Archived - The Fiscal Monitor A publication of the Department of Finance: 2014-01

January 2014: budgetary surplus of $2.2 billion

There was a budgetary surplus of $2.2 billion in January 2014, compared to a surplus of $0.5 billion in January 2013.

Revenues increased by $1.2 billion, or 5.1 per cent, reflecting increases in most revenue streams. Program expenses decreased by $0.6 billion, or 2.6 per cent, while public debt charges increased by $0.1 billion, or 3.6 per cent.

April 2013 to January 2014: budgetary deficit of $10.5 billion

For the April 2013 to January 2014 period of the 2013–14 fiscal year, the budgetary deficit stood at $10.5 billion, compared to a deficit of $13.9 billion reported in the same period of 2012–13.

Revenues were up $8.7 billion, or 4.2 per cent, reflecting increases in personal income tax, non-resident income tax, Goods and Services Tax (GST), Employment Insurance (EI) premium and other revenues. Program expenses were up $5.6 billion, or 2.9 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.2 billion, or 1.0 per cent.

There was a budgetary surplus of $2.2 billion in January 2014, compared to a surplus of $0.5 billion in January 2013.

Revenues increased by $1.2 billion, or 5.1 per cent, to $25.0 billion.

• Personal income tax revenues were up $0.1 billion, or 0.7 per cent.
• Corporate income tax revenues were up $0.1 billion, or 2.2 per cent.
• Non-resident income tax revenues were up $0.5 billion, or 48.9 per cent.
• Excise taxes and duties were up $0.3 billion, or 9.8 per cent. GST revenues were up $0.4 billion, or 16.6 per cent. Energy taxes increased by $10 million, customs import duties increased by $21 million, and other excise taxes and duties decreased by $0.1 billion.
• EI premium revenues were up $0.1 billion, or 4.4 per cent.
• Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, revenues from sales of goods and services, returns on investments, net foreign exchange revenues and miscellaneous revenues, were up $0.1 billion, or 6.2 per cent.

Program expenses were $20.5 billion, down $0.6 billion, or 2.6 per cent, from the previous year.

• Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $29 million, or 0.5 per cent. Elderly benefits increased by $0.1 billion, or 2.7 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $12 million, or 0.7 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $0.1 billion, or 4.7 per cent.
• Major transfers to other levels of government consist of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal arrangements and other transfers (Equalization, transfers to the territories, as well as a number of smaller transfer programs), transfers to provinces on behalf of Canada’s cities and communities, and the Quebec Abatement. Major transfers to other levels of government increased by $0.4 billion, or 9.4 per cent, due to legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as an increase in transfers to Canada’s cities and communities.
• Direct program expenses include transfer payments to individuals and other organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of operating expenses of National Defence and other departments and agencies and expenses of Crown corporations. Direct program expenses were down $1.0 billion, or 9.9 per cent, from the previous year. Within direct program expenses:
  • Transfer payments decreased by $0.3 billion, or 10.2 per cent, due mainly to year-over-year differences in the timing of payments.
  • Other direct program expenses decreased by $0.7 billion, or 9.8 per cent, largely reflecting a decrease in claims expenses.

Public debt charges increased by $0.1 billion, or 3.6 per cent.

For the April 2013 to January 2014 period of the 2013–14 fiscal year, there was a budgetary deficit of $10.5 billion, compared to a deficit of $13.9 billion reported during the same period of 2012–13.

Revenues increased by $8.7 billion, or 4.2 per cent, to $215.6 billion.

• Personal income tax revenues were up $3.3 billion, or 3.2 per cent.
• Corporate income tax revenues were down $0.6 billion, or 2.2 per cent.
• Non-resident income tax revenues were up $1.0 billion, or 22.2 per cent.
• Excise taxes and duties were up $1.7 billion, or 4.7 per cent, largely reflecting a $1.7-billion increase in GST revenues. Energy taxes increased by $3 million, customs import duties increased by $0.2 billion, and other excise taxes and duties decreased by $0.2 billion.
• EI premium revenues were up $1.3 billion, or 8.7 per cent, reflecting growth in insurable earnings and the EI premium rate of $1.88 per $100 of insurable earnings for 2013 and 2014.
• Other revenues were up $1.9 billion, or 9.2 per cent, reflecting in part the gain realized on the sale of General Motors common shares in September 2013.

Program expenses were $201.9 billion, up $5.6 billion, or 2.9 per cent, from the same period the previous year.

• Major transfers to persons were up $1.3 billion, or 2.2 per cent. Elderly benefits increased by $1.3 billion, or 3.8 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $22 million, or 0.2 per cent, and children’s benefits were up $0.1 billion, or 0.5 per cent.
• Major transfers to other levels of government were up $1.8 billion, or 3.6 per cent, due to legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, offset in part by a decrease in total transfer protection payments.
• Direct program expenses were up $2.6 billion, or 2.9 per cent. Within direct program expenses:
  • Transfer payments increased by $3.2 billion, or 12.2 per cent, largely reflecting the accrual of a liability for disaster assistance related to the 2013 flood in Alberta.
  • Other direct program expenses decreased by $0.6 billion, or 1.0 per cent.

Public debt charges decreased by $0.2 billion, or 1.0 per cent.

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. In contrast, the financial source/requirement measures the difference between cash coming in to the Government and cash going out. This measure is affected not only by changes in the budgetary balance but also by the cash source/requirement resulting from the Government’s investing activities through its acquisition of capital assets and its loans, financial investments and advances, as well as from other activities, including payment of accounts payable and collection of accounts receivable, foreign exchange activities, and the amortization of its tangible capital assets. The difference between the budgetary balance and financial source/requirement is recorded in non-budgetary transactions.

With a budgetary deficit of $10.5 billion and a source of $14.0 billion from non-budgetary transactions, there was a financial source of $3.4 billion for the April 2013 to January 2014 period, compared to a financial requirement of $22.6 billion for the same period the previous year. The change in the financial source/requirement over the previous year mainly reflects the repayment of principal on assets maturing under the Insured Mortgage Purchase Program.

The Government used this financial source of $3.4 billion combined with an increase in market debt of $4.3 billion to increase cash balances by $7.7 billion. The increase in market debt was achieved primarily through the issuance of marketable bonds. The level of cash balances varies from month to month based on a number of factors including periodic large debt maturities, which can be quite volatile on a monthly basis. Cash balances at the end of January 2014 stood at $32.0 billion, up $14.1 billion from their level at the end of January 2013, largely reflecting increased deposits held with the Bank of Canada under the Government’s prudential liquidity plan.

Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Nicholas Leswick at 613-995-6391.

March 2014