What are Budget Consultations Good for, Anyway?

We are delighted to host this week-long series of articles by graduate students at the Max Bell School of Public Policy at McGill University. Look for them here in our Online Analysis section.

Mariel Aramburu

June 18, 2021

This past April, the Liberal government announced the first federal budget since 2019. In hopes of a strong pandemic recovery, the budget promises massive policy measures. With transformative spending and net debt now reaching an unbelievable $1 trillion, it’s shocking what little say we actually have in the budget process. In fact, when it comes to public participation in the budget process, Canada scores an abysmal 26 out of 100 on the Open Budget Survey.

This year, pre-budget consultations took place from January 25 to February 19, just two months away from Budget Day on April 19. As the federal budget strategy is typically already in place by December or January, hosting public consultations this close to tabling the budget is nothing more but paying lip service to our democratic value of public participation. In an era of declining public confidence in politicians, increasing public participation is an easy solution to increase Canadians trust in government spending.

Opportunities for public participation in federal budget decisions take place through written submissions and witness hearings to the House of Commons Standing Committee on Finance (the Finance Committee) and the more familiar online and roundtable consultation process by the Minister of Finance. What follow up is provided after this public participation? Do consultations actively include historically underrepresented groups or those experiencing marginalization? Does the public participate in the audit process? The answer to these questions is often, none, no, and no.

The Finance Committee conducts its pre-budget consultations on a particular set of themes in the summer and fall and produces a report with recommendations in December. Written submissions received include those from corporations, industry associations, civil society organizations, and post-secondary institutions. Importantly, these consultations are not protected through legislation. While anyone is welcome to produce a written submission, this process does not facilitate participation from the general public, who are invited to take part in the more accessible consultation process hosted by the Finance minister. The federal government has not published summary reports of these consultations by the minister for over four years.

Do consultations actively include historically underrepresented groups or those experiencing marginalization? Does the public participate in the audit process?

There is no clear sense of how Canada’s pre-budget consultation process ultimately informs the federal budget document. The Finance minister’s consultations take place too close to Budget Day so it is difficult to imagine this allows for appropriate “collection, review, and consideration in advance of major budget decisions.” Further, the minister and the executive are under “no obligation to take measures recommended by the Finance Committee through the public consultation process.” While Canada’s public participation score on budget formulation is poor, it is suffering the most from its lack of public participation in the implementation and audit stages of the budget cycle.

Early data from the Independent Reporting Mechanism of the  Open Government Partnership highlights “commitments that encouraged public participation in budgeting significantly opened up decision-making processes.” The Global Initiative for Fiscal Transparency (GIFT) provides us with ten principles for public participation: accessibility, openness, inclusiveness, respect for self-expression, timeliness, depth, proportionality, sustainability, complementarity, and reciprocity. These principles provide a guide for improving Canada’s score on public participation in the budget process.

The Finance minister should ensure they conduct pre-budget consultations in the early fall to better align with the budget cycle and inform major budget decisions. These consultatory mechanisms can be legislated and require results be published in a timely manner, including information on how these findings were used in the development of the budget. As suggested by the Open Budget Survey, Canada should also publish information on budget implementation, seek out historically underrepresented groups and those experiencing marginalization, and the Auditor General of Canada should increase its efforts for formal public participation in its auditing and review process. The Auditor General currently has no policy on public participation and has a limited track record of engaging Canadians.

What jurisdictions can Canada learn from that also embody GIFT’s principles? South Korea’s “Digital Brain System,” is an example of a fiscal transparency portal that regularly monitors its budget execution and publishes its progress. South Korea also invites the public to testify during audit hearings and the United Kingdom receives contributions from the public for its audit process. Portugal and South Korea have also introduced participatory budgeting at the national level, where residents have a direct say in budget allocation processes. The Kenyan constitution even enshrines “participation of the people” as a national value and principle of governance. Finally, there is also the concept of a citizens’ budget to make it easier for populations to engage with budgets in the first place, which is being applied by governments in countries such as El Salvador, Ghana, India, New Zealand, and South Africa.

There are rumblings of a general election in the not-so-distant future. Given Canada’s commitment to openness, transparency, and accountability as its guiding principles, political parties should have a plan on how they will improve the country’s performance on public participation in the budget process.

Mariel Aramburu is working on her Master’s degree at the Max Bell School of Public Policy at McGill University. She has worked in the public service for the province of Alberta in cross-ministry, international, and intergovernmental files.