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![](/web/20061130013832im_/http://www.fin.gc.ca/images/clear.gif) |
- Fiscal Monitor 2006 -
The Fiscal Monitor
Highlights of financial results for August 2006
Highlights
August 2006: budgetary surplus of $6 million
There was a budgetary surplus of $6 million in August 2006, compared to a
$0.6-billion deficit in August 2005. Revenues increased by $1.1 billion,
driven by strong growth in income tax revenues, partially offset by a drop
in goods and services tax (GST) revenues, reflecting the cut to the GST rate
on July 1, 2006. Program expenses increased by $0.5 billion, or
3.6 per cent, reflecting increases in transfers to persons, which
now include payments under the new Universal Child Care Benefit (UCCB)
program. Public debt charges were down $17 million.
April to August 2006: budgetary surplus of $6.7 billion
For the first five months of the 2006–07 fiscal year, the budgetary
surplus is estimated at $6.7 billion, up $2.0 billion from the $4.8-billion
surplus in the same period of 2005–06. Revenues were up $5.2 billion, or
6.0 per cent, driven by strong growth in income tax revenues,
slightly offset by declines in excise tax and employment insurance (EI)
premium revenues. Program expenses were up $3.2 billion, or 4.6 per cent,
due to both higher transfers and other program expenses. Public debt charges
were up $0.1 billion.
The results to date are not representative of results expected for the
fiscal year as a whole, as they do not yet reflect the full impact of the
measures announced in Budget 2006. A full and complete update of the fiscal
outlook will be provided in the upcoming Economic and Fiscal Update.
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August 2006
There was a budgetary surplus of $6 million in August 2006, compared to a
$0.6-billion deficit in August 2005.
Budgetary revenues increased by $1.1 billion, or 6.6 per cent, to
$17.1 billion.
- Personal income tax revenues were up $0.5 billion, or
6.6 per cent, reflecting growth in employment and wages and
salaries.
- Corporate income tax revenues increased by $0.7 billion, or 52.4 per cent, in part reflecting higher payments from the resource sector.
- Other income tax revenues—withholdings from non-residents—rose
$0.2 billion, or 61.2 per cent.
- Excise taxes and duties were down $0.4 billion, driven by a
$0.5-billion or 18.7-per-cent drop in GST revenues, reflecting the impact
of the 1-percentage-point reduction in the GST rate effective July 1,
2006.
- EI premiums declined by 6.7 per cent, reflecting the decline in the
premium rate from $1.95 to $1.87 per $100 of insurable earnings, effective
January 1, 2006.
- Other revenues, consisting of net profits from enterprise Crown
corporations, revenues of consolidated Crown corporations, sales of goods
and services, returns on investments, foreign exchange revenues, revenues
of certain foundations and miscellaneous revenues, were up $0.3 billion.
This component of revenues is volatile.
Program expenses in August 2006 were $14.3 billion, up $0.5 billion or
3.6 per cent from August 2005, largely reflecting increases in transfers to
persons and increased operating expenses of National Defence and other
departments.
Transfer payments were up $0.3 billion, or 3.6 per cent.
- Transfers to persons, consisting of elderly benefits, EI benefits
and children’s benefits, were up $308 million, or
7.1 per cent. Elderly benefits increased by 4.9 per cent due to
both higher average benefits, which are indexed to Consumer Price Index
inflation, and an increase in the number of individuals eligible for
benefits. EI benefit payments decreased by 1.7 per cent, reflecting
declines in regular and maternity benefits. Children’s benefits consist
of the Canada Child Tax Benefit and the new UCCB, which began on
July 1, 2006. Children’s benefits were up $210 million,
largely reflecting $197 million in transfers under the UCCB program.
- Transfers to other levels of government, consisting of transfers in
support of health and other social programs (Canada Health Transfer and
Canada Social Transfer), fiscal transfers, transfers to provinces on
behalf of Canada’s cities and communities, transfers for early learning
and child care and Alternative Payments for Standing Programs, were down
$39 million, or 1.2 per cent.
- Subsidies and other transfers increased by $47 million, or 3.7 per
cent.
Other program expenses consist of transfers to Crown corporations and
operating expenses for departments and agencies, including National Defence.
They also reflect the ongoing assessment of the Government’s liabilities.
These expenses increased by $187 million, or 3.7 per cent.
Public debt charges decreased by $17 million.
![Revenues and expenses (April to August 2006)](/web/20061130013832im_/http://www.fin.gc.ca/FiscMon/images/2006-08_1e.gif)
April to August 2006
In the first five months of the 2006–07 fiscal year, there was a
budgetary surplus of $6.7 billion, up $2.0 billion from the $4.8-billion
surplus reported in the same period of 2005–06.
Budgetary revenues were up $5.2 billion, or 6.0 per cent, to $92.7
billion.
- Personal income tax revenues rose $4.3 billion, or
10.8 per cent, reflecting solid growth in employment and wages
and salaries combined with the progressivity of the personal income tax
system.
- Corporate income tax revenues were up $1.2 billion, or 11.2 per
cent, reflecting a higher corporate instalment payment base and lower
refunds to date, which in turn reflect profit growth in 2005 and ongoing
gains in corporate profitability this year.
- Other income tax revenues rose $0.3 billion, or 17.8 per cent.
- Excise taxes and duties were down $0.5 billion, or
2.7 per cent, primarily due to a $0.6-billion drop in GST
revenues, reflecting the impact of the GST rate reduction on July 1, 2006.
Sales and excise tax revenues were also lower, declining by $0.1 billion,
or 1.4 per cent. Customs import duties were up $0.1 billion while revenues
from the Air Travellers Security Charge were up $6 million.
- EI premium revenues decreased by 7.0 per cent, reflecting the
decline in the premium rate from $1.95 to $1.87 per $100 of insurable
earnings, effective January 1, 2006.
- Other revenues rose $0.4 billion, or 5.8 per cent.
Program expenses in the April to August 2006 period were $71.8 billion,
up $3.2 billion or 4.6 per cent from the same period of 2005–06, due to
both higher transfers and increased operating costs of departments and
agencies, including National Defence. Public debt charges increased by $0.1
billion.
Transfer payments, which account for about two-thirds of total program
expenses, increased by $2.2 billion, or 5.0 per cent.
- Transfers to persons advanced by 3.5 per cent. Elderly benefits
were up 4.7 per cent while EI benefits were down 5.6 per cent. The
year-to-date decline in EI benefits is mainly attributable to a decline in
regular benefits, which is in turn due to improved labour market
conditions compared to the same period in 2005–06. Maternity and
parental benefits are also down year-to-date due to the implementation of
the Quebec Parental Insurance Plan, effective January 1, 2006. Children’s
benefits increased by 13.3 per cent, largely reflecting transfers under
the new UCCB, which began on July 1, 2006.
- Transfers to other levels of government were up $1.5 billion,
or 9.3 per cent, largely due to the impact of the 2004 agreement on health
care, as well as a $650-million transfer to provinces and territories in
July 2006 for early learning and child care.
- Subsidies and other transfers increased by $5 million, or
0.1 per cent.
Other program expenses increased by $1.0 billion, or 4.0 per cent,
reflecting an increase in the operating costs of departments and agencies,
including National Defence. Crown corporation expenses declined by
$0.1 billion, or 4.1 per cent.
Public debt charges were up 0.6 per cent due to an increase in the
average effective interest rate on the stock of interest-bearing debt.
![Budgetary balance](/web/20061130013832im_/http://www.fin.gc.ca/FiscMon/images/2006-08_2e.gif)
![Federal debt (accumulated deficit)](/web/20061130013832im_/http://www.fin.gc.ca/FiscMon/images/2006-08_3e.gif)
Financial source of $4.1 billion for April to August 2006
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, 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.
Non-budgetary transactions resulted in a net requirement of $2.6 billion
in the April to August period, down from a $10.2-billion requirement in the
same period of 2005–06. The decrease in the net requirement largely
reflects a number of one-time payments, such as a $2.8-billion transfer
under the Offshore Revenues Accords made in June 2005 upon passage of the
Budget Implementation Act, 2005.
With a budgetary surplus of $6.7 billion and a net requirement of
$2.6 billion from non-budgetary transactions, there was a financial
source of $4.1 billion in the first five months of 2006–07 compared to a
financial requirement of $5.4 billion in the same period of 2005–06.
Net financing activities down $17.8 billion
The Government used this financial source of $4.1 billion and a reduction
in its cash balances of $13.7 billion to reduce its market debt by
$17.8 billion by the end of August 2006, largely through a reduction of
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 August
stood at $4.3 billion.
Table 1
Summary statement of transactions
|
|
August |
April
to August |
|
|
|
|
2005 |
2006 |
2005–06 |
2006–07 |
|
|
($
millions) |
Budgetary
transactions |
|
|
|
|
Revenues |
16,048 |
17,115 |
87,522 |
92,747 |
Expenses |
|
|
|
|
Program
expenses |
-13,839 |
-14,342 |
-68,649 |
-71,828 |
Public
debt charges |
-2,784 |
-2,767 |
-14,103 |
-14,192 |
|
|
|
Budgetary
balance (deficit/surplus) |
-575 |
6 |
4,770 |
6,727 |
Non-budgetary
transactions |
562 |
1,210 |
-10,206 |
-2,586 |
Financial
source/requirement |
-13 |
1,216 |
-5,436 |
4,141 |
Net
change in financing activities |
3,942 |
-1,006 |
-4,397 |
-17,819 |
Net
change in cash balances |
3,929 |
210 |
-9,833 |
-13,678 |
Cash
balance at end of period |
|
|
7,290 |
4,253 |
|
Note:
Positive numbers indicate net source of funds. Negative numbers
indicate net requirement for funds. |
Table 2
Budgetary revenues
|
|
August |
|
April
to August |
|
|
|
|
|
|
|
2005 |
2006 |
Change |
2005–06 |
2006–07 |
Change |
|
|
($
millions) |
(%) |
($
millions) |
(%) |
Tax
revenues |
|
|
|
|
|
|
Income
taxes |
|
|
|
|
|
|
Personal
income tax |
7,707 |
8,217 |
6.6 |
40,291 |
44,634 |
10.8 |
Corporate
income tax |
1,272 |
1,938 |
52.4 |
10,949 |
12,177 |
11.2 |
Other
income tax |
260 |
419 |
61.2 |
1,575 |
1,855 |
17.8 |
|
|
|
Total
income tax |
9,239 |
10,574 |
14.4 |
52,815 |
58,666 |
11.1 |
Excise
taxes and duties |
|
|
|
|
|
|
Goods
and services tax |
2,802 |
2,279 |
-18.7 |
13,716 |
13,144 |
-4.2 |
Customs
import duties |
332 |
362 |
9.0 |
1,378 |
1,484 |
7.7 |
Sales
and excise taxes |
821 |
879 |
7.1 |
4,042 |
3,985 |
-1.4 |
Air
Travellers Security Charge |
29 |
28 |
-3.4 |
149 |
155 |
4.0 |
|
|
|
Total
excise taxes and duties |
3,984 |
3,548 |
-10.9 |
19,285 |
18,768 |
-2.7 |
|
|
|
Total
tax revenues |
13,223 |
14,122 |
6.8 |
72,100 |
77,434 |
7.4 |
Employment
insurance premiums |
1,297 |
1,210 |
-6.7 |
7,863 |
7,312 |
-7.0 |
Other
revenues |
1,528 |
1,783 |
16.7 |
7,559 |
8,001 |
5.8 |
Total
budgetary revenues |
16,048 |
17,115 |
6.6 |
87,522 |
92,747 |
6.0 |
|
Note:
Totals may not add due to rounding. |
Table 3
Budgetary expenses
|
|
August |
|
April
to August |
|
|
|
|
|
|
|
2005 |
2006 |
Change |
2005–06 |
2006–07 |
Change |
|
|
($
millions) |
(%) |
($
millions) |
(%) |
Transfer
payments |
|
|
|
|
|
|
Transfers
to persons |
|
|
|
|
|
|
Elderly
benefits |
2,404 |
2,522 |
4.9 |
11,978 |
12,545 |
4.7 |
Employment
insurance benefits |
1,180 |
1,160 |
-1.7 |
5,808 |
5,485 |
-5.6 |
Children’s
benefits |
739 |
949 |
28.4 |
3,846 |
4,356 |
13.3 |
|
|
|
Total |
4,323 |
4,631 |
7.1 |
21,632 |
22,386 |
3.5 |
Transfers
to other levels of government |
|
|
|
|
|
|
Support
for health and other social programs |
|
|
|
|
|
|
Canada
Health Transfer |
1,584 |
1,679 |
6.0 |
7,917 |
8,392 |
6.0 |
Canada
Social Transfer |
685 |
709 |
3.5 |
3,427 |
3,542 |
3.4 |
|
|
|
Total |
2,269 |
2,388 |
5.2 |
11,344 |
11,934 |
5.2 |
Fiscal
transfers |
1,062 |
1,081 |
1.8 |
5,392 |
5,523 |
2.4 |
Canada’s
cities and communitites |
112 |
0 |
-100.0 |
112 |
306 |
173.2 |
Early
learning and child care |
0 |
0 |
n/a |
0 |
650 |
n/a |
Alternative
Payments for Standing Programs |
-196 |
-261 |
33.2 |
-1,197 |
-1,305 |
9.0 |
|
|
|
Total |
3,247 |
3,208 |
-1.2 |
15,651 |
17,108 |
9.3 |
Subsidies
and other transfers |
|
|
|
|
|
|
Agriculture |
97 |
89 |
-8.2 |
463 |
399 |
-13.8 |
Foreign
Affairs and International Trade |
317 |
138 |
-56.5 |
997 |
845 |
-15.2 |
Health |
81 |
82 |
1.2 |
682 |
718 |
5.3 |
Human
Resources Development |
33 |
86 |
160.6 |
610 |
682 |
11.8 |
Indian
and Northern Development |
338 |
355 |
5.0 |
1,984 |
2,003 |
1.0 |
Industry
and Regional Development |
211 |
224 |
6.2 |
786 |
747 |
-5.0 |
Other |
193 |
343 |
77.7 |
1,919 |
2,052 |
6.9 |
|
|
|
Total |
1,270 |
1,317 |
3.7 |
7,441 |
7,446 |
0.1 |
|
|
|
Total
transfer payments |
8,840 |
9,156 |
3.6 |
44,724 |
46,940 |
5.0 |
Other
program expenses |
|
|
|
|
|
|
Crown
corporation expenses |
|
|
|
|
|
|
Canadian
Broadcasting Corporation |
140 |
118 |
-15.7 |
595 |
595 |
0.0 |
Canada
Mortgage and Housing Corporation |
142 |
158 |
11.3 |
846 |
798 |
-5.7 |
Other |
268 |
211 |
-21.3 |
1,501 |
1,429 |
-4.8 |
|
|
|
Total |
550 |
487 |
-11.5 |
2,942 |
2,822 |
-4.1 |
Defence |
1,182 |
1,344 |
13.7 |
5,649 |
6,175 |
9.3 |
All
other departments and agencies |
3,267 |
3,355 |
2.7 |
15,334 |
15,891 |
3.6 |
|
|
|
Total
other program expenses |
4,999 |
5,186 |
3.7 |
23,925 |
24,888 |
4.0 |
Total
program expenses |
13,839 |
14,342 |
3.6 |
68,649 |
71,828 |
4.6 |
Public
debt charges |
2,784 |
2,767 |
-0.6 |
14,103 |
14,192 |
0.6 |
Total
budgetary expenses |
16,623 |
17,109 |
2.9 |
82,752 |
86,020 |
3.9 |
|
Note:
Totals may not add due to rounding. |
Table 4
The budgetary balance and financial source/requirement
|
|
August |
April
to August |
|
|
|
|
2005 |
2006 |
2005–06 |
2006–07 |
|
|
($
millions) |
Budgetary
balance (deficit/surplus) |
-575 |
6 |
4,770 |
6,727 |
Non-budgetary
transactions |
|
|
|
|
Capital
investing activities |
-136 |
-114 |
-117 |
-413 |
Other
investing activities |
170 |
-47 |
-940 |
417 |
Pension
and other accounts |
-447 |
1,358 |
-1,688 |
1,482 |
Other
activities |
|
|
|
|
Accounts
payable, receivables,
accruals and allowances |
1,431 |
-1,159 |
-10,266 |
-6,837 |
Foreign
exchange activities |
-728 |
932 |
1,540 |
1,579 |
Amortization
of tangible capital assets |
272 |
240 |
1,265 |
1,186 |
|
|
|
Total
other activities |
975 |
13 |
-7,461 |
-4,072 |
Total
non-budgetary transactions |
562 |
1,210 |
-10,206 |
-2,586 |
Net
financial source/requirement |
-13 |
1,216 |
-5,436 |
4,141 |
|
Note:
Totals may not add due to rounding. |
Table 5
Financial source/requirement and net financing activities
|
|
August |
April
to August |
|
|
|
|
2005 |
2006 |
2005–06 |
2006–07 |
|
|
($
millions) |
Net
financial source/requirement |
-13 |
1,216 |
-5,436 |
4,141 |
Net
increase (+)/decrease (-) in financing activities |
|
|
|
|
Unmatured
debt transactions |
|
|
|
|
Canadian
currency borrowings |
|
|
|
|
Marketable
bonds |
2,261 |
3,051 |
1,383 |
1,620 |
Treasury
bills |
1,800 |
-2,700 |
-1,800 |
-13,800 |
Canada
Savings Bonds |
-84 |
-77 |
-392 |
-379 |
Other |
-1 |
-105 |
-142 |
-1,015 |
|
|
|
Total |
3,976 |
169 |
-951 |
-13,574 |
Foreign
currency borrowings |
-87 |
-945 |
-3,591 |
-3,855 |
|
|
|
Total |
3,889 |
-776 |
-4,542 |
-17,429 |
Cross-currency
swap revaluation |
0 |
-121 |
-5 |
-121 |
Unamortized
discounts on debt issues |
39 |
-102 |
66 |
-223 |
Obligations
related to capital leases |
14 |
-7 |
84 |
-46 |
Net
change in financing activities |
3,942 |
-1,006 |
-4,397 |
-17,819 |
Change
in cash balance |
3,929 |
210 |
-9,833 |
-13,678 |
|
Note:
Totals may not add due to rounding. |
Table 6
Condensed statement of assets and liabilities
|
|
March 31, 2006 |
August 31, 2006 |
Change |
|
|
($ millions) |
Liabilities |
|
|
|
Accounts payable, accruals and allowances |
101,432 |
88,630 |
-12,802 |
Interest-bearing debt |
|
|
|
Unmatured debt |
|
|
|
Payable in Canadian dollars |
|
|
|
Marketable bonds |
261,134 |
262,754 |
1,620 |
Treasury bills |
131,597 |
117,797 |
-13,800 |
Canada Savings Bonds |
17,342 |
16,963 |
-379 |
Other |
3,102 |
2,087 |
-1,015 |
|
|
Subtotal |
413,175 |
399,601 |
-13,574 |
Payable in foreign currencies |
14,085 |
10,230 |
-3,855 |
Cross-currency swap revaluation account |
-2,258 |
-2,379 |
-121 |
Unamortized discounts and premiums
on
market debt |
-6,780 |
-7,003 |
-223 |
Obligations related to capital leases |
2,927 |
2,881 |
-46 |
|
|
Total unmatured debt |
421,149 |
403,330 |
-17,819 |
Pension and other accounts |
|
|
|
Public sector pensions |
131,062 |
131,957 |
895 |
Other employee and veteran future benefits |
43,369 |
44,031 |
662 |
Other pension and other accounts |
5,493 |
5,418 |
-75 |
|
|
Total pension and other accounts |
179,924 |
181,406 |
1,482 |
Total interest-bearing debt |
601,073 |
584,736 |
-16,337 |
Total liabilities |
702,505 |
673,366 |
-29,139 |
Financial assets |
|
|
|
Cash and accounts receivable |
82,843 |
63,200 |
-19,643 |
Foreign exchange accounts |
40,827 |
39,248 |
-1,579 |
Loans, investments and advances
(net of
allowances) |
41,889 |
41,472 |
-417 |
|
|
Total financial assets |
165,559 |
143,920 |
-21,639 |
|
|
Net debt |
536,946 |
529,446 |
-7,500 |
Non-financial assets |
55,447 |
54,674 |
-773 |
Federal debt (accumulated deficit) |
481,499 |
474,772 |
-6,727 |
|
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October 2006
|