The Fiscal Monitor
A publication of the Department of Finance

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December 2014: budgetary surplus of $2.4 billion

There was a budgetary surplus of $2.4 billion in December 2014, compared to a surplus of $1.2 billion in December 2013. Revenues increased by $1.0 billion, or 4.3 per cent, as increases in corporate income tax revenues and other revenues were partially offset by a decrease in personal income tax revenues. Program expenses decreased by $0.2 billion, or 1.2 per cent, largely reflecting a decrease in direct program expenses, offset in part by an increase in major transfers to other levels of government. Public debt charges increased by $32 million, or 1.5 per cent.

April to December 2014: budgetary deficit of $0.9 billion

For the April to December 2014 period of the 2014–15 fiscal year, the Government posted a budgetary deficit of $0.9 billion, compared to a deficit of $12.2 billion reported in the same period of 2013–14. Revenues were up $7.3 billion, or 3.8 per cent, reflecting increases in all revenue sources. Program expenses were down $3.5 billion, or 1.9 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 $0.4 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on bonds.   

December 2014

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There was a budgetary surplus of $2.4 billion in December 2014, compared to a surplus of $1.2 billion in December 2013.

Revenues in December 2014 totalled $24.8 billion, up $1.0 billion, or 4.3 per cent, from December 2013.

  • Personal income tax revenues were down $0.2 billion, or 1.9 per cent.
  • Corporate income tax revenues were up $0.3 billion, or 8.3 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 10.5 per cent.
  • Excise taxes and duties were down $32 million, or 0.8 per cent. Goods and Services Tax (GST) revenues decreased by $0.1 billion, energy taxes increased by $1 million, customs import duties increased by $40 million, and other excise taxes and duties decreased by $10 million.
  • Employment Insurance (EI) premium revenues were up $28 million, or 3.1 per cent. 
  • 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 $0.9 billion or 37.4 per cent, largely reflecting the gain realized on the transfer to Ontario of the province’s one-third portion of the Government’s holdings of General Motors common shares.    

Program expenses in December 2014 were $20.2 billion, down $0.2 billion, or 1.2 per cent, from December 2013. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $7 million, or 0.1 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 $0.2 billion, or 11.9 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $13 million, or 1.2 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 3.3 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 include transfer payments to individuals and 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 $0.4 billion, or 4.4 per cent, from the previous year. Within direct program expenses:
    • Transfer payments decreased by $0.6 billion, or 18.4 per cent, reflecting decreases across a number of departments.
    • Other direct program expenses increased by $0.1 billion, or 2.3 per cent.

Public debt charges increased by $32 million, or 1.5 per cent.

Impact of Transfer of General Motors Common Shares to Ontario

In 2008 and 2009, the Government entered into agreements with Ontario to provide financial assistance to the automotive sector whereby Ontario contributed one-third of the financial assistance and participates with the Government in any future economic benefit or loss resulting from these transactions. Through subsequent financial assistance agreements with General Motors, the Government acquired common and preferred shares in a restructured General Motors. In recognition of its agreements with Ontario, the Government recorded a liability to the Province to reflect Ontario’s one-third participation in the value of these shares.

Following General Motors’ initial public offering in November 2010, the value of the Government’s holdings of General Motors common shares and the liability to Ontario have been adjusted to reflect changes in the market value of the common shares. Unrealized gains and losses due to changes in the value of the Government’s holdings of the shares have been recorded as part of other comprehensive income. Other comprehensive income is excluded from the calculation of the Government’s budgetary balance and is instead recorded directly as a component of the federal debt, or accumulated deficit. Changes in the value of the liability to Ontario have been expensed and reflected in the budgetary balance.

On December 22, 2014, at the request of the Province, the Governments of Canada and Ontario agreed to transfer one-third of the remaining General Motors common shares to Ontario. In accordance with generally accepted accounting standards for the Canadian public sector, this transfer has resulted in $0.9 billion in cumulative unrealized gains on Ontario’s portion of the shares moving out of other comprehensive income and flowing through other revenues and the budgetary balance. These gains offset previously recorded expenses associated with the revaluation of the liability to Ontario, with no overall impact on the federal debt.

April to December 2014

For the April to December 2014 period of the 2014–15 fiscal year, there was a budgetary deficit of $0.9 billion, compared to a deficit of $12.2 billion reported during the same period of 2013–14.

Revenues increased by $7.3 billion, or 3.8 per cent, to $197.9 billion.

  • Personal income tax revenues were up $2.0 billion, or 2.1 per cent. 
  • Corporate income tax revenues were up $2.3 billion, or 10.6 per cent.
  • Non-resident income tax revenues were up $0.2 billion, or 5.4 per cent. 
  • Excise taxes and duties were up $1.5 billion, or 4.2 per cent. GST revenues increased by $0.7 billion, or 3.1 per cent, energy taxes by $0.1 billion, customs import duties by $0.3 billion, and other excise taxes and duties by $0.4 billion. 
  • EI premium revenues were up $0.5 billion, or 3.9 per cent, reflecting growth in earnings.
  • Other revenues were up $0.8 billion, or 4.1 per cent.

For the April to December 2014 period, program expenses were $177.8 billion, down $3.5 billion, or 1.9 per cent, from the same period the previous year. 

  • Major transfers to persons were up $1.5 billion, or 2.8 per cent. Elderly benefits increased by $1.3 billion, or 4.2 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 3.0 per cent, and children’s benefits were down $0.2 billion, or 1.7 per cent.  
  • Major transfers to other levels of government were up $1.9 billion, or 4.2 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 $7.0 billion, or 8.5 per cent. Within direct program expenses:
    • Transfer payments decreased by $4.5 billion, or 16.9 per cent, reflecting decreases across a number of departments, including the accrual in 2013–14 of a liability for disaster assistance related to the 2013 flood in Alberta, 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 $2.4 billion, or 4.4 per cent, due in large part to a decrease in pension and benefit costs based on the Government’s latest actuarial valuations.

Public debt charges decreased by $0.4 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on bonds.

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

Financial source of $0.7 billion for April to December 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 $0.9 billion and a financial source of $1.6 billion from non-budgetary transactions, there was a financial source of $0.7 billion for the April to December 2014 period, compared to a financial requirement of $1.8 billion for the same period the previous year.

Net financing activities up $1.4 billion

The Government used the financial source of $0.7 billion along with an increase in unmatured debt of $1.4 billion to increase cash balances by $2.1 billion. The increase in unmatured 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 2014 stood at $28.1 billion, up $1.6 billion from their level at the end of December 2013. 

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

  20131 2014 2013–141 2014–15
Budgetary transactions        
  Revenues 23,813 24,828 190,540 197,866
  Expenses
    Program expenses -20,452 -20,211 -181,340 -177,826
    Public debt charges -2,158 -2,190 -21,382 -20,942
 

  Budgetary balance (deficit/surplus) 1,203 2,427 -12,182 -902
Non-budgetary transactions -1,417 -2,053 10,431 1,603
 

Financial source/requirement -214 374 -1,751 701
Net change in financing activities -3,862 -5,997 3,945 1,362
 

Net change in cash balances -4,076 -5,623 2,194 2,063
Cash balance at end of period 26,508 28,133
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
1 Certain comparative figures 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
  December   April to December  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 12,378 12,140 -1.9 95,806 97,789 2.1
    Corporate income tax 3,575 3,871 8.3 21,843 24,156 10.6
    Non-resident income tax 534 590 10.5 4,020 4,236 5.4
 

    Total income tax 16,487 16,601 0.7 121,669 126,181 3.7
  Excise taxes and duties
    Goods and Services Tax 2,681 2,618 -2.3 23,436 24,160 3.1
    Energy taxes 467 468 0.2 4,074 4,150 1.9
    Customs import duties 319 359 12.5 3,166 3,418 8.0
    Other excise taxes and duties 526 516 -1.9 4,105 4,510 9.9
 

    Total excise taxes and duties 3,993 3,961 -0.8 34,781 36,238 4.2
 

  Total tax revenues 20,480 20,562 0.4 156,450 162,419 3.8
Employment Insurance premiums 915 943 3.1 13,962 14,502 3.9
Other revenues 2,418 3,323 37.4 20,128 20,945 4.1
 

Total revenues 23,813 24,828 4.3 190,540 197,866 3.8
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  December   April to December  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,508 3,700 5.5 31,219 32,536 4.2
  Employment Insurance benefits 1,668 1,470 -11.9 12,522 12,892 3.0
  Children's benefits 1,089 1,102 1.2 9,923 9,758 -1.7
 

  Total 6,265 6,272 0.1 53,664 55,186 2.8
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,545 2,677 5.2 22,910 24,086 5.1
    Canada Social Transfer 1,017 1,048 3.0 9,161 9,436 3.0
 

    Total 3,562 3,725 4.6 32,071 33,522 4.5
  Fiscal arrangements and other transfers 1,566 1,625 3.8 14,770 15,282 3.5
  Canada's cities and communities 75 54 -28.0 1,736 1,903 9.6
  Quebec Abatement -348 -389 11.8 -3,170 -3,383 6.7
 

  Total 4,855 5,015 3.3 45,407 47,324 4.2
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
514 435 -15.4 4,530 4,479 -1.1
    Agriculture and Agri-Food 166 107 -35.5 850 668 -21.4
    Employment and Social Development 412 384 -6.8 4,061 3,973 -2.2
    Foreign Affairs, Trade and Development 341 248 -27.3 1,962 1,608 -18.0
    Health 240 255 6.3 2,145 2,232 4.1
    Industry 314 234 -25.5 1,883 1,670 -11.3
    Other 1,021 792 -22.4 11,313 7,590 -32.9
 

    Total 3,008 2,455 -18.4 26,744 22,220 -16.9
  Other direct program expenses
    Crown corporations 543 633 16.6 5,587 5,486 -1.8
    National Defence 1,806 1,871 3.6 14,974 15,075 0.7
    All other departments
      and agencies
3,975 3,965 -0.3 34,964 32,535 -6.9
 

    Total other direct program expenses 6,324 6,469 2.3 55,525 53,096 -4.4
 

  Total direct program expenses 9,332 8,924 -4.4 82,269 75,316 -8.5
 

Total program expenses 20,452 20,211 -1.2 181,340 177,826 -1.9
Public debt charges1 2,158 2,190 1.5 21,382 20,942 -2.1
 

Total expenses 22,610 22,401 -0.9 202,722 198,768 -2.0

Note: Totals may not add due to rounding.
1 Comparative figures 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
  December April to December
 

  2013 2014 2013–14 2014–15
Budgetary balance (deficit/surplus) 1,203 2,427 -12,182 -902
Non-budgetary transactions
  Capital investment activities -553 -355 -3,069 -2,613
  Other investing activities 287 586 21,434 3,775
  Pension and other accounts 677 344 4,013 1,485
  Other activities    
    Accounts payable, receivables, accruals and allowances -1,860 -1,069 -8,520 -2,213
    Foreign exchange activities -495 -1,912 -6,220 -1,774
    Amortization of tangible capital assets 527 353 2,793 2,943
 

    Total other activities -1,828 -2,628 -11,947 -1,044
 

  Total non-budgetary transactions -1,417 -2,053 10,431 1,603
 

Financial source/requirement -214 374 -1,751 701
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  December April to December
 

  2013 2014 2013–14 2014–15
Financial source/requirement -214 374 -1,751 701
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 594 -6,527 10,254 9,248
      Treasury bills -5,100 -600 -9,600 -6,500
      Retail debt 284 150 -1,059 -638
      Other 0 0 0 0
 

      Total -4,222 -6,977 -405 2,110
    Foreign currency borrowings 81 542 953 -1,523
 

    Total -4,141 -6,435 548 587
    Cross-currency swap revaluation 277 394 3,576 863
    Unamortized discounts and premiums on market debt1 69 84 -127 279
    Obligations related to capital leases and other unmatured debt -67 -40 -52 -367
 

  Net change in financing activities -3,862 -5,997 3,945 1,362
Change in cash balance -4,076 -5,623 2,194 2,063
Note: Totals may not add due to rounding.
1 Comparative figures 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 6
Condensed statement of assets and liabilities
$ millions
March 31,
2014
December 31,
2014
Change
Liabilities
   Accounts payable and accrued liabilities 111,421 109,926 -1,495
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 473,319 482,567 9,248
            Treasury bills 152,990 146,490 -6,500
            Retail debt 6,327 5,689 -638
 
            Subtotal 632,636 634,746 2,110
      Payable in foreign currencies 16,030 14,507 -1,523
      Cross-currency swap revaluation 2,326 3,189 863
      Unamortized discounts and premiums on market debt 3,184 3,463 279
      Obligations related to capital leases and other unmatured debt 4,782 4,415 -367
 
      Total unmatured debt 658,958 660,320 1,362
     Pension and other liabilities  
         Public sector pensions 153,083 152,746 -337
         Other employee and veteran future benefits 71,409 73,246 1,837
         Other liabilities 5,914 5,899 -15
 
         Total pension and other liabilities 230,406 231,891 1,485
 
      Total interest-bearing debt 889,364 892,211 2,847
 
   Total liabilities 1,000,785 1,002,137 1,352
Financial assets
   Cash and accounts receivable 128,574 131,355 2,781
   Foreign exchange accounts 72,262 74,036 1,774
   Loans, investments, and advances (net of allowances)1 117,635 111,628 -6,007
 
   Total financial assets 318,471 317,019 -1,452
 
Net debt 682,314 685,118 2,804
Non-financial assets 70,433 70,103 -330
 
Federal debt (accumulated deficit) 611,881 615,015 3,134
Note: Totals may not add due to rounding.
1 December 31, 2014 amount includes $2.2 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to December 2014 period.

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.

February 2015