Transcript Management of fiscal framework

Management of the Fiscal Framework
June 2016
Managing the Fiscal Framework
• All about fiscal planning / budgeting
• Projecting total revenues, expenses and the
budgetary balance of the Government
• Setting a fiscal policy rule or objective
• Working with the Government to ensure that the
fiscal plan is achieved in concert with its other
priorities and objectives
Will walk you through the steps – in general within context of Budget 2016
2
The Budget
• The key annual policy document
• Vehicle to implement Government priorities
• Sets out economic and fiscal forecast (2-5 years)
3
Managing the Fiscal Framework
•
Cabinet Retreat – Broad Policy Objectives
•
Fall Update – Baseline Fiscal Projections
•
Soliciting Budget Proposals
•
Budget Decisions and Final Fiscal Projections
•
Budget Tabled
•
Spending-Tax Authority
•
Program Implementation
Late Summer
Fall- Winter
(Oct-Dec)
Winter
(Jan-Feb)
Winter
(Feb-Mar)
Spring
(April-June)
4
Budget Preparation (Summer)
• Government reviews existing priorities
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Election Commitments, SFT, Emerging Pressures
Minister of Finance reviews economic and fiscal developments
since Budget
• Cabinet Retreat
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Cabinet begins shaping the Budget in light of the economic
and political climate, reports on public issues and concerns
Provides central agencies and departments with broad
direction to guide them with budget preparations
5
Consultation (Fall - Winter)
• 5-year Update of Economic and Fiscal Projections
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Discusses risks associated with economic and fiscal
projections
Sets framework for consultations with stakeholders
• Ministers send Budget letters to Minister of Finance
• Public Consultations
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House of Commons Standing Committee on Finance
Minister of Finance public consultations (across country)
Consultations conducted by other Ministers
Minister of Finance meeting with P/T finance ministers
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Development and Decision (Winter)
•
Finance Canada updates its fiscal projections
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Private sector survey (economic side)
Revenue forecast
Expenditure forecast
Regular meetings - Prime Minister and Minister of
Finance
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Budget themes, structure, strategies
Budget timing
Specific measures
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Development and Decision (Winter)
• Consideration of Budget Proposals
• Finance 2-pager with recommendations/options/conditions
• Authored by Finance Analysts (Tax Policy, EDCF, Social Policy,
International Trade and Finance…)
• TBS and PCO consulted
• Recommendation to Minister of Finance for decision
• Prime Minister receives Minister of Finance decision and PCO
recommendation
• Some subject to Cabinet committee approval
• Booked in the Fiscal Framework (source of funds)
Approval (Winter to Spring)
 Budget usually tabled in February or March
 Budget lock-up and Budget Speech
 Parliamentary Approval of the Budget and Budget
related-legislation:
 Concurrence on Notices of Ways and Means Motion;
administration of tax measures
 Budget debate - vote on Budget as a package (Vote of
Confidence)
 Approval of legislation implementing the budget, by both House
and Senate (Budget Implementation Act(s))
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Implementation (Spring)
 Complete unfinished policy development work and develop
Memoranda to Cabinet
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Present submissions to Treasury Board to access funds
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Present Main and Supplementary Estimates to Parliament
for Approval
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Budget 2016
Economic and Fiscal Outlook
Economic and Fiscal Projections
• Economic and Fiscal Forecast
• Private Sector Survey 15+ forecasters
• Key variables – Nominal GDP, Interest Rates, CPI, employment
• Fiscal forecast of key revenue and expenditure streams based on these
outlooks
• Cost of New Measures
Federal Revenues and Expenses
Composition of Revenues
Other
Taxes and
Excise
Taxes
6%
Other
Revenues
11%
Personal
Income Tax
48%
Composition of Expenditures
Operating
Expenses
28%
Transfer
Payments
13%
Public Debt
Charges
9%
Goods and
Services
Tax
11%
EI
Premiums
8%
Other
Income
Taxes
2%
Corporate
Income Tax
14%
Total 2014-15 Revenues: $282.3 billion
Major
Transfers
to Other
Levels of
Governme
nt
23%
Major
Transfers
to Persons
27%
Total 2014-15 Expenditures: $280.4 billion
Winter 2016 – Economic Conditions Deteriorate
Further
Canadian Nominal GDP Outlook
billions of dollars
2,300
7.3% of GDP
($155 billion)
2,200
June 2014
survey
2,100
February
2016
survey
Budget 2016 planning
assumption
2,000
1,900
2014
Q1
2015
Q1
2016
Q1
2017
Q1
Budget 2016 – Forecasted Budgetary Balance
Budget 2016 Budgetary Balance ($B)
Projection
February Statement
Budget 2016
10
5
0
-5
-2.3
-7.2
-3.1
-$5.4B
-10
-18.4
-15.5
-13.9
-11.0
-7.0
-6.7
-15
-$14.3B
-8.9
-20
-$17.7B
-13.5
-11.0
-25
-$22.8B
-30
-$29.4B
-$29.0B
20162017
20172018
-35
20152016
Source: Department of Finance.
20182019
20192020
20202021
The Government is committed to reducing the federal debt-to-GDP
ratio to a lower level over a five-year period
Federal Debt-to-GDP Ratio
per cent of GDP
70
Actual
Projected
60
50
40
31.2
32.5 32.4 32.1 31.6
30.9
30
20
10
0
19941995
19971998
20002001
20032004
Sources: Department of Finance; Public Accounts of Canada; Statistics Canada.
20062007
20092010
20122013
20152016
20182019
The Government will set a timeline for balancing the budget when
growth is forecast to remain on a sustainably higher track
Projected Budgetary Balance
Projected Federal Debt-to-GDP ratio
$ billions
per cent of GDP
5
33
Actual
Projected
Actual
0
Projected
Growth 0.3 p.p.
lower
32
Budget 2016
-5
-10
February 2016
survey
February survey
(top quartile)
Growth 0.4 p.p.
higher
Average 2016-2020
Nominal GDP growth
of 3.9 per cent
-15
-20
31
Average 2016-2020
Nominal GDP growth
of 3.9 per cent
30
29
Growth 0.3 p.p.
lower
Growth 0.4 p.p.
higher
28
Budget 2016
-25
27
-30
26
February 2016 survey
February survey (top quartile)
-35
25
2014- 2015- 2016- 2017- 2018- 2019- 20202015 2016 2017 2018 2019 2020 2021
Note: The February 2016 survey scenario is based on the average private sector economists’
projection for nominal GDP, without any forecast adjustment. The top-end survey scenario is
based on the average of the four most optimistic projections for nominal GDP among the
economists surveyed.
Sources: Department of Finance survey of private sector economists; Department of Finance
calculations.
2014- 2015- 2016- 2017- 2018- 2019- 20202015 2016 2017 2018 2019 2020 2021
Sources: Department of Finance survey of private sector economists; Department of Finance
calculations.
Budget 2016 – Decision Process
 Budget Implementation Act
 Expedited Supplementary Estimates A process
• Decisions provided to Treasury Board Secretariat
• Treasury Board submissions and decisions
• Parliamentary Approval through Supplementary Estimates A
Moving forward – Budget 2017 and beyond…
• The Government will build on this momentum, leading towards
the development of its Growth Strategy, Fall Update, and
Budget 2017.
• Late Summer 2016
• Cabinet retreat and priority setting
• Provides officials with broad direction in lead-up to Budget 2017
 Fall/Winter 2016
• Update of Economic and Fiscal Projections
• Proposals to Cabinet Committees
• Launch of Public Consultation Process
• Ministerial Letter Exchange
Moving forward – Budget 2017 and beyond…
• Winter 2017
• Final Private Sector Survey
• 2-pager Analysis and Decisions
• Budget 2017 release (typically February or March)
 Spring/Summer 2017
• Treasury Board and other Conditions to be met
• Parliamentary Approval - Estimates
Management of the Fiscal Framework
June 2016