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News

The Fiscal Monitor

2011-12-23

Highlights

October 2011: budgetary deficit of $2.2 billion

There was a budgetary deficit of $2.2 billion in October 2011, compared to a deficit of $4.1 billion in October 2010.

Revenues increased by $1.4 billion, or 8.1 per cent, reflecting higher personal income tax, corporate income tax and Goods and Services Tax (GST) revenues. Program expenses were down $0.6 billion, or 3.2 per cent, reflecting lower transfer payments and other program expenses. Public debt charges increased by $0.1 billion.

April to October 2011: budgetary deficit of $15.4 billion

For the first seven months of the 2011–12 fiscal year, the budgetary deficit stood at $15.4 billion, compared to a deficit of $21.5 billion reported in the same period of 2010–11.

Revenues were up $5.7 billion, or 4.5 per cent, primarily reflecting higher income tax revenues, which were partially offset by lower GST revenues. Program expenses were down $1.0 billion, or 0.8 per cent. Public debt charges were up $0.6 billion.

October  2011

There was a budgetary deficit of $2.2 billion in October 2011, compared to a $4.1-billion deficit in October 2010.

Revenues increased by $1.4 billion, or 8.1 per cent, to $19.0 billion.

  • Personal income tax revenues were up $0.4 billion, or 3.8 per cent.
  • Corporate income tax revenues were up $0.5 billion, or 36.7 per cent.
  • Non-resident income tax revenues were down $34 million, or 7.8 per cent.
  • Excise taxes and duties were up $0.7 billion, or 21.4 per cent. GST revenues were up $0.5 billion, or 26.7 per cent. Energy taxes were down $1 million, customs import duties were up $0.1 billion, and other excise taxes and duties were up $11 million.
  • Employment Insurance (EI) premium revenues were up $45 million, or 5.0 per cent, consistent with the 2011 premium rate of $1.78 per $100 of insurable 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 $0.2 billion, or 7.3 per cent.

Program expenses in October 2011 totalled $18.6 billion, down $0.6 billion, or 3.2 per cent, from October 2010. Program expenses include transfer payments and other program expenses.

Transfer payments decreased by $0.2 billion, or 1.2 per cent.

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.1 billion, or 1.2 per cent. Elderly benefits increased by $0.2 billion, or 7.4 per cent, reflecting the introduction of the Guaranteed Income Supplement top-up benefit in July 2011, as well as growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.2 billion, or 10.8 per cent, reflecting a decrease in regular benefits. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $15 million.
  • Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal 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, increased by $0.4 billion, or 10.1 per cent, reflecting legislated growth in transfers and payments to Canada’s cities and communities.
  • Other transfer payments were down $0.6 billion, or 25.0 per cent.

Other program expenses consist of operating expenses of Crown corporations, departments and agencies, including National Defence, and also reflect the ongoing assessment of the Government’s liabilities. These expenses decreased by $0.5 billion, or 6.7 per cent, from the previous year.

Public debt charges increased by $0.1 billion, or 3.0 per cent.

April to October 2011

For the first seven months of the 2011–12 fiscal year, there was a budgetary deficit of $15.4 billion, compared to a deficit of $21.5 billion reported during the same period of 2010–11.

Revenues increased by $5.7 billion, or 4.5 per cent, to $133.4 billion.

  • Personal income tax revenues were up $4.5 billion, or 7.1 per cent.
  • Corporate income tax revenues were up $1.5 billion, or 11.7 per cent, reflecting an increase in receipts of about 5.6 per cent and a decrease of 3.1 per cent in refunds of taxes paid.
  • Non-resident income tax revenues were up $0.1 billion, or 5.4 per cent.
  • Excise taxes and duties were down $0.7 billion, or 2.9 per cent, mainly reflecting a decrease in GST revenues of about $0.9 billion, or 5.5 per cent. Energy taxes were up $19 million, customs import duties were up $0.2 billion, and other excise taxes and duties were down $0.1 billion.
  • EI premium revenues were up $0.5 billion, or 4.8 per cent, reflecting growth in insurable earnings and the 2011 premium rate of $1.78 per $100 of insurable earnings.
  • Other revenues were down $0.2 billion.

For the April to October 2011 period, program expenses were $130.4 billion, down $1.0 billion, or 0.8 per cent, from the same period the previous year.

Transfer payments decreased by $1.3 billion, or 1.4 per cent.

  • Major transfers to persons were up $30 million, or 0.1 per cent. Elderly benefits increased by $1.3 billion, or 6.1 per cent, reflecting the introduction of the Guaranteed Income Supplement top-up benefit, as well as growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $1.3 billion, or 11.8 per cent, reflecting a decrease in regular benefits. Children’s benefits were up $0.1 billion, or 1.4 per cent.
  • Major transfers to other levels of government were up $2.5 billion, or 8.1 per cent, reflecting legislated growth in transfers and transfer protection payments to provinces, as well as an increase in transfers to Canada’s cities and communities.
  • Other transfer payments were down $3.8 billion, or 20.5 per cent, reflecting declines across a number of departments, including a decline in infrastructure transfers, consistent with the wind-down of Canada’s Economic Action Plan.

Other program expenses increased by $0.3 billion, or 0.6 per cent, from the previous year.

Public debt charges increased by $0.6 billion, or 3.2 per cent, reflecting a higher stock of interest-bearing debt and a higher effective interest rate on that debt.

Revenues: April to October 2011
Revenues $billions
EI premiums 10.3
Corporate income taxes 14.1
Other revenues 17.1
Excise taxes and duties 23.8
Personal income taxes 68.2
Total 133.4
Expenses: April to October 2011
Expenses $billions
Other transfer payments 14.8
Public debt charges 18.4
Major transfers to other levels of gov't 33.6
Major transfers to persons 39.4
Other program expenses 42.5
Total 148.8

Financial requirement of $28.6 billion for April to October 2011

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are receivable 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 $15.4 billion and a requirement of $13.2 billion from non-budgetary transactions, there was a financial requirement of $28.6 billion for the April to October 2011 period, compared to a financial requirement of $40.8 billion for the same period the previous year.

Net financing activities up $27.4 billion

The Government financed this financial requirement of $28.6 billion by decreasing cash balances by $1.2 billion and increasing market debt by $27.4 billion. The increase in market 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 October 2011 stood at $9.0 billion, up $3.2 billion from their level at the end of October 2010.

 
Table 1
Summary statement of transactions
  October April to October
 
  2010 2011 2010–11 2011–12
  ($ millions)
Budgetary transactions        
  Revenues 17,597 19,015 127,705 133,430
  Expenses        
    Program expenses -19,204 -18,597 -131,384 -130,381
    Public debt charges -2,501 -2,576 -17,865 -18,440
 
  Budgetary balance (deficit/surplus)  -4,108 -2,158 -21,544 -15,391
Non-budgetary transactions 2,119 4,113 -19,304 -13,173
 
Financial source/requirement -1,989 1,955 -40,848 -28,564
Net change in financing activities 2,030 2,665 21,028 27,388
 
Net change in cash balances 41 4,620 -19,820 -1,176
Cash balance at end of period     5,804 8,978
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

 

 
Table 2
Revenues
  October    April to October  
 
 
 
  2010
($ millions)		 2011
($ millions)		  Change
(%)		 2010–11
($ millions)		 2011–12
($ millions)		  Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 9,600 9,961 3.8 63,733 68,245 7.1
    Corporate income tax 1,476 2,018 36.7 12,616 14,089 11.7
    Non-resident income tax 436 402 -7.8 2,533 2,671 5.4
 
    Total income tax 11,512 12,381 7.5 78,882 85,005 7.8
  Excise taxes and duties            
    Goods and Services Tax 1,933 2,450 26.7 16,020 15,139 -5.5
    Energy taxes 493 492 -0.2 3,083 3,102 0.6
    Customs import duties 199 329 65.3 2,026 2,267 11.9
    Other excise taxes and duties 449 460 2.4 3,348 3,253 -2.8
 
    Total excise taxes and duties 3,074 3,731 21.4 24,477 23,761 -2.9
 
  Total tax revenues 14,586 16,112 10.5 103,359 108,766 5.2
Employment Insurance premiums 908 953 5.0 9,795 10,268 4.8
Other revenues 2,103 1,950 -7.3 14,551 14,396 -1.1
 
Total revenues 17,597 19,015 8.1 127,705 133,430 4.5
Note: Totals may not add due to rounding.

 

 
Table 3
Expenses
   October    April to October   
 
 
 
  2010
($ millions)		 2011
($ millions)		  Change
(%)		 2010–11
($ millions)		 2011–12
($ millions)		  Change
(%)
Transfer payments            
  Major transfers to persons            
    Elderly benefits 2,995 3,217 7.4 20,596 21,860 6.1
    Employment Insurance benefits 1,570 1,401 -10.8 11,376 10,038 -11.8
    Children's benefits 1,067 1,082 1.4 7,444 7,548 1.4
 
    Total 5,632 5,700 1.2 39,416 39,446 0.1
  Major transfers to other levels
   of government		            
    Support for health and other
     social programs		            
      Canada Health Transfer 2,198 2,257 2.7 15,159 15,858 4.6
      Canada Social Transfer 932 960 3.0 6,521 6,717 3.0
 
      Total 3,130 3,217 2.8 21,680 22,575 4.1
    Fiscal transfers1 1,379 1,464 6.2 10,668 11,743 10.1
    Canada's cities and communities 0 295 n/a 858 1,562 82.1
    Quebec Abatement1,2 -286 -328 14.7 -2,089 -2,256 8.0
 
    Total 4,223 4,648 10.1 31,117 33,624 8.1
  Other transfer payments    
    Aboriginal Affairs and
     Northern Development 		 648 -55 -108.5 3,332 2,844 -14.6
    Agriculture and Agri-Food 156 230 47.4 998 894 -10.4
    Foreign Affairs and International
     Trade		 146 133 -8.9 1,788 1,439 -19.5
    Health 151 161 6.6 1,467 1,449 -1.2
    Human Resources and Skills
     Development		 239 230 -3.8 2,039 1,671 -18.0
    Industry 286 305 6.6 1,538 1,366 -11.2
    Other 965 939 -2.7 7,395 5,099 -31.0
 
    Total 2,591 1,943 -25.0 18,557 14,762 -20.5
 
  Total transfer payments 12,446 12,291 -1.2 89,090 87,832 -1.4
Other program expenses    
  Crown corporations 993 771 -22.4 6,105 5,676 -7.0
  Defence 1,847 1,839 -0.4 10,582 11,391 7.6
  All other departments and agencies 3,918 3,696 -5.7 25,607 25,482 -0.5
 
  Total other program expenses 6,758 6,306 -6.7 42,294 42,549 0.6
 
Total program expenses 19,204 18,597 -3.2 131,384 130,381 -0.8
Public debt charges 2,501 2,576 3.0 17,865 18,440 3.2
 
Total expenses 21,705 21,173 -2.5 149,249 148,821 -0.3
1 Comparative figures have been reclassified to conform to the presentation in the 2010–11 audited financial statements.
2 These amounts represent recoveries of the Quebec Abatement, which is comprised of federal tax abated under the Alternative Payments for Standing Programs and the Youth Allowance Program of that province.
Note: Totals may not add due to rounding.

 

 
Table 4
The budgetary balance and financial source/requirement
   October  April to October
 
  2010 2011 2010–11 2011–12
   ($ millions)
Budgetary balance (deficit/surplus) -4,108 -2,158 -21,544 -15,391
Non-budgetary transactions        
  Capital investment activities -189 -185 -2,518 -1,155
  Other investing activities -412 1,778 -1,680 550
  Pension and other accounts 486 368 3,164 1,948
  Other activities        
    Accounts payable, receivables, accruals and allowances 782 1,235 -20,140 -12,677
    Foreign exchange activities 931 630 -745 -4,346
    Amortization of tangible capital assets 521 287 2,615 2,507
 
    Total other activities 2,234 2,152 -18,270 -14,516
 
  Total non-budgetary transactions 2,119 4,113 -19,304 -13,173
 
Financial source/requirement -1,989 1,955 -40,848 -28,564
Note: Totals may not add due to rounding.

 

 
Table 5
Financial source/requirement and net financing activities
  October April to October
 
  2010 2011 2010–11 2011–12
  ($ millions)
Financial source/requirement -1,989 1,955 -40,848 -28,564
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds 3,004 6,337 26,650 16,482
      Treasury bills -900 -1,400 -6,100 10,100
      Retail debt -30 -43 -367 -323
      Other 0 0 -390 -16
 
      Total 2,074 4,894 19,793 26,243
    Foreign currency borrowings -175 -347 36 389
 
    Total 1,899 4,547 19,829 26,632
    Cross-currency swap revaluation -1 -1,709 668 1,218
    Unamortized discounts and premiums on market debt 134 -162 612 -364
    Obligations related to capital leases -2 -11 -81 -98
 
  Net change in financing activities 2,030 2,665 21,028 27,388
Change in cash balance 41 4,620 -19,820 -1,176
Note: Totals may not add due to rounding.

 

 
Table 6
Condensed statement of assets and liabilities
  March 31,
 2011		 October 31,
 2011		 Change
  ($ millions)
Liabilities      
  Accounts payable and accrued liabilities 119,060 102,455 -16,605
  Interest-bearing debt      
    Unmatured debt      
      Payable in Canadian currency      
        Marketable bonds 416,080 432,562 16,482
        Treasury bills 162,980 173,080 10,100
        Retail debt 10,141 9,818 -323
        Other 27 11 -16
 
        Subtotal 589,228 615,471 26,243
      Payable in foreign currencies 7,628 8,017 389
      Cross-currency swap revaluation -5,091 -3,873 1,218
      Unamortized discounts and premiums
       on market debt		 -4,485 -4,849 -364
      Obligations related to capital leases
       and other unmatured debt		 3,875 3,777 -98
 
      Total unmatured debt 591,155 618,543 27,388
    Pension and other liabilities  
        Public sector pensions 146,135 147,532 1,397
        Other employee and veteran future benefits 58,206 59,125 919
        Other liabilities 6,315 5,947 -368
 
        Total pension and other liabilities 210,656 212,604 1,948
 
    Total interest-bearing debt 801,811 831,147 29,336
 
  Total liabilities 920,871 933,602 12,731
Financial assets  
  Cash and accounts receivable 96,907 91,803 -5,104
  Foreign exchange accounts 48,507 52,853 4,346
  Loans, investments, and advances (net of allowances)1 158,549 152,175 -6,374
 
  Total financial assets 303,963 296,831 -7,132
   
Net debt 616,908 636,771 19,863
Non-financial assets 66,581 65,229 -1,352
 
Federal debt (accumulated deficit) 550,327 571,542 21,215

1 October 31, 2011 amount includes $2.5 billion in other comprehensive losses reported by enterprise Crown corporations and other government business enterprises and $3.3 billion in transitional adjustments resulting from the adoption of International Financial Reporting Standards by enterprise Crown corporations and other government business enterprises.
Note: Totals may not add due to rounding.

Source