Canada needs a full federal budget now to show where taxpayers’ money is going

Canada’s federal finance minister has

announced

that

a budget will not be presented

during the upcoming session of Parliament, but there will be a fall economic statement (FES) presented later this year, which surprised many and it should. Isn’t one of the basic constitutional principles of our democracy that taxpayer money cannot be spent without the consent of Parliament?

Yes. Under sections 53 and 54 of the

Constitution Act, 1867,

no public money can be spent without the consent of Parliament. However, like most rules, there are exceptions.

Under section 30 of the

Financial Administration Act

, the governor general may use time-limited “special warrants” to enable the

federal government to spend money

without parliamentary approval if Parliament is not in session, spending is urgently required for the public good and the funding request has not been previously authorized by Parliament.

The use of special warrants has been rare in Canadian history. But following the prorogation of Parliament in early January, the governor general approved two special warrants to fund federal spending. The first was authorized until May 15 for approximately $40 billion in spending and the second was approved on May 2 for $33 billion until June 29.

It is highly debatable whether or not such special warrants were able to be issued during the period of prorogation, but I’ll leave that debate for constitutional experts.

To be clear, no budgets were presented to the public for these special warrant spending amounts. One might argue that a budget was not necessary since a budget was presented in April 2024 for that upcoming year and was updated by an FES in December 2024, but, again, that is debatable.

There are no laws requiring the federal government to present an annual budget, but there are longstanding constitutional conventions that make it obligatory. A budget serves as the primary mechanism for the government to seek Parliament’s approval for taxation and spending.

Given the above framework, it is shocking that a 2025 budget will not be presented. However, on Sunday, after obviously feeling the heat, Prime Minister

Mark Carney

said there would be a much more comprehensive budget in the fall.

Does he mean a full budget? Or an FES? I assume he means the former. If so, that will have been roughly 18 months since the tabling of the last federal budget in April 2024.

Since Canada was born in 1867, there has always been an annual full federal budget presented. Until 2020, the COVID-19 year, there were annual budgets presented during the First and Second World Wars, the Great Depression years of 1929 until the 1930s and even with unstable minority governments — such as the Joe Clark government of 1979.

Even with new governments being elected, there have always been budgets presented, often with short but reasonable delays. Given that, having no budget presented in 2020 was shocking.

Until Carney’s announcement on Sunday, it appeared Canada would go without a 2025 budget. The 2020 precedent was unsettling then and repeating it would have been indefensible.

And to be clear, an FES is not a budget — no matter how comprehensive it is — nor is a brief fiscal update that will likely be presented to Parliament before it recesses for the summer.

An FES has historically been used as a mid-year update to provide revised projections and updates on economic and fiscal performance. The annual federal budget is the foundational policy document for the government and is a confidence motion; in other words, the government can fall if the budget is not supported by Parliament. The FES is not.

Skipping a federal budget would have been a significant departure from convention while raising obvious questions about

fiscal transparency

, parliamentary oversight and accountability.

Transparency, oversight and accountability are not aspirational objectives. They are foundational to providing a responsible government. Trust in institutions will inevitably erode when public scrutiny is evaded.

Taxpayers have a right to know how their hard-earned dollars are being spent, and Parliament has a duty to approve it with sufficient transparency. Without proper oversight, governments can easily drift into recklessness, ideological spending and corruption.

From a tax perspective

, the government has signalled that it will push through one of its campaign promises to reduce the lowest personal tax bracket by one per cent, which means all personal tax credits with the exception of charitable donations in excess of $200 will be reduced by one per cent as well, making the use of such credits less beneficial. Tax cuts are generally welcome, but this is not a substitute for a comprehensive fiscal plan.

Combine the original non-presentation of a federal budget with the proposal by Carney to “

separate

the operational budget from the capital budget” — an old and deceptive accounting trick to mask spending — the recent spending by special warrants and the retaliatory tariffs against the United States that were

suspended

during the recent election campaign while encouraging Canadians to be “elbows up” (a cringeworthy and vacuous slogan), the transparency record of this new government is not off to a good start.

Canadians should be deeply concerned by any attempt to obscure transparency and reject any justification for it, especially from those citing U.S. volatility or increased North Atlantic Treaty Organization (NATO) spending targets. Nonsense. The reality is there will always be shifting sands, but a budget is a necessary starting point for transparency and accountability.

• Look out — the government is banking on increased tax penalties to help pay for its spending
• Carney needs to deliver ‘Big Bang’ tax reform to get the country back in black

“Sunlight is said to be the best of disinfectants,” Justice Louis Brandeis so appropriately stated. Instead of swaggering around with “elbows up,” it’s time for this new government to step into the sunlight and face Canadians directly — continuously. Our parliamentary democracy demands it.

Let’s hope that the May 18 announcement by Carney of a “budget in the fall” means a full budget, not a “comprehensive” FES.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

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