The Fiscal Monitor
A publication of the Department of Finance

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August 2014: budgetary deficit of $0.3 billion

There was a budgetary deficit of $0.3 billion in August 2014, compared to a deficit of $2.0 billion in August 2013. Revenues decreased by $7 million, as increases in personal income tax and Goods and Services Tax (GST) revenues were offset by a decrease in corporate income tax revenues. Program expenses decreased by $1.6 billion, or 8.4 per cent, largely reflecting a decrease in direct program expenses. Public debt charges decreased by $0.1 billion, or 4.9 per cent.

April to August 2014: budgetary deficit of $1.1 billion

For the April to August 2014 period of the 2014–15 fiscal year, the Government posted a budgetary deficit of $1.1 billion, compared to a deficit of $6.6 billion reported in the same period of 2013–14.

Revenues were up $4.4 billion, or 4.2 per cent, reflecting increases in tax revenues and Employment Insurance (EI) premium revenues, which were partially offset by lower other revenues. Program expenses were down $1.0 billion, or 1.0 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 $0.1 billion, or 1.1 per cent.   

August 2014

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There was a budgetary deficit of $0.3 billion in August 2014, compared to a deficit of $2.0 billion in August 2013.

Revenues in August 2014 totalled $19.4 billion, down $7 million from August 2013.

  • Personal income tax revenues were up $0.7 billion, or 7.0 per cent.
  • Corporate income tax revenues were down $1.2 billion after increasing by $1.6 billion in July, reflecting monthly volatility.
  • Non-resident income tax revenues were up $23 million, or 5.3 per cent.
  • Excise taxes and duties were up $0.5 billion, or 14.3 per cent. This increase is mostly due to a $0.4-billion, or 19.0-per-cent, increase in GST revenues. Energy taxes were up $2 million, customs import duties were up $7 million, and other excise taxes and duties were up $0.1 billion.
  • EI premium revenues were up $0.1 billion, or 3.5 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 down $0.1 billion, or 3.4 per cent. 

Program expenses in August 2014 were $17.7 billion, down $1.6 billion, or 8.4 per cent, from August 2013. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.1 billion, or 2.4 per cent. Elderly benefits increased by $0.1 billion, or 3.8 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 $40 million, or 2.9 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $28 million, or 2.5 per cent.   
  • 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 increased by $0.2 billion, or 4.3 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 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 $2.0 billion, or 23.0 per cent, from the previous year. Within direct program expenses:
    • Transfer payments decreased by $0.2 billion, or 9.5 per cent.
    • Other direct program expenses decreased by $1.8 billion, or 28.0 per cent, largely reflecting a one-time adjustment in August 2014 to reflect an updated accrual estimate of pension and other employee and veteran future benefit costs.

Public debt charges decreased by $0.1 billion, or 4.9 per cent.   

April to August 2014

For the April to August 2014 period of the 2014–15 fiscal year, there was a budgetary deficit of $1.1 billion, compared to a deficit of $6.6 billion reported during the same period of 2013–14. 

Revenues increased by $4.4 billion, or 4.2 per cent, to $108.2 billion.

  • Personal income tax revenues were up $2.2 billion, or 4.3 per cent. 
  • Corporate income tax revenues were up $0.9 billion, or 7.7 per cent.
  • Non-resident income tax revenues were up $9 million, or 0.4 per cent. 
  • Excise taxes and duties were up $1.1 billion, or 5.9 per cent. GST revenues were up $0.6 billion, or 4.5 per cent. Energy taxes were up $0.1 billion, customs import duties were up $0.2 billion, and other excise taxes and duties were up $0.3 billion. 
  • EI premium revenues were up $0.4 billion, or 4.0 per cent, reflecting growth in earnings.
  • Other revenues were down $0.2 billion, or 2.2 per cent.

For the April to August 2014 period, program expenses were $97.2 billion, down $1.0 billion, or 1.0 per cent, from the same period the previous year. 

  • Major transfers to persons were up $0.8 billion, or 2.6 per cent. Elderly benefits increased by $0.7 billion, or 3.9 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.2 billion, or 3.1 per cent, and children’s benefits were down $0.1 billion, or 2.2 per cent.  
  • Major transfers to other levels of government were up $1.0 billion, or 3.8 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.  
  • Direct program expenses were down $2.7 billion, or 6.3 per cent. Within direct program expenses:
    • Transfer payments decreased by $1.0 billion, or 8.1 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 $1.7 billion, or 5.5 per cent, largely reflecting a one-time adjustment in August 2014 to reflect an updated accrual estimate of pension and other employee and veteran future benefit costs. 

Public debt charges decreased by $0.1 billion, or 1.1 per cent.

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

Financial requirement of $3.9 billion for April to August 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 deficit of $1.1 billion and a requirement of $2.8 billion from non-budgetary transactions, there was a financial requirement of $3.9 billion for the April to August 2014 period, compared to a financial requirement of $21.6 billion for the same period the previous year. 

Net financing activities up $7.7 billion

The Government financed this financial requirement of $3.9 billion and increased cash balances by $3.9 billion by increasing unmatured debt by $7.7 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 August 2014 stood at $29.9 billion, virtually unchanged from their level at the end of August 2013. 

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

  20131,2 2014 2013–141,2 2014–152
Budgetary transactions        
  Revenues 19,361 19,354 103,884 108,247
  Expenses
    Program expenses -19,283 -17,657 -98,195 -97,245
    Public debt charges -2,117 -2,013 -12,264 -12,125
 

  Budgetary balance (deficit/surplus) -2,039 -316 -6,575 -1,123
Non-budgetary transactions -1,296 2,990 -14,999 -2,765
 

Financial source/requirement -3,335 2,674 -21,574 -3,888
Net change in financing activities -880 -6,304 27,177 7,746
 

Net change in cash balances -4,215 -3,630 5,603 3,858
Cash balance at end of period 29,916 29,932

Note: Positive numbers indicate a net source of funds.  Negative numbers indicate a net requirement for funds.
1Certain comparative figures have been restated to conform with the presentation in the Annual Financial Report of the Government of Canada for 2013–14.
2Certain comparative figures and year-to-date amounts for 2014–15 have been restated to reflect a change in the Government's accounting policy for bond buyback operations as reported in the Annual Financial Report of the Government of Canada for 2013–14.

 
Table 2
Revenues
  August   April to August  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,185 10,903 7.0 50,967 53,171 4.3
    Corporate income tax 1,702 481 -71.7 11,437 12,317 7.7
    Non-resident income tax 437 460 5.3 2,208 2,217 0.4
 

    Total income tax 12,324 11,844 -3.9 64,612 67,705 4.8
  Excise taxes and duties
    Goods and Services Tax 2,147 2,554 19.0 12,821 13,402 4.5
    Energy taxes 463 465 0.4 2,167 2,218 2.4
    Customs import duties 397 404 1.8 1,770 1,938 9.5
    Other excise taxes and duties 452 529 17.0 2,206 2,527 14.6
 

    Total excise taxes and duties 3,459 3,952 14.3 18,964 20,085 5.9
 

  Total tax revenues 15,783 15,796 0.1 83,576 87,790 5.0
Employment Insurance premiums 1,459 1,510 3.5 9,616 10,004 4.0
Other revenues1 2,119 2,048 -3.4 10,692 10,453 -2.2
 

Total revenues 19,361 19,354 0.0 103,884 108,247 4.2
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
  August   April to August  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,445 3,575 3.8 17,179 17,848 3.9
  Employment Insurance benefits 1,391 1,431 2.9 7,078 7,300 3.1
  Children's benefits 1,117 1,089 -2.5 5,483 5,364 -2.2
 

  Total 5,953 6,095 2.4 29,740 30,512 2.6
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,544 2,676 5.2 12,722 13,381 5.2
    Canada Social Transfer 1,018 1,048 2.9 5,090 5,242 3.0
 

    Total 3,562 3,724 4.5 17,812 18,623 4.6
  Fiscal arrangements and other transfers 1,566 1,626 3.8 8,505 8,781 3.2
  Canada's cities and communities 0 0 n/a 1,015 987 -2.8
  Quebec Abatement -359 -376 4.7 -1,795 -1,879 4.7
 

  Total 4,769 4,974 4.3 25,537 26,512 3.8
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
470 427 -9.1 2,316 2,480 7.1
    Agriculture and Agri-Food 133 61 -54.1 324 186 -42.6
    Employment and Social Development 487 405 -16.8 2,146 1,914 -10.8
    Foreign Affairs, Trade and Development 245 193 -21.2 1,098 820 -25.3
    Health 113 96 -15.0 1,141 1,261 10.5
    Industry 220 216 -1.8 921 907 -1.5
    Other 634 686 8.2 4,751 4,097 -13.8
 

    Total 2,302 2,084 -9.5 12,697 11,665 -8.1
  Other direct program expenses
    Crown corporations 599 499 -16.7 3,346 2,828 -15.5
    National Defence 1,550 1,677 8.2 8,052 8,116 0.8
    All other departments
      and agencies1
4,110 2,328 -43.4 18,823 17,612 -6.4
 

    Total other direct program expenses 6,259 4,504 -28.0 30,221 28,556 -5.5
 

  Total direct program expenses 8,561 6,588 -23.0 42,918 40,221 -6.3
 

Total program expenses 19,283 17,657 -8.4 98,195 97,245 -1.0
Public debt charges2 2,117 2,013 -4.9 12,264 12,125 -1.1
 

Total expenses 21,400 19,670 -8.1 110,459 109,370 -1.0

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.
2Comparative figures and year-to-date amounts for 2014–15 have been restated to reflect a change in the Government's accounting policy for bond buyback operations as reported in the Annual Financial Report of the Government of Canada for 2013–14.

 
Table 4
The budgetary balance and financial source/requirement
$ millions
  August April to August
 

  2013 2014 2013–14 2014–15
Budgetary balance (deficit/surplus) -2,039 -316 -6,575 -1,123
Non-budgetary transactions
  Capital investment activities -500 -173 -1,351 -1,269
  Other investing activities 624 232 2,184 4,469
  Pension and other accounts -211 -789 1,275 440
  Other activities    
    Accounts payable, receivables, accruals and allowances 551 3,202 -15,513 -10,507
    Foreign exchange activities -2,102 185 -3,421 2,364
    Amortization of tangible capital assets 342 333 1,827 1,738
 

    Total other activities -1,209 3,720 -17,107 -6,405
 

  Total non-budgetary transactions -1,296 2,990 -14,999 -2,765
 

Financial source/requirement -3,335 2,674 -21,574 -3,888
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  August April to August
 

  2013 2014 2013–14 2014–15
Financial source/requirement -3,335 2,674 -21,574 -3,888
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -883 -268 9,706 5,576
      Treasury bills -800 -5,300 14,700 4,200
      Retail debt -26 -21 -189 -143
      Other 0 0 0 0
 

      Total -1,709 -5,589 24,217 9,633
    Foreign currency borrowings 314 117 696 -223
 

    Total -1,395 -5,472 24,913 9,410
    Cross-currency swap revaluation 1,103 -409 2,479 -1,379
    Unamortized discounts and premiums on market debt1 -591 -110 -210 -4
    Obligations related to capital leases and other unmatured debt 3 -313 -5 -281
 

  Net change in financing activities -880 -6,304 27,177 7,746
Change in cash balance -4,215 -3,630 5,603 3,858
Note: Totals may not add due to rounding.
1Comparative figures and year-to-date amounts for 2014–15 have been restated to reflect a change in the Government's accounting policy for bond buyback operations as reported in the Annual Financial Report of the Government of Canada for 2013–14.

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

For inquiries about this publication, contact Glenn Purves at 613-369-5655.

October 2014