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House of Commons Procedure and Practice

Second Edition, 2009

 
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The government exercises its borrowing authority when there is a shortfall between its expenditures, as authorized by Parliament in the main and supplementary estimates and in interim supply, and its revenues, whose projected levels are also approved by Parliament. The government borrows principally by issuing treasury bills, marketable bonds and Canada Savings Bonds, on domestic and foreign markets. The Financial Administration Act states that the Governor in Council may authorize the Minister to borrow money on behalf of Her Majesty in right of Canada.[357] Only securities now require the authority of Parliament.[358]

Prior to 1975, it was the custom to include requests for borrowing authority in one of the first appropriation or supply bills of a new fiscal year.[359] The primary justification for including new borrowing authority in an appropriation act was the contention that borrowing powers to cover any shortfall between revenues and expenditures should be authorized almost automatically, given that both the shortfall and the borrowing requirements were a consequence of actions already approved by Parliament. Where circumstances necessitated increasing the level of borrowing authority, the increases were sought by way of subsequent appropriation bills, such as those enacting supplementary estimates or interim supply.

The 1968 changes to supply procedures made the inclusion of borrowing authority in appropriation bills problematic. The revised process usually offered no opportunity for Members to debate the borrowing provisions; the borrowing clauses were not part of the estimates, which were discussed in standing committees, and the supply bills containing the borrowing clauses were generally passed without debate.[360] In 1975, the Speaker ordered a borrowing clause struck from a supply bill related to supplementary estimates on the grounds that, under the rules, its inclusion in a supply bill based on supplementary estimates virtually precluded discussion of the borrowing provisions.[361] Later, in 1981, the Speaker found no objection to including a request for borrowing authority in a tax bill based on a ways and means motion, provided that the government also gave the regular 48 hours’ notice for the introduction of a bill in order to cover the borrowing provisions.[362]

Though borrowing authority bills could occasionally be dealt with expeditiously, other times debate became prolonged and the government resorted to time allocation.[363] The Standing Orders were amended in April 1991 to limit debate at second reading on borrowing bills to two sitting days.[364] Though the limitation applies only to second reading, on two occasions since 1991, the House agreed to refer the bill to a Committee of the Whole in order to expedite its passage.[365] The most recent borrowing authority legislation was introduced either when the budget was presented or shortly thereafter.[366]

Prior to 2007, the Financial Administration Act gave the government standing authority to refinance its market debt, while specific authority was to be granted by Parliament to undertake additional borrowing beyond an existing $4 billion of non-lapsing borrowing authority. The Act also required the Minister of Finance to table annually in Parliament a report on the plan for managing the public debt for the upcoming fiscal year (the Debt Management Strategy),[367] and a separate report on actual results for the fiscal year recently ended (the Debt Management Report).[368]

In its Budget 2007, the government proposed to amend the Financial Administration Act to modernize Crown borrowing authorities and increase flexibility to meet future borrowing needs, particularly with respect to the consolidation of Crown borrowings.[369] Notably, the existing $4‑billion statutory non-lapsing limit on borrowing authority was replaced with a more flexible framework that consolidates the borrowing authority into one general provision, under the authority of the Governor in Council.[370] The amendments also provided for enhanced disclosure on anticipated borrowing and planned uses of funds through the Debt Management Strategy; enhanced disclosure requirements on actual borrowing and uses of funds compared to those forecast through the Debt Management Report; and detailed information on outcomes provided in the Public Accounts of Canada.[371]



[357] S.C. 1985, c. F‑11, s. 43.1.

[358] S.C. 1985, c. F‑11, s. 43(2).

[359] See Debates, December 16, 1975, pp. 10054‑5.

[360] See Debates, December 10, 1974, pp. 2138‑9; December 11, 1974, p. 2143; March 20, 1975, pp. 4357‑62; March 21, 1975, pp. 4364‑5.

[361] See Speaker Jerome’s ruling, Journals, December 9, 1975, p. 924, Debates, pp. 9880‑3. After the clause was struck from the appropriation bill, the government introduced a separate bill dealing solely with borrowing authority, which the House after a brief debate agreed to pass (Journals, December 16, 1975, p. 943). The bill was considered at second reading, in Committee of the Whole and at third reading in one sitting. In 1977 and 1978, the House agreed to a debate at second reading of a supply bill, based on interim supply, which contained a borrowing clause. See Journals, March 21, 1977, p. 598; Debates, March 24, 1977, p. 4298; Journals, March 13, 1978, p. 476; Debates, March 16, 1978, pp. 3837‑8.

[362] See Speaker Sauvé’s rulings, Debates, January 19, 1981, p. 6319; February 16, 1982, p. 15053.

[363] Time allocation was used at the second reading stage of borrowing authority bills in 1980, 1981, 1983, 1984 and 1990. In 1981 and 1983, the House also concurred in time allocation at report stage and at third reading stage.

[364] Standing Order 73(5). See Journals, April 11, 1991, p. 2914. See also Journals, February 27, 1995, p. 1174; March 2, 1995, p. 1195; March 3, 1995, pp. 1199, 1202. In one case, when the Minister of Finance used the second reading debate on a borrowing bill to make a major economic statement, the House agreed to extend the hours of sitting for both days of the debate (Journals, December 1, 1992, pp. 2265‑6).

[365] Journals, April 30, 1993, pp. 2884, 2887; March 19, 1996, p. 114; March 21, 1996, pp. 129‑30.

[366] In 1985, the Minister of Finance tabled a paper which set out recommendations aimed at improving the borrowing process based on the basic principle that the government should not seek borrowing authority for a fiscal year without first providing Parliament with all relevant details relating to the financial requirements. The same paper stressed how important it was that borrowing bills be passed in a timely manner so that the government could carry out an orderly debt program. See pp. 9‑12 of “The Canadian Budgetary Process―Proposals for Improvement”, tabled in the House on May 23, 1985 (Journals, pp. 648‑9). See also Journals, February 23, 1994, p. 188; February 27, 1995, p. 1174; March 6, 1996, p. 55; February 18, 1997, p. 1146.

[367] See, for example, Journals, March 30, 2004, p. 236; March 21, 2005, p. 529; April 7, 2006, p. 36; March 19, 2007, p. 1111. In the last case, the “Debt Management Strategy” was appended in Annex 3 of The Budget Plan 2007, published by the Department of Finance, www.fin.gc.ca, 2007, pp. 318‑34.

[368] See, for example, Journals, December 8, 2004, p. 320; November 25, 2005, p. 1343; November 28, 2006, p. 830; December 6, 2007, p. 275.

[369] As of 2008, the government is proposing to consolidate the borrowings of the Business Development Bank of Canada, Canada Mortgage and Housing Corporation (not including the Canada Housing Trust), and Farm Credit Canada with the government’s own debt program. This measure will reduce overall borrowings costs, while enhancing the liquidity of the government bond market. See The Budget Plan 2007, pp. 328‑29.

[370] Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, received Royal Assent on June 22, 2007 (S.C. 2007, c. 29). See the Financial Administration Act, R.S. 1985, c. F-11, s. 43.1.

[371] Financial Administration Act, R.S. 1985, c. F-11, s. 49. The period within which the Debt Management Report must be tabled was shortened from 45 to 30 sitting days following the tabling of the Public Accounts of Canada.

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