embarrassment to the government, orareas of local interest to the individual Parliamentarian. While these areby no means unimportant, a more systematic approach to spending review hasthe potential to reap significant benefits in the form of a morecost-effi ci ent and effecti ye departmental structure.

T~1ARDSMORE EFFECTIVE PROGRAM EVALUATION

. Party politics will undoubtedly always be.a vltal..element inall forms of parliamentary debate. However, if a more systematic programevaluation procedure were to be implemented, such partisanship could bereduced at the conmvittee 1 evel , and improvements i n programs and/or activi -

ties could be realized. Indeed, the greater emphasis on effectiveness and

efficiency measur!s within fl~expenditure budget documents has increasedat least the potential for Parliamentarians to conduct a more objectivescrutiny of programs • While the. program information in the budgetdocuments is by no means complete, Parliamentarians in many instances

can obtain external assessments of the program or activity iii question.

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A review of these sources as well as the Main Estimates documents couldlead to a more thorough investigation of a program’s content and impact.

To assist Members and Senators in evaluating the programinformation presented to Parliament, we have developed a set of genericquestions which the Parliamentarian can consider when reviewing the expen-

diture plans (see Appendix). While they are by no means all-encompassing,they identify the major~areasj,hich need to be addressed when. .assessing thespending documents and defining what additional information may berequi red

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. APPEMDIX

SlJ~ESTEDLIST OF GEMERIC WESTIONSTO IOMSIDERWHEM EVALUATIMO GOVERNMEMT PROGRAM IMFORMATIOM

LMderstanding the Progra . .

1. What are the program’s overall objectives? Do they coincide withoverall government philosophy and policy?

2. Does the program produce goods or services, or is it simply a reallo-cation mechanism?

3. Are specific goals/targets of the program clearly identified?

4. Who make up the program clientele?

5. What are the resources required by this program: Funds? ~ Person-years? Other financing sources (user fees, tax expenditures)?

. 6. Is there a detailed justification of resource use?

Progra EvaluationC’ .

7. What is the nature of my interest in this program: constituency?accountabi 1 i ty? other?

8. What are the tangible rèsülts of the program’s operatiàns is proposedby the department or agency?

9. What are the “burning issues” associated with this program?

10. What is the clientele’s opinion of the program? How do the views ofthe clientele differ from those of the program’s manager within thegovernment? . . : • ~ ~ •

11. How is the program perceived by outside observers (e.g., AuditorGeneral’s Office, experts in the given area, media, Parliament,pressure groups)?

12. Have the program’s objectives been met in the past?

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13. Where are the real opportunities for improvement?

- economy? .

-. efficiency?- level of service?

. .- effectiveness?- revenues?- policy development?- new directions/innovations?

14. What would happen if the program’s budget was cut by 10%, 20%, 60%?

15. If past objectives have not been reached, how should the program bemodified?

16. What should be the priorities of the Minister/officials responsiblefor the given program over the next few years?