Canada. Consolidated Surpluses Down

The consolidated surplus for all Canadian governments, including the two major pension plans, fell from $31.5 billion to $2.4 billion in current dollars between the fiscal years ending March 31, 2008 and March 31, 2009. The deterioration came as expenditures continued to increase while revenues fell during the year.

The federal government's financial position went from a surplus of $12.8 billion to a surplus of $883 million. At the same time, the financial position of provincial, territorial and local governments went from a combined surplus of $6.9 billion to a combined deficit of $9.7 billion.

The two major pension plans recorded a surplus of $11.2 billion, down from $11.8 billion.

Revenues and expenditures

Consolidated government revenues declined 2.1% to $633.7 billion during the fiscal year ending March 2009, while expenditures grew 2.5% to $631.3 billion.

Among revenue sources, income taxes fell 7.7%, which was attributable almost entirely to a decrease in corporate income taxes. In addition, consumption taxes declined 4.1%, mostly due to a drop in general sales tax revenues.

Investment income, which includes natural resources revenues, increased 10.2%, mainly reflecting revenues generated by the auction of the spectrum airwaves by the federal government.

On the expenditures side, spending on social services, health and education continued to dominate, the three categories combined accounting for nearly two-thirds of total spending.

Debt charges were equal to 6.9 cents of every dollar of government revenues in fiscal year 2008/2009, down from 7.1 cents in the previous year.

Provincial, territorial and local governments

The provincial, territorial and local governments recorded a combined deficit of $9.7 billion by the end of March 2009 after four consecutive years of surpluses.

Expenditures for these governments combined increased 5.2% during the fiscal year ending March 31, 2009, five times the growth for revenues.

The largest increase in revenues came from general purpose transfers from the federal government, which increased 9.3%. Income taxes, which include personal and corporate income as well as mining and logging taxes, fell 5.9%.

Spending on health, education and social services represented the lion's share of outlays. These three functions alone accounted for 65% of consolidated provincial, territorial and local government expenditures in 2009, the same percentage as the previous year.

Debt charges rose for a fourth consecutive year, representing 6.6 cents out of every dollar of government revenues in fiscal year 2008/2009.

The governments of Newfoundland and Labrador, Saskatchewan and Alberta recorded surpluses on a consolidated basis as of March 2009. Those of Nova Scotia, British Columbia, Yukon and the Northwest Territories went from a surplus position to a deficit position. The provinces of Prince Edward Island, Quebec, Ontario and Manitoba recorded higher deficits.

Local governments in deficit position despite higher transfer revenues

Local governments, which comprise municipalities and school boards, recorded a deficit of $1.1 billion for the year ending December 31, 2008. Revenues and expenditures each increased by 5.2%, revenues to $121.8 billion and expenditures to $122.9 billion.

The largest increase occurred in transfer revenues (+8.1%). Transfer revenues increased at the fastest pace in Yukon (+29.7%), followed by Saskatchewan (+29.4%) and the Northwest Territories (+22.4%).

Local government expenditures during 2008 were concentrated mainly in education, which accounted for 39.1% of spending, followed by transportation and communication (12.9%) and environment (10.4%).

Expenditures on housing increased 11.5%, while spending on transportation and communication rose 9.8%. The largest increase in local government spending occurred in Yukon at 21.6%, followed by Saskatchewan (+10.9%) and British Columbia (+9.7%).

Source:Statistics Canada, June 16, 2009

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