Briefing binder created for the Deputy Minister of Finance on the occasion of an appearance before Committee of the Whole on May 26, 2021

The following tables outline the year over year changes since the 2020-21 Main Estimates.

Increases in voted items are generally a result of additional funding received for initiatives or programs that were approved via a Treasury Board submission. 

Decreases in voted items are generally a result of the expiration of time limited funding for specific initiatives or programs.

The increase in budgetary statutory estimates is due to the following factors:

• The Canada Health Transfer is a Federal Transfer provided to provinces and territories in support of health care.
• The increase of $1,256.1 million is due to the legislated growth rate of nominal gross domestic product of 3.0 per cent for 2021-22. 

• The Fiscal Equalization program ensures that less prosperous provinces have sufficient revenue to provide reasonably comparable levels of public services at comparable levels of taxation, thereby reducing fiscal disparities among provinces. 
• The increase of $338.0 million is due to the legislated growth rate of nominal gross domestic product of 1.6 per cent. 

• Interest on Unmatured Debt are payments that will be made over the course of the year on the Government's market debt (i.e. Government of Canada bonds, Treasury Bills and retail debt). The interest recorded is dependent upon the level and composition of unmatured debt, the effective interest rates applicable and the cost of servicing the debt.
• The $1,527.1 million decrease reflects the impact of lower forecasted interest rates forecasted by private sector economists and takes into consideration borrowing increases required for the COVID-19 pandemic response.

• The Canada Social Transfer is the federal transfer provided to provinces and territories in support of social assistance and social services, post-secondary education, and programs for children.
• The $450.6 million increase is a result of the legislated 3 per cent annual growth rate.

• Other Interest Costs represent the interest on liabilities for federal public service pension plans, deposit and trust accounts and other specified purpose accounts.
• The interest recorded in this vote is a statutory requirement and is dependent upon the level and composition of pensions and other liabilities, as well as the applicable effective interest rates. 
• The decrease of $438.7 million reflects a decrease in the average Government of Canada long term bond rate used to calculate interest on the public service superannuation accounts, which pertain to service pre-April 1, 2000.

• The Territorial Formula Financing Program enables territorial governments to provide their residents with programs and services that are comparable to those provided in the rest of Canada, at comparable levels of taxation.
• The $199.7 million increase reflects the incorporation of new and updated data for territorial expenditure requirements and revenue capacities into the program's legislated formula.

• Through the Canada Infrastructure Bank (CIB), the federal government has committed $35 billion to support infrastructure projects across the country. The CIB will focus on priority investment sectors including transit, green infrastructure, clean power, broadband access, and trade and transportation.
• The $3,968.0 million increase reflects payments to the bank to carry out approved activities as outlined in  their 2020-21 to 2024-25 Corporate Plan.

• The International Development Association is the concessional financing arm of the World Bank. It provides 35-40 year interest free loans and grants to countries at risk of debt distress.   
• The International Development Association holds a replenishment every three years to seek financing from donors for the upcoming three-year period. The 19^th replenishment was finalized in December 2019, where Canada pledged a grant of $1,271.0 million, to be paid in three annual instalments beginning in fiscal year 2020-21, and a concessional loan of US$630.0 million, to be paid in two annual payments starting in fiscal year 2021-22. 

• Finance Canada and the Royal Canadian Mint have a Memorandum of Understanding for the Mint to produce and manage the distribution of domestic coinage on behalf of the Department. The Department of Finance reimburses the Royal Canadian Mint for the cost of coinage production and distribution.
• The decrease of $2.0 million reflects the Mint's revised forecasts for coin demand. Coin demand fluctuated due to COVID and is expected to decline more sharply in the long term. 

• At the G8 Summit in Gleneagles in 2005, donors, including Canada, agreed to have international financial institutions cancel 100 per cent of the debts owed to them by eligible poor countries to free up resources to help such countries achieve Millennium Development Goals. To cover its share of the costs, Canada committed a total of $2.5 billion over the 50 year lifespan of this initiative. Canada's first payment for this initiative was made in fiscal year 2005-06. Annual payments will continue until 2054.
• The increase of $15.2 million is in line with the revised payment schedule agreed to by the Government of Canada and the World Bank in 2019.

• Statutory Subsidies are annual grants paid to all provinces as a result of agreements entered into upon their joining Canada. There are four types of payments:  
  • Allowances to support the development and maintenance of their government; 
  • Allowances per head of population; 
  • Special grants; and 
  • Interest on debt allowances. 
  • While about one-third of these payments are items that are fixed, the remainder is calculated using a population based formula. The decrease of $4,588 is due to the updated population data for three provinces used in the calculation of the payment estimates. 

• The amount for Contribution to Employee Benefit Plans is set by the Treasury Board Secretariat. The 2021-22 percentage is 14.8 per cent of salary funding and represents the government's contribution to various employee benefit plans.
• The increase of $0.4 million is due to increases in salary included in these Estimates. 

• The Youth Allowances Recovery is a recovery from the province of Quebec related to the discontinued Youth Allowances Program.
• Recoveries from the province of Quebec are based on personal income tax data. The $6.2 million increase in the recovery is reflective of an increase in the estimated value of Quebec's personal income tax points based on estimates made in September 2020.

• The Alternative Payments for Standing Programs is a recovery from the province of Quebec of an additional tax point transfer (13.5 points) above and beyond the tax point transfer that used to be part of the Canada Health Transfer and the Canada Social Transfer.
• In the 1960s, Quebec chose to use the federal government's contracting-out arrangements for certain federal–provincial programs. Since Quebec, like other provinces, receives its full cash entitlement under the Canada Health Transfer and Canada Social Transfer, the value of these tax points is reimbursed to the Government of Canada each year. 
• The increased recovery of $36.1 million is a result of higher forecasted levels of federal personal income taxes.

3. Total Statutory (non-budgetary) – A decrease of $1.2 million

• This item represents Canada's purchase of initial shares pursuant to the Asian Infrastructure Investment Bank Agreement Act. Membership in the Asian Infrastructure Investment Bank provides an opportunity for Canada to further engage in multilateral development efforts that support inclusive economic growth in Asia and beyond.
• *Redacted*
• Canada has committed to purchasing 1,991 in paid-in shares, at a cost of US$199.0 million (approximately C$256.3 million), to be paid in five equal installments annually of US$39.8 million (approximately C$52.3 million) starting in 2017-18.
• The decrease in 2020-21 is due to forecasted US currency fluctuations.

For action: Your approval is required by February 10, 2021 to allow for the submission of the 2021-22 Departmental Plan to the Treasury Board of Canada Secretariat.

Further to statutory requirements in the Financial Administration Act, the Departmental Plan (DP) is tabled in Parliament by the President of the Treasury Board. The DP provides an overview of departmental priorities, planned results and associated resource requirements for fiscal year 2021-22. 

The 2021-22 Department of Finance DP has been prepared in consultation with branches and has been reviewed by members of the Departmental Audit Committee. The Ministers’ message summarizes the Department’s priorities for 2021-22 based on mandate letter commitments and government-wide priorities. The message has been prepared in collaboration with the Consultations and Communications Branch and may be amended to include additional information that you may wish to communicate to Canadians.

The financial data included in this plan is consistent with the information that will be presented in the Department’s Main Estimates, which are tabled simultaneously with the DP.

There is no requirement for Ministers to approve the supplementary information tables listed on page 32 of the DP as they will be approved administratively by the Chief Financial Officer before they are made available on the Department’s website.

Please note Treasury Board Secretariat (TBS) has advised there is a risk that departments that submit late may have to arrange their own tabling.

TBS requires one copy of the DP in both official languages, signed by both ministers, for tabling purposes. Upon approval, please sign the attached English and French cover pages.

Attachments (2):

1. 2021–22 Departmental Plan (EN)