Archived - Supplementary Document to the Planned Results for 2004-2005 

Archived information

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This information would normally be made available at the beginning of a fiscal year. However, for 2004/05 it was delayed due to the prorogation of Parliament. Therefore, some of the matters referred to prospectively herein have already been accomplished or overtaken by other events.

Activities anticipated within the coming year (04-05)

Key Issue 1: Building the Future
Objective 1a: Maintaining a Healthy Fiscal Climate
1a.1: Continue to pursue the Government's Debt Repayment Plan to ensure the federal debt-to-GDP ratio remains on a permanent downward track. The target of keeping the federal debt-to-GDP ratio on a steady downward track continues to be a priority for the Government. According to the fiscal projections in Budget 2004, the federal debt-to-GDP ratio (accumulated deficit) will fall to 42 per cent in 2003-04 from 44.2 per cent in 2002-03, and to about 38 per cent for 2005-06. The Government has also set an objective of reducing the federal-debt-to-GDP ratio to 25 per cent within the next ten years.

This will be achieved by maintaining a prudent approach to financial management, which includes two-year rolling targets for balanced budgets, a Contingency Reserve and economic prudence. The Contingency Reserve, if not needed, is used to reduce the federal debt.

As part of instituting a new management approach in government, Budget 2004 implements $1 billion in annual reallocation from existing spending in 2004-05 and beyond to meet Budget 2003 commitments. As well, the Cabinet Committee on Expenditure Review is examining all programs to identify at least $3 billion annually in savings within four years for reinvestment in the priorities of Canadians while improving government management. The Government is also implementing significant new measures to strengthen financial management and accountability.

Objective 1b: Building a Stronger Society
1b.1: Ensure predictable and growing funding for health and social programs. In support of the 2003 First Ministers' Accord on Health Care Renewal, the Government of Canada committed to provide a total of $36.8 billion over five years in support of health through transfers and direct spending initiatives. The Department will ensure that planned increases in transfer payments resulting from the Accord are implemented, and in particular that the additional $2 billion for health is provided to provinces wishing to receive the funding in the 2004-05 fiscal year.

The Department of Finance has implemented the necessary transfer increases related to the 2003 Accord and will implement the Budget 2004 commitment to provide additional funding to the Canada Social Transfer for early learning and childcare and a new Public Health and Immunization Trust upon passage of the Budget Implementation Act, 2004.

For 2004-05, the Department will ensure that provinces, territories and stakeholders are aware of the growing and predictable nature of the federal funding commitments, and will continue to ensure the effective administration of federal transfers and targeted funding.

The Prime Minister has committed to a meeting of First Ministers to discuss health sustainability within the context of the national agenda in the Summer of 2004, with meetings of Finance Ministers in advance of the First Ministers' Meeting. The Department will prepare for a Finance Ministers' meeting on health sustainability and subsequently assist in the preparation for the First Ministers' Meeting.

1b.2: Improve the transparency and accountability of federal transfer support to the provinces and territories. As part of the 2003 First Ministers' Accord on Health Care Renewal, the Government of Canada committed to restructure the Canada Health and Social Transfer (CHST) to improve the accountability and transparency of federal transfer support for health.

Retroactive to April 1, 2004, the Department of Finance will implement the restructuring of the CHST into:

  • The Canada Health Transfer (CHT) in support of health;
  • The Canada Social Transfer (CST), a block transfer in support of post-secondary education, social assistance and social services, including early childhood development, and early learning and child care services.

These new transfers will make the federal contribution to health care and social programs more transparent to Parliament and to Canadians. The Department will improve its communications efforts to ensure Canadians and stakeholders benefit fully from the new transfer structure.

1b.3: Ensure fiscal disparities are addressed through the Equalization and Territorial Formula Financing (TFF) programs. The current Equalization program expired on March 31, 2004. Budget 2004 proposes a new Equalization framework to be implemented retroactive to April 1, 2004, replacing the continuation of payments legislation that is currently in place. The new proposal will improve the Equalization program through a number of changes to maintain the integrity of the program and to improve the way it operates. For example, a number of tax bases will be updated, reflecting changes to various provincial tax systems and the availability of new data. These changes will improve the program's measure of fiscal capacity. The system under which provinces receive Equalization payments will also be modified. This modification will provide provinces with more stable and predictable year-over-year payments.

The current Territorial Formula Financing (TFF) Agreements expired on March 31, 2004. New TFF Agreements are to be implemented retroactive to April 1, 2004. The new agreements will ensure that territorial governments have the capacity to provide a level of services comparable to those of provinces, while addressing the unique challenges and high costs of the North. In addition, the new arrangements allow the territories to target their priority areas including health and economic development.

1b.4: Ensure the retirement income system remains sustainable and meets seniors' needs. In consultation with the provinces and territories, the Department will provide analysis, research and advice to support federal and provincial Finance Ministers' triennial financial review of the Canada Pension Plan (CPP), which the CPP legislation requires that Ministers make "best efforts" to complete by the end of 2005.

Budget 2004 proposes clarifying the rules governing CPP employer contributions and refunds and changing the rules in the case of business restructurings to allow the successor employer in a business restructuring to take into account the amounts paid by the predecessor in determining the amount owed for the balance of the year. This clarification will ensure harmonization between the CPP and the Quebec Pension Plan with respect to employer contributions and will reduce the burden of compliance on employers undergoing a business restructuring.

Budget 2004 proposes allowing for the reinstatement of CPP disability benefits if a former recipient is required to cease working for reasons relating to his or her disability within two years of returning to work. The new proposals will provide greater support for persons with disabilities who take up the challenge of reintegrating into the workforce.

The Department will prepare an annual report on the operations of the CPP, in consultation with the Department of Social Development.

In consultation with the provinces, the Department will undertake a special examination of the CPP Investment Board, as required under section 47(1) of the CPP Investment Board Act, to verify that: assets are properly safeguarded, that its human, physical, and financial resources are managed economically and efficiently, and that its operations are carried out effectively.

The Department will implement the transfer of all CPP assets remaining with the federal government to the CPP Investment Board over a three-year period, following the formal agreement of provincial governments.

Objective 1c: Implementing Key Federal Environmental Sustainable Development Priorities
1c.1: In the context of planning for future budgets, work with other federal departments and stakeholders to identify ways to address environmental sustainable development priorities. Budget 2004 makes significant new investments in support of sustainable development, including:
  • Investing $4B over ten years in the clean up federal and shared-liability contaminated sites.
  • Providing $200 million to Sustainable Development Technology Canada, bringing its total funding level to $550 million. The Budget also broadens the mandate of SDTC to allow it to deliver innovative technology solutions in relation to the full spectrum of sustainable development issues - climate change, clean air, water and soil.
  • Using part of the proceeds from the sale of the government's Petro-Canada shares to increase support for environmental technologies by $800 million between 2006-07 and 2010-11, as new opportunities emerge and priorities are identified.
  • Investing $15M over two years to develop and report on environmental indicators that will help ensure that environmental considerations are better integrated into decision-making.

Finance officials will work with other federal Departments on the implementation of these initiatives and to identify potential future funding priorities.

1c.2: Work with other government departments to evaluate federal horizontal management of water policy. The Department will participate in the development of a framework providing a comprehensive inventory of the roles and responsibilities of federal departments regarding freshwater issues. The framework will be used to assess priorities for federal action.

Key Issue 2: Integrating the Economy and the Environment
Objective 2a: Evaluating the Potential for and Developing Practical Uses of Economic Instruments
2a.1: Participate in further work in cooperation with other federal departments, other governments and stakeholders on the design of a system of covenants with the large industrial emitters sector to achieve reductions in their greenhouse gas emission intensities to help further Canada's climate change objectives under the Kyoto Protocol. Additionally, the Department will participate in work on potential mechanisms to facilitate a domestic and international permit-trading system. The Climate Change Plan for Canada proposes that large final emitters (LFEs) be required to reduce their GHG emissions by 55 Mt from their 2010 "business as usual" levels through the establishment of covenants with a regulatory or financial backstop and a domestic emissions trading system. Through a process being led by Natural Resources Canada, Finance has participated, and will continue to participate, in inter-departmental consultations on the analysis and design of the LFE system (e.g. addressing competitiveness concerns and credit for early action) and a domestic and international permit trading system (e.g. tax and accounting treatment of permits). Legislation is expected to be tabled in the Fall of 2004.
2a.2: Continue to participate in the Steering Committee and as observers at working group levels with the National Round Table on the Environment and the Economy (NRTEE) on its Ecological Fiscal Reform program over 2003-2005. The Department participates as an ex-officio member in the NRTEE's Expert Advisory Group, the steering committee for their Ecological Fiscal Reform (EFR) program, and sits in as an observer on various EFR working groups, including the most recent research program related to EFR and energy.
2a.3: Continue to undertake analysis and research concerning the economic and fiscal implications of population aging. Research and analysis on the economic and fiscal implications of population aging is on-going. Several research projects are scheduled for completion in 2004-05. Research output will be shared with other government stakeholders working on population aging and is likely to be presented in academic forums.
2a.4: Continue to keep abreast of the emerging literature related to population aging and its economic and fiscal impacts; develop and employ analytical tools (such as computable general equilibrium models, microsimulation models and econometric methods) to examine impacts associated with population aging and provide analysis of current and proposed policies. The Department will draft a research paper that provides a summary and analysis of recent studies on population aging in Canada. It will also develop analytical tools (such as computable general equilibrium (CGE) and simulation models) for the purposes of examining impacts associated with population aging. These and other tools facilitate analysis of current and proposed policies. Research output will be shared with other government stakeholders working on population aging and is likely to be presented in academic forums.
2a.5: Continue to evaluate research concerning environment-related tax measures. Assess the potential of proposals received from stakeholders for using the tax system to assist the Government in meeting its environmental objectives, with specific emphasis on the relative effectiveness of tax measures compared to other instruments that may be available within the context of the Government's other fiscal and policy objectives. The Department will continue to evaluate research and proposals concerning environment-related tax measures. As one example of the ongoing work, the Department will continue to review stakeholder submissions regarding potential modifications to Class 43.1, which prescribes certain renewable energy and energy efficiency equipment that qualifies for accelerated tax depreciation. In addition, to provide overall context, the Department will develop and issue a framework setting out the general parameters and criteria that guide the Department in the assessment of proposals to use the tax system to achieve sustainable development objectives.

Objective 2b: Increasing the Knowledge Base Through Integrated Decision Making
2b.1: Continue to maintain awareness of the departmental process for implementing the 1999 Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals (Strategic Environmental Assessment). As part of the annual Strategic Environmental Assessment (SEA) awareness-raising activities, the Department will:
  • request that the Canadian Environmental Assessment Agency (CEAA) provide a briefing on SEA to the Department's Sustainable Development Working Group (SDWG) and other interested Departmental officials;
  • give a presentation to officials on the internal SEA process;
  • present a report to the Departmental Coordinating Committee on the state of SEA implementation within the Department;
  • provide an overview of Departmental SEA procedures to Canadian Environmental Assessment Agency (CEAA) staff for their consideration and comments; and,
  • develop a method to include material on SEA in the orientation material for new employees.
2b.2: Conduct research and analysis on environmental and natural resource issues. Within the Economic Development Branch, research will be targeted at nascent environmental and natural resource policy issues and made available within the Department. Past research has contributed to a better understanding of key environmental policy issues at both the senior and officer levels within the Department.

Key Issue 3: Integrating Sustainable Development in the Global Economy
Objective 3a: Participating in Negotiating International Environmental Agreements
3a.1: Support initiatives to enhance the understanding of linkages between Multilateral Environmental Agreements and trade rules. The Committee on Trade and Environment (CTE) of the World Trade Organization (WTO) is scheduled to meet on three occasions during 2004. Finance officials will participate in the development of the Canadian position for these meetings.
3a.2: Collaborate with other government departments on Canada's ongoing approach to international negotiations and activities on climate change, focusing primarily on economic and fiscal issues under negotiation. The first Conference of the Parties to the Framework Convention on Climate Change was held in 1995; the Kyoto Protocol was signed by Canada in 1997 and ratified in 2002. The Department of Finance will continue to assist with the analysis and development of considerations for Canada's approach to international climate change negotiations - for example, in relation to the 10th Conference of the Parties, which will be held in Argentina in late 2004, and discussions on the second commitment period, which are due to begin in 2005. The Department's focus will be on the analysis of economic and fiscal implications of issues under consideration.
3b: Integrating the Environment Into Future Negotiations on Trade and Investment Agreements 3b.1: In conjunction with the Department of Foreign Affairs and International Trade (DFAIT), examine trade and environment linkages in the context of the World Trade Organization and trade negotiations. The Department will continue to participate in the Environmental Assessment of Trade Negotiations Steering Committee chaired by the Department of Foreign Affairs. It is anticipated that an Initial Environmental Assessment Report of the Proposed Canada-Singapore Free Trade Agreement will be released during the 2004-2005 fiscal year.
3b.2: With DFAIT and Industry Canada, strive to promote free trade in the environmental sector and continue to review specific requests to remove tariffs unilaterally where they are identified as a significant disincentive to the acquisition of environmental technology products. The Department will continue to actively support the reduction or elimination of tariff and non-tariff barriers on environmental goods and services in the WTO Doha round. In this regard, Finance will participate in the development of Canadian submissions to the WTO Committee on Trade and Environment.

Objective 3c: Involving International Financial Institutions
3c.1: Work with other donor governments during the 14th replenishment of the World Bank/International Development Association's (IDA14) financing for the world's poorest countries to ensure that sustainable development issues remain high priorities (the replenishment negotiations are expected to begin in early 2004, with the three-year replenishment period to become effective in July 2005). It is anticipated that Canada will actively participate in the IDA14 replenishment negotiations (the first of at least four IDA14 donor replenishment meetings convened February 18-20, 2004).

In advance of the first replenishment meeting, the Department consulted with the Canadian International Development Agency (CIDA), the Department of Foreign Affairs (DFA) and the Department of International Trade (DIT) to establish a negotiating position that stresses sustainable development as an operational priority for IDA14. The Department will conduct additional consultations with CIDA and DFA/DIT as the replenishment negotiations proceed, and will work on a Canadian strategy for engaging other IDA14 donors in raising the profile of sustainable development issues.

3c.2: Undertake consultations in 2004 with interested Canadian non-governmental organizations to exchange views on how best to support sustainable development within the IDA14 negotiations and within the international financial institutions more broadly. The Department will seek the views of interested non-governmental organizations (NGOs) on sustainable development and other policy issues through consultations at the official's level in advance of individual IDA14 replenishment negotiation meetings. It will also organize consultations between the Minister of Finance and interested NGOs on broader development issues, including the promotion of sustainable development by international financial institutions.
3c.3: Work with the Executive Boards of the World Bank and European Bank for Reconstruction and Development to support operations that promote sustainable development. The Department will use its regular consultations with the Executive Directors' offices to stress the priority of sustainable development issues at these two institutions. It will also offer specific guidance to the Executive Directors on policy and certain specific projects as they come forward to the Executive Boards for review and approval.

Objective 3d: Increasing knowledge and understanding of the relationship between financial services and international environmental practices
3d.1: Participate in upcoming events such as the annual United Nations Environment Program (UNEP) Finance Initiative Global Roundtable and other corporate social responsibility events. The Department will continue to attend conferences and events that increase our knowledge of international environmental practices as they relate to the financial sector. For example, the Financial Sector Policy Branch was in attendance at the Pensions Summit on "Strategies to Build Sustainability into Pension Plans" in April 2004 and will attend the 2004 Corporate Social Responsibility Conference in May 2004, both organized by the Conference Board of Canada.

Objective 3e: Maintaining a dialogue with federal financial institutions on sustainable development with a view to continually improving the annual Public Accountability Statements
3e.1: Maintain open dialogue with representatives of financial institutions on Public Accountability Statements. The Department will hold discussions with financial institutions to determine areas for improvements regarding the second round of Public Accountability Statements (PAS) to be produced during the first half of 2004. In this regard, the Financial Sector Policy Branch plans to meet with financial institutions this summer, as it did during the fall 2002, when financial institutions were developing their first round of PAS.
Objective 3f: Informing and educating others interested in sustainable development on the merits of the Public Accountability Statements
3f.1: Participate in various interdepartmental and external events. The Department will respond to any requests for information stemming from the presentation made on PAS at the United Nations Environment Programme Finance Initiative (UNEP FI) Global Roundtable in Tokyo in October 2003.

The Department will continue to provide input on sustainable development initiatives pertaining to financial institutions taking place within other government departments.

Key Issue 4: Greening Operations
Objective 4a: Enhancing awareness of the environmental impacts of our operations and encouraging employee and management adoption of best practices
4a.1: Increase the proportion of employees participating in the ongoing promotion of SD principles in the workplace to 20 per cent by 2006.[1] The Department will develop a Green Citizenship Network to directly engage employees in departmental greening initiatives. It will also develop and implement awareness modules for best practices for procurement and facilities management, and continue to promote Earth Day and Environment Week with a variety of interactive displays and events - with the objective of raising participation to 15% by December 31, 2004.
4a.2: Increase the number of requests for materials on greening initiatives, policies and achievements by 30 per cent by 2006.[2] The Department will revise the "Greening the Office" Web page, creating a virtual resource centre for employees to access greening information - with the objective of increasing the number of requests by 10%.

Objective4b: Developing tools and guides and maintaining existing programs to support the implementation of best practices
4b.1: Develop a tracking system to determine the baseline and benchmarks for the recommendation of environmentally preferred products and services by 2006. The Department will provide green procurement training and determine methods of tracking green purchases by December 31, 2004, in partnership with Public Works and Government Services Canada
4b.2: Develop and implement a strategy to reduce resource consumption by 2005. The Department will consult with stakeholders and investigate opportunities to reduce resource consumption.

1 From a 12-per-cent baseline of employees who participated in a Finance-endorsed event in 2003. [Return]

2 From a baseline of 1,300 requests for information on the Greening the Office intranet site in 2002-03.  [Return]