Archived - The Fiscal Monitor A publication of the Department of Finance: 2015-04

April and May 2015: budgetary surplus of $3.9 billion

For the first two months of the 2015–16 fiscal year (April and May), there was a budgetary surplus of $3.9 billion, compared to a deficit of $1.1 billion reported in the same period last year. By month, there was a surplus of $2.5 billion in April and a surplus of $1.4 billion in May.

For the two months combined, revenues increased by $5.5 billion, or 12.8 per cent, largely reflecting increases in income tax revenues, excise taxes and duties, and the gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015. Program expenses were up $0.6 billion, or 1.5 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 $0.1 billion, or 2.3 per cent.

There was a budgetary surplus of $3.9 billion in the April to May 2015 period, compared to a $1.1 billion deficit for the same period in the previous year.

Revenues increased by $5.5 billion, or 12.8 per cent, to $49.1 billion.

• Personal income tax revenues were up $1.9 billion, or 9.2 per cent, reflecting, in part, timing issues which raised the May 2015 results.
• Corporate income tax revenues were up $0.5 billion, or 9.0 per cent.
• Non-resident income tax revenues were down $0.1 billion, or 7.6 per cent.
• Excise taxes and duties were up $0.6 billion, or 8.3 per cent. Within this component, Goods and Services Tax revenues were up $0.6 billion, or 11.3 per cent. Energy taxes were up $0.1 billion, customs import duties were up $46 million and other excise taxes and duties were down $0.1 billion.
• Employment Insurance (EI) premium revenues were up $0.2 billion, or 3.7 per cent, reflecting growth in earnings.
• 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 $2.4 billion, or 58.2 per cent, primarily reflecting the gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015.

Total program expenses in the April to May 2015 period were $40.0 billion, up $0.6 billion, or 1.5 per cent, from the prior year. This increase mainly reflects higher transfer payments to persons and other levels of government, offset in part by a decrease in direct program expenses.

• Major transfers to persons, consisting of elderly benefits, EI benefits and children’s benefits, increased by $0.7 billion, or 5.7 per cent. Elderly benefits increased by $0.4 billion, or 4.9 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 $0.3 billion, or 10.2 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $31 million, or 1.4 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 $0.5 billion in the April to May period, or 4.8 per cent, from the prior year, primarily reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and the Equalization and Territorial Formula Financing transfers.
• 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 departments and agencies, and expenses of Crown corporations. Direct program expenses in the April to May period were down $0.6 billion, or 3.9 per cent, from the prior year.
  • Transfer payments decreased by $0.1 billion, or 2.7 per cent.
  • Other direct program expenses decreased by $0.5 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 $0.1 billion, or 2.3 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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 $3.9 billion and a requirement of $5.4 billion from non-budgetary transactions, there was a financial requirement of $1.4 billion for the April to May 2015 period, compared to a financial requirement of $3.6 billion from the same period the previous year.

The government financed this financial requirement of $1.4 billion and increased cash balances by $12.1 billion by increasing unmatured debt by $13.5 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills. 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 May 2015 stood at $40.1 billion, up $0.1 billion from their level at the end of May 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.

July 2015