Treasury Board of Canada: History, Organization and Issues

Feature by Jay Makarenko || Dec 14, 2009

The Treasury Board of Canada represent a key entity within the federal government. As an important cabinet committee and central agency, they play an important role in financial and personnel administration. Even though the Treasury Board plays a significant role in government decision making, the general public tends to know little about its operation and activities. The following article provides an introduction to the Treasury Board, with a focus on its history, responsibilities, organization, and key issues.

Treasury Board of Canada and Government

The role of the Treasury Board and Secretariat in the Canadian government

Historical Overview of the Treasury Board of Canada

Summary of the Treasury Board’s creation and evolution

Organization of the Treasury Board of Canada

Mandate, personnel, and financial structure of the Treasury Board

Issues Concerning the Treasury Board of Canada

Treasury Board, public administration, democracy

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Treasury Board of Canada and Government

The role of the Treasury Board and Secretariat in government

Treasury Board as a Cabinet Committee

In discussing the Treasury Board of Canada, it is necessary to first make an important initial distinction between the Treasury Board proper and the Treasury Board Secretariat. The Treasury Board proper is a small cabinet committee consisting of ministers appointed by the Prime Minister. The federal cabinet is arranged into several committees, which have specific responsibilities and areas of focus. In most cases, this committee system is informal and may be altered at the prime minister’s discretion. The Treasury Board, however, is unique in that it is the only committee established through legislation and formally recognized as a committee of the Queen’s Privy Council of Canada. As such, its mandate, composition, and organization is established in Canadian law.

Generally speaking, the Treasury Board plays a role within the federal government in managing its finances. More specifically, its key roles may be divided into three categories: financial management, financial advisor, and personnel management. Accordingly, the Treasury Board is a highly important cabinet committee with significant and broad influence on the operation of government generally, as well as individual departments and agencies.

With regard to financial management, the Treasury Board is responsible for overseeing and reporting on government expenditures. The Treasury Board, however, is not a policy maker. Decisions concerning policy and program direction, as well as general government spending, are made by the prime minister, other “policy-focused” cabinet committees, and individual departments and agencies. Moreover, the Treasury Board is only responsible for the expenditure side of the government’s financial management; the revenue stream, including tax policy and collection, is the responsibility of the federal Department of Finance.

All this is to say that the Treasury Board oversees the distribution of funds from government revenues to the various elements of government, ensures that individual departments and agencies spend within their pre-determined budgetary limits, and reviews departmental spending to ensure value-for-money. Moreover, the Treasury Board is responsible for preparing and reconciling the government’s annual spending estimates, which outlines how much money each department and agency of the federal government spends over a given fiscal year. In this context, the Treasury Board may be viewed as the federal government’s internal banker and accountant.

While general policy decisions are outside of the Treasury Board’s domain, it nevertheless plays the role of financial advisor to the government. As such, the Treasury Board and its staff make recommendations to the government concerning the efficient management of its finances, such as advising on new accounting or expenditure approval systems. Moreover, when the government seeks to alter spending levels, be it across the board or within particular policy sectors, the Treasury Board often advises as to where spending on specific areas and programs can be decreased or improved.

Not only is the Treasury Board central to the administration of the federal government’s finances, but it also plays an important role in personnel management. While the Public Service Commission of Canada and individual government departments and agencies are responsible for appointing and recruiting members to the public service, the Treasury Board acts as the general manager and employer of the bureaucracy. Accordingly, the Treasury Board has a number of specific duties, including responsibility for collective bargaining with public service unions, setting out general employment standards and guidelines, and overseeing the administration of employment legislation relating to the public service, such as the Official Languages Act.

Treasury Board Secretariat as a Central Agency

The Treasury Board is even more unique in that it is only cabinet committee that does not rely on the Privy Council Office (PCO) for secretariat support. Instead, it is served by its own body of public servants — the Treasury Board Secretariat (TBS).

The TBS is charged with providing support to the Treasury Board. Thus, it provides advice to Board members on policies, priorities, and directives. Moreover, the TBS acts as the ‘eyes, ears, and arms’ of the Board with respect to the discharge of the Board’s responsibilities. Considering the federal government’s extensive scope, Board members themselves cannot effectively oversee management of government spending in each department and agency. Instead, Board members usually set out general guidelines and priorities, leaving the actual job of oversight and review to TBS staff.

In its role, the TBS is often considered a key central agency of government. The term “central agencies” refers to a group of government administrative bodies that enjoy responsibilities extending across all policy areas. Other key central agencies include the Department of Finance, the Privy Council Office (PCO), the Public Service Commission, and the Prime Minister’s Office (PMO).


Historical Overview of the Treasury Board of Canada

Summary of the Treasury Board’s creation and evolution

Early History of the Treasury Board

The Treasury Board was first established in 1867 by Canada’s first prime minister, Sir John A Macdonald. Its general purpose, much as it still is today, was to assist cabinet ministers in the overall financial management of the federal government. In so doing, the Board’s key responsibility was to prepare and reconcile the government’s annual spending estimates. However, the new organization was created within the federal finance department, with the minister of finance chairing, and the deputy minister of finance acting as the Board’s secretary.

In 1869, the Treasury Board was granted an official mandate within government on a statutory basis. To this day, it remains the only committee of Cabinet grounded in legislation. Initially the Treasury Board’s powers were set out in the first federal Finance Act. The Board’s authority and responsibilities have since evolved through a number of pieces of federal legislation, the most important of which, today, is the Financial Administrative Act.

For a list of legislation relevant to the Treasury Board and Treasury Board Secretariat:

Move to Centralization in the 1930s and 40s

Since its initial creation in 1867, the Treasury Board has gone through a number of important periods of reform. The first of these came in the 1930s and 40s, as the federal government was dealing with a series of economic and political events — specifically, the Great Depression and the Second World War.

Before this period, Government of Canada finances were managed in a somewhat haphazard manner. While the Treasury Board fulfilled its mandate, preparing and reconciling annual government spending estimates, there was little in the way of centralized or standardized expenditure/accounting systems. Overspending by government departments and officials was not uncommon. Moreover, different departments and agencies within the government often used very different accounting systems. In 1930, when R.B. Bennett became prime minister, he was unable to determine the precise financial position of the federal government due to these systematic shortcomings.

In response, Prime Minister Bennett’s government passed the Consolidated Revenue and Audit Act of 1931, which imposed a highly centralized system for authorizing expenditures within the government, in addition to providing for a standardized accounting system. The Act also created the position of Comptroller of the Treasury within the Department of Finance, who was responsible for authorizing each expenditure made under the authority of a particular minister. Also, the Treasury Board and its staff began taking a greater role in controlling government preparing and controlling government expenditures.

During the Second World War, the federal government delegated greater authority to the Treasury Board. Under a new Financial Administration Act, the Treasury Board was permitted to make final decision on a number of expenditure-related matters without having to refer to full cabinet.

Move to Decentralization in the 1960s

The next significant period of Treasury Board reform took place in the 1960s. As already mentioned, Prime Minister Bennett’s reforms brought centralized financial control to the federal government — a period when the Treasury Board played a greater role in controlling government expenditures. This was due, in large part, to the economic and political crises of the day. By the 1960s, however, the federal government was enjoying a much healthier and stable financial position.

In 1960, the federal government launched the Royal Commission on Government Organization, which is commonly referred to as the “Glassco Commission” after its Commissioner, Grant Glassco. The Commission’s purpose was to inquire into, and make recommendations regarding, the organization and methods of federal government departments and agencies. In its five-volume final report, released in 1962–63, the Commission recommended a decentralized approach to management — one in which the government should “let managers manage,” while individual departments should be free of inappropriate central control.

With the easing of the government’s financial position, and the Glassco Commission’s recommendations, the federal government under took several key reforms relating directly to the Treasury Board. Overall, the government emphasized ministerial authority over central control, whereby individual departments gained greater autonomy and accountability regarding their expenditures. While these reforms did not eliminate the role of the Treasury Board in the government’s financial management, it did have the effect of blunting some of its influence.

Another important change to take effect during this period involved the organization of the Treasury Board itself. Previously, the Board had operated within the federal Department of Finance. In 1966, however, the Treasury Board and its Secretariat were separated from Finance, and became their own department. Under the re-organization, the minister of finance no longer headed the new department (although the minister still sat on the Board). This office was instead filled by a separate ministerial position referred to as the President of the Treasury Board. In addition, an independent office of the Secretary of the Treasury Board was established, ending the tradition where the deputy minister of finance held the title.

Additionally, in 1967, the Treasury Board was assigned the role of employer of the federal public service. As such, it became responsible for collective bargaining with public employees and overseeing the administration of the Official Languages Act in the public service.

Recentralization in the 1980s and 90s

Beginning in the late 1970s, the move to a decentralized management system came under critical attack. During the 1960s and early 1970s, government expenditures ballooned with the implementation of the modern welfare state and its associated social programs. Consequently, the federal government again found itself under considerable financial pressures. Moreover, during the 1970s, the federal government came under attack for its financial management. In 1976, the federal Auditor General publicly criticized the government, reporting that Parliament and the government had lost, or was close to losing, effective control over the public purse.

Continuing with this theme, the 1976 Royal Commission on Financial Management and Accountability (commonly referred to as the “Lambert Commission” after its head, Allan Lambert) concluded that the federal government needed to exercise greater control over its financial stewardship. A key Commission recommendation was to strengthen the role of the Treasury Board and its Secretariat, such that they could centrally oversee and manage the expenditures of individual departments and agencies.

In the period during and following the Lambert Commission, the federal government made significant changes to re-centralize financial control, with important consequences for the Treasury Board and its Secretariat. While this did not usher in a new era of domineering centralization, it did lead to attempts to balance central control with “letting the managers manage.” In 1978, the new Office of the Comptroller General was established, reporting to the President of the Treasury Board (the previous office of the Comptroller of the Treasury had been abolished in the 1960s during the period of decentralization). The responsibilities of this new office were broader than those of the previous Comptroller of the Treasury. In addition to certifying and authorizing expenditures for departments and agencies, the new Comptroller was tasked with the responsibility of program evaluation and internal audits. In 1993, the Office of the Comptroller-General was folded into the Treasury Board Secretariat, only to be re-established as a separate entity within the Secretariat in 2003.

Also important to note: the introduction of new financial processes, such as the 1979 Policy and Expenditure Management System (PEMS), later replaced by the Expenditure Management System, in 1995. PEMS builds on previous financial management systems, such as the Planning, Programming and Budgeting System (PPBS), first introduced in the late 1960s. Under this system, Cabinet policy committees set ceilings for departmental expenditures. Moreover, the Treasury Board plays a central role in this process, overseeing implementation of these set ceilings. This includes costing programs and allocating funds to individual departments and agencies.

The pivotal role played by the Treasury Board is further evident during the late 1980s and 90s, as successive government’s attempted to reign in the federal deficit. During this period, the Treasury Board and its Secretariat, in conjunction with other central agencies (notably the Department of Finance and the Privy Council Office) worked to identify and recommend areas where the federal government could cut expenditures. This process began under Conservative Prime Minister Brian Mulroney, and was later accelerated under the Liberal government of Prime Minister Jean Chrétien.

While smaller reforms of the Treasury Board have taken place since the 1990s, its general function has remained the same: namely, to provide central oversight and management relating to the expenditures of individual federal departments and agencies.


Organization of the Treasury Board of Canada

Leadership, staff, and financial structures of the Treasury Board

Members of the Treasury Board of Canada

Membership in the Treasury Board proper, as a cabinet committee, is set out in the federal Financial Administration Act. Under this legislation, the Board is headed by the President of the Treasury Board, who is designated a cabinet minister. The president acts as the chair of the Board and, in this function, presides over Board meetings. In addition, the President is responsible for the activities of the Secretary of the Treasury Board and the Comptroller General of Canada (see below for more on these offices).

In addition to the president, the Act provides for the appointment of four other members to the Treasury Board, as well as alternates. Under the legislation, these positions must be filled by members of the Queen’s Privy Council for Canada. In practice, senior members of the federal cabinet are usually chosen, with the minister of finance filling one of the Board seats. The remaining members and alternates are selected at the prime minister’s discretion.

Personnel of the Treasury Board Secretariat

The Treasury Board Secretariat (TBS) is headed by the Secretary of the Treasury Board, a senior public servant who is designated a deputy minister. The secretary is responsible for the day-to-day administration of the TBS and reports to the Treasury Board president. The secretary usually represents the face of the TBS to the president and the Board, meeting regularly with its affiliated ministers to provide updates on the Secretariat’s work and advice on policies and directives.

Another important member of the TBS is the Comptroller General of Canada, a senior public servant responsible for government-wide direction and leadership for financial management and internal audits. While the comptroller general is part of the TBS and reports to the secretary and president of the Treasury Board, s/he is supported by his/her own staff within the Office of the Comptroller General (OCG).

In the fiscal year 2006-07, the TBS employed 1,179 full time equivalents (2006-07 Departmental Performance Report). TBS staff possess a range of educational backgrounds, in areas including policy/public administration, economics, business administration, and accounting.

Organization of the Treasury Board Secretariat

TBS staff are organized into different branches or sectors, each with their own focus and areas of responsibility. Examples of TBS branches include:

  • Expenditure Management Sector: focuses on the government’s broader expenditure system and plays a role in the entire expenditure cycle, including expenditure analysis, forecasting and expenditure management strategies, policies, and operations through results-based budgeting, evaluation, accountability, and reporting
  • Chief Information Officer Branch: provides strategic direction and leadership for government-wide information management and information technology
  • Office of the Chief Human Resources Officer: focuses on the TBS’s responsibilities in supporting the Treasury Board as public service employer
  • Office of the Comptroller General: focuses on government-wide financial management and internal audit activities
  • Government Operations Sector: provides analysis and advice on strategic resource allocation for federal government department and agencies
  • Regulatory Issues Unit: supports the Treasury Board president on regulatory issues
  • Strategic Communications and Ministerial Affairs: ensures the president, secretary, associate secretaries, and exempt staff of the Treasury Board and Secretariat are provided with the briefing, correspondence, and logistical support related to Treasury Board meetings, parliamentary affairs, Cabinet affairs, and dealings with other government departments and non‑governmental organizations

Issues Concerning the Treasury Board of Canada

Treasury Board, public administration, democracy

Treasury Board as Kafka’s Castle

One of the most widely cited examinations of the Treasury Board is A. W. Johnson’s 1971 article The Treasury Board of Canada and the Machinery of Government of the 1970s. Central to Johnson’s article is the comparison of the Treasury Board to the fictional castle in Franz Kafka’s The Castle. Johnson argued that the Treasury Board, like Kafka’s castle, was a mysterious and all-powerful organization — one which ruled the life of the public service. As he stated:

In the minds of many public servants the Treasury Board of Canada, as it has been known in the past, could be likened to Kafka's Castle: the apparent if unknown source of authority which governs the village (the Public Service) - remote, mysterious, all-powerful, beyond comprehension in terms both of reason and judgment, and above all beyond the reach, let alone the influence, of the ordinary mortals governed by it. The public servants in turn have been the citizens of the village: performing their daily task in the shadow of the Castle (the Treasury Board) — obeying its rules without reason or recourse, abiding by its decisions with resignation, and above all accepting its authority without question.

The “Kafka’s castle” metaphor was intended to express two key ideas. First, that the Treasury Board, as a central agency, played an important role government and represented a mechanism for exercising central control over individual departments and agencies. As Johnston noted in his article, however, during this period the Treasury Board had begun to introduce reforms to allow for greater autonomy at the departmental and agency levels regarding financial management. Second, the public service itself knew very little about the Treasury Board and the manner it which it managed government spending. To the public service, the Treasury Board was a “remote” and “mysterious” entity it was required to obey “without reason or recourse.”

Between Administrative Control and Flexibility

Johnson’s “Kafka’s castle” metaphor is useful in that it highlights a number of key administrative and political issues regarding the Treasury Board’s operation. In the context of administration, it brings attention to the basic tension between exercising centralized control and allowing for flexibility through decentralized decision making.

In regards to the former, the Treasury Board can, and has, served as a mechanism through which the prime minister and cabinet can control the financial administration of individual departments and agencies. For some, such centralized control is necessary for a properly functioning public service. As Johnson himself argues, cabinet must maintain a certain minimum control over the administrative operations of its departments if it is to remain accountable to Parliament and the electorate. Correspondingly, one may argue that individual departments and agencies are incapable of seeing the “big financial picture” and exercising fiscal prudence. As such, central agencies, such as the Treasury Board and its Secretariat, are necessary to bring financial discipline to government — especially in difficult economic and fiscal times.

Others, however, have argued that flexibility through decentralized administration is vital, not only to effective program service delivery but to financial efficiency. This view was at the heart of the 1960 Glassco Commission as well as the New Public Management (NPM) movements of the late 1990s, which focused on the mantra “letting the managers manage” and advocated less centralized control.

The tension can thus be characterized as follows: on the one hand, the Treasury Board is a necessary instrument of centralized control, both in ensuring accountability and in bringing broad coordination and vision to the financial management of government. On the other hand, if centralized control is too domineering, then government loses the flexibility and efficiencies stemming from individual departments and agencies playing a role in decision making.

The Treasury Board’s history has been characterized by this tension, as it has shifted like a pendulum between centralization and decentralization. Beginning in the 1930s, the Treasury Board was used to bringing strong central control to spending, as the government attempted to deal with the economic and fiscal crisis of the Great Depression. In the 1960s and early 1970s, however, the Board’s influence diminished slightly, as the government sought to allow individual departments and agencies greater administrative say. Then, the 1980s and early 1990s again saw a greater role for the Treasury Board, as governments dealt with rising social program costs and systematic deficits.

Centralization and Democracy

Another issue in this whole discussion is the role of the Treasury board vis-à-vis the implications for Canadian democracy. Not only is Johnson’s “Kafka’s castle” metaphor applicable to the relationship between the Board and the public service, but also between the Board and the electorate. The Treasury Board and its Secretariat enjoy considerable influence over the nation’s financial management and, in turn, the programs and services offered by federal departments. But the Treasury Board and its Secretariat operate largely in the shadows, without much in the way of public knowledge or scrutiny of their actions. This lack of transparency limits democratic accountability, as the public and Parliament cannot adequately assess the performance of the organization and its staff, or hold officials accountable for their conduct.

That said, the Treasury Board does not operate within a vacuum of transparency and democratic accountability. Members of the Treasury Board, including its president, are cabinet ministers, who are responsible to the elected members of the House of Commons — and the Canadian people. In the end, the Treasury Board reports to the prime minister, who is again responsible to the House of Commons, as well as the general electorate for his/her political decisions and management of government. Furthermore, under the Federal Accountability Act, introduced in 2006, deputy ministers, such as the Treasury Board secretary, are required to regularly appear before parliamentary committees to explain the organization’s actions and related decision making.


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