Budget 2003 - Budget Plan
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Annex 5
Fiscal Performance of Canada’s Federal-Provincial-Territorial Government Sector

Introduction

• This annex presents historical data on the fiscal situation of the aggregate federal-provincial-territorial government sector, based on Public Accounts data, as published by individual governments. Data for the federal government, Nova Scotia, Quebec, Ontario, Manitoba, Alberta, British Columbia, the Northwest Territories and Nunavut are presented on an accrual basis of accounting.
• The aggregate federal-provincial-territorial government sector recorded an estimated surplus of $8.2 billion in 2001–02, the fourth consecutive annual surplus.
• In aggregate, the provincial-territorial government sector is estimated to have been in a slight deficit position ($22 million) in 2001–02. However, six provinces and one territory are estimated to have posted budgetary surpluses for 2001–02. The federal government recorded a surplus of $8.2 billion.
• Revenue-to-GDP (gross domestic product) ratios declined last year at both the federal and provincial-territorial levels, reflecting tax reduction measures implemented by both levels of government. Provincial-territorial revenues continue to exceed federal revenues.
• Spending as a percentage of GDP increased at both the federal and provincial-territorial government levels in 2001–02, although at both levels of government, the spending ratios were well below those in 1993–94.
• Debt-to-GDP ratios continue to fall. On an accrual basis, the federal ratio has declined by 21 percentage points from its peak of 67.5 per cent in 1995–96 to 46.5 per cent in 2001–02. The aggregate provincial-territorial government ratio has declined by over 5 percentage points to 22.1 per cent, which is less than half the federal level.

Federal-provincial-territorial governments recorded an aggregate surplus for the fourth consecutive year

• In 2001–02 the federal-provincial-territorial governments recorded an aggregate surplus of $8.2 billion, representing the fourth consecutive surplus.
• This represents a remarkable turnaround from 1993–94, when the federal-provincial-territorial government sector posted a $58.7-billion deficit.

A majority of provinces recorded surpluses in 2001–02

• Six provinces and one territory recorded surpluses in 2001–02.^[1] The provincial-territorial sector, as a whole, is estimated to have posted a small deficit of $22 million for 2001–02.

Total provincial-territorial revenues have consistently exceeded federal revenues

• For the last 10 years provincial-territorial revenues (including federal transfers such as the Canada Health and Social Transfer and equalization) have consistently exceeded federal revenues.
• Federal revenues as a share of GDP declined from 17.1 per cent in 2000–01 to 15.7 per cent in 2001–02, reflecting reductions in personal and corporate income taxes and employment insurance premiums, as well the slowdown in global economic activity.
• Provincial-territorial revenues as a percentage of GDP declined from 18.3 per cent in 2000–01 to 17.4 per cent in 2001–02, reflecting lower natural resource revenues and tax reduction measures.

Program spending has declined significantly as a share of GDP

• From 1993–94 to 2001–02 federal program spending as a share of GDP fell by 4.5 percentage points—from 15.9 to 11.4 per cent.
• Over the same period provincial-territorial program spending, measured as a share of GDP, fell by 3.5 percentage points—from 19.1 to 15.6 per cent.

The debt burden is much larger at the federal level

• Throughout the past decade the federal debt burden, as measured by the debt-to-GDP ratio, has been more than twice as high as the provincial-territorial debt burden.
• In 2001–02 the federal debt-to-GDP ratio, measured on an accrual basis, was estimated at 46.5 per cent, a drop of 21 percentage points from its peak of 67.5 per cent of GDP in 1995–96.
• The provincial-territorial debt-to-GDP ratio was estimated at 22.1 per cent in 2001–02, a decline of 5.3 percentage points from 1995–96.

Debt charges as a per cent of total revenues are significantly higher at the federal level

• As a result of its larger debt burden, the federal government faces much higher debt-servicing charges than the provincial-territorial sector.
• In 1995–96 the federal government spent 37 cents of every dollar of revenue on debt charges. Although significant progress has been made in reducing this burden, federal debt charges still consume 22.9 cents of every dollar of revenue, compared to 11.3 cents for the provincial-territorial sector.

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¹ All provinces and territories (except for Nunavut) have provided final results for 2001–02.[Return]

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