Backgrounders The Estimates Process Overview of the 2004-2005 Main Estimates Overview of the 2004-2005 Reports on Plans and Priorities for the Government of Canada For immediate release October 8, 2004 OTTAWA - Reg Alcock, President of the Treasury Board, today tabled in the House of Commons, the 2004-2005 Main Estimates detailing $186.1 billion in expenditures. The 2004-2005 Main Estimates are being re-tabled as a result of the general election and the dissolution of Parliament this past June, which did not allow time to obtain full approval from Parliament. "In March, Parliament approved approximately three quarters of the 2004-05 Main Estimates," said Minister Alcock. "With today's re-tabling, approval is being sought for the remainder of the government's expenditure plan." Minister Alcock also tabled the government's Reports on Plans and Priorities for all federal departments and agencies. These reports, which were delayed due to the June election call, are detailed expenditure plans for 89 Government departments and agencies. They also outline objectives, initiatives and planned results, including resourcerequirements as set out in the March 23, 2004 Budget. "The Government of Canada remains committed to the rigorous stewardship of public resources and to improving its transparency and accountability to Parliament and the people of Canada," said Minister Alcock. "Together, the Main Estimates and Reports on Plans and Priorities provide Parliament with the information it needs to fulfil its duty as guardian of public funds. The Main Estimates support the government's annual request to Parliament for authority to spend public funds and provide information to Parliament about adjustments to projected statutory spending that has been previously authorized by Parliament." As is standard practice, the government will seek additional spending authority in the Supplementary Estimates, which are scheduled to be tabled in November. Please refer to the backgrounders for further details on the 2004-2005 Main Estimates and the Reports on Plans and Priorities. These documents are posted on the Treasury Board Secretariat Web site at: http://www.tbs-sct.gc.ca. - 30 - For more information, contact: Lise Jolicoeur Press Secretary Office of the President of the Treasury Board and Minister responsible for the Canadian Wheat Board (613) 957-2666 Suzanne Meunier Media Relations Treasury Board of Canada Secretariat (613) 957-2391 IF THERE IS A DISCREPANCY BETWEEN ANY PRINTED VERSION AND THE ELECTRONIC VERSION OF THIS NEWS RELEASE, THE ELECTRONIC VERSION WILL PREVAIL. TTY (Telecommunications device for the hearing impaired) ¿ (613) 957-9090 Backgrounder The Estimates Process October 8, 2004 Each year, the Government prepares Estimates in support of its request to Parliament for authority to spend public funds. This request is formalized through the tabling of appropriation bills in Parliament. The Estimates, which are tabled in the House of Commons by the President of the Treasury Board, consist of three parts: Part I - The Government Expenditure Plan provides an overview of federal spending and summarises the relationship of the key elements of the Main Estimates to the current Expenditure Plan. Part II - The Main Estimatesdirectly support the Appropriation Act. The Main Estimates identify the spending authorities (Votes) and amounts to be included in subsequent appropriation bills. Parliament will be asked to approve these Votes to enable the government to proceed with its spending plans. Parts I and II of the Estimates are tabled concurrently on or before March 1. Part III - Departmental Expenditure Plans, which are divided into two components: (1) Reports on Plans and Priorities (RPPs) are individual expenditure plans for each department and agency (excluding Crown Corporations). These reports provide increased levels of detail on business lines and contain information on objectives, initiatives and planned results, including links to related resource requirements over a three-year period. These documents are being tabled today. (2) Departmental Performance Reports (DPRs) are individual department and agency accounts of results achieved against planned performance expectations, as set out in respective RPPs. The Departmental Performance Reports cover the most recently completed fiscal year and are scheduled to be tabled at the end of October. The Estimates, along with the Minister of Finance's Budget, reflect the Government's annual budget planning and resource allocation priorities. In combination with the subsequent reporting of financial results in the Public Accounts and of results achieved in Departmental Performance Reports, this material helps Parliament hold the government to account for the allocation and management of public funds. Backgrounder Overview of the 2004-2005 Main Estimates October 8, 2004 Introduction The 2004-2005 Main Estimates total $186.1 billion, including $2.8 billion in non- budgetary expenditures related to such things as loans and investments and $183.3 billion in budgetary spending. These Main Estimates support the government's request for Parliament's permission to spend $65.1 billion under program authorities (voted appropriations) for which annual approval is required. The remaining $121.0 billion is statutory and those forecasts are provided for information purposes only. 2004-2005 Main Estimates ($ Millions) Budgetary % Non-budgetary Total Voted Appropriations 64,987 35% 78 65,065 Statutory Spending Authority 118,303 65% 2,687 120,990 Total Main Estimates $183,290 $2,765 $186,055 The expenditures provided in the Main Estimates are consistent with the $183.3 billion expenditure plan for 2004-2005 set out in the November 2003 Economic and Fiscal Update and reflect estimates for new and restructured organizations resulting from the machinery of government changes announced in December 2003. Spending Authority The Government submits the Estimates to Parliament in support of its request for authority to spend public funds. Parliament will subsequently consider appropriation bills to authorize spending. The Estimates include information on both budgetary and non-budgetary spending authorities. Budgetary expenditures include: the cost of servicing the public debt; operating and capital expenditures; transfer payments to other levels of government, organizations or individuals; and payments to Crown corporations. Non-budgetary expenditures include loans, investments and advances that represent changes in the composition of the financial assets of the Government of Canada. Estimates Documents The Main Estimates are published in three parts. Parts I and II, which are contained in a single volume, must be tabled on or before March 1st of the immediately preceding fiscal year. Part I situates the Main Estimates in the context of the Government's overall expenditure plan as presented in the most recent Budget. Part II of the Main Estimates is the traditional "blue book" that provides details on statutory and voted items within each departmental and agency program. In April 1997, Parliament agreed to split the traditional Part III documents, which are individual department and agency spending plans, into two components: Departmental Performance Reports (DPRs), which report individual departmental results measured against performance objectives and are normally tabled in the fall; and Reports on Plans and Priorities (RPPs), which provide detailed multi-year expenditure plans and are normally tabled in the spring. This year, due to the recent major reorganization of departments, some of these will only be tabled in the fall. Major changes in the 2004-2005 Main Estimates In total, the 2004-2005 Main Estimates have increased by $10.1 billion relative to the 2003-2004 Main Estimates: an increase of $10.2 billion in budgetary spending and a decrease of $0.1 billion in non-budgetary spending. Year-over-year Main Estimates provide partial indicators of changes in government spending. Typically, the Budget is tabled in close proximity to the Main Estimates and, given both production and secrecy constraints, it is not possible to reflect all new spending plans in the Main Estimates. The result is that, while Main Estimates represent the major part of the government's spending plans, significant amounts are excluded and dealt with in Supplementary Estimates later during the fiscal year. As a consequence, annual variations in both the relative and absolute amounts of planned spending not reflected in Main Estimates can distort the spending growth rates implied by year-over-year comparisons. In order to provide Parliament with a complete picture of their future plans, departments and agencies submit individual Reports on Plans and Priorities after the Main Estimates are tabled in order to allow departments and agencies to incorporate the necessary adjustments flowing from recent planned spending decisions. For 2004-2005, this also reflects spending estimates for new and restructured organizations resulting from the machinery of government changes announced in December 2003. The following provides an overview of the major changes in budgetary and non-budgetary spending affecting the 2004-2005 Main Estimates. A. Budgetary Main Estimates - a net $10,235 million increase Overall, the budgetary spending in the 2004-2005 Main Estimates has increased by $10,235 million relative to the 2003-2004 Main Estimates. The following provides an overview of the major drivers behind this increase in budgetary spending: 1. Major transfers to other levels of government ($3,036 million) Overall, major transfers to other levels of government (federal-provincial fiscal arrangements) have increased by $3,306 millionrelative to the 2003-2004 forecasts. This can be attributed to the following major increases in expenditures: $1,500 million for the new multi-year statutory Health Reform Transfer (Department of Finance); $1,175 million for the Canada Health and Social Transfers (Department of Finance); $440 million for increased fiscal equalization payments of $385 million to the provinces and payments of $55 million to territorial governments (Department of Finance); $191 million relating to a decrease in recoveries from the Youth Recovery ($44 million) and Alternative Payments for Standing Programs ($147 million) (Department of Finance). 2. Major transfers to persons ($1,050 million) Overall the major, or direct, transfers to persons have increased by $1,050 million from 2003-2004. The forecast increase in statutory payments is attributable to the following: $1,141 million for elderly benefits due to increases in Old Age Security payments of $953 million and Guaranteed Income Supplement payments of $144 million. In addition, allowance payments are forecast to increase by some $44 million. Overall, these changes are due to an increase in the average rate of payments and in the forecast number of beneficiaries (Human Resources Development Canada (Social Development Canada)); $91 million reduction for the downward statutory adjustment to the reduced forecast of net Employment Insurance (EI) benefits to individuals offset by increased costs of EI administration as reported in the Consolidated specified purpose account. 3. Public debt charges ($1,400 million) Public Debt Interest and Servicing costs are being forecast to decrease by $1,400 million over 2003-2004. This is comprised of a decrease in interest and other costs including a reduction to the Canada Investment and Savings account (Department of Finance). 4. Direct program spending (including other transfer payments and subsidies, payments to Crown corporations and operating and capital expenditures) ($7,279 million) In total, direct program spending has increased by $7,279 million. This is largely due to the following major changes: Increases $1,012 million to ease pressures on the defence budget for operational support; to sustain core elements of the Defence Services Program, such as peacekeeping activities and capital infrastructure; and, to partially compensate for the loss of purchasing power due to price increases (National Defence); $759 million for initiatives in support of the Agricultural Policy Framework (Agriculture & Agri-Food, Canadian Food Inspection Agency, Health, International Trade, Canadian Grain Commission, Environment); $574 million in payments, including payments for loan agreements, in support of development assistance activities (Canadian International Development Agency); $564 millionfor statutory contributions to public service employee benefit plans (government-wide); $468 million relating to the increased demand for ongoing programs such as the implementation of the First Nations Water Management Strategy (in partnership with Health) and the settlement of specific, comprehensive, and special claims and adjustments (Indian Affairs and Northern Development); $446 million in support of grant and scholarship programs to strengthen research capacity in Canada in the areas of health research and innovation, including such initiatives as the Canada Graduate Scholarship and the Canada Research Chairs programs (Natural Science and Engineering Research Council, Social Sciences and Humanities Research Council, Canadian Institutes for Health Research); $406 million to support improvement projects such as highway improvements under the Border Infrastructure Fund and the Canada Strategic Infrastructure Fund (Office of Infrastructure of Canada); $405 million to support various health programs and initiatives such as the sustainability of First Nations and Inuit Health and initiatives related to the First Ministers' Accord on Health Care Renewal (Health); $330 millionfor salary increases relating to the settlement of collective bargaining agreements, including for the salaries of judges, Royal Canadian Mounted Police members and National Defence military and civilian personnel (government-wide); $251 million in support of benefit programs such as: the Veterans Independence Program; the Other Health Purchased Services; and Disability Pensions (Veterans Affairs); $186 million to support an increase in climate change activities to reduce greenhouse gas to meet Canada's Kyoto commitments (Natural Resources, Environment, Industry, National Research Council); $170 million due to additional resources to address homelessness issues (Human Resources and Skills Development); $159 millionfor public service insurance programs such as health care, provincial health payroll taxes and premiums, and social security plans for locally-engaged employees outside of Canada (Treasury Board Secretariat); $153 million for programs that support a cohesive and creative Canada such as the Canada Television Fund, Official Languages programs, and several programs for Aboriginal peoples (Canadian Heritage); $141 million for accommodation costs and approved fit-up and expansion of client space (Public Works and Government Services); $134 million to meet workload requirements and administrative costs relating to the implementation of tax collection agreements (Canada Customs and Revenue Agency); $128 million for the delivery of housing renovation programs designed to support the renovation and renewal of the existing stock of housing and help low-income persons with critical housing repair needs (Canada Mortgage and Housing); $127 million in payments relating to the next phase of the Toronto Waterfront Revitalization Project, the continuation of the port divestiture program for an additional two years, and for the Greater Toronto Airport Authority for the air rail link. This is offset by a decrease in contributions for highway improvements in New Brunswick due to the end of the program (Transport); $96 million for programs or for projects that promote or enhance the economic development and diversification of Western Canada, including contributions under the Infrastructure Canada Program (Western Economic Diversification); $90 million in statutory payments to the Newfoundland Offshore Petroleum Resource Fund primarily due to an increase in royalty revenue related to Terra Nova oil and gas production (Natural Resources); $70 million to assist producers in recovering from the impacts of the Bovine Spongiform Encephalopathy (BSE) crisis in Canada (Agriculture & Agri-Food); $68 million in assistance to the Canadian softwood lumber sector (Industry, Natural Resources); $63 million in additional resources for the transformation of the Meteorological Service of Canada, the implementation of the Canada Environmental Protection Act, and to support future negotiations with the U.S. on border air quality (Environment); $61 million to the Canadian Coast Guard for capital expenditures such as the refurbishment of its fleet and shore-based infrastructure (Fisheries and Oceans); $60 million to strengthen and enhance English and French radio and television programming (Canadian Broadcasting Corporation); $54 million in support of activities or projects related to national parks, national marine conservation areas, commercial heritage properties and visitor facilities, ecological integrity, and the protection of wildlife species at risk in Canada (Parks Canada); $50 million to provide cost-shared financial assistance and technology-related advice to small- and medium-sized enterprises; to fund technology cluster initiatives across Canada, including facility construction and investment in new and expanded research programs (National Research Council of Canada); and, $26 million in payments to various international financial institutions. This is the net result of a $116 million increase in grant and contribution payments under multilateral debt reduction agreements offset by a $90 million reduction in payments to the International Development Association and to the International Monetary Fund's poverty and growth facility (Department of Finance). Decreases $76 million related to the Fisheries Access Program due to the scaling down of program activities as fishing license agreement obligations are fulfilled (Fisheries and Oceans); $75 million in payments to VIA Rail for the wind-down of the Renaissance 1 capital funding project for the revitalization of the VIA fleet (Transport); $64 million reduction in capital expenditures (Public Works and Government Services). B. Non-Budgetary Main Estimates - A net $117 million decrease Overall, the non-budgetary spending in the 2004-2005 Main Estimates has decreased by $117 million relative to the 2003-2004 Main Estimates. This can be explained in part by decreases in the following non-budgetary spending forecasts: $271 million for loans disbursed under the Canada Student Financial Assistance Act. This decrease is primarily due to the impact of loan reimbursements from borrowers on the loan portfolio (Human Resources Development Canada (Social Development Canada)); $73 million for payments to various international financial institutions, due almost solely to reductions to loans to the International Monetary Fund's Poverty Reduction and Growth Facility (Department of Finance). This is offset by a total increase of $234 million in the following non-budgetary expenditures: $205 million in payments for the purpose of facilitating and developing trade between Canada and other countries under the terms of the Export Development Act (Export Development Canada) $29 million relating to advances under the National Housing Act. This increase in spending authority is due to a decrease in the Corporation's loan repayment to the Consolidated Revenue Fund (Canada Mortgage and Housing Corporation). Backgrounder Overview of the 2004-2005 Reports on Plans and Priorities for the Government of Canada October 8, 2004 Introduction The Government of Canada presents its overall spending priorities through the expenditure plan set out by the Minister of Finance in the Budget. It implements the plan through a series of legislative measures, the Estimates and related appropriation bills. On March 23, 2004, the Government of Canada tabled its most recent Budget. Due to the timing of the Budget and the subsequent election call, tabling of the 2004-2005 Reports on Plans and Priorities and their referral to the Standing Committees of the House of Commons was delayed until the fall. The Reports on Plans and Priorities are tabled in Parliament by the President of the Treasury Board on behalf of the ministers who preside over the departments and agencies identified in Schedules I, I.1 and II of the Financial Administration Act. Crown corporations do not produce a Report on Plans and Priorities. They report separately to Parliament through their corporate plans. The Report on Plans and Priorities sets out the department's expenditure plans for the next three years based on the department's strategic outcomes. Departments and agencies are asked to identify in their reports specific planned results for the planning period, along with the key activities and initiatives that would be undertaken to achieve them, consistent with their planned expenditures. This supports the priorities established in Results for Canadians: A Management Framework for the Government of Canada, which was tabled in the House of Commons by the President of the Treasury Board in March 2000. Accordingly, the Reports provide Members of Parliament and Canadians with a succinct description of how departments and agencies are planning to deliver on the government's commitments within the context of its financial framework. They also provide a basis upon which to describe actual progress. The information on planned expenditures and results provides parliamentarians with a context for their review of the Estimates and an opportunity to discuss and influence the longer-term plans of the government. Budgetary Spending Budgetary Spending ($ billions) 2004-2005 Budgetary Spending 183.3 Less: Public Debt Charges 35.4 Program Spending 147.9 The March 2004 Budget presents planned budgetary spending of $183.3 billion for 2004-2005. Of that amount, $35.4 billion is for public debt charges and $147.9 billion is for program spending, consisting of major transfer payments to individuals and to other levels of government, and direct program spending. Program Spending Total program spending of $147.9 billion in 2004-2005 is consistent with the planned spending levels for that year set out in the March 2004 Budget. The following table provides further details on planned program spending for 2004-2005. It focuses on major transfer payments. Program Spending by Major Component ($ billions) 2004-2005 Planned Spending Major Transfer Payments: Other Levels of Governments: - Fiscal Equalization 10.0 - Canada Health and Social Transfer 20.5 - Health Reform Transfer 1.5 - Territorial Governments 1.8 - Alternative Payments for Standing Programs (2.6) - Youth Allowance Recovery and Statutory Subsidies (0.6) To Persons: - Elderly Benefits 27.9 - Employment Insurance Benefits 15.7 Total Major Transfer Payments 74.2 Direct Program Spending 76.6 Adjustments to Budget (2.9) Total Program Spending 147.9 Direct program spending does not include major transfer payments or public debt charges. It consists of operating and capital spending, a number of subsidies and transfer payments such as those to Aboriginal peoples, and funding for regional and industrial development, agriculture and international aid. Direct program spending might be described as the cost of the "machinery" of government and comprises the hundreds of programs and services that directly support the economic, cultural and social fabric of the nation. "Adjustments to Budget" are attributable to several factors: Those amounts which for Budget and accounting purposes have been charged to prior years when the obligations were incurred (e.g., multilateral debt reduction agreements, assistance to provinces related to natural disasters, contaminated sites remediation), adjustments related to accrual accounting and projected lapses. It also includes funds for initiatives that were announced in the Budget, but which require further development. The white section of the following chart focuses on the distribution of $76.6 billion in 2004-2005 direct program spending across the various ministries of the Government of Canada. Program Spending by Ministry The following table sets out the planned budgetary program spending by ministry that consists of those departments, agencies and Crown corporations for which a given minister is accountable to Parliament. The presentation is consistent with the financial information contained in the Reports on Plans and Priorities. 2004-2005 Planned Spending Program Spending by Ministry ($ millions) Agriculture and Agri-Food Canada 2,703.8 Atlantic Canada Opportunities Agency 526.7 Canada Customs and Revenue Agency 3,385.9 Canadian Heritage 3,392.0 Citizenship and Immigration Canada 1,036.1 Economic Development Agency of Canada for Regions of Quebec 427.9 Environment Canada 1,446.4 Finance Canada 31,985.4 Fisheries and Oceans Canada 1,476.6 Foreign Affairs and International Trade 4,714.4 Governor General 19.5 Health Canada 4,107.1 Human Resources and Skills Development Canada 4,419.9 Indian and Northern Affairs Canada 5,835.7 Industry Canada 4,672.9 International Trade 237.8 Justice Canada 1,478.2 National Defence 14,074.4 Natural Resources Canada 1,561.0 Office of Infrastructure Canada 593.5 Parliament 450.9 Privy Council Office 295.2 Public Works and Government Services Canada 2,737.0 Public Safety and Emergency Preparedness Canada 5,515.6 Social Development 28,608.1 Transport Canada 1,782.1 Treasury Board of Canada Secretariat 2,688.7 Veterans Affairs Canada 2,790.7 Western Economic Diversification Canada 390.8 Consolidated Specified Purpose Accounts[1] 17,408.7 Adjustments to Budget[2] (2,863.0) Total Program Spending 147,900.0 [1]The major component of the Consolidated Specified Purpose Accounts item is the Employment Insurance Account. [2] Refer to page 3 for information on this adjustment.
