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September 2010: budgetary deficit of $3.9 billion

There was a budgetary deficit of $3.9 billion in September 2010, compared to a deficit of $5.0 billion in September 2009.

Revenues increased by $2.0 billion, or 13.1 per cent, reflecting growth in most revenue streams. Program expenses were up $0.6 billion, or 3.1 per cent, reflecting both higher transfer payments and higher other program expenses. Public debt charges increased by $0.4 billion.

April to September 2010: budgetary deficit of $17.4 billion

For the first six months of the 2010–11 fiscal year, the budgetary deficit stood at $17.4 billion, compared to a deficit of $28.6 billion reported in the same period of 2009–10. Roughly $9 billion of the $17.4-billion deficit was attributable to actions taken under Canada’s Economic Action Plan, including tax reductions, Employment Insurance (EI) related measures and infrastructure funding. Revenues were up $7.8 billion, or 7.6 per cent, primarily reflecting higher Goods and Services Tax (GST) and personal and corporate income tax revenues. Program expenses were down $3.7 billion, or 3.2 per cent, largely reflecting one-time support provided to the automotive industry in 2009–10, partially offset by increased transfers to other levels of government in 2010–11. Public debt charges were up $0.3 billion on a year-over-year basis.

September 2010

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There was a budgetary deficit of $3.9 billion in September 2010, compared to a $5.0-billion deficit in September 2009.

Revenues increased by $2.0 billion, or 13.1 per cent, to $17.3 billion.

  • Personal income tax revenues were up $0.3 billion, or 3.5 per cent, dampened by a one-time downward adjustment of $0.2 billion to reflect new economic information incorporated in the October 2010 Update of Economic and Fiscal Projections. Absent this adjustment, personal income tax revenues would have increased by 6.4 per cent.
  • Corporate income tax revenues were up $0.5 billion, or 60.5 per cent, primarily reflecting a decline in refunds relative to September 2009.
  • Non-resident income tax revenues were up $23 million, or 8.8 per cent.
  • Excise taxes and duties were up $0.4 billion, or 11.2 per cent. GST revenues were up $0.3 billion, or 12.0 per cent. Energy taxes were up $10 million, customs import duties were down $13 million, and other excise taxes and duties were up $0.1 billion.
  • EI premium revenues were up $0.2 billion, or 22.3 per cent, reflecting a one-time $0.2-billion upward adjustment to reflect new economic information incorporated in the October 2010 Update of Economic and Fiscal Projections. Absent this adjustment, EI premium revenues would have increased by 1.9 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 $0.6 billion.

Program expenses in September 2010 were $18.6 billion, up $0.6 billion, or 3.1 per cent, from September 2009, reflecting both higher transfer payments and higher other program expenses.

Transfer payments increased by $0.4 billion, or 3.2 per cent.

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, decreased by $0.1 billion, or 1.7 per cent. Elderly benefits increased by $0.1 billion, or 2.2 per cent. EI benefit payments decreased by $0.2 billion, or 11.6 per cent, reflecting a decrease in regular benefits. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $26 million, or 2.5 per cent.
  • Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (Canada Health Transfer and Canada Social Transfer), fiscal transfers, transfers to provinces on behalf of Canada’s cities and communities, and Alternative Payments for Standing Programs, increased by $0.1 billion, or 3.4 per cent.
  • Other transfer payments were up $0.3 billion.

Other program expenses consist of operating expenses of Crown corporations, departments and agencies, including National Defence, and also reflect the ongoing assessment of the Government’s liabilities. These expenses increased by $0.2 billion, or 2.9 per cent, over the prior year.

Public debt charges increased by $0.4 billion.

April to September 2010

For the first six months of the 2010–11 fiscal year, there was a budgetary deficit of $17.4 billion, compared to a deficit of $28.6 billion reported during the same period of 2009–10. Roughly $9 billion of the $17.4-billion deficit was attributable to actions taken under Canada’s Economic Action Plan.

Revenues increased by $7.8 billion, or 7.6 per cent, to $110.1 billion.

  • Personal income tax revenues were up $2.0 billion, or 3.8 per cent.
  • Corporate income tax revenues were up $1.6 billion, or 16.3 per cent, reflecting a decline in receipts of about 6 per cent, which was more than offset by a decrease of roughly 26 per cent in refunds of taxes paid.
  • Non-resident income tax revenues were down $0.2 billion, or 10.0 per cent.
  • Excise taxes and duties were up $3.3 billion, or 18.0 per cent. GST revenues were up $2.8 billion, or 24.5 per cent. Energy taxes were up $0.1 billion, customs import duties were down $4 million, and other excise taxes and duties were up $0.4 billion.
  • EI premium revenues were up $0.5 billion, or 5.7 per cent, broadly in line with growth in insurable earnings. The premium rate was kept stable at $1.73 per $100 of insurable earnings for 2009 and 2010.
  • Other revenues were up $0.7 billion, or 6.3 per cent.

Program expenses for April to September 2010 were $112.2 billion, down $3.7 billion, or 3.2 per cent, from the same period the previous year, primarily reflecting lower transfer payments.

Transfer payments for April to September 2010 were down $3.7 billion, or 4.6 per cent, from the same period the previous year.

  • Major transfers to persons were down $0.1 billion, or 0.4 per cent. Elderly benefits increased by $0.4 billion, or 2.5 per cent, in line with growth in the elderly population. EI benefit payments decreased by $0.8 billion, or 7.3 per cent, reflecting a decrease in regular benefits. Children’s benefits were up $0.2 billion, reflecting in part enhancements to the National Child Benefit Supplement and the Canada Child Tax Benefit which took effect in July 2009 as part of Canada’s Economic Action Plan.
  • Major transfers to other levels of government were up $1.2 billion, or 4.6 per cent, largely reflecting legislated growth in the Canada Health Transfer and one-time transfer protection payments to provinces in August 2010 to prevent declines in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers between 2009–10 and 2010–11.
  • Other transfer payments were down $4.8 billion, primarily reflecting one-time assistance to the automotive industry in 2009–10, partially offset by increased transfers across various departments.

Other program expenses increased by $30 million, or 0.1 per cent, from the previous year’s level.

Public debt charges increased by $0.3 billion, or 2.0 per cent.

Revenues and expenses

Financial requirement of $38.9 billion for April to September 2010

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are receivable 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 $17.4 billion and a requirement of $21.4 billion from non-budgetary transactions, there was a financial requirement of $38.9 billion in the April to September period of 2010–11, compared to a financial requirement of $55.7 billion in the same period of 2009–10. The decrease in the financial requirement in 2010–11 reflects the improvement in the budgetary balance, a reduction in the financing requirements of Canada Mortgage and Housing Corporation under the Insured Mortgage Purchase Program (IMPP) due to the winding down in March 2010 of purchases of insured mortgage pools under the IMPP, as well as one-time assistance provided to the automotive industry in 2009–10.

Net financing activities up $19.0 billion

The Government financed this financial requirement of $38.9 billion by increasing market debt by $19.0 billion and reducing cash balances by $19.9 billion. The increase in market 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 September 2010 stood at $5.8 billion, down $14.3 billion from their level at the end of September 2009.

Table 1
Summary statement of transactions
  September April to September
 

  2009 2010 2009–10 2010–11
  ($ millions)
Budgetary transactions        
  Revenues 15,306 17,310 102,297 110,108
  Expenses        
    Program expenses -18,032 -18,587 -115,879 -112,180
    Public debt charges -2,248 -2,646 -15,060 -15,364
 

  Budgetary balance (deficit/surplus) -4,974 -3,923 -28,642 -17,436
Non-budgetary transactions -5,189 341 -27,034 -21,423
Financial source/requirement -10,163 -3,582 -55,676 -38,859
Net change in financing activities 5,697 -657 30,712 18,998
Net change in cash balances -4,466 -4,239 -24,964 -19,861
Cash balance at end of period     20,068 5,763
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
Table 2
Revenues
  September   April to September  
 
 
 
  2009 2010 Change 2009–10 2010–11 Change
          ($ millions) (%)               ($ millions) (%)
Tax revenues            
  Income taxes            
    Personal income tax 8,019 8,302 3.5 52,130 54,133 3.8
    Corporate income tax 848 1,361 60.5 9,581 11,140 16.3
    Non-resident income tax 262 285 8.8 2,330 2,097 -10.0
 

    Total income tax 9,129 9,948 9.0 64,041 67,370 5.2
  Excise taxes and duties            
    Goods and Services Tax 2,252 2,523 12.0 11,311 14,087 24.5
    Energy taxes 465 475 2.2 2,502 2,590 3.5
    Customs import duties 319 306 -4.1 1,831 1,827 -0.2
    Other excise taxes and duties 348 460 32.2 2,495 2,899 16.2
 

    Total excise taxes and duties 3,384 3,764 11.2 18,139 21,403 18.0
 

  Total tax revenues 12,513 13,712 9.6 82,180 88,773 8.0
Employment Insurance premiums 1,012 1,238 22.3 8,408 8,887 5.7
Other revenues 1,781 2,360 32.5 11,709 12,448 6.3
Total revenues 15,306 17,310 13.1 102,297 110,108 7.6
Note: Totals may not add due to rounding.
Table 3
Expenses
  September   April to September  
 
 
 
  2009 2010 Change 2009–10 2010–11 Change
          ($ millions) (%)     ($ millions) (%)
Transfer payments            
  Major transfers to persons            
    Elderly benefits 2,894 2,959 2.2 17,178 17,601 2.5
    Employment Insurance benefits 1,598 1,413 -11.6 10,582 9,806 -7.3
    Children's benefits 1,025 1,051 2.5 6,152 6,377 3.7
 

    Total 5,517 5,423 -1.7 33,912 33,784 -0.4
  Major transfers to other levels of government            
    Support for health and other
    social programs
           
      Canada Health Transfer 2,165 2,158 -0.3 12,363 12,961 4.8
      Canada Social Transfer 830 931 12.2 5,430 5,589 2.9
 

      Total 2,995 3,089 3.1 17,793 18,550 4.3
    Fiscal transfers 1,272 1,325 4.2 8,351 8,961 7.3
    Canada's cities and communities 0 0 n/a 957 858 -10.3
    Alternative Payments for Standing Programs -235 -246 4.7 -1,378 -1,475 7.0
 

    Total 4,032 4,168 3.4 25,723 26,894 4.6
  Other transfer payments            
    Agriculture and Agri-Food 65 166 155.4 628 842 34.1
    Foreign Affairs and International Trade 170 273 60.6 1,390 1,642 18.1
    Health 241 212 -12.0 1,290 1,316 2.0
    Human Resources and Skills Development 244 431 76.6 1,484 1,800 21.3
    Indian Affairs and Northern Development 403 64 -84.1 2,553 2,684 5.1
    Industry 171 269 57.3 1,060 1,252 18.1
    Other 1,023 1,235 20.7 12,333 6,430 -47.9
 

    Total 2,317 2,650 14.4 20,738 15,966 -23.0
 

  Total transfer payments 11,866 12,241 3.2 80,373 76,644 -4.6
Other program expenses            
  Crown corporations 868 752 -13.4 4,859 5,112 5.2
  Defence 1,719 1,752 1.9 9,392 8,735 -7.0
  All other departments and agencies 3,579 3,842 7.3 21,255 21,689 2.0
 

  Total other program expenses 6,166 6,346 2.9 35,506 35,536 0.1
Total program expenses 18,032 18,587 3.1 115,879 112,180 -3.2
Public debt charges 2,248 2,646 17.7 15,060 15,364 2.0
Total expenses 20,280 21,233 4.7 130,939 127,544 -2.6
Note: Totals may not add due to rounding.            
Table 4
The budgetary balance and financial source/requirement
  September April to September
 

  2009 2010 2009–10 2010–11
  ($ millions)
Budgetary balance (deficit/surplus) -4,974 -3,923 -28,642 -17,436
Non-budgetary transactions        
  Capital investing activities -477 -283 -1,243 -2,329
  Other investing activities -3,344 -1,236 -16,752 -1,268
  Pension and other accounts 278 469 3,640 2,678
  Other activities        
    Accounts payable, receivables, accruals and allowances 805 803 -15,740 -20,922
    Foreign exchange activities -2,763 259 1,409 -1,676
    Amortization of tangible capital assets 312 329 1,652 2,094
 

    Total other activities -1,646 1,391 -12,679 -20,504
  Total non-budgetary transactions -5,189 341 -27,034 -21,423
Financial source/requirement -10,163 -3,582 -55,676 -38,859
Note: Totals may not add due to rounding.        
Table 5
Financial source/requirement and net financing activities
  September April to September
 

  2009 2010 2009–10 2010–11
  ($ millions)
Financial source/requirement -10,163 -3,582 -55,676 -38,859
Net increase (+)/decrease (-)
in financing activities
       
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds 1,793 -3,554 37,071 23,646
      Treasury bills 2,300 3,300 700 -5,200
      Retail debt -17 -46 -60 -337
      Other 0 0 -67 -390
 

      Total 4,076 -300 37,644 17,719
    Foreign currency borrowings 2,220 -145 -2,112 211
 

    Total 6,296 -445 35,532 17,930
    Cross-currency swap revaluation -492 -297 -4,471 669
    Unamortized discounts and premiums on market debt -96 96 -263 478
    Obligations related to capital leases -11 -11 -86 -79
  Net change in financing activities 5,697 -657 30,712 18,998
Change in cash balance -4,466 -4,239 -24,964 -19,861
Note: Totals may not add due to rounding.
Table 6
Condensed statement of assets and liabilities
  March 31, 2010 September 30, 2010 Change
  ($ millions)
Liabilities      
  Accounts payable and accrued liabilities 120,525 97,662 -22,863
  Interest-bearing debt      
    Unmatured debt      
      Payable in Canadian currency      
        Marketable bonds 367,962 391,608 23,646
        Treasury bills 175,849 170,649 -5,200
        Retail debt 11,855 11,518 -337
        Other 452 62 -390
 
        Subtotal 556,118 573,837 17,719
    Payable in foreign currencies 8,243 8,454 211
    Cross-currency swap revaluation -4,233 -3,564 669
    Unamortized discounts and premiums on market debt -5,092 -4,614 478
    Obligations related to capital leases 4,090 4,011 -79
 
    Total unmatured debt 559,126 578,124 18,998
    Pension and other liabilities      
      Public sector pensions 142,843 144,392 1,549
      Other employee and veteran future benefits 54,227 55,592 1,365
      Other liabilities 6,587 6,351 -236
 
      Total pension and other liabilities 203,657 206,335 2,678
    Total interest-bearing debt 762,783 784,459 21,676
  Total liabilities 883,308 882,121 -1,187
Financial assets      
  Cash and accounts receivable 101,205 79,403 -21,802
  Foreign exchange accounts 46,950 48,626 1,676
  Loans, investments, and advances (net of allowances)1 152,681 154,480 1,799
 
  Total financial assets 300,836 282,509 -18,327
 
Net debt 582,472 599,612 17,140
Non-financial assets 63,375 63,610 235
Federal debt (accumulated deficit) 519,097 536,002 16,905
Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.
1 Includes $531 million in other comprehensive income reported by enterprise Crown corporations and other government business enterprises in 2010–11.
Note: Totals may not add due to rounding.

For inquiries about this publication,
contact Doug Nevison at 613-995-6391.
November 2010