Expenses

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Expenses consist of all charges which enter into the calculation of the annual deficit or surplus of the Government.

Accounting for expenses

The Government reports all expenses on an accrual basis.

Expenses for Government operations are recorded when goods are received or services are rendered. Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and the transfers are authorized by the consolidated financial statements date. In the case of transfers that do not form part of an existing program, they are considered to be authorized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the consolidated financial statements. Public debt charges are recorded when incurred and include interest, servicing costs, costs of issuing new borrowings, amortization of premiums and discounts on market debt, as well as interest on public sector pensions and other employee and veteran future benefits.

Expenses include provisions to reflect changes in the value of assets or liabilities, including provisions for bad debts, for loans, investments and advances, as well as for inventory obsolescence. Expenses also include amortization of tangible capital assets, utilization of inventories, as well as prepaid expenses and other.

Organizations within the Government's accounting entity transact with each other on a day-to-day basis and thus contribute to the amounts of revenues and expenses recorded in the accounts. In preparing the consolidated financial statements, these “internal transactions” are eliminated so as to report on the basis of transactions with outside parties only.

Table 3.6 presents a comparative summary of external expenses by type. The table also discloses the external expenses by segment.

Table summary

The table presents, in millions of dollars, a two-year comparative of external expenses by segment and by type. It consists of seven columns: a detailed listing of components; Major transfer payments; Other transfer payments; Total transfer payments; Other program expenses; Public debt charges; Total expenses. The last six columns are divided into two columns, respectively—current year, and previous year. The first series of rows presents the ministries. The following row presents the Crown corporations and other entities. A final row presents the total for this table.

Table 3.6
External expenses by segment and by type

(in millions of dollars)

  Major transfer paymentsLink to footnote 1 Other transfer payments Total transfer payments Other program expenses Public debt chargesLink to footnote 3 Total expenses
2015–2016 2014–2015 2015–2016 2014–2015 2015–2016 2014–2015 2015–2016 2014–2015 2015–2016 2014–2015 2015–2016 2014–2015
Ministries
Agriculture and Agri-Food 1,289 1,290 1,289 1,290 739 791 2,028 2,081
Canadian Heritage 1,056 1,286 1,056 1,286 442 455 1,498 1,741
Environment and Climate Change 135 116 135 116 1,506 1,541 1 1 1,642 1,658
Families, Children and Social Development 72,396 66,086 6,465 6,292 78,861 72,378 2,882 2,635 81,743 75,013
Finance 63,877 61,136 512 920 64,389 62,056 484 511 25,303 26,325 90,176 88,892
Fisheries, Oceans and the Canadian Coast Guard 94 90 94 90 1,544 1,581 1,638 1,671
Global Affairs 4,367 4,039 4,367 4,039 1,857 2,087 6,224 6,126
Health 2,985 2,932 2,985 2,932 3,340 3,313 6,325 6,245
Immigration, Refugees and Citizenship 1,083 984 1,083 984 1,138 1,061 2,221 2,045
Indigenous and Northern Affairs 7,832 7,576 7,832 7,576 1,408 1,204 9,240 8,780
Infrastructure and Communities 1,973 1,973 1,098 983 3,071 2,956 64 64 3,135 3,020
Innovation, Science and Economic Development 1,650 2,644 1,650 2,644 2,351 2,363 4,001 5,007
Justice 340 345 340 345 1,275 1,280 1,615 1,625
National Defence 152 136 152 136 28,519 23,669 88 68 28,759 23,873
National Revenue 10,509 10,372 3,701 3,350 14,210 13,722 7,989 8,108 22,199 21,830
Natural Resources 577 1,184 577 1,184 944 1,067 2 2 1,523 2,253
Office of the Governor General's Secretary 21 20 21 20
Parliament 1 1 1 1 570 542 571 543
Privy Council 105 9 105 9 566 313 671 322
Public Safety and Emergency Preparedness 620 204 620 204 10,375 9,831 1 1 10,996 10,036
Public Services and Procurement 4,181 4,350 158 156 4,339 4,506
Transport 529 593 529 593 908 919 42 41 1,479 1,553
Treasury Board 4,214 3,277 4,214 3,277
Veterans Affairs 18 18 18 18 911 1,000 929 1,018
Provision for valuation and other items (negative 221) (negative 353) (negative 221) (negative 353) 455 (negative 604) 234 (negative 957)
Total ministries 148,755 139,567 34,388 34,639 183,143 174,206 78,683 71,378 25,595 26,594 287,421 272,178
Crown corporations and other entities 486 487 486 487 8,533 7,770 9,019 8,257
Total expensesLink to footnote 2 148,755 139,567 34,874 35,126 183,629 174,693 87,216 79,148 25,595 26,594 296,440 280,435

Expenses by segment

The Government's segmented information, which is based on the ministerial portfolio structure, groups together departments and agencies' activities for which a Minister is responsible as well as those of the Crown corporations and other entities as described in Note 13 to the consolidated financial statements in Section 2 of this volume.

Government's cost of operations

Government's cost of operations consists of three major types: transfer payments, other program expenses and public debt charges.

Transfer payments

The major transfer payments include payments to persons and payments to provinces and territories.

Payments to persons include payments for income support or income supplement. Assistance is based on age, family status, income, and employment criteria.

Payments to provinces and territories are made under the following programs:

The other transfer payments include various subsidies paid through federal programs to stabilize market prices for commodities, to develop new technologies, to conduct research, to establish new jobs through support for training and to promote educational and cultural activities. Also included are expenses of other consolidated entities and other miscellaneous payments.

Other program expenses

This category covers the costs associated with programs directly delivered by the federal government such as national defence, food inspection, the Coast Guard, the federal court system, the operation of health facilities for natives and veterans, and the national parks system. It also includes the expenses of consolidated Crown corporations and other entities incurred with third parties.

Table 3.7 presents a comparative analysis by province and territory of certain transfer payments.

Table summary

The table presents, in millions of dollars, a two-year comparative of certain transfer payments by province and territory. It consists of eleven columns: a detailed listing of components; Fiscal year; Old age security benefits; Employment insurance benefits; Fiscal arrangements; Quebec abatement; Canada health transfer; Canada social transfer; Other major transfers; Children's benefits; and Total. All rows are split into two by transfer payments—current year, previous year. A final row presents the total for this table.

Table 3.7
Major transfer payments by province and territory

(in millions of dollars)

  Fiscal year Old age security benefitsLink to footnote 4 Employment insurance benefits Fiscal arrangements Quebec AbatementLink to footnote 5 Canada health transfer Canada social transfer Other major transfersLink to footnote 6 Children's benefits Total
Newfoundland and Labrador 2015–2016 920 1,050 33 493 192 30 2,718
2014–2015 882 975 2 493 187 30 2,569
Prince Edward Island 2015–2016 227 247 361 139 53 15 1,042
2014–2015 218 231 360 134 52 50 1,045
Nova Scotia 2015–2016 1,492 889 1,817 900 341 53 5,492
2014–2015 1,442 839 1,817 860 335 53 5,346
New Brunswick 2015–2016 1,272 971 1,671 720 273 43 4,950
2014–2015 1,220 927 1,668 687 267 89 4,858
Quebec 2015–2016 12,683 4,169 9,526 (negative 4,451) 7,880 2,987 458 33,252
2014–2015 12,195 4,156 9,395 (negative 4,234) 7,477 2,908 458 32,355
Ontario 2015–2016 17,142 6,078 2,372 13,145 4,984 745 44,466
2014–2015 16,627 5,959 1,997 12,459 4,847 745 42,634
Manitoba 2015–2016 1,571 613 1,741 1,230 466 66 5,687
2014–2015 1,539 563 1,753 1,167 454 66 5,542
Saskatchewan 2015–2016 1,347 577 2 1,081 409 56 3,472
2014–2015 1,336 486 2 998 398 130 3,350
Alberta 2015–2016 3,729 2,474 256 3,869 1,516 209 12,053
2014–2015 3,611 1,663 5 3,478 1,452 209 10,418
British Columbia 2015–2016 6,399 2,257 4 4,450 1,695 253 15,058
2014–2015 6,193 2,156 4 4,249 1,641 253 14,496
Total provinces 2015–2016 46,782 19,325 17,783 (negative 4,451) 33,907 12,916 1,928 128,190
2014–2015 45,263 17,955 17,003 (negative 4,234) 32,002 12,541 2,083 122,613
Northwest Territories 2015–2016 26 34 1,233 44 16 15 1,368
2014–2015 25 35 1,209 47 15 15 1,346
Nunavut 2015–2016 9 20 1,454 36 13 15 1,547
2014–2015 9 22 1,409 33 13 15 1,501
Yukon Territory 2015–2016 28 31 874 38 14 15 1,000
2014–2015 27 31 851 32 13 29 983
International 2015–2016 157 9 166
2014–2015 259 9 268
Total expenses for provinces and territories 2015–2016 47,002 19,419 21,344 (negative 4,451) 34,025 12,959 1,973 132,271
2014–2015 45,583 18,052 20,472 (negative 4,234) 32,114 12,582 2,142 126,711
Accrual and other adjustments 2015–2016 (negative 1,541) (negative 1,541)
2014–2015 (negative 1,480) 33 (negative 1,447)
Subtotal 2015–2016 45,461 19,419 21,344 (negative 4,451) 34,025 12,959 1,973 130,730
2014–2015 44,103 18,052 20,505 (negative 4,234) 32,114 12,582 2,142 125,264
Add: transfers made through the tax system 2015–2016 18,025 18,025
2014–2015 14,303 14,303
Total major transfer payments 2015–2016 45,461 19,419 21,344 (negative 4,451) 34,025 12,959 1,973 18,025 148,755
2014–2015 44,103 18,052 20,505 (negative 4,234) 32,114 12,582 2,142 14,303 139,567

Public debt charges

Public debt charges include the interest on unmatured debt and on pensions, other future benefits and other liabilities, the amortization of premiums and discounts on unmatured debt, and the servicing costs and the costs of issuing new borrowings.

A comparative summary of public debt charges is presented in Table 3.8. The table also discloses the reconciling items between total public debt charges as reported in the ministerial section of the Department of Finance in Section 6 of Volume II of the Public Accounts of Canada and the total expenses of the public debt indicated in Table 3.6. The reconciling items include the interest expenses on capital leases as well as accrual and other adjustments.

Table summary

The table presents, in millions of dollars, a two-year comparative of public debt charges. It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents unmatured debt. It is subdivided into four sections, each with a subtotal and a row that presents the total for the series. The second series of rows presents pensions and other future benefits. It is subdivided into two sections, each with a subtotal and a row that presents the total for the series. The third series of rows presents other liabilities and a row for the total of this series. The fourth series of rows presents consolidated specified purpose accounts and a row for the total of this series. The fifth series of rows presents public debt charges and a row for the total of this series. The sixth series of rows presents various applicable adjustments. A final row presents the total for this table.

Table 3.8
Public debt charges
Link to footnote 7
(in millions of dollars)

  2015–2016 2014–2015
Unmatured debt
Interest on:
Marketable bonds 13,160 13,562
Retail debt 34 47
Medium-term notes 9 5
Subtotal 13,203 13,614
Amortization of discounts on Canada and Treasury bills
Treasury bills 861 1,418
Canada bills 10 2
Subtotal 871 1,420
Amortization of premiums and discounts on all other debts
Marketable bonds 632 405
Foreign bonds 6
Real return bonds (negative 106)
Consumer price index adjustments on real return bonds 971 436
Subtotal 1,503 841
Cross-currency swap revaluation (negative 487) (negative 542)
Servicing costs and costs of issuing new borrowings 11 19
Capital lease obligations 209 209
Other unmatured debt 83 60
Total public debt charges related to unmatured debt 15,393 15,621
Pensions and other future benefits
Interest on:
Public sector pensions—Superannuation accounts 7,333 7,906
Less: allowance for pension adjustments 122 (negative 4)
Subtotal 7,455 7,902
Other employee and veteran future benefits
Public Service Health Care Plan and Pensioners' Dental Service Plan 729 777
Severance and other benefits 80 93
Accumulated sick leave entitlements 39 48
Worker's compensation 32 39
Veterans' disability and other future benefits 1,442 1,656
Royal Canadian Mounted Police disability and other future benefits 218 233
Subtotal 2,540 2,846
Total public debt charges related to pensions and other future benefits 9,995 10,748
Other liabilities
Canada Pension Plan 2 3
Government Annuities Account 9 11
Deposit and trust accounts 19 25
Other specified purpose accounts 171 179
Other liabilities 6 7
Total public debt charges related to other liabilities 207 225
Consolidated specified purpose accounts
Interest 3 5
Total public debt charges related to consolidated specified purpose accounts 3 5
Total public debt charges before consolidation adjustments 25,598 26,599
Less: consolidation adjustments 3 5
Total public debt chargesLink to footnote 7Link to footnote 8 25,595 26,594
Comprised of:
Total public debt charges under statutory authorities before accrual and other adjustments and consolidation adjustments 22,644 23,488
Accrual and other adjustments 2,954 3,111
Consolidation adjustments (negative 3) (negative 5)
Total public debt charges 25,595 26,594

Expenses by object

Table 3.9 reconciles the total net expenditures by object initially recorded by departments under the partial accrual method of accounting to the total expenses which is based on the full accrual method of accounting. Reconciliation items represent the effect of consolidation and full accrual accounting.

Table summary

The table presents, in millions of dollars, the effect of consolidation and full accrual accounting on the total expenses by object. It consists of four columns: a detailed listing of components; Total net expenditures; Reconciliation; Total expenses. The first row presents transfer payments. The next series of rows presents other program expenses. The following rows present public debt charges, total gross expenses and revenues netted against expenditures. A final row presents the total for this table.

Table 3.9
Total expenses by object
Link to footnote 9
(in millions of dollars)

  Total net expenditures Reconciliation Total expenses
Transfer payments 152,054 31,575 183,629
Other program expenses
Crown corporationsLink to footnote 10 7,846 7,846
Personnel 39,617 10,554 50,171
Transportation and communications 2,661 (negative 165) 2,496
Information 330 (negative 95) 235
Professional and special services 11,083 (negative 2,730) 8,353
Rentals 3,142 (negative 1,090) 2,052
Repair and maintenance 3,122 (negative 357) 2,765
Utilities, materials and supplies 2,833 (negative 320) 2,513
Acquisition of land, buildings and works 1,734 (negative 1,734)
Acquisition of machinery and equipment 4,095 (negative 4,095)
Other subsidies and expenses 9,011 (negative 3,419) 5,592
Amortization of tangible capital assets 5,049 5,049
Net loss on disposal of assets 144 144
Total other program expenses 77,628 9,588 87,216
Public debt charges 22,644 2,951 25,595
Total gross expenses 252,326 44,114 296,440
Less: revenues netted against expenditures 10,927 (negative 10,927)
Total expenses 241,399 55,041 296,440

Expenditures under statutory authorities

Spending authorities provided by statutory authorities are for specified purposes and for such amounts and such time periods as the acts prescribe. These spending authorities do not generally lapse at the end of the year during which they were granted. Expenditures under such authorities account for approximately half of the total program expenses each year.

Table 3.10 presents a comparative summary of the ministerial expenditures under statutory authorities.

Table summary

The table presents, in millions of dollars, a two-year comparative summary of the ministerial expenditures under statutory authorities. It consists of three columns: a detailed listing of components; current year; previous year. The first series of rows presents a detailed listing of statutory authorities. The second series of rows presents superannuation, supplementary retirement benefits, death benefits and other pension. It is divided into five sections, respectively—Public Service; Canadian Forces; Royal Canadian Mounted Police; Shared Services Canada; and All other statutory expenditures. A final row presents the total ministerial expenditures under statutory authorities.

Table 3.10
Expenditures under statutory authorities

(in millions of dollars)

  2015–2016 2014–2015
Old age security payments (Old Age Security Act) 35,050 33,536
Canada health transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act) 34,025 32,114
Public debt charges 22,644 23,488
Fiscal equalization (Part I—Federal-Provincial Fiscal Arrangements Act) 17,341 16,669
Canada social transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act) 12,959 12,582
Guaranteed income supplement payments (Old Age Security Act) 9,922 10,066
Universal child care benefit (Universal Child Care Benefit Act) 8,759 2,738
Territorial financing (Part I.1—Federal-Provincial Fiscal Arrangements Act) 3,561 3,469
Gas Tax Fund 2,000 2,000
Canada Education Savings grant payments to Registered Education Savings Plans (RESPs) trustees on behalf of RESP beneficiaries to encourage Canadians to save for post-secondary education for their children 821 781
Canada study grants to qualifying full and part-time students pursuant to the Canada Student Financial Assistance Act 714 707
Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act 618 631
Contribution payments for the AgriInsurance program 604 611
Judges' salaries, allowances and annuities, annuities to spouses and children of judges and lump sum payments to spouses of judges who die while in office 533 506
Old age allowance payments (Old Age Security Act) 513 531
Electoral expenditures 451 115
Payments to International Development Association 442 883
Payments to the Newfoundland Offshore Petroleum Resource Revenues Fund 301 752
Youth allowances recovery (Federal-Provincial Fiscal Revision Act, 1964) (negative 811) (negative 767)
Alternative payments for standing programs (Part VI—Federal-Provincial Fiscal Arrangements Act) (negative 3,641) (negative 3,467)
Total 146,806 137,945
Superannuation, supplementary retirement benefits, death benefits and other pensionsLink to footnote 11
Public Service
Government's contributions to the public service pension plan and the Retirement Compensation Arrangements Account 3,439 2,875
Government's contributions to the Canada and the Quebec pension plans 665 641
Government's contribution to the Employment Insurance Operating Account 311 295
Government's contributions to the Death Benefit Account 14 14
Total Contributions 4,429 3,825
Less: recoveries from revolving funds 91 94
Total 4,338 3,731
Canadian Forces
Government's contribution to the Canadian Forces Pension Plan and the Retirement Compensation Arrangements Account 1,000 1,064
Government's contribution to the Canada and the Quebec pension plans 184 178
Government's contribution as employer to the Employment Insurance Operating Account 84 82
Statutory payments under the Supplementary Retirement Benefits Act 2 2
Government's contribution to the Death Benefit Account 2 3
Total 1,272 1,329
Royal Canadian Mounted Police
Government's contribution to the Royal Canadian Mounted Police Pension Plan and the Retirement Compensation Arrangements Account 353 361
Government's contribution to the Canada and the Quebec pension plans 59 55
Government's contribution as employer to the Employment Insurance Operating Account 27 21
Statutory payments under the Supplementary Retirement Benefits Act 8 8
Total 447 445
Shared Services Canada
Government's contribution to the Canada and the Quebec pension plans 3 4
Government's contribution to the Employment Insurance Operation Account, the Royal Canadian Mounted Police Pension Plan and the Retirement Compensation Arrangements Account 1 1
Total 4 5
All other statutory expenditures 3,363 3,525
Total ministerial expenditures under statutory authoritiesLink to footnote 12 156,230 146,980

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