The Department of Finance
140 years and counting

A New Department for a New Country

In 1867, Canada became a self-governing dominion, comprising New Brunswick, Nova Scotia, Ontario and Quebec.

The first Minister of Finance, Alexander Galt, had previously served in the same capacity for the Province of Canada (made up of parts of present-day Ontario, Quebec and Labrador).

The Department’s Creation and its Marching Orders

The Department of Finance was one of the original departments of the Government of Canada. Others included Agriculture, the Penitentiary Service, Public Works, Post Office, Secretary of State, and the Privy Council Office.

Originally, the Department of Finance’s primary functions were bookkeeping, administering the collecting and spending of public monies, and servicing the national debt.

The total number of officers, clerks, and messengers in the Department in 1867 was twenty-eight.

In June 1869, John Rose, who succeeded Alexander Galt as Finance Minister, introduced a statute spelling out the Department’s duties, which were basically doing everything not assigned to anyone else.

The Evolution of the Department

Canada has had 39 Ministers of Finance since 1867, looking after a range of tasks.

At various times since its establishment, the Department has done the work of the Treasury Board Secretariat, the Comptroller of the Treasury, the Royal Canadian Mint and the Canadian International Trade Tribunal, as well as taking charge of tax inspection and old age and public service pensions.

During World War I, the federal government borrowed from, and taxed, individual Canadians directly for the first time, through Victory Loans and income tax, which was introduced in 1917.

In the early 1930s the Government transferred detailed operational and program responsibilities to other departments or agencies, so the Department of Finance could concentrate on essential analytical and policy work.

In 1939, departmental officials developed a new approach to the federal budget. Instead of simply attempting to balance expenditures with revenues, they began to use taxing powers and spending policies to influence economic development in general.

During World War II, Canadian GNP doubled and annual federal spending increased to 10 times that of the 1939 figure, significantly increasing the influence of the department. Much of that influence was exercised through its budgets.

The Bottom Line on Budgets

Canada’s first Budget, tabled on December 7, 1867, showed $7.4 million in receipts and $5.3 million in expenditures.

Since then, there have been 142 Budgets, as well as 22 related mini-Budgets, Interim Budgets, Economic and Fiscal Updates, and Financial Statements.

The shortest interval between Budgets was four months (June 18, 1971 to October 14, 1971). The longest was 16 months (February 25, 1937 to June 16, 1938).

In the early years, the Budget consisted simply of a speech by the Finance Minister in the House of Commons, which was recorded by hand in Hansard.

Newspaper reporters sitting in the Press Gallery made notes on the speech, from which they wrote their stories. The Department did not provide the media with special Budget documentation or briefings.

By the 1960s, copies of the Budget speech were produced on an ink-fed duplicating machine and collated by hand in the Minister’s office. This document was given to reporters as the Minister began his speech.

The Budget process today is much more elaborate, sometimes involving footwear.

No one knows for sure how or when the “tradition” of a Finance Minister wearing new shoes on Budget day began.

By 2007, seven Canadian Finance Ministers had worn new shoes on Budget day, including three who made their own variations on the theme. Paul Martin sported work boots. John Crosbie wore mukluks. And Jim Flaherty, who wore new shoes on Budget Day in 2006, bought his son ice skates for Budget 2007.

The Department Today

Today, as we move toward the next milestone of the 150th anniversary, the Department of Finance continues to play a vital role in helping the Government of Canada develop the social and economic policies that will further improve the standard of living and quality of life of Canadians, their families and their communities in the years to come.

And it does so as one of the Government of Canada’s smallest departments, with fewer than 1,000 people.