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

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Highlights

October 2012: budgetary deficit of $1.7 billion

There was a budgetary deficit of $1.7 billion in October 2012, compared to a deficit of $2.1 billion in October 2011.

Revenues increased by $1.6 billion, or 8.0 per cent, reflecting increases in all tax revenue streams. Program expenses increased by $1.1 billion, or 6.1 per cent, reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges decreased by $38 million, or 1.5 per cent.

April to October 2012: budgetary deficit of $10.6 billion

For the first seven months of the 2012–13 fiscal year, the budgetary deficit stood at $10.6 billion, compared to a deficit of $13.9 billion reported in the same period of 2011–12.

Revenues were up $4.9 billion, or 3.6 per cent, reflecting higher income tax revenues, excise taxes and duties, and Employment Insurance (EI) premium revenues. Program expenses were up $2.7 billion, or 2.0 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.1 billion, or 6.1 per cent.

October 2012

There was a budgetary deficit of $1.7 billion in October 2012, compared to a deficit of $2.1 billion in October 2011.

Revenues increased by $1.6 billion, or 8.0 per cent, to $20.9 billion.

  • Personal income tax revenues were up $0.4 billion, or 4.4 per cent.
  • Corporate income tax revenues were up $0.8 billion, or 38.1 per cent, largely reflecting earlier receipts of payments relative to the same period last year.
  • Non-resident income tax revenues were up $0.1 billion, or 16.7 per cent.
  • Excise taxes and duties were up $0.1 billion, or 3.5 per cent. Goods and Services Tax (GST) revenues were up $0.1 billion, or 2.1 per cent. Energy taxes were up $25 million, customs import duties were up $22 million, and other excise taxes and duties were up $33 million.
  • EI premium revenues were up $0.1 billion, or 7.9 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 $5 million, or 0.3 per cent.

Program expenses in October 2012 were $20.0 billion, up $1.1 billion, or 6.1 per cent, from October 2011.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, decreased by $0.1 billion, or 1.2 per cent. Elderly benefits increased by $0.2 billion, or 5.5 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 $0.3 billion, or 18.5 per cent. Children's benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $17 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, increased by $0.2 billion, or 4.1 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
  • 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 $1.0 billion, or 11.9 per cent, from the previous year.
    • Transfer payments increased by $0.5 billion, or 20.9 per cent, largely reflecting an increase in claims expenses at Aboriginal Affairs and Northern Development Canada.
    • Other direct program expenses increased by $0.5 billion, or 8.5 per cent, a significant portion of which is attributable to the Government's decision not to appeal the Federal Court of Canada decision regarding the offset of the Pension Act disability benefits from the Service Income Security Insurance Plan.

Public debt charges decreased by $38 million, or 1.5 per cent.

April to October 2012

For the first seven months of the 2012–13 fiscal year, there was a budgetary deficit of $10.6 billion, compared to a deficit of $13.9 billion reported during the same period of 2011–12.

Revenues increased by $4.9 billion, or 3.6 per cent, to $141.8 billion.

  • Personal income tax revenues were up $2.5 billion, or 3.7 per cent.
  • Corporate income tax revenues were up $1.1 billion, or 7.3 per cent, reflecting an increase in receipts of about 0.4 per cent and a decrease of 14.6 per cent in refunds of taxes paid.
  • Non-resident income tax revenues were up $0.1 billion, or 1.9 per cent.
  • Excise taxes and duties were up $0.9 billion, or 3.5 per cent, largely reflecting an increase in GST revenues of $0.6 billion, or 3.8 per cent. Energy taxes and customs import duties each increased by $0.1 billion, while other excise taxes and duties increased by $36 million.
  • EI premium revenues were up $0.8 billion, or 7.4 per cent, reflecting growth in insurable earnings and the 2012 premium rate of $1.83 per $100 of insurable earnings.
  • Other revenues were down $0.5 billion, or 3.2 per cent.

For the April to October 2012 period, program expenses were $135.1 billion, up $2.7 billion, or 2.0 per cent, from the same period the previous year.

  • Major transfers to persons were up $1.1 billion, or 2.7 per cent. Elderly benefits increased by $1.4 billion, or 6.4 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 $0.4 billion, or 4.0 per cent, and children's benefits were up $0.1 billion, or 0.8 per cent.
  • Major transfers to other levels of government were up $0.8 billion, or 2.3 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 $0.9 billion, or 1.4 per cent.
    • Transfer payments were down $0.4 billion, or 2.0 per cent, reflecting decreases across a number of departments.
    • Other direct program expenses increased by $1.2 billion, or 2.9 per cent, largely reflecting an increase in the accrual cost of employee and veteran future benefits.

Public debt charges decreased by $1.1 billion, or 6.1 per cent, reflecting a lower effective interest rate on the stock of interest-bearing debt.

Revenues: April to October 2012
Revenues $billions
EI premiums 10.002
Corporate income taxes 13.488
Other revenues 14.238
Excise taxes and duties 22.233
Personal income taxes 60.984
Total 120.945
Expenses: April to September 2012
Expenses $billions
Public debt charges 14.777
Major transfers to other levels of gov’t 29.563
Major transfers to persons 34.868
Direct program expenses 50.622
Total 129.830

Financial requirement of $22.3 billion for April to October 2012

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are earned 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 $10.6 billion and a requirement of $11.8 billion from non-budgetary transactions, there was a financial requirement of $22.3 billion for the April to October 2012 period, compared to a financial requirement of $28.6 billion for the same period the previous year.

Net financing activities up $25.3 billion

The Government financed this financial requirement of $22.3 billion and increased cash balances by $3.0 billion by increasing market debt by $25.3 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 October 2012 stood at $16.3 billion, up $7.4 billion from their level at the end of October 2011.

 

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

  20111 2012 2011–121 2012–13
Budgetary transactions
  Revenues 19,336 20,886 136,939 141,831
  Expenses
    Program expenses -18,885 -20,028 -132,397 -135,081
    Public debt charges -2,576 -2,538 -18,440 -17,315
 

  Budgetary balance (deficit/surplus) -2,125 -1,680 -13,898 -10,565
Non-budgetary transactions 4,080 1,019 -14,666 -11,755
 

Financial source/requirement 1,955 -661 -28,564 -22,320
Net change in financing activities 2,665 -1,221 27,388 25,323
 

Net change in cash balances 4,620 -1,882 -1,176 3,003
Cash balance at end of period 8,978 16,336
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
  October   April to October  
 
 
 
  2011
($ millions)
2012
($ millions)
Change
(%)
2011–12
($ millions)
2012–13
($ millions)
Change
(%)
Tax revenues
  Income taxes
    Personal income tax1 10,061 10,500 4.4 68,945 71,484 3.7
    Corporate income tax2 2,206 3,047 38.1 15,405 16,535 7.3
    Non-resident income tax 402 469 16.7 2,671 2,721 1.9
 

    Total income tax 12,669 14,016 10.6 87,021 90,740 4.3
  Excise taxes and duties
    Goods and Services Tax3 2,483 2,536 2.1 16,632 17,267 3.8
    Energy taxes 492 517 5.1 3,102 3,181 2.5
    Customs import duties 329 351 6.7 2,267 2,393 5.6
    Other excise taxes and duties 460 493 7.2 3,253 3,289 1.1
 

    Total excise taxes and duties 3,764 3,897 3.5 25,254 26,130 3.5
 

  Total tax revenues 16,433 17,913 9.0 112,275 116,870 4.1
Employment Insurance premiums 953 1,028 7.9 10,268 11,030 7.4
Other revenues 1,950 1,945 -0.3 14,396 13,931 -3.2
 

Total revenues 19,336 20,886 8.0 136,939 141,831 3.6
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, and that portion of the Atlantic Investment Tax Credit and the Scientific Research and Experimental Development Tax Credit that is eligible to be refunded.
3 Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.
 
Table 3
Expenses
  October    April to October  
 
 
 
  2011
($ millions)
2012
($ millions)
Change
(%)
2011–12
($ millions)
2012–13
($ millions)
Change
(%)
Major transfers to persons
  Elderly benefits 3,217 3,393 5.5 21,860 23,256 6.4
  Employment Insurance benefits 1,401 1,142 -18.5 10,038 9,640 -4.0
  Children's benefits 1,082 1,099 1.6 7,548 7,606 0.8
 

  Total 5,700 5,634 -1.2 39,446 40,502 2.7
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,257 2,402 6.4 15,858 16,811 6.0
    Canada Social Transfer 960 988 2.9 6,717 6,918 3.0
 

    Total 3,217 3,390 5.4 22,575 23,729 5.1
  Fiscal arrangements and other transfers 1,464 1,497 2.3 11,743 11,746 0.0
  Canada's cities and communities 295 295 0.0 1,562 1,330 -14.9
  Quebec Abatement -328 -344 4.9 -2,256 -2,404 6.6
 

  Total 4,648 4,838 4.1 33,624 34,401 2.3
Direct program expenses
  Transfer payments            
    Aboriginal Affairs and
      Northern Development
-55 777 n/a 2,844 3,438 20.9
    Agriculture and Agri-Food 230 73 -68.3 894 591 -33.9
    Foreign Affairs and
      International Trade
133 142 6.8 1,439 1,248 -13.3
    Health 161 183 13.7 1,449 1,476 1.9
    Human Resources and
      Skills Development1
374 302 -19.3 2,767 3,149 13.8
    Industry 305 271 -11.1 1,366 1,255 -8.1
    Other2 1,227 1,124 -8.4 7,115 6,361 -10.6
 

    Total 2,375 2,872 20.9 17,874 17,518 -2.0
  Other direct program expenses
    Crown corporations1 625 676 8.2 4,567 4,551 -0.4
    National Defence 1,839 2,158 17.3 11,391 11,875 4.2
    All other departments
      and agencies
3,698 3,850 4.1 25,495 26,234 2.9
 

    Total other direct program expenses 6,162 6,684 8.5 41,453 42,660 2.9
 

  Total direct program expenses 8,537 9,556 11.9 59,327 60,178 1.4
 

Total program expenses 18,885 20,028 6.1 132,397 135,081 2.0
Public debt charges 2,576 2,538 -1.5 18,440 17,315 -6.1
 

Total expenses 21,461 22,566 5.1 150,837 152,396 1.0
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, and that portion of the Atlantic Investment Tax Credit and the Scientific Research and Experimental Development Tax Credit that is eligible to be refunded.
 
Table 4
The budgetary balance and financial source/requirement
$ millions
  October  April to October
 

  2011 2012 2011–12 2012–13
Budgetary balance (deficit/surplus) -2,125 -1,680 -13,898 -10,565
Non-budgetary transactions
  Capital investment activities -185 -223 -1,155 -1,304
  Other investing activities 1,778 -561 550 -3,010
  Pension and other accounts 368 290 1,948 3,572
  Other activities    
    Accounts payable, receivables, accruals and allowances1 1,202 2,149 -14,170 -15,258
    Foreign exchange activities 630 -942 -4,346 1,857
    Amortization of tangible capital assets 287 306 2,507 2,388
 

    Total other activities 2,119 1,513 -16,009 -11,013
 

  Total non-budgetary transactions 4,080 1,019 -14,666 -11,755
 

Financial source/requirement 1,955 -661 -28,564 -22,320
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
  October  April to October
 

  2011 2012 2011–12 2012–13
Financial source/requirement 1,955 -661 -28,564 -22,320
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 6,337 2,915 16,482 9,024
      Treasury bills -1,400 -4,900 10,100 14,900
      Retail debt -43 -51 -323 -243
      Other 0 0 -16 -11
 

      Total 4,894 -2,036 26,243 23,670
    Foreign currency borrowings -347 102 389 -10
 

    Total 4,547 -1,934 26,632 23,660
    Cross-currency swap revaluation -1,709 786 1,218 459
    Unamortized discounts and premiums on market debt -162 -63 -364 1,307
    Obligations related to capital leases and other unmatured debt -11 -10 -98 -103
 

  Net change in financing activities 2,665 -1,221 27,388 25,323
Change in cash balance 4,620 -1,882 -1,176 3,003
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2012
October 31,
2012
Change
Liabilities
   Accounts payable and accrued liabilities 125,003 106,475 -18,528
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 448,140 457,164 9,024
            Treasury bills 163,221 178,121 14,900
            Retail debt 8,922 8,679 -243
            Other 11 0 -11
 
            Subtotal 620,294 643,964 23,670
      Payable in foreign currencies 10,715 10,705 -10
      Cross-currency swap revaluation -4,448 -3,989 459
      Unamortized discounts and premiums on market debt -4,295 -2,988 1,307
      Obligations related to capital leases and other unmatured debt 4,086 3,983 -103
 
      Total unmatured debt 626,352 651,675 25,323
     Pension and other liabilities  
         Public sector pensions 148,911 150,041 1,130
         Other employee and veteran future benefits 60,515 63,238 2,723
         Other liabilities 6,933 6,652 -281
 
         Total pension and other liabilities 216,359 219,931 3,572
 
      Total interest-bearing debt 842,711 871,606 28,895
 
   Total liabilities 967,714 978,081 10,367
Financial assets
   Cash and accounts receivable 107,662 107,395 -267
   Foreign exchange accounts 56,997 55,140 -1,857
   Loans, investments, and advances (net of allowances)1 152,920 154,309 1,389
 
   Total financial assets 317,579 316,844 -735
 
Net debt 650,135 661,237 11,102
Non-financial assets 67,959 66,875 -1,084
 
Federal debt (accumulated deficit) 582,176 594,362 12,186
Note: Totals may not add due to rounding.
1 October 31, 2012 amount includes $1.6 billion in other comprehensive losses reported by enterprise Crown corporations and other government business enterprises.

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.
December 2012