Main Estimates: Reforms Fall Short of what is require
At the end of February, the President of the Treasury tabled the Main Estimates for 2017-18. At one time, the tabling of the Main Estimates was a major political event. The media and financial commentators were given early access in a “lock up”, much like that for a budget. Treasury Board officials, as well as officials from government departments, were available to answer questions and provide explanations on government spending plans. Today, there is no longer a special briefing for the media and, as a result, little media coverage. The tabling of the Main Estimates has become a non-event. This is unfortunate but not surprising. Despite their importance, the presentation of the Main Estimates is confusing for the media, the public, and for Parliamentarians.
All spending by the government must be approved by Parliament. Spending is of two types. First there are statutory programs, such as for elderly benefits, the Canada Health Transfer, the Canada Social Transfer, Equalization, public debt charges, among others. They account for about 60 per cent of total spending. They are provided under existing legislation and do not require annual approval, unless changes to the parameters of the program are being proposed.
The remaining 40 per cent of spending, such as wages and salaries, capital and other transfers, require annual approval by Parliament through appropriations bills supported by the Main Estimates and three Supplementary Estimates. Under current rules, Main Estimates must be tabled on or before March 1st. Supplementary Estimates are usually tabled in May, November, and February/March.
Until 2006, Main Estimates were usually tabled after the budget, which was tabled in mid-February. However, since 2006, most budgets have been tabled in late March, after the tabling of the Main Estimates. In these cases, the Main Estimates did not include any of the proposed budget measures, nor were they based on the budget’s economic assumptions.
The President of the Treasury Board has proposed changes to better align the Budget and the Main Estimates, by delaying the tabling of the Main Estimates to May 1st, in order to include most budget items. The PBO and ourselves have commented on these proposals (see PBO: Considerations for Parliament in Reforming the Business of Supply, and 3dpolicy: Reform of the Estimates: Increase the Scope of the Estimates).
Main Estimates for 2017-18 totalled $258.0 billion. This is $72.1 billion lower than the forecast of $330.1 billion for expenses in the November 2016 Economic Statement. No reconciliation between the Main Estimates spending number and the budget forecast was provided. Hopefully, reconciliation will be provided in the upcoming budget.
Most of this difference is due to the differences in the universe covered. The Estimates exclude expenditures related to the employment insurance program, the Child Care Benefit, refundable tax expenditures, among others. These could account for up to $70 billion of the current difference. Having the same universe for both the Budget and the Estimates would eliminate most of the difference between the two sets of spending numbers. However, this is not addressed in the President’s current proposals.
The Budget and Estimates are also on different basis of accounting. The Estimates are on a modified cash basis of accounting, recognizing expenditures when the payment is made. In contrast, the Budget is on an accrual basis of accounting, recognizing expenses when the liability is incurred. In addition, the Budget includes an estimate of the lapse, recognizing that departments/agencies will not use all of their appropriations during the course of the year.
As we have argued in the past, unless the universes are identical, there will continue to be major differences between the two sets of spending estimates. It also means that Parliamentary committees will not review major components of spending. The changes proposed by the President do not address these concerns.