MPs' spending power needs an overhaul, report warns

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The power of MPs to review and approve spending is a woefully outdated in an era of global financial crises and deep government cutbacks, warns an international body of accountants.

But Conservative MP Mike Wallace says he thinks his government is open to giving committees more influence over spending by government departments.

The spending review powers of Members of Parliament in Canada, the U.K., Ireland and Australia were put under the microscope by the Association of Chartered Certified Accountants and all were found sorely lacking.

One bright spot for Canada, according to the report, was the 2008 appointment of the first Parliamentary Budget Officer, Kevin Page. A similar position has since been created in the U.K. and promised in Australia.

The report notes that in its first three years, Canada's PBO "has demonstrated an impressive record of achievements, including five economic and fiscal updates and more than 20 research reports which have received high praise."

But having extra information from a PBO is not a substitute for a detailed review of departmental budgets, states the ACCA report, which is being formally released Wednesday.

Mr. Wallace, the Conservative MP who is also vice-chair of the Commons Committee on Government Operations, said he's personally interested in updating the rules to give MPs a bigger role.

As it stands now, he said, the stakes are too high for committees that vote to alter a department's estimates – or spending – plans.

"A change in an estimate could force an election, so it's not be taken lightly," he said. "If you're going to give us the right to do it, we should have the responsibility to do it – within reason. It just doesn't exist right now... I think our government, based on my discussions with my colleagues, is open to a discussion on what we can do to improve the system to make Members of Parliament more engaged in the financial operation of government."

The Commons returns from its holiday recess on Jan. 30 at a time when the opposition claims the power of MPs and House of Commons committees is weakening since the Conservatives formed a majority government. The review of spending reports is expected to take on a much higher prominence than usual this year as they will provide the details of specific budget cuts that are part of the government's overall plan to erase the deficit.

Liberal MP John McCallum, who is also a vice-chair of the government operations committee, says the most immediate step the Conservatives could take is to be clear in the upcoming budget as to what is being cut, rather than leaving MPs to rely on leaks from public sector unions.

"The honest way to do it is to be upfront with Canadians," he said. Beyond that, Mr. McCallum said he expects all parties would support changes to the way MPs perform their "fundamental" job of reviewing spending.

All four Parliaments reviewed in the ACCA report rely on a long-standing practice of approving government spending through "supply" votes that are routinely approved with little scrutiny. The ACCA report says MPs see little point in getting involved in a process they cannot influence and calls on Parliaments to change this "antiquated" system.

"Parliamentary scrutiny on its own may not prevent the next financial crisis, but it is a vital part of a nation's governance by holding the executive to account for public finance," the report concludes. "If done well it may help manage the risks of future financial crisis and potentially the future risks of a downgrading of a country's credit rating."

The report points to work done by Joachim Wehner of the London School of Economics, which places all four Parliaments near the bottom of a ranking. Dr. Wehner's "Index of Legislative Budget Institutions" places the United States at the top of the list because of the strong powers held by Congress over government spending.

The ACCA report does not comment on the fact that those Congressional powers did not prevent the financial crisis that began in the United States, nor on the fact that Washington is failing to tackle its own debt issues due to political gridlock.

Nonetheless, the push for Parliamentary reform in Ottawa is expected to heat up this year as Mr. Page uses his final year as PBO to advocate greater independence for his successor. Mr. Page has argued the PBO should be an independent office reporting to Parliament, rather than a branch of the Parliamentary Library.