Spending proposals: when is a royal recommendation needed?

• Author: Lukyniuk, Michael
• Position: Essay

In the Canadian parliamentary system of government, the Crown (i.e., the executive branch) is solely responsible for the management of public monies and only the Crown may initiate a request to the House of Commons for new or increased taxation or spending. This is known as the financial initiative of the Crown and is entrenched in section 54 of the Constitution Act 1867. The Act also states in section 53 that any legislation for the appropriation of public revenue or for the imposition of a tax must originate in the House of Commons. On the surface, it would seem a relatively straightforward matter to determine if spending or taxation is being contemplated. However, the House is often presented with many complex and creative manners in which an authorization for spending or taxation may be expressed. When a point of order is raised concerning an infringement of the financial initiative of the Crown, the Speaker must closely scrutinize the bill, or the amendment, and rule on its admissibility. This article examines about 80 rulings since 1969 which deal with spending initiatives and the need for a royal recommendation.

**********

Over the last forty years, there has been a great deal of interest in the financial initiative of the Crown, especially as it pertains to spending. From time to time, Speakers of the House of Commons have been asked to decide whether bills, or amendments to bills, propose spending. If they do and the measure is not recommended by the Crown, its progress is arrested since the Crown alone has the constitutional authority to initiate spending.

Of course, the Speaker does not rule on constitutional matters but Standing Order 79(1) echoes the wording found in the Constitution Act and authorizes the Chair to ensure that "This House shall not adopt or pass any ... bill for the appropriation of any part of the public revenue ... to any purpose that has not been first recommended to the House by a message from the Governor General...." Therefore, the Speaker of the House of Commons has a critical procedural role to play in determining whether a measure infringes on the financial initiative of the Crown.

The instrument which signals the desire of the Crown to initiate spending is called the "royal recommendation". It is provided by the Governor General whenever a request is made by Cabinet for the introduction of a legislative measure that seeks the authorization of Parliament for spending. The royal recommendation is attached to a bill (or an amendment to a bill) and printed in the Journals and Notice Paper of the House of Commons. The royal recommendation is currently a pro forma text reading: "Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled An Act to...."

It should be stressed that the royal recommendation solely applies to "spending"--the withdrawal of public funds from the Consolidated Revenue Fund (CRF) (1). It does not apply to the imposition of taxes upon the people--the manner that revenues are raised and added to the CRF (procedurally known as the ways and means process). Nor does it apply to issues relating to fiscal management--the deficit/surplus status of government finances in the CRF. (2)

When a request for spending is made by the Crown, the House considers the proposition and may take one of three actions: it may agree to the request, it may reduce the spending provisions, or 'it may reject the request outright. However, the House cannot increase the amount of spending that is proposed by the Crown. To do so would infringe on the financial initiative of the Crown.

Spending requests take one of two basic forms: they can be brought forward as legislative requests for "annual appropriations" or for "statutory expenditures". A royal recommendation is required for both. (3)

Normally, government bills seeking an authorization for spending are accompanied with a royal recommendation on introduction. If an amendment to the bill seeks to further increase spending later at report stage, such an amendment must be accompanied by another royal recommendation. This applies to amendments proposed either by a Cabinet Minister or an opposition Member. If an amendment to a bill at report stage requires a royal recommendation and is not accompanied by one, the Speaker will not select the amendment for debate or a vote in accordance with Standing Order 79(1). (In committees, Chairs will rule such amendments inadmissible, since there is no mechanism to bring in a royal recommendation at clause-by-clause consideration of bills in committees.) Another point to bear in mind is that if an amendment to a bill seeks to restore a spending provision which a bill was attempting to remove from the parent Act, then no royal recommendation is needed since the provisions in the parent Act would be unchanged.

A special procedure has been adopted regarding private Members' initiatives. Private Members' bills involving spending may be introduced, debated and proceed through the legislative process without a royal recommendation until third reading. (4) If by that time a royal recommendation is not provided, the Speaker will decline to put the question on the vote at third reading and the initiative "dies". In this manner, the financial initiative of the Crown is respected.

Therefore, a decision taken by the Speaker on whether an initiative involves spending is absolutely critical to its progress. To apply a consistent and objective approach to each case, the Speaker is guided by two basic principles: that the terms and conditions of the royal recommendation cannot be expanded upon, and that a new and distinct request for expenditure must be accompanied by a royal recommendation.

Terms and conditions: The royal recommendation states that an appropriation of public funds must be made "under the circumstances, in the manner and for the purposes set out" in the bill to which it is attached. The terms and conditions of the royal recommendation are a specific expression of the financial initiative of the Crown and amendments may not propose measures which go beyond these qualifications. Basically, terms and conditions relate to the mechanisms or schemes by which the authorization for spending is based. For example, the Small Business Loans Bill C-9 provided loan guarantees for certain financial institutions but not Alberta Treasury Branches; an amendment to include such institutions was judged to be beyond the terms of the royal recommendation. (5) An amendment to Crop Insurance Bill C-48 proposed to extend compensation for crop damage caused by water fowl to coverage of crop damage by wildlife; the Speaker explained "This, of course, is not procedurally acceptable because not only does it go beyond the scope of the clause but it also infringes on the royal recommendation." (6) On the other hand, the Speaker found that an amendment to the National Housing Bill C-133 which added municipally-owned housing corporations to the definition of non-profit organizations was within the terms and conditions of the royal recommendation. (7)

New and distinct requests for expenditure: This refers to measures which propose spending and are not supported by any existing statute. When considering a bill or amendment, the Speaker reflects on whether some entirely new activity or function is being proposed that radically diverges from those already authorized. The simplest examples are bills which propose the establishment of new offices, agencies or departments. Speakers have consistently ruled that such measures require a royal recommendation. (8)

Since the adoption of the procedural reforms on the Supply process in the late 1960s, a significant body of parliamentary jurisprudence has developed on this subject. Rulings have been delivered by the Speaker on the need for a royal recommendation when committee amendments are contested on the floor of the House, when private Members' bills are called into question and, prior to 1991, when rulings were delivered on report stage amendments.

The following cases, organized by theme, illustrate some further complexities when dealing with the requirement for a royal recommendation:

Appropriating provisions

Ultimate authority: The royal recommendation provides the ultimate authority to make an appropriation. Nothing further should be required to authorize spending, otherwise the constitutional authority of the Crown would be compromised or Parliament would be delegating its powers to some other body. Amendments to Unemployment insurance Bill C-124 were ruled inadmissible because they would have subjected spending provisions to an additional resolution of the House. In the Ukrainian Canadian Restitution Bill C-331, a provision called on the government to enter into negotiations with a community to set appropriate levels of restitution. A royal recommendation is not required for the unknown outcome of future negotiations. The Speaker explained that "... it cannot be said that this bill upon enactment would effect an appropriation of public funds. At the very least, a bill effecting an appropriation of public funds ... does so immediately upon enactment. Once Parliament approves a bill that requires a royal recommendation, there should be nothing further required to make the appropriation. To subject an appropriation to a subsequent action beyond the control of Parliament is in effect for Parliament to delegate its powers and responsibilities in respect of supply to someone else. This Parliament cannot do." (9)

Eluding requirement: In an attempt to elude the requirement for a royal recommendation, bills have contained wording to the effect that nothing in the bill should be interpreted as involving spending. The Speaker has ruled that such provisions are not an acceptable manner of eluding the requirement for a royal recommendation. A...