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2002 April Report of the Auditor General of Canada Insert 8.1—A history of the use of Treasury Board Vote 5 for grant payments
2002 April Report of the Auditor General of Canada
Insert 8.1—A history of the use of Treasury Board Vote 5 for grant payments
Wording of Treasury Board Vote 5 has evolved. The government has provided for contingencies in appropriation acts since 1876-77. The current form of the Government Contingencies Vote reflects an amalgamation in 1964-65 of two Department of Finance votes. The Main Estimates for that year showed Vote 15 of the Department of Finance as follows:
Contingencies—Subject to the approval of the Treasury Board, to supplement the paylist provisions of other votes; for miscellaneous minor or unforeseen expenses; and for awards under the Public Servants Inventions Act; including authority to re-use any sums repaid to this appropriation from other appropriations.
The 1966-67 Main Estimates changed "to supplement the paylist provisions of other votes" to read "to supplement other votes" and restricted miscellaneous minor or unforeseen expenses to those "not otherwise provided for."
The Vote first appeared as Treasury Board Vote 5 in the 1967-68 Main Estimates. It carried additional authority to supplement other votes for "other requirements" and to reuse any amounts reimbursed to the Vote that had been allotted for non-paylist requirements. Although the Vote's current limit is $750 million, the provision for reusing reimbursed amounts means that the Vote is a revolving authority.
The Treasury Board Secretariat has used the Introduction to the Main Estimates to keep Parliament informed of the changes to Vote 5. The 1978-79 Main Estimates described it as follows:
This vote provides funds to meet relatively small expenditures of a miscellaneous character that cannot be foreseen when the Estimates are drawn up and to meet the salary costs arising out of collective bargaining agreements that come into effect in the New Year and that exceed the provision that departments made in their own votes for these costs.
The next year, "relatively small expenditures of a miscellaneous character" became "urgent expenditures of a miscellaneous character." The 1987-88 Main Estimates dropped the mention of "urgency." In the 2001-02 Main Estimates, the description reads:
This Vote supplements other appropriations to provide the Government with the flexibility to meet unforeseen expenditures until Parliamentary approval can be obtained and to meet additional paylist costs such as severance pay and maternity benefits which are not provided for in departmental estimates. [emphasis added]
Long-standing concerns of auditors general. The 1968, 1969, and 1970 reports of the Auditor General questioned the Treasury Board's use of Vote 5 to fund grants without first having Parliament's approval. In 1968, we noted that the Treasury Board had authorized eight grants without Parliament's prior sanction. In 1969 we noted the payment of seven grants from Vote 5 that had later been included in supplementary estimates; we reported in 1971 that the House of Commons had been told the grants had been "allocated" or "allotted" but not that they had already been paid. We raised similar issues in 1972, and in 1973 we asked the House to look at the related policies of the Treasury Board Secretariat.
On 26 June 1975, the Secretary of the Treasury Board told the House of Commons Standing Committee on Public Accounts that all grants paid initially from the contingencies vote were later included as a matter of course in supplementary estimates, for Parliament's consideration, with the notation that the funds were provided from Treasury Board Vote 5. Therefore, in his view, no other action was necessary.
Speakers' rulings. Over the years, Speakers of the House of Commons have made a number of rulings concerning estimates. In our view the thrust of those rulings, as they touch on the transfer of temporary authority from Vote 5 to pay for grants, is as follows:
- The government cannot establish a program through the estimates process; that process provides money only for programs already authorized by statute. The grants to airlines were funded out of Vote 5 (Exhibit 8.4) but in our view, Parliament had not authorized this spending.
- The principles of parliamentary control are simple: through legislation, the government establishes a program that is subject to Parliament's scrutiny; then it seeks Parliament's authority to spend money on that program through an appropriation act.
On 21 March 1983, the Speaker made the following ruling on a case that involved a payment of funds while the authorizing legislation was still before the House:
The Hon. Member for Calgary Centre also objected to Vote 10c under Industry, Trade and Commerce. I agree with the Hon. Member that here the real issue is not the method used to transfer money from the Treasury Board Contingencies Vote to Vote 10c, but rather the purpose of the program for which the grant is intended. As outlined in the Estimates, the grant is to provide payments under the Small Business Investment Grant Act which is now before the House in the form of Bill C-136.
I can only repeat what I said in my ruling of June 12, 1981, that "the Appropriation Act should only seek authority to spend the money for a program that has been previously authorized by a statute." Vote 10c clearly anticipates legislation, and, in that sense, seeks to establish a new program in the absence of other legislative authority and seeks also the funds to put it into operation. In accordance with rulings by my two predecessors and myself, I must agree with the Hon. Member for Calgary Centre that Vote 10c is also out of order. Accordingly, Vote L11c under Fisheries and Oceans and Vote 10c under Industry, Trade and Commerce, being improperly before the House, shall be deleted from the Supplementary Estimates (C) for the fiscal year ending March 31, 1983, and I so order.
Senate Standing Committee on National Finance. Over the years, this Committee has expressed an interest in the government's use of the contingencies vote. In its Third Report dated 16 December 1986, the Committee noted a discrepancy between the statement of the purpose of the Vote in Part III of the Estimates—for "urgent expenditures of a miscellaneous nature which cannot be foreseen when the Estimates are drawn up"—and the Vote's actual wording in the proposed schedule to the appropriation act, "to provide for miscellaneous minor and unforeseen expenses." The Committee recommended that TBS examine the use of Vote 5, clarify its purpose, and redraft parts II and III of future Estimates to ensure consistency between them.
The Committee also commented on the growth in the Vote's component covering "urgent or unforeseen expenditures." In the view of Secretariat officials, this was a matter of policy and the responsibility of ministers. However, in testimony before the Committee they stated:
The very vagueness. in the wording of the Vote where we refer to miscellaneous, minor and unforeseen expenditure is open to all kinds of interpretation. in summary. there is a tremendous grey area in the wording of the Vote. That means there is a lot of latitude for government to decide how they would like to use this particular Vote and the circumstances under which they can do so.
The Committee concluded that the ambiguous wording on the use of this allotment and the absence of any guidelines left Vote 5 susceptible to abuse. It recommended that the Treasury Board Secretariat draw up guidelines on the use of the Vote in "urgent and unforeseen" circumstances so that Parliament could give it closer scrutiny.