Financial Administration Act
The Financial Administration Act ( is legislation enacted by the Parliament of Canada, governing financial administration of the government, public assets, the estimates process, the Department of Finance, the Treasury Board of Canada and Crown Corporations. The Government of Canada has described the Act as the "cornerstone of the legal framework for general financial management and accountability of public service organizations and Crown corporations."
Legislative history
1951-52 version
The first version of the Act was moved as Bill 25 in 1951 by member of parliament and government house leader Alphonse Fournier on behalf of the Minister of Finance, Douglas Abbott during the 5th session of the 21st Canadian Parliament. According to Fournier, the intent was for the minister to introduce the legislation, but he was out of the country at the time, occupied with duties related to the then-nascent NATO. The bill followed a failed attempt at the same legislation in the fourth legislation that died on the order paper when parliament prorogued.The legislation was intended as a consolidation of multiple pieces of existing legislation, including the Department of Finance and Treasury Board Act, acts related to Crown Corporations, and the Consolidated Revenue and Audit Act which originated in 1878 and had a substantial update in 1931 but in the opinion of a legislator had no substantial updates since. The legislation was also characterized as highly technical Some remnants of the Department of Finance and Treasury Board Act remained after consolidation.
The Act had multiple stated objectives, with one heavily featured in debated being the regularization of the relationship between the government and Canadian Crown Corporations. However, the Act was also intended to update and consolidate the government's procedures related to public borrowing, debt management, the comptroller general, to provide general debt relief on all debts incurred to the government before 1940, changing accounting practices with regard to government inventory, regularizing debt forgiveness procedures for the future, and modernization of the Treasury Board.
Some changes may also have stemmed from recommendations made by the auditor general Robert Sellar, possibly made in private correspondence to a single member. One such recommendation seemed to be whether the auditor general should be permitted to serve as auditor for Crown Corporations.
The bill received both debate when notice was given for the motion for the bill to be read a first time, by Fournier, and debate at first reading, which contrasts with modern practice. The bill was read for a first time on November 22.
Some Crown Corporations were exempted from the Act, either deliberately or due to the fact crown corporations had not yet been incorporated.
One major innovation in this Act was the development of the modern estimates process statutorily centred in Treasury Board and its secretariat that was absent in the Act of 1869, which was formerly centered instead at the cabinet level. Inaccuracies in estimations offered by the government had led to a larger than expected surplus in 1952, an item criticized by opposition leader George Drew, instigating interest in a more accurate estimates to avoid overtaxation without parliamentary approval.
After debate the bill was read a second time and referred to the public accounts committee, despite it being characterized as not having substantial organizational bandwidth to conduct the study. The report of the committee was considered section by section and passed third reading on December 15, and after receiving Senate approval, received Royal Assent on December 21, but has been at time categorized as either the Financial Administration Act of 1951 or 1952, as it was proclaimed and entered into force on October 1, 1952.
Senate approval was without major incident, was sponsored by Senator The Honourable Wishart McLea Robertson, leader of the government in the Senate for first reading on December 17. The second reading was moved by Senator , with short debate and passed, also on December 17, and referred to the Banking and Commerce Committee. The committee considered the bill that night, and third reading was agreed to without amendment the following day.
1985 Act
The Financial Administration Act received a minor update and a redesignation as the 1985 Act under the Mulroney government in the 33rd Parliament, as a part of a larger omnibus change to the Income Tax Act, pension legislation, unemployment insurance legislation and gas revenue legislation. The Act received only a small change under Part VI of the legislation. At the same time that the bill was being amended, the Financial Administration Act was invoked as something that should have led to parliamentary oversight of the privatisation of de Havilland Canada, which the government rejected, and did not succeed.It received a series of technical amendments in 1990 centered around accountability of Crown Corporations, and speed of government payments to vendors.
The Act has since seen multiple changes every calendar year from 2003 to 2023.
Statutory details and powers
Part I
Treasury Board and Treasury Board Secretariat
Part I of the Act establishes the Treasury Board, and the departments of the Treasury Board Secretariat. The Treasury Board is set at a size of five members of the Privy Council for Canada, and chaired by the President of the Treasury Board, and shall also consist of the Minister of Finance. It also establishes the Deputy Minister of the department, styled as the "Secretary of the Treasury Board", as well as designating the department as the structure that houses the Chief Information Officer of Canada, and the Comptroller General of Canada, both to be appointed by orders-in-council.Responsibilities
Part I also lays out the responsibilities of the Treasury Board, including allowing it, non-exclusively and on behalf of the cabinet, to set administrative policy for the government, manage the estimates process, manage the negotiation of government contracts, conduct program reviews of other departments' programs, manage capital assets, manage human resources and human resources procedures, and to conduct internal audits. Beyond these core responsibilities, the cabinet retains the power to delegate other powers to the board.The Act also gives the Treasury Board powers related to government pension plans, namely police, military and the public service. It also establishes that for each pension plan, the Treasury Board may establish a corporation governing each, and the formula for the composition of the Board of Directors
The Act also lays out limitations on the human resources power of the Board, specifically, the Act does not extend to powers otherwise delegated by legislation to the Public Service Commission or the Commissioner of the RCMP. The Act also establishes some powers which remain with the deputy ministers of other government departments, including setting departmental training regimens, discipline and awarding of merit awards to their employees.
Department of Finance
Part I also establishes the Department of Finance, the role of the minister, and the role of the Deputy Minister of Finance.Financial Responsibilities of Deputy Ministers
The Act provides the responsibilities of deputy heads of departments to provide financial accountability for public funds, including through internal audit, efficient deployment of resources and implementation of accounting controls and practices.Part II
Receiver General
The Act establishes the responsibility of the Receiver General for Canada as the sole recipient of Canadian public moneys, its responsibility to record keep, and its ability to contract agents with a legal obligation to remit collected funds to the Receiver General. The Act also establishes that the Treasury Board may establish financial procedures governing the Receiver General.Public money
The Act establishes the Consolidated Revenue Fund of Canada, under the responsibility of the Minister of Finance, and that it is to be used to pay out debts outstanding against the government.Part III
Parliamentary Authority
Part III of the Act establishes that payments out of the consolidated revenue fund may not be conducted without parliamentary approval. This may occur through parliamentary approval of the estimates, a parliamentary approved contractual guarantee, or through parliamentary passage of legislation with mandated legislated spending. An exception is made for governmental departments spending revenues that it generates, but that parliament may optionally choose to designate through an appropriation act that revenues should count against the budget of that department.In case of an election period and up to sixty days after, the Governor General, acting on advice of the Prime Minister, may approve special warrants, if there is special need.
Payment Requirements
The Act establishes conditions that must be met by contractors prior to disbursement of funding, namely that the minister or their designate confirms the expenditure is deemed reasonable for the services rendered, or that a pre-existing contract has been signed setting the price. Disbursements must be paid out of the consolidated revenue fund and authorized by the Receiver General.Contracts
Part III also governs government contracts. The Act necessitates each contract to have a clause declaring that payments are subject to parliamentary approval of spending for that purpose in each fiscal year covered by the contract.The Act also allows the government to prohibit through regulation fees paid to those governed by the Lobbying Act, those convicted of corruption or fraud, or providing defective goods to the government in the past.