The Fiscal Monitor
A publication of the Department of Finance

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July 2015: budgetary surplus of $0.2 billion

There was a budgetary surplus of $0.2 billion in July 2015, compared to a deficit of $1.2 billion in July 2014. Revenues increased by $2.1 billion, or 9.8 per cent, reflecting higher corporate income tax and Goods and Services Tax (GST) revenues. Program expenses increased by $0.9 billion, or 4.2 per cent, reflecting increases in major transfers to persons and other levels of government, offset in part by a decrease in direct program expenses. Public debt charges decreased by $0.1 billion, or 4.8 per cent.

April to July 2015: budgetary surplus of $5.2 billion

For the April to July 2015 period of the 2015–16 fiscal year, the Government posted a budgetary surplus of $5.2 billion, compared to a deficit of $0.8 billion reported in the same period of 2014–15. Revenues were up $8.3 billion, or 9.3 per cent, reflecting increases in all revenue streams. Program expenses were up $3.0 billion, or 3.8 per cent, due mainly to increases in major transfers to persons and other levels of government. Public debt charges were down $0.7 billion, or 7.2 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

July 2015

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There was a budgetary surplus of $0.2 billion in July 2015, compared to a deficit of $1.2 billion in July 2014.

Revenues increased by $2.1 billion, or 9.8 per cent, to $23.9 billion.

  • Personal income tax revenues were up $0.3 billion, or 3.1 per cent.
  • Corporate income tax revenues were up $0.8 billion, or 38.7 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 12.1 per cent.
  • Excise taxes and duties were up $0.5 billion, or 11.4 per cent. This rise is mostly due to a $0.4-billion, or 14.8-per-cent, increase in GST revenues. Energy taxes were up $7 million, customs import duties were up $0.1 billion, and other excise taxes and duties were down $20 million.
  • Employment Insurance (EI) premium revenues were up $0.1 billion, or 3.7 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 $0.4 billion, or 18.1 per cent.

Program expenses in July 2015 were $21.3 billion, up $0.9 billion, or 4.2 per cent, from July 2014.

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.7 billion, or 11.2 per cent. Elderly benefits increased by $0.1 billion, or 3.0 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 $0.1 billion, or 4.9 per cent. Children’s benefits increased by $0.5 billion, or 46.6 per cent, due mainly to the enhancement and expansion of the Universal Child Care Benefit (UCCB) effective January 2015. 
  • 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 $0.9 billion, or 16.2 per cent, due to legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as an increase in transfers to Canada’s cities and communities, reflecting timing factors. 
  • 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 $0.7 billion, or 7.3 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.3 billion, or 11.7 per cent.
    • Other direct program expenses decreased by $0.4 billion, or 5.7 per cent.

Public debt charges decreased by $0.1 billion, or 4.8 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

April to July 2015

For the April to July 2015 period of the 2015–16 fiscal year, there was a budgetary surplus of $5.2 billion, compared to a deficit of $0.8 billion reported during the same period of 2014–15.

Revenues increased by $8.3 billion, or 9.3 per cent, to $97.2 billion.

  • Personal income tax revenues were up $2.0 billion, or 4.8 per cent.
  • Corporate income tax revenues were up $1.3 billion, or 11.0 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 6.9 per cent.
  • Excise taxes and duties were up $1.6 billion, or 9.9 per cent. This rise is mostly due to a $1.3-billion, or 11.5-per-cent, increase in GST revenues. Energy taxes were up $0.1 billion, customs import duties were up $0.2 billion, and other excise taxes and duties were up $45 million.
  • EI premium revenues were up $0.3 billion, or 3.7 per cent, reflecting growth in earnings.
  • Other revenues were up $2.9 billion, or 34.4 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 July 2015 period, program expenses were $82.6 billion, up $3.0 billion, or 3.8 per cent, from the same period the previous year.

  • Major transfers to persons were up $2.7 billion, or 11.0 per cent. Elderly benefits increased by $0.7 billion, or 4.9 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.3 billion, or 5.0 per cent. Children’s benefits were up $1.7 billion, or 39.6 per cent, largely reflecting increased benefits related to the expansion and enhancement of the UCCB.
  • Major transfers to other levels of government were up $1.0 billion, or 4.6 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 $0.6 billion, or 1.9 per cent. Within direct program expenses:
    • Transfer payments increased by $0.1 billion, or 0.8 per cent.
    • Other direct program expenses decreased by $0.7 billion, or 2.9 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 $0.7 billion, or 7.2 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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

Financial requirement of $14.2 billion for April to July 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 $5.2 billion and a requirement of $19.4 billion from non-budgetary transactions, there was a financial requirement of $14.2 billion for the April to July 2015 period, compared to a financial requirement of $6.6 billion for the same period the previous year.

Net financing activities up $24.5 billion

The Government financed this financial requirement of $14.2 billion and increased cash balances by $10.3 billion by increasing unmatured debt by $24.5 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 July 2015 stood at $38.2 billion, up $4.7 billion from their level at the end of July 2014.

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

  2014 2015 2014–15 2015–16
Budgetary transactions        
  Revenues 21,736 23,856 88,893 97,171
  Expenses
    Program expenses -20,476 -21,334 -79,588 -82,630
    Public debt charges -2,491 -2,372 -10,112 -9,380
 

  Budgetary balance (deficit/surplus) -1,231 150 -807 5,161
Non-budgetary transactions -4,279 -9,138 -5,755 -19,401
 

Financial source/requirement -5,510 -8,988 -6,562 -14,240
Net change in financing activities 7,352 19,214 14,050 24,515
 

Net change in cash balances 1,842 10,226 7,488 10,275
Cash balance at end of period 33,563 38,226
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  July   April to July  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 11,121 11,466 3.1 42,268 44,317 4.8
    Corporate income tax 2,048 2,840 38.7 11,836 13,138 11.0
    Non-resident income tax 453 508 12.1 1,757 1,878 6.9
 

    Total income tax 13,622 14,814 8.8 55,861 59,333 6.2
  Excise taxes and duties
    Goods and Services Tax 2,829 3,249 14.8 10,848 12,100 11.5
    Energy taxes 469 476 1.5 1,753 1,852 5.6
    Customs import duties 447 526 17.7 1,534 1,733 13.0
    Other excise taxes and duties 515 495 -3.9 1,998 2,043 2.3
 

    Total excise taxes and duties 4,260 4,746 11.4 16,133 17,728 9.9
 

  Total tax revenues 17,882 19,560 9.4 71,994 77,061 7.0
Employment Insurance premiums 1,773 1,839 3.7 8,494 8,810 3.7
Other revenues 2,081 2,457 18.1 8,405 11,300 34.4
 

Total revenues 21,736 23,856 9.8 88,893 97,171 9.3
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  July   April to July  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,604 3,712 3.0 14,273 14,971 4.9
  Employment Insurance benefits 1,286 1,349 4.9 5,869 6,165 5.0
  Children's benefits 1,060 1,554 46.6 4,275 5,968 39.6
 

  Total 5,950 6,615 11.2 24,417 27,104 11.0
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,676 2,835 5.9 10,705 11,342 6.0
    Canada Social Transfer 1,049 1,080 3.0 4,194 4,320 3.0
 

    Total 3,725 3,915 5.1 14,899 15,662 5.1
  Fiscal arrangements and other transfers 1,641 1,703 3.8 7,155 7,421 3.7
  Canada's cities and communities 357 979 174.2 987 979 -0.8
  Quebec Abatement -375 -385 2.7 -1,503 -1,538 2.3
 

  Total 5,348 6,212 16.2 21,538 22,524 4.6
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
443 546 23.3 2,053 2,143 4.4
    Agriculture and Agri-Food 46 72 56.5 125 247 97.6
    Employment and Social Development 509 424 -16.7 1,509 1,798 19.2
    Foreign Affairs, Trade and Development 157 132 -15.9 627 662 5.6
    Health 219 318 45.2 1,165 1,179 1.2
    Industry 168 176 4.8 691 707 2.3
    Other 971 552 -43.2 3,411 2,919 -14.4
 

    Total 2,513 2,220 -11.7 9,581 9,655 0.8
  Other direct program expenses
    Crown corporations 754 616 -18.3 2,329 2,646 13.6
    National Defence 1,848 1,728 -6.5 6,439 6,349 -1.4
    All other departments
      and agencies
4,063 3,943 -3.0 15,284 14,352 -6.1
 

    Total other direct program expenses 6,665 6,287 -5.7 24,052 23,347 -2.9
 

  Total direct program expenses 9,178 8,507 -7.3 33,633 33,002 -1.9
 

Total program expenses 20,476 21,334 4.2 79,588 82,630 3.8
Public debt charges 2,491 2,372 -4.8 10,112 9,380 -7.2
 

Total expenses 22,967 23,706 3.2 89,700 92,010 2.6

Note: Totals may not add due to rounding.

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

  2014 2015 2014–15 2015–16
Budgetary balance (deficit/surplus) -1,231 150 -807 5,161
Non-budgetary transactions
  Capital investment activities -451 -378 -1,096 -1,100
  Other investing activities 1,946 -594 4,237 -895
  Pension and other accounts 354 93 1,229 346
  Other activities    
    Accounts payable, receivables, accruals and allowances -5,112 -3,889 -13,709 -16,847
    Foreign exchange activities -1,328 -4,679 2,179 -2,395
    Amortization of tangible capital assets 312 309 1,405 1,490
 

    Total other activities -6,128 -8,259 -10,125 -17,752
 

  Total non-budgetary transactions -4,279 -9,138 -5,755 -19,401
 

Financial source/requirement -5,510 -8,988 -6,562 -14,240
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  July April to July
 

  2014 2015 2014–15 2015–16
Financial source/requirement -5,510 -8,988 -6,562 -14,240
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 4,592 8,751 5,844 7,763
      Treasury bills 2,100 6,000 9,500 11,200
      Retail debt -42 -21 -122 -79
      Other 0 0 0 0
 

      Total 6,650 14,730 15,222 18,884
    Foreign currency borrowings -120 1,894 -340 2,954
 

    Total 6,530 16,624 14,882 21,838
    Cross-currency swap revaluation 796 2,625 -970 2,410
    Unamortized discounts and premiums on market debt 7 -21 106 372
    Obligations related to capital leases and other unmatured debt 19 -14 32 -105
 

  Net change in financing activities 7,352 19,214 14,050 24,515
Change in cash balance 1,842 10,226 7,488 10,275
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.

September 2015