Archived - The Fiscal Monitor A publication of the Department of Finance: 2014-12
December 2014: budgetary surplus of $2.4 billion
There was a budgetary surplus of $2.4 billion in December 2014, compared to a surplus of $1.2 billion in December 2013. Revenues increased by $1.0 billion, or 4.3 per cent, as increases in corporate income tax revenues and other revenues were partially offset by a decrease in personal income tax revenues. Program expenses decreased by $0.2 billion, or 1.2 per cent, largely reflecting a decrease in direct program expenses, offset in part by an increase in major transfers to other levels of government. Public debt charges increased by $32 million, or 1.5 per cent.
April to December 2014: budgetary deficit of $0.9 billion
For the April to December 2014 period of the 2014–15 fiscal year, the Government posted a budgetary deficit of $0.9 billion, compared to a deficit of $12.2 billion reported in the same period of 2013–14. Revenues were up $7.3 billion, or 3.8 per cent, reflecting increases in all revenue sources. Program expenses were down $3.5 billion, or 1.9 per cent, reflecting a decrease in direct program expenses, offset in part by increases in major transfers to persons and other levels of government. Public debt charges were down $0.4 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on bonds.
There was a budgetary surplus of $2.4 billion in December 2014, compared to a surplus of $1.2 billion in December 2013.
Revenues in December 2014 totalled $24.8 billion, up $1.0 billion, or 4.3 per cent, from December 2013.
- Personal income tax revenues were down $0.2 billion, or 1.9 per cent.
- Corporate income tax revenues were up $0.3 billion, or 8.3 per cent.
- Non-resident income tax revenues were up $0.1 billion, or 10.5 per cent.
- Excise taxes and duties were down $32 million, or 0.8 per cent. Goods and Services Tax (GST) revenues decreased by $0.1 billion, energy taxes increased by $1 million, customs import duties increased by $40 million, and other excise taxes and duties decreased by $10 million.
- Employment Insurance (EI) premium revenues were up $28 million, or 3.1 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 $0.9 billion or 37.4 per cent, largely reflecting the gain realized on the transfer to Ontario of the province’s one-third portion of the Government’s holdings of General Motors common shares.
Program expenses in December 2014 were $20.2 billion, down $0.2 billion, or 1.2 per cent, from December 2013.
- Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $7 million, or 0.1 per cent. Elderly benefits increased by $0.2 billion, or 5.5 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 $0.2 billion, or 11.9 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $13 million, or 1.2 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 $0.2 billion, or 3.3 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
- Direct program expenses include transfer payments to individuals and 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, other departments and agencies, and expenses of Crown corporations. Direct program expenses were down $0.4 billion, or 4.4 per cent, from the previous year. Within direct program expenses:
- Transfer payments decreased by $0.6 billion, or 18.4 per cent, reflecting decreases across a number of departments.
- Other direct program expenses increased by $0.1 billion, or 2.3 per cent.
Public debt charges increased by $32 million, or 1.5 per cent.
In 2008 and 2009, the Government entered into agreements with Ontario to provide financial assistance to the automotive sector whereby Ontario contributed one-third of the financial assistance and participates with the Government in any future economic benefit or loss resulting from these transactions. Through subsequent financial assistance agreements with General Motors, the Government acquired common and preferred shares in a restructured General Motors. In recognition of its agreements with Ontario, the Government recorded a liability to the Province to reflect Ontario’s one-third participation in the value of these shares.
Following General Motors’ initial public offering in November 2010, the value of the Government’s holdings of General Motors common shares and the liability to Ontario have been adjusted to reflect changes in the market value of the common shares. Unrealized gains and losses due to changes in the value of the Government’s holdings of the shares have been recorded as part of other comprehensive income. Other comprehensive income is excluded from the calculation of the Government’s budgetary balance and is instead recorded directly as a component of the federal debt, or accumulated deficit. Changes in the value of the liability to Ontario have been expensed and reflected in the budgetary balance.
On December 22, 2014, at the request of the Province, the Governments of Canada and Ontario agreed to transfer one-third of the remaining General Motors common shares to Ontario. In accordance with generally accepted accounting standards for the Canadian public sector, this transfer has resulted in $0.9 billion in cumulative unrealized gains on Ontario’s portion of the shares moving out of other comprehensive income and flowing through other revenues and the budgetary balance. These gains offset previously recorded expenses associated with the revaluation of the liability to Ontario, with no overall impact on the federal debt.
For the April to December 2014 period of the 2014–15 fiscal year, there was a budgetary deficit of $0.9 billion, compared to a deficit of $12.2 billion reported during the same period of 2013–14.
Revenues increased by $7.3 billion, or 3.8 per cent, to $197.9 billion.
- Personal income tax revenues were up $2.0 billion, or 2.1 per cent.
- Corporate income tax revenues were up $2.3 billion, or 10.6 per cent.
- Non-resident income tax revenues were up $0.2 billion, or 5.4 per cent.
- Excise taxes and duties were up $1.5 billion, or 4.2 per cent. GST revenues increased by $0.7 billion, or 3.1 per cent, energy taxes by $0.1 billion, customs import duties by $0.3 billion, and other excise taxes and duties by $0.4 billion.
- EI premium revenues were up $0.5 billion, or 3.9 per cent, reflecting growth in earnings.
- Other revenues were up $0.8 billion, or 4.1 per cent.
For the April to December 2014 period, program expenses were $177.8 billion, down $3.5 billion, or 1.9 per cent, from the same period the previous year.
- Major transfers to persons were up $1.5 billion, or 2.8 per cent. Elderly benefits increased by $1.3 billion, or 4.2 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.4 billion, or 3.0 per cent, and children’s benefits were down $0.2 billion, or 1.7 per cent.
- Major transfers to other levels of government were up $1.9 billion, or 4.2 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
- Direct program expenses were down $7.0 billion, or 8.5 per cent. Within direct program expenses:
- Transfer payments decreased by $4.5 billion, or 16.9 per cent, reflecting decreases across a number of departments, including the accrual in 2013–14 of a liability for disaster assistance related to the 2013 flood in Alberta, as well as a decrease in expenses associated with the revaluation of the Government’s liability to Ontario for the province’s one-third participation in the value of the Government’s equity holdings in General Motors.
- Other direct program expenses decreased by $2.4 billion, or 4.4 per cent, due in large part to a decrease in pension and benefit costs based on the Government’s latest actuarial valuations.
Public debt charges decreased by $0.4 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on bonds.
Revenues and expenses (April to December 2014)
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 $0.9 billion and a financial source of $1.6 billion from non-budgetary transactions, there was a financial source of $0.7 billion for the April to December 2014 period, compared to a financial requirement of $1.8 billion for the same period the previous year.The Government used the financial source of $0.7 billion along with an increase in unmatured debt of $1.4 billion to increase cash balances by $2.1 billion. The increase in unmatured 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 December 2014 stood at $28.1 billion, up $1.6 billion from their level at the end of December 2013.
Table 1
Summary statement of transactions
$ millions
December | April to December | |||
---|---|---|---|---|
|
|
|||
20131 | 2014 | 2013–141 | 2014–15 | |
Budgetary transactions | ||||
Revenues | 23,813 | 24,828 | 190,540 | 197,866 |
Expenses | ||||
Program expenses | -20,452 | -20,211 | -181,340 | -177,826 |
Public debt charges | -2,158 | -2,190 | -21,382 | -20,942 |
|
|
|||
Budgetary balance (deficit/surplus) | 1,203 | 2,427 | -12,182 | -902 |
Non-budgetary transactions | -1,417 | -2,053 | 10,431 | 1,603 |
|
|
|||
Financial source/requirement | -214 | 374 | -1,751 | 701 |
Net change in financing activities | -3,862 | -5,997 | 3,945 | 1,362 |
|
|
|||
Net change in cash balances | -4,076 | -5,623 | 2,194 | 2,063 |
Cash balance at end of period | 26,508 | 28,133 |
Table 2
Revenues
December | April to December | |||||
---|---|---|---|---|---|---|
|
|
|||||
2013 ($ millions) |
2014 ($ millions) |
Change (%) |
2013–14 ($ millions) |
2014–15 ($ millions) |
Change (%) |
|
Tax revenues | ||||||
Income taxes | ||||||
Personal income tax | 12,378 | 12,140 | -1.9 | 95,806 | 97,789 | 2.1 |
Corporate income tax | 3,575 | 3,871 | 8.3 | 21,843 | 24,156 | 10.6 |
Non-resident income tax | 534 | 590 | 10.5 | 4,020 | 4,236 | 5.4 |
|
|
|||||
Total income tax | 16,487 | 16,601 | 0.7 | 121,669 | 126,181 | 3.7 |
Excise taxes and duties | ||||||
Goods and Services Tax | 2,681 | 2,618 | -2.3 | 23,436 | 24,160 | 3.1 |
Energy taxes | 467 | 468 | 0.2 | 4,074 | 4,150 | 1.9 |
Customs import duties | 319 | 359 | 12.5 | 3,166 | 3,418 | 8.0 |
Other excise taxes and duties | 526 | 516 | -1.9 | 4,105 | 4,510 | 9.9 |
|
|
|||||
Total excise taxes and duties | 3,993 | 3,961 | -0.8 | 34,781 | 36,238 | 4.2 |
|
|
|||||
Total tax revenues | 20,480 | 20,562 | 0.4 | 156,450 | 162,419 | 3.8 |
Employment Insurance premiums | 915 | 943 | 3.1 | 13,962 | 14,502 | 3.9 |
Other revenues | 2,418 | 3,323 | 37.4 | 20,128 | 20,945 | 4.1 |
|
|
|||||
Total revenues | 23,813 | 24,828 | 4.3 | 190,540 | 197,866 | 3.8 |
Table 3
Expenses
December | April to December | |||||
---|---|---|---|---|---|---|
|
|
|||||
2013 ($ millions) |
2014 ($ millions) |
Change (%) |
2013–14 ($ millions) |
2014–15 ($ millions) |
Change (%) |
|
Major transfers to persons | ||||||
Elderly benefits | 3,508 | 3,700 | 5.5 | 31,219 | 32,536 | 4.2 |
Employment Insurance benefits | 1,668 | 1,470 | -11.9 | 12,522 | 12,892 | 3.0 |
Children's benefits | 1,089 | 1,102 | 1.2 | 9,923 | 9,758 | -1.7 |
|
|
|||||
Total | 6,265 | 6,272 | 0.1 | 53,664 | 55,186 | 2.8 |
Major transfers to other levels of government |
||||||
Support for health and other social programs |
||||||
Canada Health Transfer | 2,545 | 2,677 | 5.2 | 22,910 | 24,086 | 5.1 |
Canada Social Transfer | 1,017 | 1,048 | 3.0 | 9,161 | 9,436 | 3.0 |
|
|
|||||
Total | 3,562 | 3,725 | 4.6 | 32,071 | 33,522 | 4.5 |
Fiscal arrangements and other transfers | 1,566 | 1,625 | 3.8 | 14,770 | 15,282 | 3.5 |
Canada's cities and communities | 75 | 54 | -28.0 | 1,736 | 1,903 | 9.6 |
Quebec Abatement | -348 | -389 | 11.8 | -3,170 | -3,383 | 6.7 |
|
|
|||||
Total | 4,855 | 5,015 | 3.3 | 45,407 | 47,324 | 4.2 |
Direct program expenses | ||||||
Transfer payments | ||||||
Aboriginal Affairs and Northern Development |
514 | 435 | -15.4 | 4,530 | 4,479 | -1.1 |
Agriculture and Agri-Food | 166 | 107 | -35.5 | 850 | 668 | -21.4 |
Employment and Social Development | 412 | 384 | -6.8 | 4,061 | 3,973 | -2.2 |
Foreign Affairs, Trade and Development | 341 | 248 | -27.3 | 1,962 | 1,608 | -18.0 |
Health | 240 | 255 | 6.3 | 2,145 | 2,232 | 4.1 |
Industry | 314 | 234 | -25.5 | 1,883 | 1,670 | -11.3 |
Other | 1,021 | 792 | -22.4 | 11,313 | 7,590 | -32.9 |
|
|
|||||
Total | 3,008 | 2,455 | -18.4 | 26,744 | 22,220 | -16.9 |
Other direct program expenses | ||||||
Crown corporations | 543 | 633 | 16.6 | 5,587 | 5,486 | -1.8 |
National Defence | 1,806 | 1,871 | 3.6 | 14,974 | 15,075 | 0.7 |
All other departments and agencies |
3,975 | 3,965 | -0.3 | 34,964 | 32,535 | -6.9 |
|
|
|||||
Total other direct program expenses | 6,324 | 6,469 | 2.3 | 55,525 | 53,096 | -4.4 |
|
|
|||||
Total direct program expenses | 9,332 | 8,924 | -4.4 | 82,269 | 75,316 | -8.5 |
|
|
|||||
Total program expenses | 20,452 | 20,211 | -1.2 | 181,340 | 177,826 | -1.9 |
Public debt charges1 | 2,158 | 2,190 | 1.5 | 21,382 | 20,942 | -2.1 |
|
|
|||||
Total expenses | 22,610 | 22,401 | -0.9 | 202,722 | 198,768 | -2.0 |
Table 4
The budgetary balance and financial source/requirement
$ millions
December | April to December | |||
---|---|---|---|---|
|
|
|||
2013 | 2014 | 2013–14 | 2014–15 | |
Budgetary balance (deficit/surplus) | 1,203 | 2,427 | -12,182 | -902 |
Non-budgetary transactions | ||||
Capital investment activities | -553 | -355 | -3,069 | -2,613 |
Other investing activities | 287 | 586 | 21,434 | 3,775 |
Pension and other accounts | 677 | 344 | 4,013 | 1,485 |
Other activities | ||||
Accounts payable, receivables, accruals and allowances | -1,860 | -1,069 | -8,520 | -2,213 |
Foreign exchange activities | -495 | -1,912 | -6,220 | -1,774 |
Amortization of tangible capital assets | 527 | 353 | 2,793 | 2,943 |
|
|
|||
Total other activities | -1,828 | -2,628 | -11,947 | -1,044 |
|
|
|||
Total non-budgetary transactions | -1,417 | -2,053 | 10,431 | 1,603 |
|
|
|||
Financial source/requirement | -214 | 374 | -1,751 | 701 |
Table 5
Financial source/requirement and net financing activities
$ millions
December | April to December | |||
---|---|---|---|---|
|
|
|||
2013 | 2014 | 2013–14 | 2014–15 | |
Financial source/requirement | -214 | 374 | -1,751 | 701 |
Net increase (+)/decrease (-) in financing activities | ||||
Unmatured debt transactions | ||||
Canadian currency borrowings | ||||
Marketable bonds | 594 | -6,527 | 10,254 | 9,248 |
Treasury bills | -5,100 | -600 | -9,600 | -6,500 |
Retail debt | 284 | 150 | -1,059 | -638 |
Other | 0 | 0 | 0 | 0 |
|
|
|||
Total | -4,222 | -6,977 | -405 | 2,110 |
Foreign currency borrowings | 81 | 542 | 953 | -1,523 |
|
|
|||
Total | -4,141 | -6,435 | 548 | 587 |
Cross-currency swap revaluation | 277 | 394 | 3,576 | 863 |
Unamortized discounts and premiums on market debt1 | 69 | 84 | -127 | 279 |
Obligations related to capital leases and other unmatured debt | -67 | -40 | -52 | -367 |
|
|
|||
Net change in financing activities | -3,862 | -5,997 | 3,945 | 1,362 |
Change in cash balance | -4,076 | -5,623 | 2,194 | 2,063 |
Table 6
Condensed statement of assets and liabilities
$ millions
March 31, 2014 |
December 31, 2014 |
Change | |
---|---|---|---|
Liabilities | |||
Accounts payable and accrued liabilities | 111,421 | 109,926 | -1,495 |
Interest-bearing debt | |||
Unmatured debt | |||
Payable in Canadian currency | |||
Marketable bonds | 473,319 | 482,567 | 9,248 |
Treasury bills | 152,990 | 146,490 | -6,500 |
Retail debt | 6,327 | 5,689 | -638 |
|
|||
Subtotal | 632,636 | 634,746 | 2,110 |
Payable in foreign currencies | 16,030 | 14,507 | -1,523 |
Cross-currency swap revaluation | 2,326 | 3,189 | 863 |
Unamortized discounts and premiums on market debt | 3,184 | 3,463 | 279 |
Obligations related to capital leases and other unmatured debt | 4,782 | 4,415 | -367 |
|
|||
Total unmatured debt | 658,958 | 660,320 | 1,362 |
Pension and other liabilities | |||
Public sector pensions | 153,083 | 152,746 | -337 |
Other employee and veteran future benefits | 71,409 | 73,246 | 1,837 |
Other liabilities | 5,914 | 5,899 | -15 |
|
|||
Total pension and other liabilities | 230,406 | 231,891 | 1,485 |
|
|||
Total interest-bearing debt | 889,364 | 892,211 | 2,847 |
|
|||
Total liabilities | 1,000,785 | 1,002,137 | 1,352 |
Financial assets | |||
Cash and accounts receivable | 128,574 | 131,355 | 2,781 |
Foreign exchange accounts | 72,262 | 74,036 | 1,774 |
Loans, investments, and advances (net of allowances)1 | 117,635 | 111,628 | -6,007 |
|
|||
Total financial assets | 318,471 | 317,019 | -1,452 |
|
|||
Net debt | 682,314 | 685,118 | 2,804 |
Non-financial assets | 70,433 | 70,103 | -330 |
|
|||
Federal debt (accumulated deficit) | 611,881 | 615,015 | 3,134 |
Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.
For inquiries about this publication, contact Glenn Purves at 613-369-5655.
February 2015
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