Canada’s senior governments raise and spend huge amounts, and have legally unlimited capacity to borrow when their expenses exceed their revenues. Holding public officials accountable for their spending, taxing and borrowing is a foundational task in a system of representative government. While the financial information presented to legislators and the public by Canada’s federal, provincial and territorial governments has improved over time, the C.D. Howe Institute’s 2021 report card reveals major deficiencies. Too many governments present information that is opaque, misleading and late. The federal government failed to produce a budget in 2020. Massive increases in spending and borrowing in response to the COVID-19 crisis, and ambitions for new social programs and industrial policies in its aftermath, have raised the stakes – and, unfortunately, have coincided with some serious backsliding in the transparency and timeliness of financial information, notably at the federal level. In seeking to hold their governments to account, citizens and taxpayers have several tools. The three tools that are the focus of this report card are (i) the budgets governments should present around the start of the fiscal year, (ii) the estimates legislatures vote to approve specific programs, and (iii) the audited financial statements governments present in their public accounts after year-end. This report card on the usefulness of these financial documents assigns letter grades that reflect how readily an interested but non-expert user can find, understand and act on the information they should contain. In this year’s report card – which covers year-end financial statements for fiscal year 2019/20 and budgets and estimates for 2020/21 – Nova Scotia, New Brunswick, Saskatchewan, Alberta, British Columbia and Nunavut topped the class with grades of A-. Ontario earned a B. In the C range were Newfoundland and Labrador, and Yukon (C+), Prince Edward Island (C), and Manitoba and Quebec (C-). The Northwest Territories earned a D+. The federal government earned an F. Two decades ago, none of Canada’s senior governments budgeted and reported revenues, expenses and surpluses or deficits on the same accounting basis; today, presentations consistent with public sector accounting standards are the rule. Canada’s governments, however, can do better. Ontario could join the A rank next year with relatively small improvements, such as moving key numbers closer to the front of its budget, and achieving more timely presentation and publication of its budget and financial statements. Quebec needs to make further progress on issues that have long troubled its auditor general. The federal government produced a budget for the 2021/22 fiscal year, but did it late, and buried the key numbers under hundreds of pages of marginally informative and repetitive material – not a performance consistent with the importance of its fiscal policy nor the example the national government should set. This annual report card hopes to encourage further progress and limit backsliding. Canadians can get more transparent financial reporting and better fiscal accountability from their governments. But they need to demand it
