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Kim G C Moody’s Musings – 1-1-1 Newsletter For May 21, 2025
One Comment About Taxation – Is Canada Going to Have a Federal Budget Presented?
Last week, the federal Finance Minister announced that a budget would not be presented during the upcoming session of Parliament but there would be a Fall Economic Statement presented later this fall. That surprised many and it should! Isn’t one of the basic constitutional principles of our democracy that taxpayer money cannot be spent without the consent of Parliament?
Yes. Under sections 53 and 54 of the Constitution Act, 1867, no public money can be spent without the consent of Parliament. However, like most rules, there are exceptions. Under section 30 of the Financial Administration Act, the Governor General may use time-limited “special warrants” to enable the federal government to spend money without parliamentary approval if parliament is not in session, spending is urgently required for the public good and the funding request has not been previously authorized by Parliament.
The use of special warrants has been rare in Canadian history. But, following the prorogation of Parliament in early January of this year, the Governor General approved two special warrants to fund federal spending. The first was authorized until May 15, 2025 for approximately $40 billion in spending and the second was approved on May 2, 2025 for $33 billion until June 29, 2025. It is highly debatable whether or not such special warrants were able to be issued during the period of prorogation but I’ll leave that debate for constitutional experts.
To be clear, no budgets were presented to the public for these special warrant spending amounts. One might argue that no budget was necessary since a budget was presented in April 2024 for that upcoming year and was updated by a Fall Economic Statement (FES) in December 2024 but, again, that is debatable.
Regarding budgets, there are no laws requiring the federal government to present an annual budget but there are long-standing constitutional conventions that make it obligatory. A budget serves as the primary mechanism for the government to seek Parliament’s approval for taxation and spending.
Given the above framework, it was shocking that a 2025 budget would not be presented. However, on Sunday May 18, after obviously feeling the heat, PM Carney said that there would be a much more comprehensive budget in the fall. Does he mean a full budget? Or a FES? I assume he means the former. If so, that will have been roughly 18 months since the tabling of the last federal budget in April 2024. Not good.
Since Canada was born in 1867, there has always been an annual full federal budget presented. Until 2020, the COVID year. There were annual budgets presented during World War I and II, the Great Depression years of 1929 until the 1930s and even with unstable minority governments – like the Joe Clark government of 1979. Even with new governments being elected, there have always been budgets presented, often with short but reasonable delays. Given such facts, having no budget presented in 2020 was shocking.
Until PM Carney’s Sunday announcement, it appeared Canada would go without a 2025 budget. The 2020 precedent was unsettling then and repeating it would have been indefensible.
And to be clear, a FES is not a budget – no matter how “comprehensive” it is – nor is a brief fiscal update that will likely be presented to Parliament before it recesses for the summer.
A FES has historically been used as a mid-year update to provide revised projections and updates on economic and fiscal performance. The annual federal budget is the foundational policy document for the government and is a confidence motion (in other words, the government can fall if the budget is not supported by Parliament). The FES is not. Skipping a federal budget would have been a significant departure from convention while raising obvious questions about fiscal transparency, parliamentary oversight and accountability.
Transparency, oversight and accountability are not aspirational objectives. They are foundational to providing a responsible government. When public scrutiny is evaded, trust in institutions will inevitably erode. Taxpayers have a right to know how their hard-earned dollars are being spent, and Parliament has a duty to approve it with sufficient transparency. Without proper oversight, governments can easily drift into recklessness, ideological spending and corruption.
From a tax perspective, the government has signalled that it will push through one of its campaign promises – to reduce the lowest personal tax bracket by 1% which means all personal tax credits with the exception of charitable donations in excess of $200 will be reduced by 1% as well, making the use of such credits less beneficial – in the upcoming session of Parliament. While tax cuts are generally welcome, this is not a substitute for a comprehensive fiscal plan.
When you combine the original non-presentation of a federal budget with the proposal by Mr. Carney to “separate the operational budget from the capital budget” (an old and deceptive accounting trick to mask spending), the recent spending by special warrants and the fact that retaliatory tariffs against the U.S. were quietly suspended during the recent election campaign while encouraging Canadians to be “elbows up” (a cringeworthy and vacuous slogan), the transparency record of this “new” government is not off to a good start.
Canadians should be deeply concerned by any attempt to obscure transparency and reject any justification for it especially from those citing U.S. volatility or increased NATO spending targets. Nonsense. The reality is there will always be shifting sands but a budget is a necessary starting point for transparency and accountability.
As Justice Louis Brandeis so appropriately stated, “Sunlight is said the best of disinfectants”. I agree. Instead of swaggering around with “elbows up”, it’s time for this “new” government to step into the sunlight and face Canadians directly. Continuously. Our parliamentary democracy demands it.
Let’s hope that the May 18 announcement by PM Carney of a “budget in the fall” means a full budget. Not a “comprehensive” FES.
One Comment About Leadership – Leaders, Are You Always Doing Your Best?
Last month, I wrote about The Majesty of Calmness by William George Jordan, a short book from 1898 that remains remarkably relevant today. One of the most impactful sections of the book is “Doing Our Best at All Times.” A few powerful excerpts:
“I will do each day, in every moment, the best I can by the light I have; I will ever seek more light, more perfect illumination of truth, and live as best I can in harmony with the truth as I see it.”
“If a man honestly seeks to live his best at all time, that determination is visible in every moment of his living; no trifle in his life can be too insignificant to reflect his principle of living.”
“No matter how humble the calling of the individual, how uninteresting and dull the round of his duties, he should do his best. He should dignify what he is doing by the mind he puts into it; he should vitalize what little he has of power or energy or ability or opportunity, in order to prepare himself to be equal to higher privileges when they come.”
“The man who is seeking ever to do his best is the man who is keen, active, wide-awake and aggressive. He is ever watchful of himself in trifles; his standard is not ‘What will the world say?’ but ‘Is it worthy of me?’”
Brilliant wisdom. Leaders, can you look in the mirror and say you’re doing your best? If not, it’s time to course-correct. Your team, your family, and your legacy depend on it.
One Comment About Economics – Wait….You Mean Canada’s Inflation Rate Cooled Because of the Elimination of the Consumer Carbon Tax?
How many times over the past decade have we heard that Canada’s inflation rate wasn’t impacted by the ever-increasing consumer carbon tax? Plenty, especially from the governing Liberals and the clapping media seals echoing their talking points.
Now, a recent Statistics Canada report tells a different story. It shows that Canada’s inflation rate cooled significantly last month, largely due to the elimination of the consumer carbon tax in March 2025. The sharpest price drop? Gasoline.
Here’s what Statistics Canada reports:
“The Consumer Price Index (CPI) rose 1.7% year over year in April, down from a 2.3% increase in March. The slowdown was driven by lower energy prices, which fell 12.7%. Excluding energy, the CPI rose 2.9%… Gasoline prices fell 18.1%, primarily due to the removal of the consumer carbon price.”
A recent Financial Post article analyzing this data dives into additional pressures—from U.S. tariffs to rising food and shelter costs—and suggests the Bank of Canada may drop its policy rate to 2.25% this summer.
What happens next under our new PM remains to be seen. But for those paying attention, it’s not rocket science: eliminate an inflationary tax, and inflationary pressures drop. Basic economics.
Bonus Comment – Quote From American Poet and Civil Rights Activist Maya Angelou – To Do Your Best At All Times
“Do the best you can until you know better. Then when you know better, do better.”
Hope you enjoyed this edition of 1-1-1. If you’re not already part of the In the Mood Network, now’s the time. Please sign-up today. Whether it’s through consulting, coaching, speaking, or writing, my work is about planting acorns: deliberate, principled actions that challenge the status quo and grow into something far bigger. The goal? Bold reform. Stronger foundations. And a country that values hard work and common sense.
