Transcript Week 9: Financial Management

Public Administration and
Financial Management
Week 9
Fiscal Policy and the Budget
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Fiscal policy: The spending and revenue
activities of government.
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The Budget: The annual statement and
planning document for the government’s
fiscal policy.
Federal Finances
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In 2010-11, federal government expenditures
amounted to $270.5 billion.
Federal government revenues were $237.1
billion.
The annual deficit for 2010-11 was $33.4
billion.
The federal debt (or “accumulated deficit”), as
of 2010-11, was $550.3 billion.
Total Public Debt
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https://www.cia.gov/library/publications/theworld-factbook/rankorder/2186rank.html
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http://www.oecd.org/dataoecd/42/27/4798606
0.pdf [See page 326 - or the 18th page of this
document]
November 8, 2011
Economic and Fiscal Update
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Government criticized for tabling update outside
of the House of Commons.
Canada experienced significant job losses in
October (54,000 jobs lost).
Finance Minister confirms that economic
turbulence and slow economic growth mean that
the federal government will not be able to
eliminate the federal deficit until 2015-16
Those projections are dependent upon cutting
$4 billion per year in government spending.
“Your Tax Dollar”
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Presentation from the Federal Finance
Department, based on 2009-10:
http://www.fin.gc.ca/tax-impot/2010/eng/index.htm
Deficits to Surpluses and Back to Deficits
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For 27 straight years, from 1970-71 to 199697 the federal government experienced
annual deficits.
From 1997–98 to 2007–08 Canada
experienced annual surpluses.
Canada experienced deficits every year
since 2008-09 and the federal government
currently projects deficits up to and including
2014-15.
Federal Debt begins to climb again
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Federal debt peaked at $562.9 billion at the end of
1996-97.
Relative to the size of the economy, the federal debt
peaked in 1996-97 at 68.4% of GDP. [In historical
terms, it increased from about 50% of GDP in 1930
to about 110% in 1945. It was then reduced to about
25% of GDP in the mid-70s.]
At the end of 2007-08, debt was $457.6 billion or
equal to 29.8% of GDP (lowest level since March
1981).
As of 2010-11, the debt has climbed to $550.3
billion or 33.9% of GDP.
Table 3.3
Summary Statement of Transactions
Projection
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
(billions of dollars)
Budgetary revenues
237.1
243.5
251.8
268.8
285.1
298.4
310.6
Program expenses
239.6
243.0
247.4
252.5
257.6
265.3
272.4
Public debt charges
30.9
31.5
31.9
33.3
35.0
36.5
37.7
Total expenses
270.5
274.5
279.2
285.8
292.6
301.8
310.1
Budgetary balance
-33.4
-31.0
-27.4
-17.0
-7.5
-3.4
0.5
Federal debt1
550.3
585.2
612.7
629.7
637.2
640.6
640.0
Budgetary revenues
14.6
14.4
14.4
14.6
14.7
14.8
14.7
Program expenses
14.7
14.4
14.1
13.7
13.3
13.1
12.9
Public debt charges
1.9
1.9
1.8
1.8
1.8
1.8
1.8
Budgetary balance
-2.1
-1.8
-1.6
-0.9
-0.4
-0.2
0.0
Federal debt
33.9
34.6
35.0
34.2
32.9
31.7
30.3
Per cent of GDP
Note: Totals may not add due to rounding.
1 The projected level of federal debt for 2011–12 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown
corporations’ adoption of International Financial Reporting Standards.
Taxing and Spending
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In difficult economic times, it isn’t unusual to
have a deficit.
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That said, the federal government is
spending more than it is collecting via taxes.
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Does the government have a spending
problem or a revenue problem?
Spending Priorities
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Of course, government spending involves
many different things.
Different governments have different priorities
and spend on different things.
The growing size of the state and the
onset of chronic deficits
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Federal governments have introduced a
succession of budgetary planning
procedures.
Managing Government
Financial Resources
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Line-item budgeting (or incremental
budgeting) until the 1960s
Planning, Programming, Budgeting System
(PPBS), 1969
Policy and Expenditure Management System
(PEMS), 1979
Expenditure Management System (EMS),
1995
Expenditure Management Information
System (EMIS), 2007
Constructing the Budget
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“The number of people directly involved in
putting the budget together is very limited.”
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“The key players are the prime minister, one
or two of his senior advisors, the minister of
finance, the clerk of the Privy Council, the
deputy minister of finance and a handful of
senior Finance officials” (Savoie, 1999: 656).
The Financial Cycle
Winter/Spring
Budget speech (usually in February)
Followed by tabling of the Main Estimates
Fall
Economic and Fiscal Update
Departmental Performance Reports
Public Accounts of Canada
Parliamentary Review of Spending
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Budget speech is followed by days of debate
Estimates are sent to standing committees
Departmental Performance Reports are
reviewed by standing committees.
Standing Committee on Public Accounts reviews
Public Accounts and Auditor General reports
Standing Committee on Government Operations
and Estimates reviews spending plans and
expenditures of governmental organizations
http://www.hilltimes.com/news/2011/02/21/mps-says-they-dont-have-the-time-or-resources-to-properly-scrutinize-bills-spending/25514
Office of the Auditor General
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Created in 1878
An officer of parliament, nominated by the
prime minister but officially appointed by
parliament.
Serves for a term of 10 years or until the age
of 65.
Sheila Fraser served as AG from 2001 to
2011 and she and her office gained a
significant political profile.
Office of the Auditor General
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Michael Ferguson has recently been
appointed as the Auditor General.
His lack of bilingualism has generated a
storm of controversy.
One of the members of the Auditor General’s
internal audit committee has resigned over
the appointment.
Parliamentary Budget Officer
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Created in 2006
Current (and only) PBO: Kevin Page
Created by the Conservative government.
The PBO has been critical of some of the
government’s actions (challenging the accuracy of
its projections, criticizing the impact of tax cuts,
questioning the cost of jets, pointing to the lack of
information about the cost of the law and order
agenda).
Conservatives have responded by criticizing the
PBO.
Public Accounts Committee
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Unlike other parliamentary committees, it is
chaired by a member of the Official
Opposition.
Finance Minister’s Shoes
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The Parliament of Canada’s website
maintains a page that discusses the federal
tradition and tracks the history of the Finance
Minister wearing new shoes to present the
budget.
http://www.parl.gc.ca/ParlInfo/compilations/pa
rliament/BudgetNewShoes.aspx?Language=
E