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Archived - The Fiscal Monitor
A publication of the Department of finance

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Highlights

August 2012: budgetary deficit of $3.2 billion

There was a budgetary deficit of $3.2 billion in August 2012, compared to a deficit of $3.1 billion in August 2011.

Revenues increased by $0.4 billion, or 2.0 per cent, largely reflecting increases in personal income tax revenues and Goods and Services Tax (GST) revenues, offset in part by lower corporate income tax revenues. Program expenses increased by $0.5 billion, or 2.6 per cent, reflecting increases in major transfers to persons and direct program expenses. Public debt charges decreased by $0.1 billion, or 3.1 per cent.

April to August 2012: budgetary deficit of $6.2 billion

For the first five months of the 2012–13 fiscal year, the budgetary deficit stood at $6.2 billion, compared to a deficit of $9.0 billion reported in the same period of 2011–12. 

Revenues were up $3.4 billion, or 3.4 per cent, reflecting higher income tax revenues, excise taxes and duties, and Employment Insurance (EI) premium revenues. Program expenses were up $1.4 billion, or 1.5 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.9 billion, or 6.7 per cent.

August 2012

There was a budgetary deficit of $3.2 billion in August 2012, compared to a deficit of $3.1 billion in August 2011.

Revenues increased by $0.4 billion, or 2.0 per cent, to $19.1 billion.

  • Personal income tax revenues were up $0.5 billion, or 5.3 per cent.
  • Corporate income tax revenues were down $0.2 billion, or 13.5 per cent.
  • Non-resident income tax revenues were down $13 million, or 3.9 per cent.
  • Excise taxes and duties were up $0.1 billion, or 1.2 per cent. GST revenues were up $0.2 billion, or 6.1 per cent. Energy taxes were down $0.1 billion, customs import duties were up $2 million, and other excise taxes and duties were down $34 million. 
  • EI premium revenues were up $0.1 billion, or 7.8 per cent, consistent with the 2012 premium rate of $1.83 per $100 of insurable earnings.  
  • Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, revenues from sales of goods and services, returns on investments, net foreign exchange revenues and miscellaneous revenues, were down $19 million, or 0.9 per cent. 

Program expenses in August 2012 were $20.0 billion, up $0.5 billion, or 2.6 per cent, from August 2011.        

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.1 billion, or 1.2 per cent. Elderly benefits increased by $0.3 billion, or 8.8 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.2 billion, or 13.0 per cent, reflecting a decrease in regular benefits. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $12 million.
  • Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal arrangements and other transfers (Equalization, transfers to the territories, as well as a number of smaller transfer programs), transfers to provinces on behalf of Canada’s cities and communities, and the Quebec Abatement, decreased by $0.1 billion, or 1.8 per cent, as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories was more than offset by a decrease in transfers to Canada’s cities and communities, reflecting a year-over-year difference in the timing of payments.
  • Direct program expenses include operating expenses of National Defence and other departments, expenses of Crown corporations, and all other transfer payments to individuals and other organizations. Direct program expenses were up $0.5 billion, or 5.8 per cent, from the previous year.
    • Transfer payments, which include transfers for Aboriginal peoples, assistance to farmers, foreign aid, and support for research and development, infrastructure and regional development, were down $0.6 billion, or 20.8 per cent. This decrease primarily reflects a decrease in transfers at Aboriginal Affairs and Northern Development Canada, lower transfers under Foreign Affairs and International Trade Canada due mainly to the timing of payments, and a decline in infrastructure transfers, consistent with the wind-down of the stimulus provided through Canada’s Economic Action Plan.
    • Other direct program expenses, which include salaries and benefits of federal employees, amortization of facilities and equipment, and supplies, increased by $1.1 billion, or 18.2 per cent, due to a one-time adjustment in August 2012 to reflect an updated accrual estimate of employee and veteran future benefit costs based on actuarial valuations prepared for the Government’s 2011–12 financial statements.   

Public debt charges decreased by $0.1 billion, or 3.1 per cent.

April to August 2012

For the first five months of the 2012–13 fiscal year, there was a budgetary deficit of $6.2 billion, compared to a deficit of $9.0 billion reported during the same period of 2011–12. 

Revenues increased by $3.4 billion, or 3.4 per cent, to $102.4 billion.

  • Personal income tax revenues were up $1.9 billion, or 3.8 per cent. 
  • Corporate income tax revenues were up $0.1 billion, or 1.3 per cent, reflecting a decrease in receipts of about 2.9 per cent and a decrease of 10.5 per cent in refunds of taxes paid.
  • Non-resident income tax revenues were up $34 million, or 1.8 per cent. 
  • Excise taxes and duties were up $1.0 billion, or 5.5 per cent, largely reflecting an increase in GST revenues of $0.7 billion, or 5.9 per cent. Energy taxes, customs import duties and other excise taxes and duties each increased by $0.1 billion. 
  • EI premium revenues were up $0.6 billion, or 7.2 per cent, reflecting growth in insurable earnings and the 2012 premium rate of $1.83 per $100 of insurable earnings.
  • Other revenues were down $0.3 billion, or 2.6 per cent.

For the April to August 2012 period, program expenses were $96.2 billion, up $1.4 billion, or 1.5 per cent, from the same period the previous year.

  • Major transfers to persons were up $0.8 billion, or 2.7 per cent. Elderly benefits increased by $1.0 billion, or 6.7 per cent, reflecting the introduction of the Guaranteed Income Supplement top-up benefit in July 2011, as well as growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.3 billion, or 3.9 per cent, reflecting a decrease in regular benefits. Children’s benefits were up $27 million, or 0.5 per cent.  
  • Major transfers to other levels of government were up $0.4 billion, or 1.6 per cent, mainly reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, offset in part by lower transfer protection payments to provinces, lower transfers to Canada’s cities and communities and an increase in recoveries under the Quebec Abatement.  
  • Direct program expenses were up $0.3 billion, or 0.7 per cent. 
    • Transfer payments were down $0.7 billion, or 5.8 per cent, primarily reflecting a decrease in transfers at Aboriginal Affairs and Northern Development Canada, lower transfers under Foreign Affairs and International Trade Canada due mainly to the timing of payments, and a decline in infrastructure transfers, consistent with the wind-down of the stimulus provided through Canada’s Economic Action Plan. 
    • Other direct program expenses increased by $1.0 billion, or 3.5 per cent, largely reflecting an increase in the accrual cost of employee and veteran future benefits.

Public debt charges decreased by $0.9 billion, or 6.7 per cent, reflecting lower Consumer Price Index adjustments on real return bonds and a lower effective interest rate on the stock of interest-bearing debt.

Revenues: April to August 2012
Revenues $billions
EI premiums 8.8270
Corporate income taxes 11.5270
Other revenues 12.0040
Excise taxes and duties 19.0990
Personal income taxes 50.9920
Total 102.4490
Expenses: April to August 2012
Expenses $billions
Public debt charges 12.4570
Major transfers to other levels of gov’t 25.0190
Major transfers to persons 29.0640
Direct program expenses 42.1070
Total 108.6470

Financial requirement of $20.9 billion for April to August 2012

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses 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 $6.2 billion and a requirement of $14.8 billion from non-budgetary transactions, there was a financial requirement of $20.9 billion for the April to August 2012 period, compared to a financial requirement of $24.8 billion for the same period the previous year. 

Net financing activities up $27.7 billion

The Government financed this financial requirement of $20.9 billion and increased cash balances by $6.8 billion by increasing market debt by $27.7 billion. The increase in market debt was achieved primarily through the issuance of marketable bonds and 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 2012 stood at $20.1 billion, up $9.0 billion from their level at the end of August 2011.  

 
Table 1
Summary statement of transactions
$ millions
  August April to August
 

  20111 2012 2011–121 2012–13
Budgetary transactions
  Revenues 18,737 19,109 99,073 102,449
  Expenses
    Program expenses -19,523 -20,036 -94,744 -96,190
    Public debt charges -2,312 -2,241 -13,354 -12,457
 

  Budgetary balance (deficit/surplus)  -3,098 -3,168 -9,025 -6,198
Non-budgetary transactions -1,258 -5,287 -15,725 -14,751
 

Financial source/requirement -4,356 -8,455 -24,750 -20,949
Net change in financing activities 11,178 11,469 25,667 27,722
 

Net change in cash balances 6,822 3,014 917 6,773
Cash balance at end of period 11,074 20,104
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1 Comparative figures have been restated to reflect changes in accounting policy in 2012–13.
 
Table 2
Revenues
  August    April to August  
 
 
 
  2011
($ millions)
2012
($ millions)
 Change
 (%)
2011–12
($ millions)
2012–13
($ millions)
 Change
(%)
Tax revenues
  Income taxes
    Personal income tax1 9,315 9,812 5.3 49,133 50,992 3.8
    Corporate income tax2 1,774 1,535 -13.5 11,378 11,527 1.3
    Non-resident income tax 333 320 -3.9 1,929 1,963 1.8
 

    Total income tax 11,422 11,667 2.1 62,440 64,482 3.3
  Excise taxes and duties
    Goods and Services Tax3 2,593 2,752 6.1 12,121 12,833 5.9
    Energy taxes 534 457 -14.4 2,140 2,192 2.4
    Customs import duties 391 393 0.5 1,586 1,730 9.1
    Other excise taxes and duties 511 477 -6.7 2,249 2,344 4.2
 

    Total excise taxes and duties 4,029 4,079 1.2 18,096 19,099 5.5
 

  Total tax revenues 15,451 15,746 1.9 80,536 83,581 3.8
Employment Insurance premiums 1,229 1,325 7.8 8,232 8,827 7.2
Other revenues 2,057 2,038 -0.9 10,305 10,041 -2.6
 

Total revenues 18,737 19,109 2.0 99,073 102,449 3.4
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect the reclassification of the Working Income Tax Benefit and the Refundable Medical Expense Supplement as transfer payments.
2 Comparative figures have been restated to reflect the reclassification of the Canadian Film or Video Production Tax Credit, the Film or Video Production Services Tax Credit, the Scientific Research and Experimental Development Tax Credit for Canadian-Controlled Private Corporations and the refundable portion of the Atlantic Investment Tax Credit as transfer payments.
3 Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.
 
Table 3
Expenses
  August    April to August  
 
 
 
  2011
($ millions)
2012
($ millions)
 Change
(%)
2011–12
($ millions)
2012–13
($ millions)
 Change
(%)
Major transfers to persons
  Elderly benefits 3,050 3,317 8.8 15,480 16,510 6.7
  Employment Insurance benefits 1,630 1,418 -13.0 7,413 7,122 -3.9
  Children's benefits 1,031 1,043 1.2 5,405 5,432 0.5
 

  Total 5,711 5,778 1.2 28,298 29,064 2.7
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,267 2,402 6.0 11,334 12,008 5.9
    Canada Social Transfer 960 988 2.9 4,798 4,941 3.0
 

    Total 3,227 3,390 5.1 16,132 16,949 5.1
  Fiscal arrangements and other transfers 1,328 1,498 12.8 8,816 8,752 -0.7
  Canada's cities and communities 394 0 n/a 1,267 1,035 -18.3
  Quebec Abatement -320 -344 7.5 -1,600 -1,717 7.3
 

  Total 4,629 4,544 -1.8 24,615 25,019 1.6
Direct program expenses
  Transfer payments            
    Aboriginal Affairs and
      Northern Development 
578 438 -24.2 2,530 2,219 -12.3
    Agriculture and Agri-Food 124 105 -15.3 375 398 6.1
    Foreign Affairs and
      International Trade
360 188 -47.8 1,127 975 -13.5
    Health 114 118 3.5 1,040 1,063 2.2
    Human Resources and
      Skills Development1
256 354 38.3 1,901 2,164 13.8
    Industry 272 208 -23.5 927 824 -11.1
    Other2 1,225 910 -25.7 4,864 4,381 -9.9
 

    Total 2,929 2,321 -20.8 12,764 12,024 -5.8
  Other direct program expenses
    Crown corporations1 644 623 -3.3 3,371 3,362 -0.3
    National Defence 1,772 2,079 17.3 7,772 8,085 4.0
    All other departments
      and agencies
3,838 4,691 22.2 17,924 18,636 4.0
 

    Total other direct program expenses 6,254 7,393 18.2 29,067 30,083 3.5
 

  Total direct program expenses 9,183 9,714 5.8 41,831 42,107 0.7
 

Total program expenses 19,523 20,036 2.6 94,744 96,190 1.5
Public debt charges 2,312 2,241 -3.1 13,354 12,457 -6.7
 

Total expenses 21,835 22,277 2.0 108,098 108,647 0.5
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect the reclassification of expenses under Canada Mortgage and Housing Corporation - Minister's Account from Crown corporation expenses to transfer payments for Human Resources and Skills Development.
2 Comparative figures have been restated to reflect the reclassification of the Working Income Tax Benefit, the Refundable Medical Expense Supplement, the Canadian Film or Video Production Tax Credit, the Film or Video Production Services Tax Credit, the Scientific Research and Experimental Development Tax Credit for Canadian-Controlled Private Corporations and the refundable portion of the Atlantic Investment Tax Credit as transfer payments.
 
Table 4
The budgetary balance and financial source/requirement
$ millions
   August  April to August
 

  2011 2012 2011–12 2012–13
Budgetary balance (deficit/surplus) -3,098 -3,168 -9,025 -6,198
Non-budgetary transactions
  Capital investment activities -132 -311 -654 -851
  Other investing activities -80 -84 361 -1,827
  Pension and other accounts 153 1,380 1,918 2,680
  Other activities    
    Accounts payable, receivables, accruals and allowances1 11 -6,771 -17,109 -20,041
    Foreign exchange activities -1,535 128 -2,100 3,551
    Amortization of tangible capital assets 325 371 1,859 1,737
 

    Total other activities -1,199 -6,272 -17,350 -14,753
 

  Total non-budgetary transactions -1,258 -5,287 -15,725 -14,751
 

Financial source/requirement -4,356 -8,455 -24,750 -20,949
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.
 
Table 5
Financial source/requirement and net financing activities
$ millions
   August  April to August
 

  2011 2012 2011–12 2012–13
Financial source/requirement -4,356 -8,455 -24,750 -20,949
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 5,626 6,432 18,078 12,052
      Treasury bills 5,100 5,700 7,000 15,800
      Retail debt -36 -33 -261 -173
      Other 0 0 -16 -11
 

      Total 10,690 12,099 24,801 27,668
    Foreign currency borrowings -67 -145 196 -244
 

    Total 10,623 11,954 24,997 27,424
    Cross-currency swap revaluation 1,002 -426 1,037 -513
    Unamortized discounts and premiums on market debt -435 -44 -291 893
    Obligations related to capital leases and other unmatured debt -12 -15 -76 -82
 

  Net change in financing activities 11,178 11,469 25,667 27,722
Change in cash balance 6,822 3,014 917 6,773
Note: Totals may not add due to rounding.

Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Brian Pagan at 613-995-6391.
October 2012