The Honourable Elizabeth Marshall

Honourable senators, I would like to thank Senator LaBoucane-Benson for her comments. I will be doing something similar. She gave a little historical perspective on certain parts of the Main Estimates; I will go back in time a little bit when I talk about debt because we have a lot of new senators here, and I can’t say they would enjoy it, but it might help to inform them. I know that when I do stand up to speak about the estimates, many people’s eyes just glaze over.

Honourable senators, I rise to speak to Bill C-6, which is the appropriation act no. 1, 2025–26. This bill, which is supported by the 2025-26 Main Estimates, or the Blue Book, as they call it, is requesting parliamentary approval of $149 billion for the federal public administration. The 2025-26 Main Estimates document presents total spending of $488 billion for this fiscal year. Of the $488 billion, $265 billion has already received parliamentary approval through other legislation, such as the Financial Administration Act. In addition, just over $73 billion was approved by special warrants due to the 2025 general election. That leaves $149 billion left, and that’s what this bill will do — request approval for the remaining $149 billion.

I’d just like to say that in my office we do quite a thorough analysis of the bill. The bill is quite long. The appendix lists the numbers for all the government departments. We go through and cross-check the numbers, and we ensure that the Treasury Board has used their calculator in determining what goes into the bill.

The 2025-26 Main Estimates were tabled in the Senate on May 28 and referred for study to the Standing Senate Committee on National Finance on May 29.

The Main Estimates for 2025-26 outline spending of $486 billion. This is an increase of 8% when it is compared to the $449 billion outlined in last year’s Main Estimates. However, it is premature to reach a conclusion on the comparison between the Main Estimates for those two fiscal years because government will be requesting parliamentary approval for additional spending in future appropriation bills, the budget and possibly even a fiscal update. In addition, government often requests additional funding in other bills.

As an example, the Main Estimates for 2023-24 outlined $433 billion in spending, but actual expenditures for that year were $513 billion, a significant increase of $80 billion.

It is only June, and with nine months left in this fiscal year, there is still a lot of time and opportunity for the government to seek approval to spend more money.

The Main Estimates provide information only on estimated government expenditures and spending. Since there is no budget, we do not know the estimated government revenues for this year, nor is there any indication of the projected deficit. However, we do know that the revenue projections for this year of the previous government in its 2024 Fall Economic Statement are no longer valid. The new government has already indicated initiatives which will decrease revenues.

In addition, the previous government had estimated revenues of $3.3 billion to be collected this fiscal year as a result of changes to the capital gains tax. Since the capital gains tax will no longer be increased, this revenue of $3.3 billion will no longer be collected.

We can see from the 2025-26 Main Estimates that expenditures are increasing, and we know revenues are decreasing. As a result, we can expect a larger deficit for this year.

Since government plans to run a deficit this year, we can expect government to increase its borrowings. However, the debt management strategy for 2025-26 has yet to be tabled, so we do not know how much money the government plans to borrow.

Government has a legislated debt ceiling of just over $2 trillion for the federal debt and the market debt of agent Crown corporations. This limit is established under the Borrowing Authority Act. This legislation was enacted in 2017 to provide the Minister of Finance with the authority to borrow and to provide for a maximum amount of borrowing. The government cannot borrow in excess of the debt ceiling without obtaining the approval of Parliament.

The initial ceiling, established in 2017, was just over $1 trillion, so over the past eight years, the debt ceiling has doubled to just over $2 trillion. Our actual debt was $918 billion in 2015. It increased to just over $1 trillion when the Borrowing Authority Act was enacted in 2017, and it was $1.7 trillion 15 months ago. Not only has the debt ceiling doubled, but actual debt has also doubled since 2015.

The public accounts for March 31, 2024, indicate that total debt against this ceiling is $1.7 trillion. However, these are the borrowings as of 15 months ago, and we do not have any current numbers. This is one of the limitations imposed by this government — a reluctance to provide current financial information.

The debt management reports — and I want to make a distinction here; a few minutes ago, I was talking about the debt management strategy, which is forward-looking, and now I’m talking about the debt management reports, which look to the past — for March 31, 2024, and March 31, 2025, have yet to be tabled. There has been no debt management strategy tabled for 2025-26. Once again, this demonstrates the government’s reluctance to provide Canadians and parliamentarians with current financial information.

Last month, Fitch Ratings warned the federal government about getting carried away with deficit spending. It said that “Canada has experienced rapid and steep fiscal deterioration, driven by a sharply weaker economic outlook and increased government spending . . . .”

It further said:

Canada’s credit strengths offer significant headroom to weather a fiscal or economic shock, but increased structural deficits would pressure its credit profile.

The Organisation for Economic Co-operation and Development, or OECD, has already indicated that the global economy is headed for a downturn, and North America will be hardest hit. In a report released in early June, the OECD said that Canada will be one of the developed world’s hardest-hit economies this year and next. It further indicates that fiscal risks are increasing. Public debt levels are already elevated in many advanced and emerging economies, and spending pressures are rising in areas such as defence, the green transition and the aging of our population. Debt servicing costs are also increasing, putting additional pressures on public finances. Canada can certainly relate to these increased risks.

Current information on interest costs is also lacking. The Main Estimates indicate interest costs of $49 billion. However, the 2024 Fall Economic Statement projects public debt charges of $54 billion for this fiscal year, increasing to almost $70 billion by 2029-30. However, given the spending outlined in the Liberal election platform and the government’s recent Speech from the Throne, these projected interest costs are not current. As a result, I expect there will be increased debt servicing costs to finance existing and new debt, and we can expect to see these in future estimates, the budget and possibly a fall economic statement.

The Parliamentary Budget Officer, in his report on the Main Estimates, said that public debt charges have increased significantly over the last three years due to a substantial increase in the stock of public debt, combined with subsequent higher effective interest rates.

Debt servicing costs increased from $24 billion in 2014-15 to $35 billion in 2022-23, and then to $47 billion in 2023-24. Now, debt servicing costs are projected to reach $70 billion in 2029-30.

During his testimony on the Main Estimates, the Parliamentary Budget Officer told us that, in the absence of a budget, it is difficult to know the government’s forecasts with respect to revenues. He said that parliamentarians are being asked to approve funding without a plan — a long- or even medium-term plan — as to what the government plans to do beyond the Main Estimates and Supplementary Estimates (A).

I was surprised when Finance Minister Champagne said there would be no budget this year. While some may feel a budget promised this fall is a step up, I don’t agree. The budget is the government’s fiscal plan. As the Prime Minister said during the election campaign, “A plan beats no plan,” and as of now, we have no plan. To present a plan in the fall after the fiscal year is substantially over is neither helpful nor informative.

We need a budget to tell Canadians the government’s fiscal program and policy agenda for the year. It will tell us how much money the government will take from us in taxes and any other sources of revenue. Most of the government’s revenue comes from taxes on us and on businesses. A budget would also tell us how the government plans to spend our money, and how much they plan to borrow.

The government will definitely borrow billions of dollars this year, on which it will have to pay interest with our tax dollars. Those billions of dollars that the government will borrow will be repaid by our children, grandchildren and great-grandchildren. Since we as taxpayers are financing this borrowing, the government should present a budget now and tell us how much they plan to borrow and what the interest on that borrowing will be. We need a fiscal road map now.

In responding to questions regarding the decision to delay the tabling of the budget, Canada’s Auditor General told us that it is unusual to start a fiscal year without a budget, as a budget encourages global transparency. She also spoke about the need for transparency and accountability of the estimates as well as the benefits of hearings. However, she concluded her remarks by saying that the budget provides ultimate clarity for everyone.

The most reliable financial document produced by the federal government is the Public Accounts of Canada. I say that this document is the most reliable because the financial statements of the government, which are contained within the Public Accounts, are audited by the Auditor General of Canada and are therefore reliable. The Public Accounts of Canada is comprised of three volumes, and while the financial statements are audited by the Auditor General, much of the information is not. However, I still consider the information included in volumes 1, 2 and 3 to be the most reliable we have.

The problem with the Public Accounts of Canada is the government’s delay in tabling the public accounts. Although the Financial Administration Act provides for tabling by December 31 if Parliament is sitting, and even later if Parliament is not sitting, tabling the public accounts nine months after the end of the fiscal year is not helpful or useful to parliamentarians or Canadians.

Last year, for the year ending on March 31, 2024, we waited until December 17 before the government tabled the public accounts, which was Parliament’s last sitting day. There was no opportunity for discussion by the House of Commons or the Senate.

The Debt Management Report for the same fiscal year, 2023-24, has yet to be tabled. The Financial Administration Act provides for the tabling of the Debt Management Report within 30 sitting days of the tabling of the Public Accounts. Since the 2023-24 public accounts were not tabled until December 17, 30 sitting days after December 17, 2024, will be September 26, 2025 — three months from now. In other words, we can expect to receive the Debt Management Report for 2023-24 a full 18 months after the fiscal year end.

As I indicated in my opening remarks, the 2025-26 Main Estimates were referred to the Standing Senate Committee on National Finance on May 29 for study. Departmental Plans are expenditure plans for each department and agency. They describe each organization’s priorities, strategic outcomes, program, expected results and associated resource requirements. They cover a three-year period, beginning with the year indicated in the title of the report. These plans are instrumental in our review of the estimates. The government website states that the Departmental Plan, or DP, “. . . signifies the Government’s desire to enhance its accountability to Canadians through improved reporting . . . .”

The departmental plans this year were not tabled until June 18, one day before we completed our study of the Main Estimates. We need the departmental plans to help us in our study of the Main Estimates. To table these plans on June 18, one day before we completed our study, indicates — once again — the government’s reluctance to provide us with the information we need to oversee government spending.

The Department of National Defence is requesting almost $34 billion compared to $29 billion requested last year in the Main Estimates. Most of the increase is for capital expenditure — $10.9 billion this year compared to $7.2 billion last year.

Last year, during Finance Committee meetings, the Department of National Defence provided a list of the projects that were included in the $7.2 billion. This year, we do not know how the government plans to spend the $10.9 billion requested in the Main Estimates for capital projects. While department officials have committed to provide this information, we have yet to receive it.

One of the challenges faced by the Department of National Defence in the past has been in the area of procurement and the utilization of funding approved for capital acquisition, including aircraft, ships, vehicles, ammunition and other capital projects. Last year, the previous government increased its planned capital expenditures from $164 billion over 20 years to $257 billion. However, there were few details on the projects included in the $257 billion. At that time, the department indicated that projected defence spending would reach 1.76% of the GDP in 2029-30 compared to the NATO policy of 2%.

However, the Parliamentary Budget Officer, or PBO, issued a report indicating that the Department of National Defence has been challenged to spend the capital funding approved by Parliament. At that time, the PBO indicated that between 2017 and 2023, there was a cumulative shortfall of almost $12 billion between what the government actually spent on capital projects and what they had planned to spend. Supplementary Estimates (A) outlines a new spending of $9 billion, which should bring Canada’s defence spending to 2% of the GDP. I will have further comments on the Department of National Defence when I speak to Bill C-7.

The Department of Crown-Indigenous Relations and Northern Affairs is requesting $13 billion compared to last year’s Main Estimates of $10.8 billion. Almost half of the requested funding will be used to settle specific claims negotiated by Canada and/or awarded by the Specific Claims Tribunal to Indigenous groups to settle special claims. In reviewing funding requests for specific claims and settlement agreements, there are a number of challenges involved in following the money for these types of expenditures. It is not transparent.

Funding for specific claims or settlement agreements may be requested in several appropriation bills over a number of years, but the expenditure may be recorded in a different fiscal year. Unless the claims are specifically identified in the estimates documents and the public accounts along with the dollar amount, it is impossible to follow the money.

Since funding requests for claims and settlements are significant, they are frequently discussed at the Finance Committee. In a previous committee meeting about claims and settlements, the PBO told us it is concerning that the claims and settlements have increased so much. He said it raises the question as to how firmly in control the government is with respect to these claims and settlements. He went on to say that the specific claims process is very complex.

Claims and settlements represent significant amounts requested in many appropriation bills. They are recorded in the public accounts as expenditures and in many instances are included in the provision for contingent liabilities on the government’s financial statements. The problems associated with tracking the claims and settlements recently came to light when the government released the 2023-24 public accounts last December and disclosed that the deficit that year was not $40 billion, as previously thought, but was actually $61.9 billion.

Part of the explanation provided by the government for the significant increase in the deficit was $16.4 billion in Indigenous contingent liabilities, which the government said was attributable to “one-time” or “exceptional” expenses. This explanation is puzzling to me because the government has recorded increases in Indigenous contingent liabilities in previous years and certainly for amounts greater than the $16.4 billion.

For example, in the previous fiscal year — 2022-23 — the government recorded an increase of $26 billion to its contingent liabilities, which is clearly explained on pages 8 and 12 of Volume I of the 2022-23 public accounts. Other increases in Indigenous contingent liabilities have also occurred before 2022-23, so these transactions are neither one-time nor exceptional.

As I have indicated previously, the problem encountered when reviewing the Indigenous contingent liabilities is the lack of transparency in disclosing the transactions within this account.

The $16.4 billion increased the deficit last year and also increased the Indigenous contingent liabilities. Despite this increase of $16.4 billion in Indigenous contingent liabilities, at the end of the fiscal year, the Indigenous contingent liabilities had actually decreased, yet we cannot determine why — or at least I cannot, and I’ve literally spent hundreds of hours looking.

A review of lapsed funding in 2023-24 — the most recent year for which lapsed funding is available — indicates that $26.5 billion was approved for the department in 2023-24, yet they lapsed $10 billion, or 38%, of their approved funding. It raises the question as to how much of their funding was lapsed in 2024-25 and whether this is a recurring issue. I guess we will have to wait quite awhile before we find out.

The Main Estimates for 2025-26 is requesting $26 billion for consultants, which is a significant increase compared to the $19‑billion request in the 2024-25 Main Estimates.

Budget 2023 had proposed to reduce spending on consulting, other professional services and travel by roughly 15% of planned 2023-24 discretionary spending in these areas, which would result in savings of $7.1 billion over five years starting in 2023-24 and $1.7 billion ongoing. The government had committed to targeting these reductions on professional services, particularly management consulting.

While the previous government had committed to reducing the costs associated with consultants, the cost of consultants is actually increasing.

However, the Speech from the Throne stated:

. . . the government’s operating budget — has been growing by nine percent every year. The Government will introduce measures to bring it below two percent.

Based on discussions with officials from the Treasury Board of Canada Secretariat and several government departments when we reviewed the Main Estimates, there is no indication that this initiative has commenced. The 2025-26 Main Estimates are 8% higher than last year’s Main Estimates, and professional and special services being requested in the Main Estimates have increased to $26 billion from $19 billion last year.

While it’s not clear which expenditures are included in the operating budget, which will be restricted to the 2% increase, I have used the direct program expenses in The Fiscal Monitor from March 2025 to determine the magnitude of possible savings. Direct program expenses increased 8.5% in 2024-25 compared to 2023-24. If direct program expenses in 2024-25 had increased only 2% rather than the 8.5%, there would have been savings of $13 billion.

My last comments relate to Employment and Social Development Canada. The Main Estimates indicate that $8.5 billion will be paid to provinces and territories this year to support the national child care program, which was launched in 2021 at an estimated cost of $30 billion.

One of the objectives of the program was to create 250,000 new child care spaces by 2026. In its 2025 Departmental Plan, which was released last week, the department indicates that it is on track to meet the goal of creating 250,000 new spaces by 2026. However, the Fall Economic Statement, which was released in December 2024 — just six months ago — indicates that only 60,000 new spaces have been created or are in progress. Not all of the 60,000 spaces referenced have actually been created.

This is a significant discrepancy between two government documents. One states 250,000 new spaces will be created by next year, while last December, they had only created just under 60,000. This discrepancy should be resolved.

Before I conclude, I must express my disappointment with the government’s reluctance to provide us with the information we need on a timely basis in order to provide oversight of government spending.

The Main Estimates and Supplementary Estimates (A) for 2025-26 were referred to the National Finance Committee for study. The Departmental Plans for 2025-26, which explain how departments and agencies will spend this money, were not provided to us in order to assist us in our study. And we are still waiting for all of the data for the 2023-24 Departmental Results Reports.

I’ve been on the National Finance Committee for 15 years. Over the past several years, I’ve noticed the government has become more secretive and tardy in providing information which should be generally available on a timely basis. Information provided in response to questions at committee is often no longer freely given. Reports, such as the public accounts, are generally tabled late.

While the Financial Administration Act is very generous in establishing mandatory deadlines, the government held the 2023-24 public accounts until December 17 — almost nine months after the fiscal year-end.

Similarly, we are still waiting for the 2023-24 Debt Management Report — for a fiscal year that ended 15 months ago — because the wording of the Financial Administration Act is so generous that it will allow the government to hold that report for 30 sitting days after the public accounts are tabled.

My hope is that this new government will recognize the problems and remedy it so that parliamentarians can provide oversight of government spending as it was intended.

I thank my colleagues for their interest and attention. This concludes my comments on Bill C-6.