Archived - The Fiscal Monitor A publication of the Department of Finance: 2017-06

June 2017: budgetary surplus of $16 million

There was a budgetary surplus of $16 million in June 2017, compared to a deficit of $1.1 billion in June 2016. Revenues increased by $1.2 billion, or 5.2 per cent, as increases in tax revenues and other revenues were partially offset by a decrease in Employment Insurance (EI) premium revenues. Program expenses increased by $0.1 billion, or 0.3 per cent, reflecting increases in major transfers to persons and other levels of government, which were partially offset by a decrease in direct program expenses. Public debt charges increased by $47 million, or 2.4 per cent.

April to June 2017: budgetary surplus of $0.1 billion

For the April to June 2017 period of the 2017–18 fiscal year, the Government posted a budgetary surplus of $0.1 billion, compared to a deficit of $1.0 billion reported in the same period of 2016–17. Revenues were up $3.5 billion, or 4.9 per cent, as increases in tax revenues and other revenues were partially offset by a decrease in EI premium revenues. Program expenses were up $2.7 billion, or 4.0 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.3 billion, or 4.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

Quarterly update of the fiscal outlook

The financial results for the first three months of the fiscal year provide limited information with respect to the outlook for the year as a whole. That being said, the financial results for the April to June 2017 period are consistent with the fiscal projection for 2017–18 presented in the budget.

An update of the economic and fiscal outlook will be provided in the 2017 Fall Economic Statement.

There was a budgetary surplus of $16 million in June 2017, compared to a deficit of $1.1 billion in June 2016.

Revenues increased by $1.2 billion, or 5.2 per cent, to $25.0 billion.

• Personal income tax revenues were up $1.0 billion, or 9.7 per cent.
• Corporate income tax revenues were up $0.1 billion, or 3.0 per cent.
• Non-resident income tax revenues were up $0.2 billion, or 43.1 per cent.
• Excise taxes and duties were up $0.2 billion, or 3.7 per cent. Within this component, Goods and Services Tax (GST) revenues were up $0.1 billion, or 2.0 per cent. Energy taxes were up $33 million, customs import duties were up $0.1 billion, and other excise taxes and duties were up $9 million.
• EI premium revenues were down $0.3 billion, or 11.8 per cent, due to a reduction in the EI premium rate for 2017.
• 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 $37 million, or 1.6 per cent.

Program expenses in June 2017 were $22.9 billion, up $0.1 billion, or 0.3 per cent.

• Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.6 billion, or 9.1 per cent. Elderly benefits increased by $0.2 billion, or 5.6 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 $36 million, or 2.6 per cent. Children's benefits increased by $0.4 billion, or 28.6 per cent, reflecting the new Canada Child Benefit, which 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 $0.1 billion, or 2.2 per cent, mainly due to 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 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 down $0.7 billion, or 6.5 per cent.
  • Transfer payments decreased by $1.0 billion, or 25.3 per cent, due mainly to a decrease in transfers for disaster assistance.
  • Other direct program expenses increased by $0.3 billion, or 4.0 per cent, largely reflecting an increase in pension and benefit costs based on the Government's latest actuarial valuations.

Public debt charges increased by $47 million, or 2.4 per cent.

For the April to June 2017 period of the 2017–18 fiscal year, there was a budgetary surplus of $0.1 billion, compared to a deficit of $1.0 billion reported during the same period of 2016–17.

Revenues increased by $3.5 billion, or 4.9 per cent, to $75.3 billion.

• Personal income tax revenues were up $1.8 billion, or 5.4 per cent.
• Corporate income tax revenues were up $0.6 billion, or 5.6 per cent.
• Non-resident income tax revenues were up $0.3 billion, or 23.2 per cent.
• Excise taxes and duties were up $1.4 billion, or 10.9 per cent, largely reflecting a $1.2-billion increase in GST revenues. Energy taxes and customs import duties were both up $0.1 billion and other excise taxes and duties increased by $4 million.
• EI premium revenues were down $0.8 billion, or 11.2 per cent, due to a reduction in the EI premium rate for 2017.
• Other revenues were up $0.2 billion, or 3.4 per cent, due mainly to an increase in Crown corporation revenues.

For the April to June 2017 period, program expenses were $69.1 billion, up $2.7 billion, or 4.0 per cent, from the same period the previous year.

• Major transfers to persons were up $1.9 billion, or 9.1 per cent. Elderly benefits increased by $0.7 billion, or 5.9 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $44 million, or 0.9 per cent. Children's benefits were up $1.3 billion, or 28.4 per cent, reflecting the new Canada Child Benefit.
• Major transfers to other levels of government were up $0.4 billion, or 2.6 per cent, mainly reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
• Direct program expenses were up $0.3 billion, or 1.0 per cent.
  • Transfer payments decreased by $0.7 billion, or 7.9 per cent, due mainly to a decrease in transfers for disaster assistance.
  • Other direct program expenses increased by $1.0 billion, or 5.4 per cent, due in large part to an increase in pension and benefit costs based on the Government's latest actuarial valuations and an increase in operating expenses of Crown corporations.

Public debt charges decreased by $0.3 billion, or 4.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return 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 $0.1 billion and a requirement of $16.5 billion from non-budgetary transactions, there was a financial requirement of $16.4 billion for the April to June 2017 period, compared to a financial requirement of $13.6 billion for the same period the previous year.

The Government financed this financial requirement of $16.4 billion and increased cash balances by $5.6 billion by increasing unmatured debt by $21.9 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 June 2017 stood at $42.5 billion, up $4.0 billion from their level at the end of June 2016.

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.

August 2017