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Senate quietly loosens financial accountability rules; critics say honour system leads to spending scandals

The Senate has quietly relaxed financial rules to allow senators to use their hospitality budgets to pay for better accommodations, with no need to to submit monthly housing expenses, in what critics say is a return to the old honour system that led to the Senate spending scandal.

Senators, who earn $147,700, have an accommodation budget of almost $25,000 a year and $3,000 for hospitality expenses along with an office budget of $226,000.

Lax spending rules in the Senate led to RCMP criminal investigations and the Auditor-General being called in 2013 after a number of senators were accused of filing inappropriate travel, hospitality and living expenses. The Senate operated under an honour system at the time and auditors argued the spending rules were unclear, making it difficult to know whether rules had been broken. The Senate subsequently tightened its spending rules and accountability.

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But on June 14, the Senate Committee on Internal Economy, Budgets and Administration (CBIA) passed two rule changes that make senators less accountable for expenses and provide more dollars for upgraded housing.

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Pierre Lanctot, the Red Chamber’s chief financial officer, informed senators in a memo on July 12 that the CIBA committee voted to allow them to use hospitality expenses to help pay for their apartments, condominiums or Ottawa houses.

“For the current fiscal year ending March 2019, senators may request a budget transfer (up to $3,000) of their unspent and uncommitted hospitality allocation to their living expenses budget for expenses that exceed their initial budget of $24,750,” according to the memo obtained by The Globe and Mail.

Two senior Senate sources said the CIBA committee, which oversees the Senate’s $109-million annual budget, made the rule change because some senators wanted to get nicer places to live in Ottawa.

Independent Senator Larry Campbell, the chair of CIBA committee, did not return requests for comment. A spokeswoman for Conservative deputy chair Senator Denise Batters said she was in "complete agreement” with the Senate’s response sent by communications officer Alison Korn and had nothing to add to the story.

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Ms. Korn told The Globe on Friday that some senators were having a difficult time living on a housing allowance of almost $25,000.

“This is an interim measure to address the fact that some senators do not have sufficient budget to cover their living expenses, as budget increases have not kept up with inflation and the schedule of Senate work committees,” Ms. Korn said, and added CIBA committee members are currently reviewing whether to increase the housing budget for next year.

NDP MP Charlie Angus, who noted the Senate sits on average about 90 days a year, said senators were “playing shell games with taxpayers’ money.”

“It is ridiculous that on a $25,000 a year housing and per diem allowance that they can’t survive for a third of the year in Ottawa,” he said in an interview. “To me, that is living pretty high off the hog.”

Mr. Lanctot’s memo also revealed that senators no longer have to file monthly expense claims for rental apartments or secondary dwellings that they own in Ottawa. Beginning in September, Senate administration will “make payments directly to landlords for monthly rental of senators' Parliamentary district accommodation, as well as make automatic monthly allowance payments to senators who own a secondary residence,” Ms. Korn said.

Senators will only be required to show proof of a lease or ownership of a privately owned residence once year – which appears to be a return to the honour system that had long governed the unelected chamber.

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Mr. Angus said he is surprised the Red Chamber would relax financial rules put in place in the aftermath of the scandal that resulted in police investigations and a two-year line-by-line audit by federal Auditor-General Michael Ferguson.

“The honour system is not how you pay expenses and that is what led to the trouble with Mike Duffy and Pamela Wallin,” Mr. Angus said. “If there are leases with the Parliament of Canada and a landlord, that is fair and the money should be paid directly. But the fact that they can show a lease once and never show it again and have no follow-up is not acceptable.”

Mr. Ferguson conducted an audit in 2013-15 that alleged that 30 senators filed inappropriate expenses and claimed $600,000 of ineligible expenses.

Mr. Duffy, Ms. Wallin, Mac Harb and Patrick Brazeau were required to reimburse the Senate for filing inappropriate travel and living expenses. The RCMP conducted a criminal probe of the four but only Mr. Duffy was charged with fraud and breach of trust. He was later found not guilty by a Superior Court of Ontario judge.

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