Archived - The Fiscal Monitor A publication of the Department of Finance: 2016-07
July 2016: budgetary deficit of $1.8 billion
There was a budgetary deficit of $1.8 billion in July 2016, compared to a surplus of $0.2 billion in July 2015. Revenues decreased by $0.8 billion, or 3.1 per cent, due mainly to lower corporate income tax and Goods and Services Tax (GST) revenues. Program expenses increased by $1.4 billion, or 6.5 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges decreased by $0.2 billion, or 9.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.
April to July 2016: budgetary deficit of $2.8 billion
For the April to July 2016 period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $2.8 billion, compared to a surplus of $5.2 billion reported in the same period of 2015–16. Revenues were down $2.3 billion, or 2.3 per cent, reflecting decreases in other revenues and excise taxes and duties. Program expenses were up $6.5 billion, or 7.8 per cent, due to increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.8 billion, or 9.0 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.
There was a budgetary deficit of $1.8 billion in July 2016, compared to a surplus of $0.2 billion in July 2015.
Revenues decreased by $0.8 billion, or 3.1 per cent, to $23.1 billion.
- Personal income tax revenues were up $0.5 billion, or 4.2 per cent.
- Corporate income tax revenues were down $0.7 billion, or 24.5 per cent.
- Non-resident income tax revenues were up $4 million, or 0.8 per cent.
- Excise taxes and duties were down $0.4 billion, or 9.4 per cent. This decrease is mostly due to a $0.4-billion, or 11.1-per-cent, decrease in GST revenues. Energy taxes and customs import duties were each down $0.1 billion, while other excise taxes and duties were up $0.1 billion.
- Employment Insurance (EI) premium revenues were up $33 million, or 1.8 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 down $0.1 billion, or 5.1 per cent.
Program expenses in July 2016 were $22.7 billion, up $1.4 billion, or 6.5 per cent, from July 2015.
- Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.6 billion, or 9.7 per cent. Elderly benefits increased by $0.2 billion, or 6.3 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 $0.1 billion, or 9.0 per cent. Children’s benefits increased by $0.3 billion, or 18.4 per cent, reflecting the new Canada Child Benefit, which has replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.
- 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 $0.3 billion, or 5.0 per cent, mainly due to legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization 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 National Defence, other departments and agencies, and expenses of Crown corporations. Direct program expenses were up $0.4 billion, or 5.1 per cent. Within direct program expenses:
- Transfer payments increased by $0.2 billion, or 11.0 per cent.
- Other direct program expenses increased by $0.2 billion, or 3.0 per cent.
Public debt charges decreased by $0.2 billion, or 9.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.
For the April to July 2016 period of the 2016–17 fiscal year, there was a budgetary deficit of $2.8 billion, compared to a surplus of $5.2 billion reported during the same period of 2015–16.
Revenues decreased by $2.3 billion, or 2.3 per cent, to $94.9 billion.
- Personal income tax revenues were up $0.9 billion, or 2.0 per cent.
- Corporate income tax revenues were down $0.5 billion, or 3.9 per cent.
- Non-resident income tax revenues were down $0.1 billion, or 3.1 per cent.
- Excise taxes and duties were down $0.9 billion, or 4.9 per cent. This fall is mostly due to a $0.6-billion, or 4.6-per-cent, decrease in GST revenues and a $0.3-billion, or 15.0-per-cent, decrease in energy taxes. Customs import duties were down $9 million, and other excise taxes and duties were down $35 million.
- EI premium revenues were up $0.1 billion, or 1.6 per cent, reflecting growth in earnings.
- Other revenues were down $1.8 billion, or 16.3 per cent. This decline largely reflects the $2.1-billion gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015, which did not recur in 2016.
For the April to July 2016 period, program expenses were $89.1 billion, up $6.5 billion, or 7.8 per cent, from the same period the previous year.
- Major transfers to persons were up $1.5 billion, or 5.4 per cent. Elderly benefits increased by $0.7 billion, or 4.6 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.3 billion, or 4.9 per cent. Children’s benefits were up $0.5 billion, or 7.7 per cent, largely reflecting the new Canada Child Benefit, which has replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.
- Major transfers to other levels of government were up $1.1 billion, or 4.8 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers.
- Direct program expenses were up $3.9 billion, or 11.9 per cent. Within direct program expenses:
- Transfer payments increased by $2.0 billion, or 21.0 per cent, reflecting year-over-year differences in the timing of the transfers and an increase in transfers for disaster assistance.
- Other direct program expenses increased by $1.9 billion, or 8.2 per cent, due in large part to an increase in pension and benefit costs based on the Government’s latest actuarial valuations, as well as an increase in operating expenses of Crown corporations.
Public debt charges decreased by $0.8 billion, or 9.0 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.
Revenues and expenses (April to July 2016)
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 $2.8 billion and a requirement of $14.6 billion from non-budgetary transactions, there was a financial requirement of $17.4 billion for the April to July 2016 period, compared to a financial requirement of $14.2 billion for the same period the previous year.
The Government financed this financial requirement of $17.4 billion and increased cash balances by $9.5 billion by increasing unmatured debt by $26.8 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 July 2016 stood at $47.3 billion, up $9.1 billion from their level at the end of July 2015.
Table 1
Summary statement of transactions
$ millions
July | April to July | |||
---|---|---|---|---|
|
|
|||
2015 | 2016 | 2015–16 | 2016–17 | |
Budgetary transactions | ||||
Revenues | 23,856 | 23,105 | 97,171 | 94,890 |
Expenses | ||||
Program expenses | -21,334 | -22,716 | -82,630 | -89,112 |
Public debt charges | -2,372 | -2,153 | -9,380 | -8,537 |
|
|
|||
Budgetary balance (deficit/surplus) | 150 | -1,764 | 5,161 | -2,759 |
Non-budgetary transactions | -9,137 | -2,020 | -19,401 | -14,601 |
|
|
|||
Financial source/requirement | -8,987 | -3,784 | -14,240 | -17,360 |
Net change in financing activities | 19,214 | 12,567 | 24,515 | 26,818 |
|
|
|||
Net change in cash balances | 10,227 | 8,783 | 10,275 | 9,458 |
Cash balance at end of period | 38,226 | 47,303 |
Table 2
Revenues
July | April to July | |||||
---|---|---|---|---|---|---|
|
|
|||||
2015 ($ millions) |
2016 ($ millions) |
Change (%) |
2015–16 ($ millions) |
2016–17 ($ millions) |
Change (%) |
|
Tax revenues | ||||||
Income taxes | ||||||
Personal income tax | 11,467 | 11,946 | 4.2 | 44,317 | 45,188 | 2.0 |
Corporate income tax | 2,840 | 2,143 | -24.5 | 13,138 | 12,621 | -3.9 |
Non-resident income tax | 507 | 511 | 0.8 | 1,878 | 1,820 | -3.1 |
|
|
|||||
Total income tax | 14,814 | 14,600 | -1.4 | 59,333 | 59,629 | 0.5 |
Excise taxes and duties | ||||||
Goods and Services Tax | 3,250 | 2,888 | -11.1 | 12,100 | 11,546 | -4.6 |
Energy taxes | 476 | 395 | -17.0 | 1,852 | 1,574 | -15.0 |
Customs import duties | 526 | 470 | -10.6 | 1,733 | 1,724 | -0.5 |
Other excise taxes and duties | 494 | 548 | 10.9 | 2,043 | 2,008 | -1.7 |
|
|
|||||
Total excise taxes and duties | 4,746 | 4,301 | -9.4 | 17,728 | 16,852 | -4.9 |
|
|
|||||
Total tax revenues | 19,560 | 18,901 | -3.4 | 77,061 | 76,481 | -0.8 |
Employment Insurance premiums | 1,838 | 1,871 | 1.8 | 8,810 | 8,952 | 1.6 |
Other revenues | 2,458 | 2,333 | -5.1 | 11,300 | 9,457 | -16.3 |
|
|
|||||
Total revenues | 23,856 | 23,105 | -3.1 | 97,171 | 94,890 | -2.3 |
Table 3
Expenses
July | April to July | |||||
---|---|---|---|---|---|---|
|
|
|||||
2015 ($ millions) |
2016 ($ millions) |
Change (%) |
2015–16 ($ millions) |
2016–17 ($ millions) |
Change (%) |
|
Major transfers to persons | ||||||
Elderly benefits | 3,712 | 3,947 | 6.3 | 14,971 | 15,666 | 4.6 |
Employment Insurance benefits | 1,349 | 1,470 | 9.0 | 6,165 | 6,469 | 4.9 |
Children's benefits | 1,553 | 1,839 | 18.4 | 5,968 | 6,430 | 7.7 |
|
|
|||||
Total | 6,614 | 7,256 | 9.7 | 27,104 | 28,565 | 5.4 |
Major transfers to other levels of government |
||||||
Support for health and other social programs |
||||||
Canada Health Transfer | 2,836 | 3,006 | 6.0 | 11,342 | 12,023 | 6.0 |
Canada Social Transfer | 1,080 | 1,112 | 3.0 | 4,320 | 4,449 | 3.0 |
|
|
|||||
Total | 3,916 | 4,118 | 5.2 | 15,662 | 16,472 | 5.2 |
Fiscal arrangements and other transfers | 1,703 | 1,750 | 2.8 | 7,421 | 7,620 | 2.7 |
Canada's cities and communities | 979 | 1,036 | 5.8 | 979 | 1,036 | 5.8 |
Quebec Abatement | -384 | -381 | -0.8 | -1,538 | -1,526 | -0.8 |
|
|
|||||
Total | 6,214 | 6,523 | 5.0 | 22,524 | 23,602 | 4.8 |
Direct program expenses | ||||||
Transfer payments | ||||||
Agriculture and Agri-Food Canada | 72 | 65 | -9.7 | 247 | 205 | -17.0 |
Employment and Social Development Canada | 424 | 388 | -8.5 | 1,798 | 1,781 | -0.9 |
Global Affairs Canada | 132 | 310 | 134.8 | 662 | 952 | 43.8 |
Health Canada | 318 | 297 | -6.6 | 1,179 | 1,282 | 8.7 |
Indigenous and Northern Affairs Canada | 546 | 601 | 10.1 | 2,143 | 2,383 | 11.2 |
Innovation, Science and Economic Development Canada |
177 | 302 | 70.6 | 707 | 836 | 18.2 |
Other | 550 | 500 | -9.1 | 2,918 | 4,240 | 45.3 |
|
|
|||||
Total | 2,219 | 2,463 | 11.0 | 9,654 | 11,679 | 21.0 |
Other direct program expenses | ||||||
Crown corporations | 614 | 740 | 20.5 | 2,644 | 3,055 | 15.5 |
National Defence | 1,729 | 1,990 | 15.1 | 6,349 | 7,164 | 12.8 |
All other departments and agencies |
3,944 | 3,744 | -5.1 | 14,355 | 15,047 | 4.8 |
|
|
|||||
Total other direct program expenses | 6,287 | 6,474 | 3.0 | 23,348 | 25,266 | 8.2 |
|
|
|||||
Total direct program expenses | 8,506 | 8,937 | 5.1 | 33,002 | 36,945 | 11.9 |
|
|
|||||
Total program expenses | 21,334 | 22,716 | 6.5 | 82,630 | 89,112 | 7.8 |
Public debt charges | 2,372 | 2,153 | -9.2 | 9,380 | 8,537 | -9.0 |
|
|
|||||
Total expenses | 23,706 | 24,869 | 4.9 | 92,010 | 97,649 | 6.1 |
Table 4
The budgetary balance and financial source/requirement
$ millions
July | April to July | |||
---|---|---|---|---|
|
|
|||
2015 | 2016 | 2015–16 | 2016–17 | |
Budgetary balance (deficit/surplus) | 150 | -1,764 | 5,161 | -2,759 |
Non-budgetary transactions | ||||
Capital investment activities | -377 | -330 | -1,101 | -761 |
Other investing activities | -593 | -845 | -888 | -2,748 |
Pension and other accounts | 93 | 508 | 347 | 1,430 |
Other activities | ||||
Accounts payable, receivables, accruals and allowances | -3,890 | -1,287 | -16,854 | -12,349 |
Foreign exchange activities | -4,679 | -351 | -2,395 | -1,386 |
Amortization of tangible capital assets | 309 | 285 | 1,490 | 1,213 |
|
|
|||
Total other activities | -8,260 | -1,353 | -17,759 | -12,522 |
|
|
|||
Total non-budgetary transactions | -9,137 | -2,020 | -19,401 | -14,601 |
|
|
|||
Financial source/requirement | -8,987 | -3,784 | -14,240 | -17,360 |
Table 5
Financial source/requirement and net financing activities
$ millions
July | April to July | |||
---|---|---|---|---|
|
|
|||
2015 | 2016 | 2015–16 | 2016–17 | |
Financial source/requirement | -8,987 | -3,784 | -14,240 | -17,360 |
Net increase (+)/decrease (-) in financing activities | ||||
Unmatured debt transactions | ||||
Canadian currency borrowings | ||||
Marketable bonds | 8,750 | 13,065 | 7,763 | 13,234 |
Treasury bills | 6,000 | -900 | 11,200 | 13,100 |
Retail debt | -21 | 20 | -79 | 89 |
|
|
|||
Total | 14,729 | 12,185 | 18,884 | 26,423 |
Foreign currency borrowings | 1,895 | -631 | 2,954 | 458 |
|
|
|||
Total | 16,624 | 11,554 | 21,838 | 26,881 |
Cross-currency swap revaluation | 2,626 | 900 | 2,410 | -499 |
Unamortized discounts and premiums on market debt | -21 | 126 | 372 | 544 |
Obligations related to capital leases and other unmatured debt | -15 | -13 | -105 | -108 |
|
|
|||
Net change in financing activities | 19,214 | 12,567 | 24,515 | 26,818 |
Change in cash balance | 10,227 | 8,783 | 10,275 | 9,458 |
Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.
For inquiries about this publication, contact Bradley Recker at 613-369-5667.
September 2016
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