The Fiscal Monitor
A publication of the Department of Finance

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June 2015: budgetary surplus of $1.1 billion

There was a budgetary surplus of $1.1 billion in June 2015, compared to a surplus of $1.6 billion in June 2014. Revenues increased by $0.6 billion, or 2.6 per cent, due mainly to higher revenues from excise taxes and duties. Program expenses increased by $1.6 billion, or 8.2 per cent, largely reflecting the accrual of benefits related to the expansion and enhancement of the Universal Child Care Benefit (UCCB) for the April to June 2015 period following Royal Assent of enabling legislation in June. Public debt charges decreased by $0.5 billion, or 20.3 per cent, due mainly to lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.

April to June 2015: budgetary surplus of $5.0 billion

For the April to June 2015 period of the 2015–16 fiscal year, the Government posted a budgetary surplus of $5.0 billion, compared to a surplus of $0.4 billion reported in the same period of 2014–15. Revenues were up $6.2 billion, or 9.2 per cent, largely reflecting increased revenues from income taxes, excise taxes and duties, and the gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015. Program expenses were up $2.2 billion, or 3.7 per cent, due mainly to an increase in major transfers to persons, reflecting in large part the accrual of benefits related to the expansion and enhancement of the UCCB for the April to June 2015 period. Public debt charges were down $0.6 billion, or 8.0 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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 2015 Fiscal Monitor provides an update of the fiscal outlook for 2015–16. 

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 2015 period are consistent with the fiscal projection for 2015–16 presented in the budget.

June 2015

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There was a budgetary surplus of $1.1 billion in June 2015, compared to a surplus of $1.6 billion in June 2014.

Revenues increased by $0.6 billion, or 2.6 per cent, to $24.3 billion.

  • Personal income tax revenues were down $0.2 billion, or 1.6 per cent, reflecting timing issues which raised May 2015 receipts but lowered June 2015 receipts.
  • Corporate income tax revenues were down $6 million.
  • Non-resident income tax revenues were up $0.1 billion, or 30.6 per cent.
  • Excise taxes and duties were up $0.5 billion, or 11.3 per cent, driven mainly by a $0.3 billion, or 8.7 per cent, increase in Goods and Services Tax (GST) revenues. Energy taxes were up $10 million, while customs import duties and other excise taxes and duties were each up $0.1 billion.
  • Employment Insurance (EI) premium revenues were up $0.1 billion, or 3.8 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 4.7 per cent. 

Program expenses in June 2015 were $21.3 billion, up $1.6 billion, or 8.2 per cent, from June 2014. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $1.3 billion, or 21.9 per cent. Elderly benefits increased by $0.2 billion, or 6.7 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 $0.1 billion, or 6.3 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the UCCB, increased by $1.2 billion, primarily reflecting the accrual of benefits related to the expansion and enhancement of the UCCB for the April to June 2015 period following Royal Assent of enabling legislation in June. 
  • 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 $0.4 billion, or 6.9 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 due to year-over-year timing differences.
  • 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 up $0.7 billion, or 8.4 per cent. Within direct program expenses:
    • Transfer payments increased by $0.5 billion, or 22.7 per cent, due in large part to timing factors.   
    • Other direct program expenses increased by $0.2 billion, or 3.0 per cent.

Public debt charges decreased by $0.5 billion, or 20.3 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds and a lower average effective interest rate on the stock of interest-bearing debt.

April to June 2015

For the April to June 2015 period of the 2015–16 fiscal year, there was a budgetary surplus of $5.0 billion, compared to a surplus of $0.4 billion reported during the same period of 2014–15. 

Revenues increased by $6.2 billion, or 9.2 per cent, to $73.3 billion.

  • Personal income tax revenues were up $1.7 billion, or 5.5 per cent. 
  • Corporate income tax revenues were up $0.5 billion, or 5.2 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 5.1 per cent. 
  • Excise taxes and duties were up $1.1 billion, or 9.3 per cent, largely reflecting an increase in GST revenues of $0.8 billion, or 10.4 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 3.7 per cent, reflecting growth in earnings.
  • Other revenues were up $2.5 billion, or 39.8 per cent, primarily reflecting the gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015.

For the April to June 2015 period, program expenses were $61.3 billion, up $2.2 billion, or 3.7 per cent, from the same period the previous year. 

  • Major transfers to persons were up $2.0 billion, or 10.9 per cent. Elderly benefits increased by $0.6 billion, or 5.5 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 5.1 per cent. Children’s benefits were up $1.2 billion, or 37.3 per cent, largely reflecting the accrual of benefits related to the expansion and enhancement of the UCCB.  
  • Major transfers to other levels of government were up $0.1 billion, or 0.8 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 due to year-over-year timing differences.
  • Direct program expenses were up $40 million, or 0.2 per cent. Within direct program expenses:
    • Transfer payments increased by $0.4 billion, or 5.2 per cent, primarily reflecting timing factors.   
    • Other direct program expenses decreased by $0.3 billion, or 1.9 per cent, due in large part to a decrease in pension and benefit costs, offset in part by an increase in operating expenses of Crown corporations.  

Public debt charges decreased by $0.6 billion, or 8.0 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

 
Revenues and expenses (April to June 2015)
Revenues and expenses (April to June 2015) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $5.3 billion for April to June 2015

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 $5.0 billion and a requirement of $10.3 billion from non-budgetary transactions, there was a financial requirement of $5.3 billion for the April to June 2015 period, compared to a financial requirement of $1.1 billion for the same period the previous year. 

Net financing activities up $5.3 billion

The Government financed this financial requirement of $5.3 billion by increasing unmatured debt by $5.3 billion. The increase in unmatured debt was achieved primarily through the issuance of treasury bills and foreign currency borrowings.

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 2015 stood at $28.0 billion, down $3.7 billion from their level at the end of June 2014. 

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

  2014 2015 2014–15 2015–16
Budgetary transactions        
  Revenues 23,655 24,264 67,157 73,315
  Expenses
    Program expenses -19,662 -21,269 -59,112 -61,296
    Public debt charges -2,422 -1,930 -7,621 -7,008
 

  Budgetary balance (deficit/surplus) 1,571 1,065 424 5,011
Non-budgetary transactions 962 -4,880 -1,476 -10,263
 

Financial source/requirement 2,533 -3,815 -1,052 -5,252
Net change in financing activities -10,738 -8,236 6,698 5,301
 

Net change in cash balances -8,205 -12,051 5,646 49
Cash balance at end of period 31,718 27,999
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  June   April to June  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,672 10,497 -1.6 31,147 32,851 5.5
    Corporate income tax 4,076 4,070 -0.1 9,788 10,298 5.2
    Non-resident income tax 431 563 30.6 1,304 1,370 5.1
 

    Total income tax 15,179 15,130 -0.3 42,239 44,519 5.4
  Excise taxes and duties
    Goods and Services Tax 2,933 3,189 8.7 8,019 8,851 10.4
    Energy taxes 425 435 2.4 1,284 1,376 7.2
    Customs import duties 370 444 20.0 1,087 1,207 11.0
    Other excise taxes and duties 493 629 27.6 1,483 1,548 4.4
 

    Total excise taxes and duties 4,221 4,697 11.3 11,873 12,982 9.3
 

  Total tax revenues 19,400 19,827 2.2 54,112 57,501 6.3
Employment Insurance premiums 2,087 2,167 3.8 6,721 6,971 3.7
Other revenues 2,168 2,270 4.7 6,324 8,843 39.8
 

Total revenues 23,655 24,264 2.6 67,157 73,315 9.2
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  June   April to June  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,543 3,781 6.7 10,669 11,259 5.5
  Employment Insurance benefits 1,419 1,330 -6.3 4,583 4,816 5.1
  Children's benefits 1,056 2,224 110.6 3,215 4,414 37.3
 

  Total 6,018 7,335 21.9 18,467 20,489 10.9
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,677 2,836 5.9 8,029 8,507 6.0
    Canada Social Transfer 1,048 1,080 3.1 3,145 3,240 3.0
 

    Total 3,725 3,916 5.1 11,174 11,747 5.1
  Fiscal arrangements and other transfers 1,625 1,687 3.8 5,514 5,718 3.7
  Canada's cities and communities 630 0 -100.0 630 0 -100.0
  Quebec Abatement -376 -384 2.1 -1,128 -1,153 2.2
 

  Total 5,604 5,219 -6.9 16,190 16,312 0.8
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
318 335 5.3 1,610 1,597 -0.8
    Agriculture and Agri-Food 37 113 205.4 79 175 121.5
    Employment and Social Development 326 733 124.8 1,000 1,374 37.4
    Foreign Affairs, Trade and Development 104 171 64.4 470 530 12.8
    Health 272 201 -26.1 946 861 -9.0
    Industry 171 239 39.8 523 531 1.5
    Other 973 908 -6.7 2,440 2,367 -3.0
 

    Total 2,201 2,700 22.7 7,068 7,435 5.2
  Other direct program expenses
    Crown corporations 388 662 70.6 1,575 2,030 28.9
    National Defence 1,518 1,634 7.6 4,591 4,621 0.7
    All other departments
      and agencies
3,933 3,719 -5.4 11,221 10,409 -7.2
 

    Total other direct program expenses 5,839 6,015 3.0 17,387 17,060 -1.9
 

  Total direct program expenses 8,040 8,715 8.4 24,455 24,495 0.2
 

Total program expenses 19,662 21,269 8.2 59,112 61,296 3.7
Public debt charges 2,422 1,930 -20.3 7,621 7,008 -8.0
 

Total expenses 22,084 23,199 5.0 66,733 68,304 2.4

Note: Totals may not add due to rounding.

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

  2014 2015 2014–15 2015–16
Budgetary balance (deficit/surplus) 1,571 1,065 424 5,011
Non-budgetary transactions
  Capital investment activities -442 -560 -645 -722
  Other investing activities -231 -175 2,291 -301
  Pension and other accounts 517 -152 875 253
  Other activities    
    Accounts payable, receivables, accruals and allowances -2,519 -4,884 -8,597 -12,958
    Foreign exchange activities 3,289 478 3,507 2,284
    Amortization of tangible capital assets 348 413 1,093 1,181
 

    Total other activities 1,118 -3,993 -3,997 -9,493
 

  Total non-budgetary transactions 962 -4,880 -1,476 -10,263
 

Financial source/requirement 2,533 -3,815 -1,052 -5,252
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  June April to June
 

  2014 2015 2014–15 2015–16
Financial source/requirement 2,533 -3,815 -1,052 -5,252
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -7,638 -7,689 1,252 -988
      Treasury bills -2,500 -2,800 7,400 5,200
      Retail debt -14 -21 -80 -58
      Other 0 0 0 0
 

      Total -10,152 -10,510 8,572 4,154
    Foreign currency borrowings -193 1,594 -220 1,060
 

    Total -10,345 -8,916 8,352 5,214
    Cross-currency swap revaluation -550 542 -1,766 -215
    Unamortized discounts and premiums on market debt 95 176 99 393
    Obligations related to capital leases and other unmatured debt 62 -38 13 -91
 

  Net change in financing activities -10,738 -8,236 6,698 5,301
Change in cash balance -8,205 -12,051 5,646 49
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 Glenn Purves at 613-369-5655.

August 2015