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Ottawa, October 13, 2004
2004-065

Government of Canada Records Seventh Consecutive Surplus

Related documents:

• Annual Financial Report of the Government of Canada - Fiscal Year 2003–2004.
• Fiscal Reference Tables - October 2004.

Minister of Finance Ralph Goodale announced today that the Government of Canada recorded a surplus of $9.1 billion for fiscal year 2003–04. Consistent with generally accepted accounting principles, the $9.1 billion has been applied to reduce Canada’s federal debt. This marks the seventh consecutive annual surplus, the first time such a record has been achieved in Canada’s history.

As a result of the seven consecutive surpluses, Canada’s federal public debt has been reduced by a total of $61.4 billion from its peak in 1996–97. At the end of 2003–04, it stood at $501.5 billion. As well, the federal debt-to-GDP (gross domestic product) ratio now stands at 41.1 per cent, down sharply from its peak of 68.4 per cent in 1995–96. It is now at its lowest level since 1983–84.

"The Government’s bottom line received a $5.1-billion boost from stronger-than-expected revenues," Minister Goodale said. "Thanks to a resilient economy, the level of incomes and government revenues were higher than estimated in the last federal budget, illustrating that the Canadian economy successfully weathered the problems of 2003, which included BSE, SARS and the significant appreciation of the Canadian dollar."

This $5.1-billion boost is in addition to the $1.9-billion Contingency Reserve that was set aside in Budget 2004 and approximately $2 billion in lower-than-anticipated government expenses.

The Minister added that despite the significant personal and corporate tax reductions that were implemented in 2003, the Government’s tax revenues were not only higher than forecast but also rose faster than the growth levels for both personal incomes and corporate profits, as measured by Statistics Canada. As a result, a sizeable portion of this $5.1 billion higher revenue base should carry forward into the 2004–05 fiscal year and beyond.

This information is contained in the Annual Financial Report of the Government of Canada, which was released today and reviews the Government’s financial performance in the 2003–04 fiscal year.

"The Government’s commitment to balanced budgets or better continues to benefit all Canadians," said Minister Goodale. "Not only are we keeping our debt burden on a downward track, we are able to invest in national priorities such as the recent health care deal with the provinces and territories as well as other priorities, both at home and abroad."

Among the report’s highlights:

• Budgetary revenues increased by $8.4 billion, or 4.7 per cent, in 2003–04, reflecting strong growth in personal income tax revenues and a large increase in corporate income tax revenues, which rose 23.4 per cent.

• Program expenses increased by 5.8 per cent in 2003–04, primarily due to previous budget initiatives. The program expenses-to-GDP ratio rose slightly to 11.6 per cent— still well below the ratio of 15.7 per cent in 1993–94.

• Public debt charges declined by $1.5 billion in 2003–04. As a percentage of revenues, these charges stood at 19.2 per cent in 2003–04—down from the peak of about 39 per cent in the early 1990s.

• Canada was the only Group of Seven country to post a total government sector budgetary surplus in 2003.

The 2003–04 Annual Financial Report of the Government of Canada and the Fiscal Reference Tables can be viewed free of charge on the Department of Finance Web site. Printed copies of the documents are available for $16.00 from the Department of Finance Distribution Centre at (613) 995-2855.

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