Canada needs a full federal budget now to show where taxpayers’ money is going
Canada’s federal finance minister recently did
announced
that
A budget will not be delivered.
During the next parliamentary session, we won’t see an update right away, but there’ll be a Fall Economic Statement (FES) coming up later this year, which has caught quite a few off guard—understandably so. After all, isn’t one of the fundamental tenets of our democratic system that Parliament must approve before public funds can be used?
Certainly. According to sections 53 and 54 of the act, this is covered.
Constitution Act, 1867,
No public funds may be expended without the approval of Parliament. Nevertheless, similar to many regulations, there are exemptions.
According to section 30 of the
Financial Administration Act
, the governor general can utilize temporally restricted “extraordinary warrants” to facilitate the
the federal government will allocate funds
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 remains uncertain whether these specific warrants could have been granted during the prorogation phase; however, I will defer this discussion to constitutional experts.
To clarify, no budgets were disclosed to the public regarding these special warrant expenditures. It could be argued that a budget wasn’t needed because one had been presented in April 2024 for the following fiscal year and later revised with an FES in December 2024; however, this point remains contentious.
No laws mandate that the federal government must deliver an annual budget; however, strong constitutional traditions necessitate this practice. The budget acts as the main tool through which the government seeks parliamentary consent for tax collection and expenditures.
Given the aforementioned structure, it is surprising that a 2025 budget has not been introduced. Nevertheless, on Sunday, following apparent pressure, the Prime Minister
Mark Carney
mentioned that a far more detailed budget will be presented in the autumn.
Is he referring to a complete budget or an FES? I presume he means the latter. In that case, this would be approximately 18 months after the last federal budget was presented in April 2024.
Ever since Canada came into existence in 1867, an annual complete federal budget has consistently been introduced each year. Up until 2020, which marked the onset of the pandemic era due to COVID-19, these yearly financial statements continued uninterrupted through significant periods like both World Wars, the economic turmoil of the Great Depression spanning from 1929 well into the following decades, and even amidst politically volatile times under minority administrations—such as when Prime Minister Joe Clark led his administration in 1979.
Despite new administrations taking office, budgets have consistently been introduced, usually with minor yet acceptable postponements. Therefore, the absence of a budget in 2020 came as quite a shock.
Before Carney’s statement on Sunday, it seemed that Canada might not have a 2025 budget at all. The fact that they followed this pattern in 2020 was concerning, and doing so again would have been unjustifiable.
To clarify, an FES is not considered a budget – regardless of its comprehensiveness – nor is it expected to be a concise financial update that will probably be submitted to Parliament prior to its summer adjournment.
Historically, an FES serves as a mid-year update offering refined forecasts and insights into economic and fiscal conditions. The annual federal budget stands as the primary policy statement for the administration and carries significant weight—it acts as a confidence motion, meaning the government could be toppled if it doesn’t secure parliamentary support. An FES does not hold this status.
Omitting a federal budget would have marked a substantial deviation from tradition and inevitably raised serious queries regarding
fiscal transparency
, legislative scrutiny and responsibility.
Transparency, oversight, and accountability are not lofty goals; they form the bedrock of governance. When the public is sidelined, trust in these institutions will undoubtedly diminish.
Citizens have the right to understand how their hard-earned money is being used, and Parliament must ensure this occurs with adequate openness. Inadequate scrutiny can lead governments toward irresponsible behavior, ideologically driven expenditures, and corrupt practices.
From a tax perspective
The government has indicated its intention to implement one of its key election pledges by lowering the lowest personal income tax rate by 1%. This change would also decrease most personal tax credits, excluding those for charitable contributions exceeding $200, thereby diminishing the advantage gained from these credits. While reductions in taxes tend to be favorable, this measure alone does not constitute an adequate overall financial strategy.
Merge the initial presentation of a federal budget with Carney’s suggestion to “
separate
The operational budget being drawn from the capital budget—a time-honored yet misleading financial tactic aimed at hiding expenditures—the recent spending through special warrants, along with the retaliatory tariffs imposed on the United States—these measures
suspended
During the most recent election campaign, as they urged Canadians to stay “elbows up” (an awkwardly phrased and empty motto), the new administration’s track record for openness has begun poorly.
Canadians ought to be highly troubled by efforts aimed at obscuring transparency and should dismiss any rationale provided for such actions, particularly when these justifications stem from references to U.S. instability or heightened NATO expenditure goals. This is absurd. In truth, change is inevitable, yet a budget remains an essential foundation for openness and responsibility.
“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 past chairman of the Canadian Tax Foundation, and formerly chaired the Society of Estate Practitioners (Canada). Additionally, he has assumed numerous key roles within the Canadian tax sector. You can contact him via email at kgcm@kimgcmoody.com or view his LinkedIn profile for more information.
https://www.linkedin.com/in/kimgcmoody
.
_____________________________________________________________
If you like this story, sign up for the FP Investor Newsletter.
_____________________________________________________________
Bookmark our website and support our journalism:
Don’t miss the business news you need to know — add
to your bookmarks and sign up for our newsletters
here
.