Fiscal COVID : The Pandemic’s Impact on Government Finances and Accountability in Canada

Beyond its damage to Canadians’ health and their economy, COVID-19 strained public finances, and both highlighted and exacerbated gaps in governments’ accountability to legislators and voters.Spending by all senior governments jumped in the 2020/21 fiscal year – up 7 percent on average across provinces and territories, and up more than 70 percent for the federal government. Although federal direct transfers and indirect support through other programs buoyed provincial and territorial revenues, higher expenses boosted accumulated deficits across the board, with the federal government in particular borrowing enough to impair its capacity to deliver services in the future.Stewardship of public funds during the pandemic was lax. Some governments delayed their 2020/21 budgets until late in the fiscal year, and the federal government presented no budget at all. The completeness and quality of information about COVID’s impact in governments’ public accounts varied widely. Comparisons of that limited information show major differences among governments’ spending on healthcare and other programs, including health spending unrelated to the pandemic, that are hard to explain with reference to COVID’s health or economic impacts.Although many provinces and territories finished 2020/21 with surprisingly strong revenues and bottom lines, the debt-financed federal spending that supported them is winding down. Restoring fiscal health will require discipline, and COVID revealed that fiscal accountability in times of crisis is inadequate. Legislators should insist on timelier, fuller, and more reliable fiscal information in the future