Archived - The Fiscal Monitor A publication of the Department of Finance: 2015-02

February 2015: budgetary surplus of $4.6 billion

There was a budgetary surplus of $4.6 billion in February 2015, down $0.6 billion from the budgetary surplus reported for February 2014. Revenues decreased by $0.6 billion, or 2.2 per cent, reflecting decreases in most tax revenue streams. Program expenses increased by $0.3 billion, or 1.7 per cent, reflecting increases in major transfers to persons and other levels of government, offset in part by a decrease in direct program expenses. Public debt charges decreased by $0.4 billion, or 16.3 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

April 2014 to February 2015: budgetary surplus of $5.9 billion

For the April to February period of the 2014–15 fiscal year, the Government posted a budgetary surplus of $5.9 billion, compared to a deficit of $4.8 billion reported for the same period of 2013–14. Revenues were up $7.1 billion, or 2.9 per cent, reflecting increases in most revenue streams. Program expenses were down $2.5 billion, or 1.1 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 $1.1 billion, or 4.3 per cent, largely reflecting a lower average effective interest rate on bonds.

There was a budgetary surplus of $4.6 billion in February 2015, down $0.6 billion from the budgetary surplus reported for February 2014.

Revenues in February 2015 totalled $26.6 billion, down $0.6 billion, or 2.2 per cent, from February 2014.

• Personal income tax revenues were down $0.2 billion, or 2.1 per cent, reflecting timing issues which lowered the February 2015 results.
• Corporate income tax revenues were down $0.4 billion, or 5.9 per cent.
• Non-resident income tax revenues were up $12 million, or 2.5 per cent.
• Excise taxes and duties were down $0.2 billion, or 4.5 per cent. Goods and Services Tax (GST) revenues decreased by $0.2 billion, energy taxes increased by $4 million, customs import duties increased by $45 million, and other excise taxes and duties decreased by $26 million.
• Employment Insurance (EI) premium revenues were up $0.1 billion, or 4.7 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 4.5 per cent.

Program expenses in February 2015 were $20.2 billion, up $0.3 billion, or 1.7 per cent, from February 2014.

• Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.2 billion, or 2.7 per cent. Elderly benefits increased by $0.2 billion, or 6.0 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $5 million, or 0.3 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $49 million, or 4.5 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 4.7 per cent, 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 $0.1 billion, or 0.6 per cent. Within direct program expenses:
  • Transfer payments increased by $18 million, or 0.7 per cent.
  • Other direct program expenses decreased by $0.1 billion, or 1.2 per cent.

Public debt charges decreased by $0.4 billion, or 16.3 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

For the April to February period of the 2014–15 fiscal year, there was a budgetary surplus of $5.9 billion, compared to a deficit of $4.8 billion reported during the same period of 2013–14.

Revenues increased by $7.1 billion, or 2.9 per cent, to $249.9 billion.

• Personal income tax revenues were up $2.6 billion, or 2.2 per cent.
• Corporate income tax revenues were up $1.8 billion, or 5.7 per cent.
• Non-resident income tax revenues were down $0.2 billion, or 3.9 per cent.
• Excise taxes and duties were up $1.3 billion, or 3.0 per cent. GST revenues increased by $0.5 billion, or 1.8 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 $0.8 billion, or 4.0 per cent, reflecting growth in earnings.
• Other revenues were up $0.9 billion, or 3.6 per cent.

Program expenses were $219.3 billion, down $2.5 billion, or 1.1 per cent, from the same period the previous year.

• Major transfers to persons were up $1.9 billion, or 2.9 per cent. Elderly benefits increased by $1.7 billion, or 4.5 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 2.5 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 $2.1 billion, or 3.9 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 $6.5 billion, or 6.5 per cent. Within direct program expenses:
  • Transfer payments decreased by $3.5 billion, or 11.0 per cent, largely reflecting the one-time accrual in 2013–14 of a liability for disaster assistance related to the 2013 flood in Alberta. The decrease in transfer payments also reflects 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 $3.0 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 $1.1 billion, or 4.3 per cent, largely reflecting a lower average effective interest rate on bonds.

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 surplus of $5.9 billion and a financial requirement of $9.7 billion from non-budgetary transactions, there was a financial requirement of $3.8 billion for the April 2014 to February 2015 period, compared to a financial source of $8.6 billion for the same period the previous year.

The Government financed its financial requirement of $3.8 billion and increased cash balances by $2.3 billion by increasing unmatured debt by $6.1 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 February 2015 stood at $28.4 billion, down $1.9 billion from their level at the end of February 2014.

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.

April 2015