There was a budgetary deficit of $3.1 billion in December 2009, compared to a $0.3-billion surplus in December 2008.

Revenues decreased by $1.1 billion, or 5.6 per cent, to $18.4 billion in December 2009.

• Personal income tax revenues decreased by $0.8 billion, or 7.4 per cent, reflecting lower employment and the impact of personal income tax reductions announced in Canada's Economic Action Plan.
• Corporate income tax revenues were up $0.5 billion, or 20.7 per cent, reflecting stronger year-end settlement payments than in December 2008.
• Non-resident income tax revenues were down $0.3 billion, or 37.1 per cent.
• Excise taxes and duties were up $0.2 billion, or 5.6 per cent, driven by higher Goods and Services Tax (GST) revenues. GST revenues were up $0.2 billion, or 13.1 per cent. As a value-added tax, GST revenues represent the difference between total GST owed to the Government and credits claimed for GST paid on inputs. For example, GST revenues of $25.7 billion in 2008–09 were derived from total GST assessed of about $167.0 billion, less $141.3 billion of input tax credits, rebates and credits to persons. As a result, timing differences between the much larger value of GST owed to the Government and credits claimed for GST paid on inputs can yield volatile net collections on a monthly basis. Energy taxes were down $6 million, customs import duties were down $0.1 billion, and other excise taxes and duties were up $22 million.
• EI premium revenues were down $0.3 billion, or 26.5 per cent, due to a one-time adjustment to premium revenues in December 2008 to account for an understatement of premium revenues over the course of 2008 and a corresponding overstatement of personal income tax revenues. Absent last year's adjustment for prior periods, EI premium revenues would have been up 0.l per cent in December 2009. The premium rate was kept stable at $1.73 per $100 of insurable earnings for 2009 and 2010.
• Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, proceeds from the sale of goods and services, returns on investments, foreign exchange net revenues and miscellaneous revenues, were down $0.4 billion, or 18.4 per cent, due in part to a decline in receipts under the Atlantic Offshore Revenue Accounts. This revenue is transferred to Newfoundland and Labrador and Nova Scotia under the Atlantic Offshore Accords, such that there is no net impact on the budgetary balance.

Program expenses in December 2009 were $19.1 billion, up $2.2 billion, or 13.1 per cent, from December 2008, reflecting increases across most categories of expenses.

In December 2009, transfer payments were up $1.3 billion, or 11.5 per cent, from December 2008.

• Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.4 billion, or 8.1 per cent. Elderly benefits increased by $0.1 billion, or 2.4 per cent. EI benefit payments increased by $0.3 billion, or 20.2 per cent, reflecting increased regular benefits due to higher unemployment, as well as benefit enhancement measures announced as part of Canada's Economic Action Plan. Children's benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $0.1 billion, or 6.1 per cent.
• Major transfers to other levels of government, consisting of federal 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, and Alternative Payments for Standing Programs, were up $0.2 billion, largely reflecting legislated growth in the Canada Health Transfer and the Canada Social Transfer.
• Other transfer payments were up $0.7 billion, reflecting increases across most departments.

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 increased by $0.9 billion, or 16.4 per cent, over the prior year, reflecting increases across a number of departments and the impact of the Economic Action Plan.

Public debt charges increased by $0.1 billion compared to December 2008.

April to December 2009

Through the first nine months of the 2009–10 fiscal year, there was a budgetary deficit of $39.4 billion, compared to a surplus of $0.4 billion reported during the same period of 2008–09. Over $16 billion of the $39.4-billion deficit was attributable to actions taken under Canada's Economic Action Plan, including tax reductions, enhanced EI benefits and support for the automotive industry.

Revenues declined by $19.4 billion, or 11.2 per cent, to $154.0 billion.

• Personal income tax revenues were down $6.7 billion, or 7.8 per cent, reflecting lower employment and the impact of tax relief measures. These tax reductions included increases in the basic personal amount and personal income tax bracket thresholds, an enhancement of the Working Income Tax Benefit, as well as the Home Renovation Tax Credit.
• Corporate income tax revenues were down $7.0 billion, or 31.1 per cent, reflecting an increase of roughly 44 per cent in refunds of taxes paid and a decline of about 9 per cent in receipts.
• Non-resident income tax revenues were down $1.1 billion, or 24.2 per cent.
• Excise taxes and duties were down $2.5 billion, or 7.9 per cent, primarily due to a $2.0-billion, or 9.9-per-cent, decline in GST revenues. GST revenues are projected to strengthen over the course of the fiscal year, reflecting the unwinding of timing impacts that dampened GST revenues early in the fiscal year and the projected recovery over the remainder of the fiscal year in spending on items that are subject to the GST. Energy taxes were up $42 million, customs import duties were down $0.5 billion, and other excise taxes and duties decreased by $25 million.
• EI premium revenues were down 1.9 per cent. The premium rate was kept stable at $1.73 per $100 of insurable earnings for 2009 and 2010.
• Other revenues were down $1.9 billion, or 10.5 per cent.

Program expenses for April to December 2009 were $171.2 billion, up $22.0 billion, or 14.8 per cent, from the same period the previous year, primarily reflecting increased EI benefit payments, increased transfers to other levels of government, and support for the automotive industry.

Transfer payments for April to December 2009 were up $18.7 billion, or 19.0 per cent, from the same period the previous year.

• Major transfers to persons were up $6.3 billion, or 14.1 per cent. Elderly benefits increased by $1.1 billion, or 4.4 per cent, in line with growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $4.9 billion, or 45.6 per cent, reflecting higher unemployment and benefit enhancements introduced as part of Canada's Economic Action Plan. Children's benefits were up $0.3 billion.
• Major transfers to other levels of government were up $3.2 billion, or 9.2 per cent, primarily reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization, as well as the previously announced doubling of the gas tax transfer to provinces and municipalities, as of April 1, 2009.
• Other transfer payments were up $9.2 billion, largely reflecting support for the automotive industry and increased infrastructure funding, as well as increased assistance for workers, students and persons with disabilities. These increases were partially offset by a decrease in transfers to Newfoundland and Labrador and Nova Scotia under the Atlantic Offshore Accords.

Other program expenses increased by $3.3 billion, or 6.6 per cent, from the previous year's level.

Public debt charges decreased by $1.7 billion, or 6.9 per cent, as the increase in the stock of interest-bearing debt was more than offset by lower average effective interest rates on that stock.

Financial requirement of $61.0 billion for April to December 2009

The budgetary balance is presented on an 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.

With a budgetary deficit of $39.4 billion and a requirement of $21.6 billion from non-budgetary transactions, there was a financial requirement of $61.0 billion in the April to December period of 2009–10, compared to a financial requirement of $50.2 billion in the same period of 2008–09. This year-over-year difference is due mainly to the deterioration in the budgetary balance, partially offset by a decrease in financing requirements under the Insured Mortgage Purchase Program.

Net financing activities up $33.8 billion

The Government financed this financial requirement of $61.0 billion by increasing market debt by $33.8 billion and reducing cash balances by $27.1 billion. The increase in market debt was achieved primarily through the issuance of marketable bonds. 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 December 2009 stood at $17.9 billion, $17.1 billion below their level at the end of December 2008.