The Fiscal Monitor
A publication of the Department of Finance

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June 2014: budgetary surplus of $1.6 billion

There was a budgetary surplus of $1.6 billion in June 2014, compared to a surplus of $0.2 billion in June 2013. Revenues increased by $0.9 billion, or 3.8 per cent, due mainly to higher revenues from non-resident income tax, excise taxes and duties, and Employment Insurance (EI) premiums. Program expenses decreased by $0.7 billion, or 3.2 per cent, largely reflecting a decrease in direct program expenses. Public debt charges increased by $0.1 billion, or 5.1 per cent.

April to June 2014: budgetary surplus of $0.4 billion

For the April to June 2014 period of the 2014–15 fiscal year, the Government posted a budgetary surplus of $0.4 billion, compared to a deficit of $2.6 billion reported in the same period of 2013–14. 

Revenues were up $2.5 billion, or 3.8 per cent, largely reflecting increased revenues from income taxes, the Goods and Services Tax (GST) and EI premiums. Program expenses were down $0.4 billion, or 0.7 per cent, reflecting a decrease in direct program expenses, offset in part by increases in major transfers to persons and other levels of government. Public debt charges were down $49 million, or 0.6 per cent.

Quarterly update of the fiscal outlook

In accordance with the Government’s commitment made in the Federal Accountability Action Plan to update government fiscal forecasts for the current fiscal year on a quarterly basis, the June 2014 Fiscal Monitor provides an update of the fiscal outlook for 2014–15.

The financial results for the first three months of the fiscal year provide limited information with respect to the outlook for the year as a whole. That being said, the financial results through the April to June 2014 period and economic developments since Budget 2014 suggest that the fiscal projection for 2014–15 presented in the budget is on track. An update of the economic and fiscal outlook for this year and beyond will be provided in the fall in the Update of Economic and Fiscal Projections.

June 2014

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There was a budgetary of surplus $1.6 billion in June 2014, compared to a surplus of $0.2 billion in June 2013.

Revenues increased by $0.9 billion, or 3.8 per cent, to $23.7 billion.

  • Personal income tax revenues were up $0.1 billion, or 0.6 per cent.
  • Corporate income tax revenues were down $0.1 billion, or 2.6 per cent.
  • Non-resident income tax revenues were up $0.2 billion, or 53.9 per cent.
  • Excise taxes and duties were up $0.6 billion, or 16.4 per cent, driven mainly by a $0.5-billion, or 21.2-per-cent, increase in GST revenues. Energy taxes were up $0.1 billion, customs import duties were up $41 million, and other excise taxes and duties were down $40 million.
  • EI premium revenues were up $0.1 billion, or 4.5 per cent, reflecting growth in 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 up $0.1 billion, or 4.0 per cent.

Program expenses in June 2014 were $19.7 billion, down $0.7 billion, or 3.2 per cent, from June 2013.

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.3 billion, or 6.0 per cent. Elderly benefits increased by $0.1 billion, or 3.4 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.2 billion, or 20.9 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $17 million.   
  • Major transfers to other levels of government consist 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. Major transfers to other levels of government decreased by $0.1 billion, or 2.1 per cent, as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories was offset by a decrease in transfers to Canada’s cities and communities. 
  • Direct program expenses include transfer payments to individuals and other organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of operating expenses of National Defence, other departments and agencies, and expenses of Crown corporations. Direct program expenses were down $0.9 billion, or 9.8 per cent, from the previous year. Within direct program expenses:
    • Transfer payments decreased by $0.7 billion, or 23.8 per cent, largely reflecting year-over-year differences in the timing of transfers across several departments.
    • Other direct program expenses decreased by $0.2 billion, or 3.2 per cent.

Public debt charges increased by $0.1 billion, or 5.1 per cent, reflecting higher consumer price adjustments on Real Return Bonds.   

April to June 2014

For the April to June 2014 period of the 2014–15 fiscal year, there was a budgetary surplus of $0.4 billion, compared to a deficit of $2.6 billion reported during the same period of 2013–14.

Revenues increased by $2.5 billion, or 3.8 per cent, to $67.2 billion.

  • Personal income tax revenues were up $0.8 billion, or 2.8 per cent.
  • Corporate income tax revenues were up $0.5 billion, or 5.5 per cent.
  • Non-resident income tax revenues were up $17 million, or 1.3 per cent. 
  • Excise taxes and duties were up $1.0 billion, or 9.2 per cent, largely reflecting an increase in GST revenues of $0.7 billion, or 9.7 per cent. Energy taxes, customs import duties and other excise taxes and duties each increased by $0.1 billion.
  • EI premium revenues were up $0.3 billion, or 4.2 per cent, reflecting growth in earnings and the EI premium rate freeze at $1.88 per $100 of insurable earnings for 2014.
  • Other revenues were down $0.1 billion, or 2.3 per cent.

For the April to June 2014 period, program expenses were $59.1 billion, down $0.4 billion, or 0.7 per cent, from the same period the previous year. 

  • Major transfers to persons were up $0.7 billion, or 3.7 per cent. Elderly benefits increased by $0.4 billion, or 3.7 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.4 billion, or 9.0 per cent, and children’s benefits were down $0.1 billion, or 2.8 per cent.  
  • Major transfers to other levels of government were up $0.3 billion, or 1.6 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, offset in part by a decrease in transfers to Canada’s cities and communities.  
  • Direct program expenses were down $1.4 billion, or 5.3 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.9 billion, or 11.5 per cent, reflecting year-over-year timing differences as well as a decrease in expenses associated with the revaluation of the Government’s liability to Ontario for the province’s one-third participation in the value of the Government’s equity holdings in General Motors.   
    • Other direct program expenses decreased by $0.5 billion, or 2.5 per cent, largely reflecting decreases in operating expenses of Crown corporations and National Defence. 

Public debt charges decreased by $49 million, or 0.6 per cent.

Revenues and expenses (April to June 2014)
Revenues and expenses (April to June 2014) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $1.1 billion for April to June 2014

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 surplus of $0.4 billion and a requirement of $1.5 billion from non-budgetary transactions, there was a financial requirement of $1.1 billion for the April to June 2014 period, compared to a financial requirement of $18.2 billion for the same period the previous year.

Net financing activities up $6.7 billion

The Government financed this financial requirement of $1.1 billion and increased cash balances by $5.6 billion by increasing unmatured debt by $6.7 billion. The increase in unmatured 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 June 2014 stood at $31.7 billion, up $6.4 billion from their level at the end of June 2013.

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

  20131 2014 2013–141 2014–15
Budgetary transactions        
  Revenues 22,779 23,655 64,669 67,157
  Expenses
    Program expenses -20,318 -19,662 -59,552 -59,112
    Public debt charges -2,304 -2,422 -7,670 -7,621
 

  Budgetary balance (deficit/surplus) 157 1,571 -2,553 424
Non-budgetary transactions -6,528 962 -15,610 -1,476
 

Financial source/requirement -6,371 2,533 -18,163 -1,052
Net change in financing activities -8,698 -10,738 19,117 6,698
 

Net change in cash balances -15,069 -8,205 954 5,646
Cash balance at end of period 25,271 31,718
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
1 Comparative figures have been restated to conform with the presentation in the Public Accounts of Canada 2013.
 
Table 2
Revenues
  June   April to June  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,607 10,672 0.6 30,304 31,147 2.8
    Corporate income tax 4,184 4,076 -2.6 9,281 9,788 5.5
    Non-resident income tax 280 431 53.9 1,287 1,304 1.3
 

    Total income tax 15,071 15,179 0.7 40,872 42,239 3.3
  Excise taxes and duties
    Goods and Services Tax 2,419 2,933 21.2 7,307 8,019 9.7
    Energy taxes 344 425 23.5 1,232 1,284 4.2
    Customs import duties 329 370 12.5 951 1,087 14.3
    Other excise taxes and duties 533 493 -7.5 1,386 1,483 7.0
 

    Total excise taxes and duties 3,625 4,221 16.4 10,876 11,873 9.2
 

  Total tax revenues 18,696 19,400 3.8 51,748 54,112 4.6
Employment Insurance premiums 1,998 2,087 4.5 6,449 6,721 4.2
Other revenues1 2,085 2,168 4.0 6,472 6,324 -2.3
 

Total revenues 22,779 23,655 3.8 64,669 67,157 3.8
Note: Totals may not add due to rounding.
1Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies.
 
Table 3
Expenses
  June   April to June  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,428 3,543 3.4 10,289 10,669 3.7
  Employment Insurance benefits 1,174 1,419 20.9 4,205 4,583 9.0
  Children's benefits 1,073 1,056 -1.6 3,306 3,215 -2.8
 

  Total 5,675 6,018 6.0 17,800 18,467 3.7
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,544 2,677 5.2 7,633 8,029 5.2
    Canada Social Transfer 1,018 1,048 2.9 3,054 3,145 3.0
 

    Total 3,562 3,725 4.6 10,687 11,174 4.6
  Fiscal arrangements and other transfers 1,566 1,625 3.8 5,303 5,514 4.0
  Canada's cities and communities 957 630 -34.2 1,015 630 -37.9
  Quebec Abatement -359 -376 4.7 -1,077 -1,128 4.7
 

  Total 5,726 5,604 -2.1 15,928 16,190 1.6
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
371 318 -14.3 1,593 1,610 1.1
    Agriculture and Agri-Food 26 37 42.3 130 79 -39.2
    Employment and Social Development 614 326 -46.9 1,251 1,000 -20.1
    Foreign Affairs, Trade and Development 303 104 -65.7 644 470 -27.0
    Health 250 272 8.8 775 946 22.1
    Industry 165 171 3.6 518 523 1.0
    Other 1,159 973 -16.0 3,076 2,440 -20.7
 

    Total 2,888 2,201 -23.8 7,987 7,068 -11.5
  Other direct program expenses
    Crown corporations 592 388 -34.5 1,877 1,575 -16.1
    National Defence 1,717 1,518 -11.6 4,880 4,591 -5.9
    All other departments
      and agencies1
3,720 3,933 5.7 11,080 11,221 1.3
 

    Total other direct program expenses 6,029 5,839 -3.2 17,837 17,387 -2.5
 

  Total direct program expenses 8,917 8,040 -9.8 25,824 24,455 -5.3
 

Total program expenses 20,318 19,662 -3.2 59,552 59,112 -0.7
Public debt charges 2,304 2,422 5.1 7,670 7,621 -0.6
 

Total expenses 22,622 22,084 -2.4 67,222 66,733 -0.7
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies.
 
Table 4
The budgetary balance and financial source/requirement
$ millions
  June April to June
 

  2013 2014 2013–14 2014–15
Budgetary balance (deficit/surplus) 157 1,571 -2,553 424
Non-budgetary transactions
  Capital investment activities -231 -442 -214 -645
  Other investing activities 424 -231 111 2,291
  Pension and other accounts 559 517 684 875
  Other activities    
    Accounts payable, receivables, accruals and allowances -7,969 -2,519 -15,334 -8,597
    Foreign exchange activities 305 3,289 -1,961 3,507
    Amortization of tangible capital assets 384 348 1,104 1,093
 

    Total other activities -7,280 1,118 -16,191 -3,997
 

  Total non-budgetary transactions -6,528 962 -15,610 -1,476
 

Financial source/requirement -6,371 2,533 -18,163 -1,052
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  June April to June
 

  2013 2014 2013–14 2014–15
Financial source/requirement -6,371 2,533 -18,163 -1,052
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -12,132 -7,638 3,970 1,252
      Treasury bills 2,100 -2,500 12,100 7,400
      Retail debt -20 -14 -128 -80
      Other 0 0 0 0
 

      Total -10,052 -10,152 15,942 8,572
    Foreign currency borrowings 145 -193 624 -220
 

    Total -9,907 -10,345 16,566 8,352
    Cross-currency swap revaluation 999 -550 2,156 -1,766
    Unamortized discounts and premiums on market debt 244 95 477 99
    Obligations related to capital leases and other unmatured debt -34 62 -82 13
 

  Net change in financing activities -8,698 -10,738 19,117 6,698
Change in cash balance -15,069 -8,205 954 5,646
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 Nicholas Leswick at 613-995-6391.

August 2014