The Fiscal Monitor
A publication of the Department of Finance

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October 2016: budgetary deficit of $1.5 billion

There was a budgetary deficit of $1.5 billion in October 2016, compared to a deficit of $0.9 billion in October 2015. Revenues increased by $2.5 billion, or 11.3 per cent, reflecting increases in all major revenue streams. Program expenses increased by $3.1 billion, or 15.0 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges decreased by $0.1 billion, or 3.1 per cent.

April to October 2016: budgetary deficit of $9.3 billion

For the April to October 2016 period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $9.3 billion, compared to a surplus of $0.6 billion reported in the same period of 2015–16. Revenues were up $0.6 billion, or 0.4 per cent, as increases in income tax revenues and Employment Insurance (EI) premium revenues were partially offset by decreases in other revenues and excise taxes and duties. Program expenses were up $12.0 billion, or 8.2 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.4 billion, or 8.9 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

October 2016

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There was a budgetary deficit of $1.5 billion in October 2016, compared to a deficit of $0.9 billion in October 2015. 

Revenues in October 2016 totalled $24.5 billion, up $2.5 billion, or 11.3 per cent, from October 2015.

  • Personal income tax revenues were up $0.8 billion, or 7.6 per cent.
  • Corporate income tax revenues were up $0.5 billion, or 16.0 per cent.
  • Non-resident income tax revenues were up $0.3 billion, or 95.2 per cent.
  • Excise taxes and duties were up $0.6 billion, or 14.1 per cent, largely due to a $0.6-billion increase in Goods and Services Tax (GST) revenues. Customs import duties and energy taxes increased by $5 million and $1 million, respectively, while other excise taxes and duties decreased by $21 million.
  • EI premium revenues were up $18 million, or 1.5 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 $0.2 billion, or 9.7 per cent. 

Program expenses in October 2016 were $24.0 billion, up $3.1 billion, or 15.0 per cent, from October 2015. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $1.0 billion, or 15.4 per cent. Elderly benefits increased by $0.3 billion, or 6.9 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 $0.3 billion, or 25.1 per cent. Children’s benefits increased by $0.4 billion, or 29.2 per cent, reflecting the new Canada Child Benefit, which replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.
  • 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 $0.4 billion, or 6.4 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 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 $1.8 billion, or 20.1 per cent. Within direct program expenses:
    • Transfer payments increased by $1.2 billion, or 46.6 per cent, reflecting increases across several departments, including claims expenses, social housing assistance and infrastructure transfers.
    • Other direct program expenses increased by $0.6 billion, or 9.5 per cent, due in large part to an increase in pension and other future benefit expenses based on the Government’s latest actuarial valuations, as well as an increase in operating expenses of Crown corporations.

Public debt charges were down $0.1 billion, or 3.1 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

April to October 2016

For the April to October 2016 period of the 2016–17 fiscal year, there was a budgetary deficit of $9.3 billion, compared to a surplus of $0.6 billion reported during the same period of 2015–16. 

Revenues increased by $0.6 billion, or 0.4 per cent, to $163.9 billion.

  • Personal income tax revenues were up $1.3 billion, or 1.7 per cent.
  • Corporate income tax revenues were up $0.4 billion, or 1.7 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 1.8 per cent. 
  • Excise taxes and duties were down $0.1 billion, or 0.4 per cent. Energy taxes and other excise taxes and duties were each down $0.1 billion, while customs import duties were down $9 million. These decreases were partially offset by a $0.1-billion, or 0.4-per-cent, increase in GST revenues. 
  • EI premium revenues were up $0.2 billion, or 1.6 per cent, reflecting growth in earnings.
  • Other revenues were down $1.2 billion, or 6.7 per cent. This decline largely reflects the $2.1-billion gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015, offset in part by growth in other components in the current year, including interest and penalties revenues.

For the April to October 2016 period, program expenses were $158.8 billion, up $12.0 billion, or 8.2 per cent, from the same period the previous year. 

  • Major transfers to persons were up $4.2 billion, or 9.0 per cent. Elderly benefits increased by $1.5 billion, or 5.6 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $1.0 billion, or 9.1 per cent. Children’s benefits were up $1.8 billion, or 17.4 per cent, largely reflecting the new Canada Child Benefit.
  • Major transfers to other levels of government were up $1.9 billion, or 4.9 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 up $5.8 billion, or 9.6 per cent. Within direct program expenses:
    • Transfer payments increased by $2.7 billion, or 15.8 per cent, reflecting increases across several departments, including the accrual of liabilities for disaster assistance and claims expenses, as well as social housing assistance and infrastructure transfers.
    • Other direct program expenses increased by $3.1 billion, or 7.1 per cent, due in large part to an increase in pension and other future benefit expenses based on the Government’s latest actuarial valuations, as well as an increase in operating expenses of Crown corporations.

Public debt charges decreased by $1.4 billion, or 8.9 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

Revenues and expenses (April to October 2016)
Revenues and expenses (April to October 2016) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $22.3 billion for April to October 2016

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 $9.3 billion and a requirement of $13.0 billion from non-budgetary transactions, there was a financial requirement of $22.3 billion for the April to October 2016 period, compared to a financial requirement of $15.2 billion for the same period the previous year. 

Net financing activities up $27.8 billion

The Government financed this financial requirement of $22.3 billion and increased cash balances by $5.4 billion by increasing unmatured debt by $27.8 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 October 2016 stood at $43.3 billion, up $2.7 billion from their level at the end of October 2015. 

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

  2015 2016 2015–16 2016–17
Budgetary transactions        
  Revenues 21,994 24,475 163,330 163,921
  Expenses        
    Program expenses -20,878 -24,012 -146,761 -158,750
    Public debt charges -2,056 -1,992 -15,934 -14,511
 

  Budgetary balance (deficit/surplus) -940 -1,529 635 -9,340
Non-budgetary transactions 1,028 -359 -15,820 -12,996
 

Financial source/requirement 88 -1,888 -15,185 -22,336
Net change in financing activities 2,087 3,603 27,829 27,758
 

Net change in cash balances 2,175 1,715 12,644 5,422
Cash balance at end of period     40,595 43,267
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  October   April to October  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,983 11,823 7.6 77,233 78,526 1.7
    Corporate income tax 2,941 3,413 16.0 21,348 21,709 1.7
    Non-resident income tax 353 689 95.2 3,437 3,500 1.8
 

    Total income tax 14,277 15,925 11.5 102,018 103,735 1.7
  Excise taxes and duties            
    Goods and Services Tax 2,763 3,373 22.1 20,403 20,488 0.4
    Energy taxes 489 490 0.2 3,334 3,242 -2.8
    Customs import duties 464 469 1.1 3,190 3,181 -0.3
    Other excise taxes and duties 510 489 -4.1 3,641 3,520 -3.3
 

    Total excise taxes and duties 4,226 4,821 14.1 30,568 30,431 -0.4
 

  Total tax revenues 18,503 20,746 12.1 132,586 134,166 1.2
Employment Insurance premiums 1,214 1,232 1.5 12,977 13,182 1.6
Other revenues 2,277 2,497 9.7 17,767 16,573 -6.7
 

Total revenues 21,994 24,475 11.3 163,330 163,921 0.4
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  October   April to October  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,817 4,079 6.9 26,235 27,694 5.6
  Employment Insurance benefits 1,260 1,576 25.1 10,636 11,608 9.1
  Children's benefits 1,493 1,929 29.2 10,457 12,274 17.4
 

  Total 6,570 7,584 15.4 47,328 51,576 9.0
Major transfers to other levels
  of government
           
  Support for health and other
    social programs
           
    Canada Health Transfer 2,834 3,006 6.1 19,847 21,039 6.0
    Canada Social Transfer 1,080 1,112 3.0 7,560 7,786 3.0
 

    Total 3,914 4,118 5.2 27,407 28,825 5.2
  Fiscal arrangements and other transfers 1,688 1,732 2.6 12,484 12,879 3.2
  Canada's cities and communities 372 414 11.3 1,351 1,450 7.3
  Quebec Abatement -462 -398 -13.9 -2,770 -2,785 0.5
 

  Total 5,512 5,866 6.4 38,472 40,369 4.9
Direct program expenses            
  Transfer payments            
    Agriculture and Agri-Food Canada 62 77 24.2 605 448 -26.0
    Employment and Social Development Canada 419 603 43.9 3,033 3,533 16.5
    Global Affairs Canada 190 169 -11.1 1,452 1,452 0.0
    Health Canada 180 191 6.1 1,773 1,903 7.3
    Indigenous and Northern Affairs Canada 670 1,254 87.2 3,775 4,761 26.1
    Innovation, Science and
      Economic Development Canada
222 471 112.2 1,383 1,760 27.3
    Other 772 921 19.3 5,293 6,197 17.1
 

    Total 2,515 3,686 46.6 17,314 20,054 15.8
  Other direct program expenses            
    Crown corporations 659 761 15.5 4,733 5,350 13.0
    National Defence 1,954 2,046 4.7 12,728 13,609 6.9
    All other departments
      and agencies
3,668 4,069 10.9 26,186 27,792 6.1
 

    Total other direct program expenses 6,281 6,876 9.5 43,647 46,751 7.1
 

  Total direct program expenses 8,796 10,562 20.1 60,961 66,805 9.6
 

Total program expenses 20,878 24,012 15.0 146,761 158,750 8.2
Public debt charges 2,056 1,992 -3.1 15,934 14,511 -8.9
 

Total expenses 22,934 26,004 13.4 162,695 173,261 6.5

Note: Totals may not add due to rounding.

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

  2015 2016 2015–16 2016–17
Budgetary balance (deficit/surplus) -940 -1,529 635 -9,340
Non-budgetary transactions        
  Capital investment activities -507 -502 -2,310 -2,172
  Other investing activities -746 -997 -3,775 -6,245
  Pension and other accounts 308 641 2,879 4,129
  Other activities        
    Accounts payable, receivables, accruals and allowances 1,073 2,223 -9,755 -4,877
    Foreign exchange activities 567 -2,073 -5,416 -6,108
    Amortization of tangible capital assets 333 349 2,557 2,277
 

    Total other activities 1,973 499 -12,614 -8,708
 

  Total non-budgetary transactions 1,028 -359 -15,820 -12,996
 

Financial source/requirement 88 -1,888 -15,185 -22,336
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  October April to October
 

  2015 2016 2015–16 2016–17
Financial source/requirement 88 -1,888 -15,185 -22,336
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds 10,371 11,196 15,510 20,261
      Treasury bills -6,800 -8,300 6,800 5,600
      Retail debt -19 40 -127 179
 

      Total 3,552 2,936 22,183 26,040
    Foreign currency borrowings 166 -112 3,103 699
 

    Total 3,718 2,824 25,286 26,739
    Cross-currency swap revaluation -1,534 898 2,301 628
    Unamortized discounts and premiums on market debt -75 -99 370 547
    Obligations related to capital leases and other unmatured debt -22 -20 -128 -156
 

  Net change in financing activities 2,087 3,603 27,829 27,758
Change in cash balance 2,175 1,715 12,644 5,422
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
October 31,
2016
Change
Liabilities      
   Accounts payable and accrued liabilities 127,853 118,089 -9,764
   Interest-bearing debt      
      Unmatured debt      
         Payable in Canadian currency      
            Marketable bonds 504,068 524,329 20,261
            Treasury bills 138,100 143,700 5,600
            Retail debt 5,076 5,255 179
 
            Subtotal 647,244 673,284 26,040
      Payable in foreign currencies 22,482 23,181 699
      Cross-currency swap revaluation 8,391 9,019 628
      Unamortized discounts and premiums on market debt 5,047 5,594 547
      Obligations related to capital leases and other unmatured debt 5,047 4,891 -156
 
      Total unmatured debt 688,211 715,969 27,758
     Pension and other liabilities      
         Public sector pensions 152,227 151,720 -507
         Other employee and veteran future benefits 85,681 90,184 4,503
         Other liabilities 5,602 5,735 133
 
         Total pension and other liabilities 243,510 247,639 4,129
 
      Total interest-bearing debt 931,721 963,608 31,887
 
   Total liabilities 1,059,574 1,081,697 22,123
Financial assets      
   Cash and accounts receivable 154,688 155,223 535
   Foreign exchange accounts 93,539 99,647 6,108
   Loans, investments, and advances (net of allowances)1 115,957 120,989 5,032
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 377,498 11,675
 
Net debt 693,751 704,199 10,448
Non-financial assets 77,765 77,660 -105
 
Federal debt (accumulated deficit) 615,986 626,539 10,553
Note: Totals may not add due to rounding.
1 October 31, 2016 amount includes $1.2 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to October 2016 period.

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

For inquiries about this publication, contact Bradley Recker at 613-369-5667.

December 2016