Show and Tell: Rating the Fiscal Accountability of Canada’s Senior Governments, 2019
William Robson () and
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Farah Omran: C.D. Howe Institute
C.D. Howe Institute Commentary, 2019, issue 545
Canada’s federal, provincial and territorial governments raised and spent more than $810 billion in 2018 – around 40 percent of gross domestic product, or some $22,000 per Canadian. They provide services ranging from national defence and policing through social services such as health and education to income supports and business subsidies. Governments’ extraordinary powers to extract resources from taxpayers and coerce citizens make monitoring the behavior of elected officials and public officials – with meaningful opportunities to intervene if they misbehave – particularly important. In seeking to monitor the behaviour of agents who should be acting on their behalf, principals – citizens and taxpayers – have a number of tools. • the budgets governments present around the beginning of the fiscal year; • the estimates legislatures vote to approve specific programs; and • the audited financial statements governments present in their public accounts after year-end. In our assessment of the usefulness of these government financial documents, we assign letter grades for the quality of these numbers: how readily users can find them, understand them and use them to make informed decisions. In this year’s report, which covers reports and financial statements for fiscal year 2017/18, and budgets and estimates for 2018/19, New Brunswick tops the class with an A+, Alberta ranks second with an A and British Columbia third with an A–. At the other end of the scale are Manitoba with a D+ and the Northwest Territories and Nunavut, each scoring an F. The federal government (B+), Saskatchewan (B), Ontario, Nova Scotia and Yukon (B-) could join the top rank with relatively small improvements, such as moving key numbers closer to the front of their budgets, more timely presentation and publication and better reconciliation between their budgets and their main estimates. We are glad to report that, over time, the grades earned by the senior governments have improved. Two decades ago, none of Canada’s senior governments budgeted and reported its revenues, expenses and bottom line on the same accounting basis; today, consistent accounting is the rule. Among the positive highlights worth noting this year is a marked improvement in Ontario’s score, thanks to the province cleaning up problems with its accounting that had prompted qualified opinions on its financial statements from the provincial auditor general. A key aim of this annual survey is to encourage further progress. The remaining deficiencies and instances of backsliding are fixable, as the examples of the leading jurisdictions show. If Canadians demanded better financial reporting from their governments, they could get it.
Keywords: Fiscal and Tax Policy; Transparency of Public Finances (search for similar items in EconPapers)
JEL-codes: H30 H50 (search for similar items in EconPapers)
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