The House of Commons Standing Committee of Finance pre-budget consultation exercise was launched in the mid-1990s and is still considered to be the most consistent and visible avenue for public participation in the federal budget process in Canada, adding legitimacy to the budget formulation process.[ref] The consultation process takes place in Ottawa as well as across the country and includes both oral testimonies and written submissions. The results of the process are published online.
The principles that this mechanism illustrates best are openness, self-expression, transparency, timeliness, inclusiveness, complementarity, proportionality, and sustainability.
Stage in the Budget Cycle, Lead Institution and Level of Government
This practice takes place in the budget formulation phase at the national level. In addition, Parliamentary Committees hold public consultations during the year as and when new Bills are being considered that introduce changes to fiscal policies e.g. new tax laws.
In each parliamentary session, the House of Commons Standing Committee of Finance’s work may include pre-budget consultations, among other tasks. Currently, the Committee has seven members, two vice-chairs, and a chairperson. The Committee is always chaired by a Member of Parliament who comes from the ruling party. Committee membership reflects government majority. The Committee can also study and report on all matters relating to the mandate of the Department of Finance and the Canada Revenue Agency. The Committee also has a mandate to consider budgetary policy. In particular, the Committee is authorized to consider and report on proposals regarding the budgetary policy of the government.
Specifically, the Standing Committee of Finance of the House of Commons started the process of pre-budget consultations in 1993-1994. Before 1993, the budget formulation process was entirely in the hands of the Ministry of Finance and was not transparent to the public.[ref] In 1993, the Minister of Finance opened up the budget formulation process and engaged the House of Commons Standing Committee on Finance to undertake consultations with the citizenry on budgetary issues.[ref] The work of the Finance Committee focuses on aggregate spending, tax policy, deficits and surpluses, and not on detailed departmental allocations.[ref]
The House of Commons Standing Committee of Finance was created under Standing Order 104(2)(g) of the House of Commons, with a mandate to “examine and enquire into all matters referred to it by the House of Commons, to report from time to time” and “(…) to send for persons, papers, and records.”[ref]
Who and How
As one study observes, the House of Commons Standing Committee on Finance pre-consultation process is “the most visible part of Parliament’s involvement in the pre-budget process.”[ref] To start the public consultation process, the Committee releases a statement through a press release inviting Canadians to voice their opinions about the upcoming budget and the Committee also outlines the specific themes they would like addressed by the witnesses who testify.[ref] For 2016, the news release inviting Canadians to participate did not include any specific themes for the submissions, but in previous years this has been common.[ref]
Any person or group is eligible to participate in the public consultation process before the Committee. Witnesses can testify in person during the public hearings of the Committee, held in multiple cities on occasion, or can submit briefs online.[ref] Based on the pre-budget consultations, the Committee forms its recommendations, which are publicly available on the website of the Committee and those who have testified or submitted written briefs can check whether the Committee has considered their presentations.
Witness testimony is recorded and is published on the website of the Committee. The summary of written submissions is also published. The consultation process is open for a reasonably long period of time (the online process is open for 60 days, while in-person consultations for a two-week or longer period, though in 2016 the consultations took place in a reduced four-day timeframe). In Canada, the main estimates are tabled by March 1, for the fiscal year starting 1 April. Budget preparation by the executive takes place from June to September, and the government’s budget consultations with the public generally take place from September to December.[ref] Budget deliberations take place within the Parliament March to June. For 2016, the Parliament’s pre-budget consultations took place in February. In 2015, they were held from June to August.[ref]
The executive is not obliged to adhere to the Committee’s recommendations based on the public consultation process and some observers note that the final report of the Committee, summarizing its recommendations drawn from the public consultation process, is tabled somewhat late to have a serious effect on the executive’s budget decisions.[ref] The Ministry of Finance also has its own pre-budget consultations.[ref] The topics on which the government seeks the opinion of Canadians is pre-set in the press release announcing the consultations.[ref] Canadians can make submissions online, reach out on Twitter, or participate in Facebook live events.[ref]
In addition, the Finance Committee also prepares studies with regards to specific bills’ budget policy implications. For 2013-2014, the Committee prepared 11 studies with budget policy implications. [ref] These studies included a report on Tax evasion and the use of tax havens, income inequality in Canada, and the impact on oil prices, among others.[ref] They are tabled in Parliament. For each study, a list of meetings, reports, and witnesses is made available to the public. Witnesses can include associations, experts, and citizens.[ref] A call for public submissions on the content of the bill always precedes the pre-budget consultations.
Results and Impact
For the 2014 pre-budget consultation exercise, the Committee received witness testimony from more than 100 people and groups and also received over 400 online submissions. This is a significant drop from 2001, when the Committee received testimony from almost 250 groups and individuals. In 2016, the Committee heard from 92 witnesses and received 175 written submissions from individuals.[ref]
The Committee notes in its Final Report that the 2016 consultations occurred over a very short timeframe (four days), and the Committee intends to return to more historic timeframes in the future for the pre-budget consultations. The input received through testimony, briefs and other submissions, fell into 27 broad federal public policy areas. The Committee publishes all the submissions and also publishes the recommendations adopted based on the public consultation process for the forthcoming budget.
Additionally, a study from Dobell and Ulrich notes that in 2001, while there was a strong alignment between the findings of the Committee and the actual budget, this alignment should not be overemphasized as the government’s intentions were reasonably transparent beforehand (and, as noted, government MPs are in the majority and the Committee is chaired by a government member). According to this study, the Committee’s work contributes to a better public understanding of the government’s agenda and the budget.
Citizen engagement is the critical factor for evaluating the effectiveness of the public consultation mechanism of the Committee. A study that examined the 2001 public consultation process of the Committee noted that, in that year, a total of 600 organizations and 37 individuals were consulted, but that it remained unclear how representative or diverse these groups and individuals were. Some Members of the Committee observed that the same messages from the same interest groups are usually heard.[ref]
Drawbacks of Committees in general, including the Finance Committee, include operating in a fixed timeframe, which makes it hard for some groups and citizens to gain access to the consultation.[ref] Well-recognized groups have more resources, allowing them easier access to the Committee, whereas lesser known or organized, lower income segments of society have a harder time gaining access.[ref] Internet-based, online discussions or more interactive websites, and video conferencing could make the process more inclusive and more transparent.[ref] The Committee often holds public hearings in major cities across the country and anyone can submit briefs online, which does encourage public participation, but has not taken specific steps to include marginalized groups, such as the disabled, Aboriginals, or women, in the public consultation process.[ref]
As Committee membership is allocated based on party lines, Committee decisions generally reflects partisan interests.
The discussions before the Committee are guided by the topics the Committee is particularly interested in discussing (as noted in the call for public participation).
The Committee opens the public consultation process through a press release that sets the agenda for the consultation process. However, this is the only means used to inform Canadians about the issues to be discussed and ask them to join the process. There does not appear to be any specific fiscal information or data that the Committee makes available to help frame the consultations or provide background information to inform the public about key fiscal policy issues.
According to some observers, the final report of the Committee summarizing its recommendations is tabled somewhat late in Parliament to have a serious impact on the budget formulation.[ref]
Principles of Public Participation in Fiscal Policy
This practice illustrates the principles of respect for self-expression, transparency and complementarity in action. The principle of timeliness is generally realized but for instance in 2016, oral testimonies were recorded in a space of 4 days only. The principle of inclusiveness could be better realized through efforts to include marginalized communities.
– Openness: The role of the committee is set out in Parliament’s standing orders, and the call for submissions is by press release, presumably with information about the process and timeline.
– Respect for self-expression: Individuals and communities can choose to participate either through oral testimony or written submissions.
– Transparency: The result of the consultation process is published and the public has a means to check how their views are incorporated. However, the process could be made more transparent if all relevant information was made available ahead of the discussions, in order to support public engagement, highlighting and informing key policy choices and trade-offs, and identifying potential social, economic and environmental impacts.
– Complementarity: The mechanism complements existing governance and accountability systems by allowing direct input to strengthen the representative role of Parliament.
– Inclusiveness: The parliamentary committee consultation that is advertised publicly and open to all. However, the principle of inclusiveness would be realized through this mechanism if the Committee employed more inclusive methods of participation to encourage the engagement of less recognized, less organized and low income/marginalized segments of society.
– Timeliness: Generally sufficient time is allowed for participation, although in 2016 the testimonies were recorded in the course of four days.
–Proportionality: The public consultation mechanism of the Committee is proportionate to the scale and impact of the formulation of the budget.
[Note: It is difficult to qualify a mechanism against this principle, since only users and implementers would be in a position to confirm the measure in which this is the case.]
–Sustainability: The mechanism is established in law and is very long-standing.
Type of Government
Canada, a country of 35 million people, is a parliamentary democracy. Legislative power rests with the Parliament of Canada, which consists of the Crown, the Senate (upper house) and the House of Commons (lower house). For legislation to become law, it must be assented to by each of the constituent parts.
Canada is a federal state, with law-making divided among the federal government, ten provinces and three territorial governments.
While civil society has shown steady growth over the past decades, during the early 2010s, several complaints emerged about the shrinking space for Canadian civil society organizations, especially for those voicing dissent.[ref] That being said, this takes place in an overall context of freedom of speech and association and other fundamental rights that are legally protected and guaranteed.
Canada is not included in the Open Government Survey. Canada is categorized as ‘free’ on the Freedom in the World Report by Freedom House.[ref]