Public Administration and Financial Management

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Public Administration and Financial Management

• Week 9

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Fiscal Policy and the Budget

• Fiscal policy The spending and revenue
  activities of government.
• The Budget The annual statement and planning
  document for the governments fiscal policy.

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Federal Finances

• 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.

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Total Public Debt

• https//www.cia.gov/library/publications/the-world
  -factbook/rankorder/2186rank.html
• http//www.oecd.org/dataoecd/42/27/47986060.pdf
  See page 326 - or the 18th page of this document

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November 8, 2011 Economic and Fiscal Update

• 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.

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Your Tax Dollar

• Presentation from the Federal Finance Department,
  based on 2009-10
• http//www.fin.gc.ca/tax-impot/2010/eng/index.htm

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Deficits to Surpluses and Back to Deficits

• For 27 straight years, from 1970-71 to 1996-97
  the federal government experienced annual
  deficits.
• From 199798 to 200708 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.

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Federal Debt begins to climb again

• 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.

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Table 3.3Summary Statement of Transactions
    Projection Projection Projection Projection Projection Projection
   
  201011 201112 201213 201314 201415 201516 201617
  (billions of dollars) (billions of dollars) (billions of dollars) (billions of dollars) (billions of dollars) (billions of dollars) (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
Per cent of GDP              
  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
Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards. Note Totals may not add due to rounding.1 The projected level of federal debt for 201112 includes an estimate of other comprehensive income, as well as estimated transitional adjustments related to enterprise Crown corporations adoption of International Financial Reporting Standards.
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Taxing and Spending

• In difficult economic times, it isnt unusual to
  have a deficit.
• That said, the federal government is spending
  more than it is collecting via taxes.
• Does the government have a spending problem or a
  revenue problem?

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Spending Priorities

• Of course, government spending involves many
  different things.
• Different governments have different priorities
  and spend on different things.

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The growing size of the state and the onset of
chronic deficits

• Federal governments have introduced a succession
  of budgetary planning procedures.

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Managing Government Financial Resources

• 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

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Constructing the Budget

• The number of people directly involved in
  putting the budget together is very limited.
• 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).

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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

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Parliamentary Review of Spending

• 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-s
  crutinize-bills-spending/25514

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Office of the Auditor General

• 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.

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Office of the Auditor General

• 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 Generals
  internal audit committee has resigned over the
  appointment.

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Parliamentary Budget Officer

• Created in 2006
• Current (and only) PBO Kevin Page
• Created by the Conservative government.
• The PBO has been critical of some of the
  governments 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.

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Public Accounts Committee

• Unlike other parliamentary committees, it is
  chaired by a member of the Official Opposition.

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Finance Ministers Shoes

• The Parliament of Canadas 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/parlia
  ment/BudgetNewShoes.aspx?LanguageE