The Fiscal Monitor
A publication of the Department of Finance

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June 2017: budgetary surplus of $16 million

There was a budgetary surplus of $16 million in June 2017, compared to a deficit of $1.1 billion in June 2016. Revenues increased by $1.2 billion, or 5.2 per cent, as increases in tax revenues and other revenues were partially offset by a decrease in Employment Insurance (EI) premium revenues. Program expenses increased by $0.1 billion, or 0.3 per cent, reflecting increases in major transfers to persons and other levels of government, which were partially offset by a decrease in direct program expenses. Public debt charges increased by $47 million, or 2.4 per cent.

April to June 2017: budgetary surplus of $0.1 billion

For the April to June 2017 period of the 2017–18 fiscal year, the Government posted a budgetary surplus of $0.1 billion, compared to a deficit of $1.0 billion reported in the same period of 2016–17. Revenues were up $3.5 billion, or 4.9 per cent, as increases in tax revenues and other revenues were partially offset by a decrease in EI premium revenues. Program expenses were up $2.7 billion, or 4.0 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.3 billion, or 4.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

Quarterly update of the fiscal outlook

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 for the April to June 2017 period are consistent with the fiscal projection for 2017–18 presented in the budget.

An update of the economic and fiscal outlook will be provided in the 2017 Fall Economic Statement.

June 2017

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There was a budgetary surplus of $16 million in June 2017, compared to a deficit of $1.1 billion in June 2016.

Revenues increased by $1.2 billion, or 5.2 per cent, to $25.0 billion.

  • Personal income tax revenues were up $1.0 billion, or 9.7 per cent.
  • Corporate income tax revenues were up $0.1 billion, or 3.0 per cent.
  • Non-resident income tax revenues were up $0.2 billion, or 43.1 per cent.
  • Excise taxes and duties were up $0.2 billion, or 3.7 per cent. Within this component, Goods and Services Tax (GST) revenues were up $0.1 billion, or 2.0 per cent. Energy taxes were up $33 million, customs import duties were up $0.1 billion, and other excise taxes and duties were up $9 million. 
  • EI premium revenues were down $0.3 billion, or 11.8 per cent, due to a reduction in the EI premium rate for 2017. 
  • 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 $37 million, or 1.6 per cent. 

Program expenses in June 2017 were $22.9 billion, up $0.1 billion, or 0.3 per cent. 

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.6 billion, or 9.1 per cent. Elderly benefits increased by $0.2 billion, or 5.6 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 $36 million, or 2.6 per cent. Children's benefits increased by $0.4 billion, or 28.6 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 $0.1 billion, or 2.2 per cent, mainly due to 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 down $0.7 billion, or 6.5 per cent.
    • Transfer payments decreased by $1.0 billion, or 25.3 per cent, due mainly to a decrease in transfers for disaster assistance. 
    • Other direct program expenses increased by $0.3 billion, or 4.0 per cent, largely reflecting an increase in pension and benefit costs based on the Government's latest actuarial valuations.

Public debt charges increased by $47 million, or 2.4 per cent.

April to June 2017

For the April to June 2017 period of the 2017–18 fiscal year, there was a budgetary surplus of $0.1 billion, compared to a deficit of $1.0 billion reported during the same period of 2016–17. 

Revenues increased by $3.5 billion, or 4.9 per cent, to $75.3 billion.

  • Personal income tax revenues were up $1.8 billion, or 5.4 per cent. 
  • Corporate income tax revenues were up $0.6 billion, or 5.6 per cent.
  • Non-resident income tax revenues were up $0.3 billion, or 23.2 per cent. 
  • Excise taxes and duties were up $1.4 billion, or 10.9 per cent, largely reflecting a $1.2-billion increase in GST revenues. Energy taxes and customs import duties were both up $0.1 billion and other excise taxes and duties increased by $4 million.
  • EI premium revenues were down $0.8 billion, or 11.2 per cent, due to a reduction in the EI premium rate for 2017. 
  • Other revenues were up $0.2 billion, or 3.4 per cent, due mainly to an increase in Crown corporation revenues.

For the April to June 2017 period, program expenses were $69.1 billion, up $2.7 billion, or 4.0 per cent, from the same period the previous year. 

  • Major transfers to persons were up $1.9 billion, or 9.1 per cent. Elderly benefits increased by $0.7 billion, or 5.9 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $44 million, or 0.9 per cent. Children's benefits were up $1.3 billion, or 28.4 per cent, reflecting the new Canada Child Benefit. 
  • Major transfers to other levels of government were up $0.4 billion, or 2.6 per cent, mainly reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
  • Direct program expenses were up $0.3 billion, or 1.0 per cent.
    • Transfer payments decreased by $0.7 billion, or 7.9 per cent, due mainly to a decrease in transfers for disaster assistance.  
    • Other direct program expenses increased by $1.0 billion, or 5.4 per cent, due in large part to an increase in pension and benefit costs based on the Government's latest actuarial valuations and an increase in operating expenses of Crown corporations.

Public debt charges decreased by $0.3 billion, or 4.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

 
Revenues and expenses (April to June 2017)
Revenues and expenses (April to June 2017) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $16.4 billion for April to June 2017

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 $0.1 billion and a requirement of $16.5 billion from non-budgetary transactions, there was a financial requirement of $16.4 billion for the April to June 2017 period, compared to a financial requirement of $13.6 billion for the same period the previous year. 

Net financing activities up $21.9 billion

The Government financed this financial requirement of $16.4 billion and increased cash balances by $5.6 billion by increasing unmatured debt by $21.9 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 June 2017 stood at $42.5 billion, up $4.0 billion from their level at the end of June 2016. 

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

  2016 2017 2016–17 2017–18
Budgetary transactions        
  Revenues 23,743 24,977 71,785 75,270
  Expenses
    Program expenses -22,862 -22,924 -66,396 -69,068
    Public debt charges -1,990 -2,037 -6,384 -6,119
 

  Budgetary balance (deficit/surplus) -1,109 16 -995 83
Non-budgetary transactions -3,957 -2,271 -12,582 -16,461
 

Financial source/requirement -5,066 -2,255 -13,577 -16,378
Net change in financing activities -9,015 -879 14,251 21,945
 

Net change in cash balances -14,081 -3,134 674 5,567
Cash balance at end of period 38,519 42,469
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  June   April to June  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,522 11,546 9.7 33,242 35,024 5.4
    Corporate income tax 3,775 3,889 3.0 10,479 11,070 5.6
    Non-resident income tax 348 498 43.1 1,308 1,611 23.2
 

    Total income tax 14,645 15,933 8.8 45,029 47,705 5.9
  Excise taxes and duties
    Goods and Services Tax 3,222 3,286 2.0 8,658 9,838 13.6
    Energy taxes 328 361 10.1 1,179 1,229 4.2
    Customs import duties 439 502 14.4 1,254 1,383 10.3
    Other excise taxes and duties 526 535 1.7 1,461 1,465 0.3
 

    Total excise taxes and duties 4,515 4,684 3.7 12,552 13,915 10.9
 

  Total tax revenues 19,160 20,617 7.6 57,581 61,620 7.0
Employment Insurance premiums 2,197 1,937 -11.8 7,081 6,286 -11.2
Other revenues 2,386 2,423 1.6 7,123 7,364 3.4
 

Total revenues 23,743 24,977 5.2 71,785 75,270 4.9
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  June   April to June  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,938 4,160 5.6 11,718 12,404 5.9
  Employment Insurance benefits 1,394 1,358 -2.6 4,998 4,954 -0.9
  Children's benefits 1,541 1,981 28.6 4,591 5,894 28.4
 

  Total 6,873 7,499 9.1 21,307 23,252 9.1
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 3,006 3,096 3.0 9,017 9,287 3.0
    Canada Social Transfer 1,112 1,146 3.1 3,337 3,437 3.0
 

    Total 4,118 4,242 3.0 12,354 12,724 3.0
  Fiscal arrangements and other transfers 1,757 1,772 0.9 5,869 5,993 2.1
  Canada's cities and communities 0 0 n/a 0 0 n/a
  Quebec Abatement -381 -397 4.2 -1,144 -1,190 4.0
 

  Total 5,494 5,617 2.2 17,079 17,527 2.6
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 59 46 -22.0 141 133 -5.7
    Employment and Social Development Canada 716 675 -5.7 1,393 1,557 11.8
    Global Affairs Canada 170 225 32.4 642 544 -15.3
    Health Canada 257 241 -6.2 984 1,057 7.4
    Indigenous and Northern Affairs Canada 376 488 29.8 1,781 1,881 5.6
    Innovation, Science and Economic Development Canada 165 371 124.8 533 907 70.2
    Other 2,027 770 -62.0 3,739 2,404 -35.7
 

    Total 3,770 2,816 -25.3 9,213 8,483 -7.9
  Other direct program expenses
    Crown corporations 836 845 1.1 2,315 2,584 11.6
    National Defence 1,814 2,084 14.9 5,173 5,488 6.1
    All other departments
      and agencies
4,075 4,063 -0.3 11,309 11,734 3.8
 

    Total other direct program expenses 6,725 6,992 4.0 18,797 19,806 5.4
 

  Total direct program expenses 10,495 9,808 -6.5 28,010 28,289 1.0
 

Total program expenses 22,862 22,924 0.3 66,396 69,068 4.0
Public debt charges 1,990 2,037 2.4 6,384 6,119 -4.2
 

Total expenses 24,852 24,961 0.4 72,780 75,187 3.3

Note: Totals may not add due to rounding.

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

  2016 2017 2016–17 2017–18
Budgetary balance (deficit/surplus) -1,109 16 -995 83
Non-budgetary transactions
  Capital investment activities -153 -272 -431 -736
  Other investing activities -531 3,401 -1,904 1,615
  Pension and other accounts 355 302 922 535
  Other activities    
    Accounts payable, receivables, accruals and allowances -6,853 -11,028 -11,062 -18,916
    Foreign exchange activities 3,121 5,022 -1,035 -60
    Amortization of tangible capital assets 104 304 928 1,101
 

    Total other activities -3,628 -5,702 -11,169 -17,875
 

  Total non-budgetary transactions -3,957 -2,271 -12,582 -16,461
 

Financial source/requirement -5,066 -2,255 -13,577 -16,378
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  June April to June
 

  2016 2017 2016–17 2017–18
Financial source/requirement -5,066 -2,255 -13,577 -16,378
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -11,935 -10 168 9,703
      Treasury bills 4,800 3,400 14,000 13,800
      Retail debt -76 71 68 -75
 

      Total -7,211 3,461 14,236 23,428
    Foreign currency borrowings -159 -855 1,089 32
 

    Total -7,370 2,606 15,325 23,460
    Cross-currency swap revaluation -1,803 -3,167 -1,399 -1,035
    Unamortized discounts and premiums on market debt 201 -267 419 -375
    Obligations related to capital leases and other unmatured debt -43 -51 -94 -105
 

  Net change in financing activities -9,015 -879 14,251 21,945
Change in cash balance -14,081 -3,134 674 5,567
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 Bradley Recker at 613-369-5667.

August 2017