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Questioning the Legality of the Federal "Spending Power"

Type: Research Studies
Date Published: October 11, 2007
Research Topics:
Law & Judicial System, Government Spending

The federal "spending power" refers the alleged "power of Parliament to make payments to people or institutions or governments for purposes on which it (Parliament) does not necessarily have power to legislate." Despite general legal and scholarly consensus that spending power rests on uncertain legal grounds, it is currently used to justify a complex tax-and-transfer system now worth upwards of $42 billion per year. This publication examines the case for and against the federal spending power, evaluating its legality in the context of Canada's founding debates, constitutional text, and binding judicial precedents.

The constitutional limitations of the spending power are not only of academic significance to politicians, lawyers, and scholars. Ordinary citizens should also be concerned about how the spending power redistributes legislative power, distorting their local policy preferences in favour of the priorities of national majorities. As federal and provincial politicians negotiate fiscal transfers amongst themselves, power is transferred away from the electorate to elites. Rather than shifting political responsibility from one order of government to the other, the federal spending power blurs the line of accountability of both orders, and contributes to a lack of confidence in Canada's democratic institutions.

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