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![](/web/20061130051248im_/http://www.fin.gc.ca/images/clear.gif) |
- Fiscal Monitor 2004 -
The Fiscal Monitor
Highlights of financial results for September 2004
Highlights
September 2004: budgetary surplus of $3.3 billion
There was a budgetary surplus of $3.3 billion in September 2004, up
significantly from a deficit of $728 million recorded in September 2003. This year-over-year higher surplus primarily reflects the net
gain from the sale of the federal government’s remaining shares in
Petro-Canada. In addition, the labour disruptions in September at the
Canada Revenue Agency resulted in delays in the processing of refunds,
thereby resulting in a temporary increase in revenues. Revenues were
up $3.5 billion compared to September 2003, while program expenses
were down $0.4 billion. Public debt charges were $0.1 billion lower
than during the same month last year.
April to September 2004: budgetary surplus of $7.9 billion
For the first six months of the 2004-05 fiscal year (April to
September), the budgetary surplus is estimated at $7.9 billion, up
$4.9 billion from the surplus reported in the same period last year.
Budgetary revenues were up $6.1 billion, or 7.1 per cent. This
reflects the inclusion of the net proceeds from the sale of the
Government’s remaining shares in Petro-Canada as well as increases
in most revenue components, consistent with the strong growth in the
economy in the first half of 2004. Program expenses were up $1.77 billion, or 2.6 per cent, primarily due to higher transfer payments,
reflecting the impact of previous budget measures. Public debt charges
were $0.4 billion lower. |
Note to Readers: Caution should be exercised in interpreting the
year-to-date fiscal results. The revenue data reported for September and the
fiscal year to date were affected by the recent federal public service
labour disruption. Revenues are in some instances overstated due to fewer
refunds having been processed. The labour disruption will also affect the
October 2004 results, but the impact should unwind over the coming months as
the Canada Revenue Agency catches up with the processing of refunds. In
addition, a number of proposed policy initiatives, including the recent
federal-provincial/territorial agreements on health care, equalization and
Territorial Formula Financing, will only be reflected in the monthly fiscal
results once enabling legislation receives Royal Assent.
|
September 2004: budgetary results
The September 2004 budgetary surplus was estimated at $3.3 billion, up
from a deficit of $728 million in September 2003.
On a year-over-year basis, budgetary revenues, at $16.9 billion, were up
$3.5 billion, or 26.2 per cent. This increase is mostly attributable to the
net proceeds from the sale of the federal government’s remaining shares in
Petro-Canada. There were also increases in personal income tax ($0.77 billion) and corporate income tax ($0.5 billion) revenues, offset somewhat
by a decline in employment insurance (EI) premium revenues ($0.2 billion).
Excise taxes and duties remained flat on a year-over-year basis.
-
Personal income tax revenues increased by $0.7 billion, or 10.7 per cent.
The year-over-year increase is primarily attributable to growth in source
deductions and higher instalment payments.
- Corporate income tax revenues were up $0.5 billion, or 46.9 per cent,
reflecting fewer refunds processed during the month of September due to
the public service labour disruption. For example, gross receipts in
September were up about 12 per cent, but a 27-per-cent fall-off in
refunds lifted net receipts by 46.9 per cent. Some of these higher net
receipts will be reversed in the coming months.
- Excise taxes and duties were flat, as a decline in customs import
duties was almost fully offset by increases in other excise taxes and
duties. Goods and services tax (GST) revenues remained flat on a
year-over-year basis, although GST refunds were down significantly due
to the public service labour disruption.
- EI premiums were down 12.0 per cent, reflecting the impact of the
lower premium rate (the employee rate for 2004 is $1.98 per $100 of
insurable earnings compared to $2.10 in 2003), which more than offset
the increase in employment and thus the number of people paying
premiums.
- Other revenues, which consist of revenues from Crown corporations,
sales of goods and services and foreign exchange revenues, were up $2.57 billion due to the sale of the federal government’s remaining shares
in Petro-Canada. Without this sale, other revenues would have declined
in September.
Program expenses in September 2004 were $10.8 billion, down $0.4 billion,
or 3.4 per cent, from September 2003. Lower EI benefits (down $0.3 billion)
and other program expenses (down $0.4 billion) more than offset increases in
transfers to other levels of government and subsidies and other transfers
(up $0.3 billion).
Total transfer payments were up $0.1 billion, or 0.8 per cent, in
September 2004.
- Major transfers to persons, consisting of elderly and EI benefits,
were down $0.3 billion on a year-over-year basis. Elderly benefits
increased 3.2 per cent due to both higher average benefits, which have
risen because of higher inflation in early 2003, and an increase in the
number of individuals eligible for benefits. EI benefits fell by 25.27 per cent, largely due to the timing of payments in September 2004
compared to the same month in 2003, and partly due to a decline in the
number of unemployed persons.
- Major transfers to other levels of government, consisting of federal
transfers in support of health and other social programs (Canada Health
Transfer, Canada Social Transfer and Health Reform Transfer), fiscal
transfers and Alternative Payments for Standing Programs, were up 8.37 per cent. The increase in federal transfers in support of health and
other social programs reflects increased funding under the February 2003
First Ministers’ Accord on Health Care Renewal. Fiscal transfers
consist of equalization entitlements, payments to the territorial
governments, statutory subsidies and recoveries under the Youth
Allowance Recovery Program. In aggregate, these transfers were up 8.07 per cent from September 2003, primarily reflecting the impact of
recoveries in 2003-04 for overpayments in previous years under the
equalization program.
- Subsidies and other transfers were up 12.6 per cent. This component is
extremely volatile on a monthly basis, reflecting the timing of
payments.
Other program expenses consist of transfers to Crown corporations and
operating expenses for departments and agencies, including defence. On a
year-over-year basis, these expenses were down 10.4 per cent. Other program
expenses were affected by the federal public service labour disruption in
September, which reduced operating costs. This component is also quite
volatile on a monthly basis, reflecting the timing of payments and the
coming into force of budget measures.
Public debt charges were down 3.5 per cent, as a decline in the stock of
interest-bearing debt more than offset the impact of an increase in the
average effective interest rate on that debt.
![Revenues and expenses](/web/20061130051248im_/http://www.fin.gc.ca/FISCMON/images/2004-09_1e.gif)
April to September 2004: budgetary results
In the first six months of the fiscal year, there was a budgetary surplus
of $7.9 billion, up $4.9 billion from the surplus of $3.0 billion reported
in the same period of 2003-04. Over half of the increase in the surplus
relates to one-time factors.
Budgetary revenues, at $93.1 billion, were up $6.1 billion or 7.1 per
cent. This increase reflects gains in tax revenues and higher other
revenues, including the sale of the federal government’s remaining shares
in Petro-Canada, offset somewhat by lower EI premiums. Tax revenues were up
$5.2 billion, or 7.3 per cent. However, as noted above, the labour
disruption in the federal public service in September has raised both
September and year-to-date tax revenues due to a lower volume of refunds
processed. This impact should largely unwind in the coming months.
- Personal income tax revenues increased by $2.5 billion, or 6.4 per
cent. The year-over-year increase is primarily attributable to the
strong growth in source deductions from employment income, partly
reflecting gains in employment.
- Corporate income tax revenues were up $1.2 billion, or 12.8 per cent,
reflecting in part the lower volume of refunds processed in September 2004. In addition, the monthly results are affected by remittance
procedures. Corporations are required to remit monthly instalments based
on their previous year’s actual tax liabilities or their current year’s
estimated liabilities, with settlement payments made within 60 days of
the close of their taxation year. Given the large increase in settlement
payments in 2003-04, reflecting the increase in corporate profits in
2003, the current monthly instalments are more reflective of the
increase in the tax liability last year than an increase in the current
year.
- Excise taxes and duties increased by $1.3 billion, or 6.4 per cent,
primarily due to growth in GST revenues, which were up 9.3 per cent.
Customs import duties were up slightly, while there was a slight decline
in the Air Travellers Security Charge.
- EI premiums were down $0.8 billion, or 8.0 per cent.
- Other revenues increased $1.8 billion, or 27.2 per cent, reflecting
the sale of the Government’s remaining shares of Petro-Canada.
On a year-over-year basis, program expenses in the April to September 2004 period were up 2.6 per cent to $67.7 billion due to higher transfers.
Public debt charges were $0.4 billion lower than in the first six months of
2003-04.
Transfer payments, which accounted for nearly two-thirds of total program
expenses, increased by $1.9 billion, or 4.6 per cent.
- Transfers to persons advanced by $0.3 billion, or 1.6 per cent.
Elderly benefits were up 3.2 per cent while EI benefits were down 1.47 per cent. Within EI benefits, an increase in special benefits, such as
sickness, maternity and parental benefits, was offset by a decline in
regular benefits, reflecting the improvement in the labour market.
- Transfers to other levels of government were up $1.1 billion, or 7.67 per7 cent, reflecting higher transfers in support of health and other
social programs resulting from the February 2003 First Ministers’
Accord on Health Care Renewal, as well as increased fiscal transfers.
Fiscal transfers were up 8.5 per cent, primarily reflecting the impact
on the 2003-04 results of recoveries related to overpayments in previous
years under the equalization program.
- Subsidies and other transfers increased by $0.5 billion, or 7.4 per
cent, primarily reflecting the impact of previous budget measures.
Other program expenses fell by $0.2 billion, or 0.8 per cent, due to
lower expenses related to Crown corporations and all departments and
agencies except defence, reflecting lower operating costs related to the
federal public service labour disruption.
Public debt charges were down $0.4 billion, as a decline in the stock of
interest-bearing debt more than offset the impact of an increase in the
average effective interest rate on that debt.
![Budgetary balance](/web/20061130051248im_/http://www.fin.gc.ca/FISCMON/images/2004-09_2e.gif)
![Federal debt (accumulated deficit)](/web/20061130051248im_/http://www.fin.gc.ca/FISCMON/images/2004-09_3e.gif)
Financial requirement of $1.0 billion for April to September 2004
The budgetary balance is presented on a full accrual basis of accounting,
recording government assets and liabilities 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), pensions and other accounts, as well as 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.
Non-budgetary transactions resulted in a net requirement of $8.9 billion
in the April to September period, down $4.7 billion from the requirement in
the same period of 2003-04. The decline is primarily attributable to the
cash transfers in the April to September 2003 period to trust funds
established in the 2003 budget for the Canada Health and Social Transfer
cash supplement ($2.5 billion), the Diagnostic/Medical Equipment Fund ($1.57 billion), Canada Health Infoway ($600 million) and the Canada Foundation for
Innovation ($500 million).
With a budgetary surplus of $7.9 billion and a net requirement of $8.97 billion from non-budgetary transactions, there was a financial requirement
of $1.0 billion in the first six months of 2004-05, down $9.6 billion from
the same period last year.
Net financing activities down $10.6 billion
The Government reduced market debt by $10.6 billion by the end of
September 2004, largely by reducing its holdings of marketable bonds. Given
the reduction in market debt and the financial requirement of $1.0 billion,
the Government lowered its cash balances by $11.5 billion. The monthly level
of cash balances varies as a result of a number of factors including
periodic large debt maturities, which can be quite volatile on a monthly
basis. Cash balances at the end of September stood at $5.7 billion.
Table 1
Summary statement of transactions
|
|
September |
April to September |
|
|
|
|
2003 |
2004 |
2003-04 |
2004-05 |
|
|
($ millions) |
Budgetary transactions |
|
|
|
|
Revenues |
13,370 |
16,873 |
86,940 |
93,086 |
Expenses |
|
|
|
|
Program expenses |
-11,128 |
-10,753 |
-65,982 |
-67,702 |
Public debt charges |
-2,970 |
-2,866 |
-17,916 |
-17,476 |
|
|
|
Budgetary balance (deficit/surplus) |
-728 |
3,254 |
3,042 |
7,908 |
Non-budgetary transactions |
2,075 |
-111 |
-13,629 |
-8,881 |
Financial source/requirement |
1,347 |
3,143 |
-10,587 |
-973 |
Net change in financing activities |
-5,708 |
-6,431 |
-140 |
-10,576 |
Net change in cash balances |
-4,361 |
-3,288 |
-10,727 |
-11,549 |
Cash balance at end of period |
|
|
3,973 |
5,701 |
|
Note: Positive numbers indicate net
source of funds. Negative numbers indicate net requirement for funds. |
Table 2
Budgetary revenues
|
|
September |
|
April to September |
|
|
|
|
|
|
|
2003 |
2004 |
Change |
2003-04 |
2004-05 |
Change |
|
|
($ millions) |
(%) |
($ millions) |
(%) |
Tax revenues |
|
|
|
|
|
|
Income taxes |
|
|
|
|
|
|
Personal income tax |
6,307 |
6,979 |
10.7 |
39,780 |
42,319 |
6.4 |
Corporate income tax |
1,122 |
1,648 |
46.9 |
9,058 |
10,220 |
12.8 |
Other income tax revenue |
171 |
181 |
5.8 |
1,350 |
1,500 |
11.1 |
|
|
|
Total income tax |
7,600 |
8,808 |
15.9 |
50,188 |
54,039 |
7.7 |
Excise taxes and duties |
|
|
|
|
|
|
Goods and services tax |
2,368 |
2,369 |
0.0 |
13,988 |
15,288 |
9.3 |
Customs import duties |
317 |
277 |
-12.6 |
1,545 |
1,581 |
2.3 |
Sales and excise taxes |
790 |
824 |
4.3 |
4,870 |
4,871 |
0.0 |
Air Travellers Security
Charge |
33 |
35 |
6.1 |
212 |
194 |
-8.5 |
|
|
|
Total excise taxes and duties |
3,508 |
3,505 |
-0.1 |
20,615 |
21,934 |
6.4 |
|
|
|
Total tax revenues |
11,108 |
12,313 |
10.8 |
70,803 |
75,973 |
7.3 |
Employment insurance premiums |
1,322 |
1,163 |
-12.0 |
9,689 |
8,910 |
-8.0 |
Other revenues |
940 |
3,397 |
261.4 |
6,448 |
8,203 |
27.2 |
Total budgetary revenues |
13,370 |
16,873 |
26.2 |
86,940 |
93,086 |
7.1 |
|
Table 3
Budgetary expenses
|
|
September |
|
April to September |
|
|
|
|
|
|
|
2003 |
2004 |
Change |
2003-04 |
2004-05 |
Change |
|
|
($ millions) |
(%) |
($ millions) |
(%) |
Transfer payments |
|
|
|
|
|
|
Transfers to persons |
|
|
|
|
|
|
Elderly benefits |
2,244 |
2,315 |
3.2 |
13,324 |
13,752 |
3.2 |
Employment insurance
benefits |
1,352 |
1,011 |
-25.2 |
7,035 |
6,935 |
-1.4 |
|
|
|
Total |
3,596 |
3,326 |
-7.5 |
20,359 |
20,687 |
1.6 |
Transfers to other levels of government |
|
|
|
|
|
|
Support for health and other
social programs |
|
|
|
|
|
|
Canada Health
Transfer |
|
1,054 |
|
|
6,325 |
|
Canada Social
Transfer |
|
652 |
|
|
3,912 |
|
Health Reform
Transfer |
|
125 |
|
|
750 |
|
Canada Health
and
Social Transfer |
1,692 |
|
|
10,150 |
25 |
-99.8 |
Fiscal transfers |
858 |
927 |
8.0 |
5,202 |
5,645 |
8.5 |
Alternative Payments for
Standing Programs |
-211 |
-225 |
6.6 |
-1,205 |
-1,433 |
18.9 |
|
|
|
Total |
2,339 |
2,533 |
8.3 |
14,147 |
15,224 |
7.6 |
Subsidies and other transfers |
|
|
|
|
|
|
Agriculture |
112 |
88 |
-21.4 |
369 |
232 |
-37.1 |
Foreign Affairs |
133 |
129 |
-3.0 |
830 |
1,023 |
23.3 |
Health |
92 |
179 |
94.6 |
708 |
874 |
23.4 |
Human Resources Development |
126 |
102 |
-19.0 |
633 |
499 |
-21.2 |
Indian and Northern
Development |
281 |
302 |
7.5 |
2,158 |
2,192 |
1.6 |
Industry and Regional
Development |
69 |
122 |
76.8 |
712 |
827 |
16.2 |
Other |
237 |
260 |
9.7 |
1,358 |
1,625 |
19.7 |
|
|
|
Total |
1,050 |
1,182 |
12.6 |
6,768 |
7,272 |
7.4 |
|
|
|
Total transfer payments |
6,985 |
7,041 |
0.8 |
41,274 |
43,183 |
4.6 |
Other program expenses |
|
|
|
|
|
|
Crown corporation expenses |
|
|
|
|
|
|
Canadian Broadcasting
Corporation |
92 |
109 |
18.5 |
583 |
660 |
13.2 |
Canada Mortgage and
Housing Corporation |
166 |
170 |
2.4 |
1,074 |
1,035 |
-3.6 |
Other |
157 |
116 |
-26.1 |
1,073 |
988 |
-7.9 |
|
|
|
Total |
415 |
395 |
-4.8 |
2,730 |
2,683 |
-1.7 |
Defence |
876 |
1,040 |
18.7 |
5,567 |
5,655 |
1.6 |
All other departments and agencies |
2,852 |
2,277 |
-20.2 |
16,411 |
16,181 |
-1.4 |
|
|
|
Total other program expenses |
4,143 |
3,712 |
-10.4 |
24,708 |
24,519 |
-0.8 |
Total program expenses |
11,128 |
10,753 |
-3.4 |
65,982 |
67,702 |
2.6 |
Public debt charges |
2,970 |
2,866 |
-3.5 |
17,916 |
17,476 |
-2.5 |
Total budgetary expenses |
14,098 |
13,619 |
-3.4 |
83,898 |
85,178 |
1.5 |
|
Table 4
Budgetary balance and financial source/requirement
|
|
September |
April to September |
|
|
|
|
2003 |
2004 |
2003-04 |
2004-05 |
|
|
($ millions) |
Budgetary balance (deficit/surplus) |
-728 |
3,254 |
3,042 |
7,908 |
Non-budgetary transactions |
|
|
|
|
Capital investing activities |
-175 |
-180 |
-1,151 |
-471 |
Other investing activities |
-832 |
-378 |
-1,361 |
-1,082 |
Pension and other accounts |
371 |
-504 |
824 |
-640 |
Other activities |
|
|
|
|
Accounts payable,
receivables,
accruals and allowances |
3,026 |
923 |
-13,535 |
-7,725 |
Foreign exchange activities |
-219 |
-161 |
168 |
-309 |
Amortization of tangible
capital assets |
-96 |
189 |
1,426 |
1,346 |
|
|
|
Total other activities |
2,711 |
951 |
-11,941 |
-6,688 |
Total non-budgetary transactions |
2,075 |
-111 |
-13,629 |
-8,881 |
Net financial source/requirement |
1,347 |
3,143 |
-10,587 |
-973 |
|
Table 5
Financial source/requirement and net financing activities
|
|
September |
April to September |
|
|
|
|
2003 |
2004 |
2003-04 |
2004-05 |
|
|
($ millions) |
Net financial source/requirement |
1,347 |
3,143 |
-10,587 |
-973 |
Net increase (+)/decrease (-) in financing
activities |
|
|
|
|
Unmatured debt transactions |
|
|
|
|
Canadian
currency borrowings |
|
|
|
|
Marketable
bonds |
-3,758 |
-4,813 |
-7,101 |
-9,478 |
Treasury
bills |
-2,200 |
-1,500 |
7,500 |
400 |
Canada
Savings Bonds |
-74 |
-30 |
-652 |
-268 |
Other |
-1 |
-1 |
173 |
-25 |
|
|
|
Total |
-6,033 |
-6,344 |
-80 |
-9,371 |
Foreign currency
borrowings |
325 |
-83 |
-48 |
-1,167 |
|
|
|
Total |
-5,708 |
-6,427 |
-128 |
-10,538 |
Obligations related to capital
leases |
0 |
-4 |
-12 |
-38 |
Net change in financing
activities |
-5,708 |
-6,431 |
-140 |
-10,576 |
Change in cash balance |
-4,361 |
-3,288 |
-10,727 |
-11,549 |
|
Table 6
Condensed statement of assets and liabilities
|
|
March 31, 2004 |
September 30, 2004 |
Change |
|
|
($ millions) |
Liabilities |
|
|
|
Accounts payable, accruals and allowances |
79,964 |
68,154 |
-11,810 |
Interest-bearing debt |
|
|
|
Unmatured debt |
|
|
|
Payable
in Canadian dollars |
|
|
|
Marketable
bonds |
278,780 |
269,302 |
-9,478 |
Treasury
bills |
113,378 |
113,778 |
400 |
Canada
Savings Bonds |
21,330 |
21,062 |
-268 |
Other |
3,427 |
3,402 |
-25 |
|
|
Subtotal |
416,915 |
407,544 |
-9,371 |
Payable in
foreign currencies |
20,542 |
19,375 |
-1,167 |
Obligations
related to
capital leases |
2,774 |
2,736 |
-38 |
Total unmatured
debt |
440,231 |
429,655 |
-10,576 |
Pension and other accounts |
|
|
|
Public sector
pensions |
127,560 |
129,598 |
2,038 |
Other employee
and veteran
future benefits |
39,367 |
39,518 |
151 |
Canada Pension
Plan
(net of securities) |
7,483 |
5,085 |
-2,398 |
Other pension
and
other accounts |
6,488 |
6,057 |
-431 |
|
|
Total
pension and other accounts |
180,898 |
180,258 |
-640 |
Total interest-bearing debt |
621,129 |
609,913 |
-11,216 |
Total liabilities |
701,093 |
678,067 |
-23,026 |
Financial assets |
|
|
|
Cash and accounts receivable |
70,921 |
55,288 |
-15,633 |
Foreign exchange accounts |
44,313 |
44,622 |
309 |
Loans, investments and advances (net of allowances) |
29,548 |
30,630 |
1,082 |
|
|
Total financial assets |
144,782 |
130,540 |
-14,242 |
|
|
Net debt |
556,311 |
547,527 |
-8,784 |
Non-financial assets |
54,818 |
53,942 |
-876 |
Federal debt (accumulated deficit) |
501,493 |
493,585 |
-7,908 |
|
|