Blown Budgets: Canada’s 2013 Fiscal Accountability Rankings

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March 24. 2014 – Canada’s senior governments have regularly missed budget spending and revenue targets during the last decade, with spending overruns of $47 billion combined, according to a report released today by the C.D. Howe Institute. In “Credibility on the (Bottom) Line: The Fiscal Accountability of Canada’s Senior Governments, 2013,” authors Colin Busby and William B.P. Robson rank the performance of Canada’s federal, provincial and territorial governments for hitting budget targets and providing transparent financial reports.

Each spring, legislatures vote budgets that set out their spending and revenue goals for the fiscal year, note the authors. Budget votes are critical for holding governments accountable to legislators, and in turn to voters and taxpayers. Over the last decade, however, Canada’s senior governments have significantly overshot their spending targets. “More accuracy in hitting budgeted amounts would have made today’s taxes and public debt lower,” Robson points out.

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“A related problem is deficiencies in financial reporting,” says Busby. “In many provinces and territories, the average citizen or legislator would have trouble simply finding and comparing the key numbers in the budget and in the end-of-year financial reports.”

While Ottawa and Ontario prepare their principal financial documents using the same basis of accounting, display the relevant numbers prominently, and provide informative reconciliations between budgets and results, in most of the other provinces and territories, inconsistent presentations of multiple revenue and spending figures would stump any but the most expert reader.

This most recent in the C.D. Howe Institute’s fiscal accountability surveys of Canada’s senior governments’ evaluates the quality of financial reporting in each government’s 2013 budget and public accounts, and assigns letter grades to each government. It also shows the results of a straightforward attempt to overcome varied financial presentations across the country by comparing budgeted to actual changes in spending and revenue.

This exercise shows substantial overshoots of projected spending – and even larger overshoots of projected revenues – over the past decade. Expressed as percentages of their budgeted expenditures in the current fiscal year to allow comparisons, Alberta and Saskatchewan showed the biggest overshoots among the provinces – averaging about 4 and 5 percent – over the period, while Yukon and Nunavut were even worse.

The news is not all bad, however. Over the most recent five years, most of Canada’s senior governments came closer to both their spending and revenue targets than they had during the previous five years. The survey concludes with several suggestions about how Canada’s senior governments can improve their financial reporting, and with it the ability of legislators and voters to hold them to account for hitting their budget targets.

The C. D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada’s trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada’s most influential think tank.

For the report go to: http://www.cdhowe.org/credibility-on-the-bottom-line-the-fiscal-accountability-of-canadas-senior-governments-2013/25216

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