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INDEPTH: CANADIAN GOVERNMENT
Budgets and economic statements: Birds of a feather?
CBC News Online | November 10, 2005

The time: Tuesday, Nov. 26, 2001. Two-and-a-half months after the terrorist attacks on the United States.

The place: the Ontario legislature.

Tensions are high as the Conservative government under Premier Mike Harris is under pressure to reassure the province that Ontario's security and prosperity are under control. Finance Minister James Flaherty is about to deliver an "economic update."

But before he can, Liberal Dwight Duncan - the party's finance critic - rises to his feet. The following exchange takes place:

Mr. Dwight Duncan (Windsor-St. Clair): On a point of order, Mr. Speaker� The purpose of an economic statement or update is to update, normally and historically. It is the view of the Official Opposition that what we see happening today is in fact the introduction �

Mr. Steve Gilchrist (Scarborough East): You haven't heard it yet.

The Speaker (Hon. Gary Carr): Order. I need to hear it. It is very serious. He may have a legitimate point of order. I need to hear it, please, member for Scarborough East.

Sorry, member for Windsor-St. Clair.

Mr. Duncan: What we see today, Mr. Speaker, is in fact the introduction of a new budget �

Budget or economic update? The Opposition Liberals were so angry at Ontario's governing Conservatives that day that the Speaker was forced to intervene several times to restore order. He tossed one Conservative from the legislature for telling a Liberal to shut her "trap, so the rest of us can hear."

There are major differences between a budget and an economic update, according to parliamentary rules in Canada.

Normally, governments table a budget early in the year. The federal government traditionally picks a date in February, before it is required to table its main spending estimates for the year. That's due on March 1.

Provincial and territorial governments table their budgets sometime after the federal government does, because what's in Ottawa's document will often have an impact on what they can do.

"The budget indicates what the spending priorities are for the government, what they intend to do over the course of the next year," Jason Clements, director of fiscal studies at the think-tank the Fraser Institute, told CBC News Online. "An update indicates where the government is in its plans. It allows the government to make mid-course adjustments."

There are several major steps involved in the tabling of a budget. They include:
  • The minister of finance sets the process for the budget in motion by rising in the House to ask that an Order of the Day be designated for a budget presentation on a specific sitting day at a specific time.

  • On the day the budget is to be released, interested parties are given a chance to look at the budget documents in a "lockup." The parties include journalists, economists and opposition politicians, among others. They are released from the lockup when the finance minister rises to make the budget speech in the House of Commons.

  • Following the delivery of the budget speech, the Speaker of the House recognizes a member of the Official Opposition, who usually makes a brief speech and then moves the adjournment of the debate, thus reserving the right to speak first when debate is resumed.

  • The rules of the House provide for four days of resumed debate on the budget and permit only one amendment and one sub-amendment to the minister of finance's motion.

  • The amendment is usually moved by the Official Opposition's finance critic. The sub-amendment is moved by a member of the next largest opposition party.
There are also strict rules governing the timing of votes on the budget and amendments to it. When the government does not control a majority of the seats, the opposition parties can negotiate changes in exchange for their support of the document. A minority government unwilling to compromise runs the risk of going down to defeat, like then prime minister Joe Clark did on Dec. 13, 1979.

The rules are substantially looser for economic statements. Unlike a budget presentation, these statements can be delivered without official notice. They also don't lead to the formal debate process associated with budgets. However, any legislation arising from the economic statement which affects taxation must follow the same path as legislation arising from the budget.

There is no vote on an economic update. A minority government cannot fall because its economic update is not supported by the opposition parties. A minority government will fall if its budget is defeated in the legislature.

But a minority government can fall if the economic update leads to the introduction of legislation that changes tax rules - and that legislation is defeated.

Another difference between budgets and economic updates, Clements says, is the size of the document.

"A budget will normally be about 300 pages long. An economic update is usually between 50 and 80 pages."

But sometimes the line between the two blurs a bit. Clements cites the example of the economic update delivered by then finance minister Paul Martin on Oct. 18, 2000.

"That update introduced substantial tax relief," says Clements. "It was a pre-election statement."

It also provided one-time relief for low- and modest-income Canadians to help ease the impact of rising home heating expenses. Cheques of $125 per individual or $250 per family were mailed out in January 2001. Total cost to the government was $1.3 billion.

A few days after Martin delivered that update, Chretien called an election for Nov. 27, 2000. Clements points out that the government did not table a budget the following year, so the economic update turned out to be more of a budget than an update.

Another difference between budgets and economic updates is that there is no lock-up for an economic update. And in keeping with that tradition, the Martin government described the gathering of reporters, economists and opposition politicians in a secure room three hours before the scheduled release of the update on Nov. 14, 2005 as a "technical briefing."






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