The Federal Budget and the Estimates: How They Compare

(Disponible en français : Le budget fédéral et le budget des dépenses : ce qui les distingue)

In Canada’s parliamentary system, the federal government must obtain Parliament’s approval to change taxes and to spend funds. The government presents its intentions to Parliament in the estimates and in the federal budget, which the Finance Minister delivers today. As both include references to planned spending, parliamentarians may wonder: What is the role of these documents? Why might their numbers differ?

The budget

The federal budget is a forward-looking policy document in which the government announces proposed spending, taxation and other initiatives, and provides fiscal and economic forecasts for the coming years. It is usually tabled in the House of Commons in January, February or March.

The vote on the budget is a confidence measure for the government. However, it does not authorize spending or changes in taxation.

These changes must be enacted in separate legislation that can take different forms, including:

  • appropriation bills, which authorize the federal government to spend money from the Consolidated Revenue Fund;
  • ways and means bills, which authorize changes to federal revenue collection through taxation and other means;
  • budget implementation bills, which implement various measures announced in the budget; or
  • other legislation.

The estimates

Parliament provides the government with the authority to spend funds through appropriation bills. To support Parliament’s consideration of these bills, the government presents its detailed spending plans in estimates documents, which provide information on planned discretionary and anticipated statutory spending by federal organizations.

Planned spending for the coming fiscal year is outlined in the main estimates, which must be tabled on or before 1 March. Requested discretionary spending for each federal organization is divided into votes, such as operating and capital expenditures votes.

The government also seeks Parliament’s approval to spend funds through supplementary estimates. In the past several years, there have been three supplementary estimates, in the spring, fall and winter, known as supplementary estimates (A), (B) and (C).

Supplementary estimates provide information to support appropriation bills that seek approval for spending on items announced in the budget, transferring funds within or between organizations, and other funding requirements.

Ongoing, or statutory, spending is authorized by previously adopted legislation for specific purposes, and is included in the estimates solely for information purposes. It constitutes almost two thirds of federal spending and includes major transfers to the provinces/territories, such as the Canada Health Transfer, and to individuals, such as Old Age Security benefits. The remaining one third of federal spending must be approved annually through appropriation bills.

Differences in spending figures

 Spending figures in the budget and the estimates may differ for several reasons:

  • The main estimates are finalized prior to the budget, so items announced in the budget generally are not included in the main estimates for that year. Instead, they may be included in supplementary estimates or the subsequent year’s main estimates.
  • The budget and the estimates are prepared using different accounting methodologies. The estimates are prepared on a modified cash basis; that is, they authorize cash expenditures to occur during the fiscal year. The budget is prepared on an accrual basis, whereby revenues and expenses are recorded in the period to which they relate, regardless of when the cash is paid or received. For example, under cash accounting, the purchase of a new building by the government is recorded in the fiscal year in which the money was spent to buy it. Under accrual accounting, the building is recorded as an asset that is expensed over time as the building ages.
  • The estimates present requests for authorizing spending on a net basis, with spending for some federal organizations netted by revenue the organization expects to receive from fees, sales or other sources. The budget presents federal spending on a gross basis; that is, spending is not netted by specified revenue.

Related Resources

Smith, Alex. A Guide to the Estimates. Publication no. 2009-25-E. Parliamentary Information and Research Service, Library of Parliament, Ottawa, 6 January 2010.

Author: Alex Smith, Library of Parliament