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ARCHIVED - RPP 2006-2007
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Section I: Overview

Minister's Message


James M. Flaherty Minister of Finance

Canadians gave our new government a mandate to lead change based on five clear priorities:

  • cleaning up government by passing the Federal Accountability Act;
  • reducing the tax burden of Canadians starting with a one-percentage-point cut to the GST;
  • making Canadian streets and communities safer by cracking down on crime and introducing mandatory minimum sentences;
  • supporting the childcare choices of parents through direct assistance and by supporting employers who cover the full cost of creating childcare spaces; and
  • working with provinces to improve health care by establishing a Patient Wait Times Guarantee.

The 2006 budget delivered on those priorities in a focussed and fiscally responsible way. In fact, it went beyond the five basic priorities with additional action to reduce taxes, curb spending while providing enhanced funding to priority areas, address the fiscal balance issue, invest in education, improve Canada's borders, build new infrastructure, increase security, and more.

The Department of Finance Canada will pursue policies to foster greater productivity, competitiveness, and growth of Canada's economy as well as to maintain balanced budgets and reduce debt. It will continue to develop tax and tariff policy, manage federal borrowing, administer transfers of federal funds to the provinces and territories, develop regulatory policy for the financial sector and advance Canada's interests on the international stage.

Canadians can look to the future with confidence. The government continues to record surpluses, the economy continues to grow, core inflation remains within the target range set by the Bank of Canada and the government, corporate profits are strong, and employment is at an all-time high.

That being said, in developing policies to build an even better tomorrow, the government will not take Canada's economic and fiscal success for granted. The government will continue to make the difficult choices that are needed about what we as a government can do and when we can do it. Our approach will continue to be frugal, focussed, and fiscally responsible.

The Department of Finance Canada has made significant progress already and will continue to work on vital economic and social policies that will improve the standard of living and quality of life enjoyed by Canadians, their families, and their communities even more in the years to come.

Management Representation Statement

I submit for tabling in Parliament the 2006–07 report on plans and priorities (RPP) for the Department of Finance Canada.

This document has been prepared based on the reporting principles contained in Guide for the Preparation of Part III of the 2006-2007 Estimates: Reports on Plans and Priorities and Departmental Performance Reports.

It adheres to the specific reporting requirements outlined in the Treasury Board of Canada Secretariat (the Secretariat) guidance:

  • it is based on the department's approved Program Activity Architecture structure as reflected in its Management, Resources, and Results Structure;
  • it presents consistent, comprehensive, balanced, and accurate information;
  • it provides a basis of accountability for the results achieved with the resources and authorities entrusted to it; and
  • it reports finances based on approved planned spending numbers from the Secretariat in the RPP.

The paper version was signed by

Rob Wright
Deputy Minister,
Department of Finance Canada


Summary Information


Reason for existence: The goal of the Department of Finance Canada is to foster a strong economy, resulting in higher standards of living and an improved quality of life for Canadians.


Financial Resources: ($ thousands)


2006–07

2007–08

2008–09

73,952,320

75,454,456

77,186,405


Human Resources: FTEs


2006–07

2007–08

2008–09

901

901

894


Departmental priorities by strategic outcome


Strategic outcome: To create a fiscal, economic, social, and global advantage for Canada by providing appropriate policies and sound advice with respect to economic, social, and financial conditions and to the government's overall agenda.

Planned Spending ($ thousands)

Priority

Type

Expected Results

2006–07

2007–08

2008–09

1. Sound Fiscal Management

Ongoing

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

8,633

8,577

8,644

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

1,305

1,297

1,307

High-quality research and evaluation

643

639

644

Transparent fiscal planning and sustainable fiscal policy

5,980

5,942

5,989

Stable, low-cost financing for the Government of Canada

34,290,960

34,664,164

34,489,070

A well-functioning market in Government of Canada securities

1,005

918

824

Effective management of Canada's official international reserves

2,009

1,834

1,647

A cost-effective retail debt program

105,045

96,754

96,754

A sound borrowing framework for Crown entities

2,344

2,139

1,921

A supply of coinage at a reasonable cost

83,420

80,992

49,262

A thorough assessment of operating and capital funding related to economic development and policy proposals

2,402

2,386

2,405

Sound Fiscal Management Subtotal

34,503,746

34,865,642

34,658,467

2. Sustainable Economic Growth

Ongoing

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

8,633

8,577

8,644

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

1,305

1,297

1,307

High-quality research and evaluation

643

639

644

Effective monitoring and forecasting of economic performance

5,477

5,442

5,485

Effective briefing and advice on a wide selection of economic questions

1,758

1,747

1,761

A regulatory framework that promotes soundness, efficiency, and competitiveness of Canada's financial sector and serves the needs of individuals, businesses, and the economy

8,415

7,679

6,897

Sound advice to the Minister on economic proposals

2,402

2,386

2,405

Enhanced productivity and economic growth through other governmental initiatives

2,882

2,863

2,886

Improved awareness of the requirements and departmental process for conducting strategic environmental assessments

320

318

321

Stronger international trading system and more open markets

6,665

6,625

6,677

Sustainable Economic Growth Subtotal

38,500

37,573

37,027

3. Sound Social Policy Framework

Ongoing

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

8,633

8,577

8,644

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

1,305

1,297

1,307

High-quality research and evaluation

643

639

644

A sound legislative and regulatory framework for federally regulated defined benefit pension plans

1,201

1,096

985

Effective framework for investment of Canada Pension Plan (CPP) funds*

0

0

0

Implementation of a new formula for Equalization and Territorial Formula Financing

9,388

6,659

6,712

Determination of the most appropriate arrangements for post-secondary education and training

3,252

2,307

2,325

Effective implementation of government social policy priorities

4,590

3,256

3,282

Financial support for Canadian provinces and territories to assist them in providing public services, universally accessible health care services, post-secondary education, and social assistance

38,631,828

40,095,000

41,940,000

4. Effective International Presence

Ongoing

Understand and contribute to international economic policies and reforms

1,758

1,747

1,761

A world-class anti-money laundering and anti-terrorist financing framework

2,403

2,193

1,969

Effective support for Canada's presidency in 2006–07 of the Financial Action Task Force

2,402

2,192

1,968

Policy positions and proposals that improve prospects for global economic and financial stability and better financial governance

4,095

4,070

4,102

Effective international initiatives to strengthen developing economies

5,237

5,205

5,246

Sound Social Policy Framework Subtotal

38,660,840

40,118,831

41,963,899

Payments to international organizations and Canadian creditors consistent with the government's commitments

733,340

417,005 511,967
Effective International Presence Subtotal 749,235 432,412

527,013

Total Department of Finance Canada

73,952,320

75,454,456 77,186,405

* Spending related to an effective framework of CPP funds is recovered from Human Resources and Social Development Canada.

Note: The planned spending figures associated with each expected result is an estimate based on management representation.


Departmental Plans and Priorities

The goal of the Department of Finance Canada is to foster a strong economy, resulting in a higher standard of living and an improved quality of life for all Canadians.

Mandate

The Department is committed to making a difference for Canadians by helping the Government of Canada develop and implement strong and sustainable economic, fiscal, social, security, and financial sector policies and programs.

The Department serves as the government's primary source of analysis and advice on the economic, fiscal, and tax implications of key government priorities. Its responsibilities include preparing the federal budget, developing tax and tariff policy and legislation, managing federal borrowing on financial markets, administering major transfers of federal funds to the provinces and territories, developing regulatory policy for the country's financial sector, and representing Canada within international financial institutions.

Mission

The Department's mission is to support the Minister of Finance by providing the best possible analysis and policy advice on economic, fiscal, social, and financial issues; implementing government decisions in a timely and efficient manner; and communicating government decisions in the clearest way possible, within and outside government. Its mission is also to act as an effective conduit for the views of participants in the economy from all parts of Canada and to maintain high-quality support systems and development programs to carry out the Department's functions.

Strategic outcome

In support of its mission, the Department has one strategic outcome: To create a fiscal, economic, social, and global advantage for Canada by providing appropriate policies and sound advice with respect to economic, social, and financial conditions and to the government's overall agenda.

Program activities

Under its Program Activity Architecture, the Department has established 10 program activities to support its strategic outcome:

1. Tax Policy;

2. Economic and Fiscal Policy;

3. Financial Sector Policy;

4. Economic Development and Corporate Finance;

5. Federal-Provincial Relations and Social Policy;

6. International Trade and Finance;

7. Public Debt;

8. Domestic Coinage;

9. Transfer Payments to Provinces and Territories; and

10. International Financial Organizations.

Alignment with Government of Canada outcomes

The Department of Finance Canada is actively involved in the government's policy and legislative agenda, helping to develop and implement fiscal, economic, social, and financial policies and programs. Its responsibilities include preparing the federal budget, developing tax and tariff policy and legislation, managing federal borrowing on financial markets, administering major transfers of funds to provinces and territories, developing regulatory policy for the country's financial sector, and representing Canada in international financial institutions and forums.

These activities align with the following Government of Canada outcomes, as reported in the 2006–07 Government of Canada Report on Plans and Priorities:

  • strong economic growth;
  • a fair and secure marketplace;
  • a diverse society that promotes linguistic duality and social inclusion;
  • Canadian prosperity through global commerce; and
  • global poverty reduction through sustainable development.

As well, certain activities in the Department support all Government of Canada outcomes.

Operating environment

The operating environment of the Department is characterized by the following:

  • a strong commitment to consultation, coordination, and collaboration with a wide range of partners and client groups;
  • a dynamic engagement with a rapidly changing global economy; and
  • a strong commitment to accountability and risk management in its day-to-day business.

Partnerships, consultation, and collaboration

An important component of the work conducted by the Department involves consultation and collaboration with partners in both the public and private sectors. Its primary partners and clients include the following:

The Government, Cabinet, and the Treasury Board

The Department provides analysis, advice, and recommendations regarding economic, social, federal-provincial, and financial affairs and tax matters. It also provides instructions about how to draft legislation in many of these areas.

Parliament and parliamentary committees

The Department acts as the primary sponsor of bills on taxation, federal and provincial/territorial transfers, and financial matters and manages them through the parliamentary process. It also supports the Minister of Finance in the fulfilment of his or her parliamentary responsibilities.

The public and Canadian interest groups

The Department supports an expanded program of public information and consultation. This includes responding to requests for information and providing opportunities for Canadians to participate in open, broad-based consultations on key economic, social, fiscal, and tax issues.

Departments, agencies, and Crown corporations

The Department plays an active role in encouraging coordination and harmony among all federal initiatives that affect the economy, the financial sector, and financial markets.

Provincial and territorial governments

The Department develops and administers transfer payments in support of social programs and works with the provinces and territories on fiscal, taxation, financial sector, and other issues of concern to all governments. It also works with these other jurisdictions as joint stewards of the CPP to ensure that the CPP remains financially secure and stable.

Financial market participants

The Department deals with issues affecting federal financial institutions. It develops the rules and regulations that govern these institutions so they remain safe and sound and are responsive to consumers' needs. The Department also deals on an ongoing basis with a range of market participants, including banks, securities dealers, and investors, in fulfilling its responsibility for managing the public debt and international reserves.

International economic and finance community

The Department plays a key role in promoting a strong multilateral system of global economic and financial governance. The most important role in this regard is support for the Minister's participation in the G7, G8, and G20 processes. The Department also has a lead role in managing the country's activities related to international and financial organizations, such as the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD), the Financial Action Task Force on Money Laundering (FATF), and the Financial Stability Forum. As well, the Department plays an important role in other organizations, such as the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO).

International trade community

The Department plays an important role in negotiating Canada's trade arrangements with other nations and monitoring how those arrangements serve Canada's interests.

International engagement

The Department plays an active and leading role in representing Canada internationally. The Department supports the Minister of Finance's involvement in the G7 process as well as his involvement in other key ministerial forums, including the G8 and G20 finance ministers' processes and IMF and World Bank meetings. These and similar processes are important forums for exchanging views and forging consensus on measures to strengthen global economic growth, promote financial stability, and reduce global poverty.

The Department's activities are undertaken in the context of a rapidly integrating, technology-driven global economy. Events that take place far from Canada can have a powerful impact, both adverse and beneficial, on Canada's economy.

To support its work on international economic issues, the Department holds extensive consultations not only within the federal government but also with provincial governments, the private sector, civil society, and the Canadian public.

Accountability and risk management

The Department must manage the financial risks associated with the government's financial assets and liabilities. It must be ready to respond to economic and financial developments by taking prompt and decisive action to mitigate, where appropriate, their effects on the Canadian economy and fiscal framework.

The Department is also committed to ensuring that all of its employees and activities, at the personal, professional, and organizational levels, meet the highest standards of ethical conduct and accountability.

The Internal Audit and Evaluation Division has developed an internal audit plan that addresses all areas of higher risk and significance to the Department. Each year, audits are selected based on the potential risks and exposures identified in a risk assessment and confirmed through interviews with Internal Audit and Evaluation Committee members. The Internal Audit and Evaluation Committee then approves the Risk-based Internal Audit.

The Risk-based Internal Audit Plan ensures an appropriate mix of audits to provide the Department's management with an objective assessment of the design and operations of management practices, control systems, and information in keeping with the government's continuous management improvement program and accountability for results.

Priorities

The Department has established four key priorities in support of its mission. Figures 1 to 4 summarize the key expected results planned by the Department under each of the four priorities by program activity. Section II provides more details on ongoing initiatives and key commitments for each of the 10 program activities.

Priority 1: Sound fiscal management

A solid macroeconomic framework, which includes transparent fiscal management, underpins healthy economic growth, and helps ensure the sustainability of Canada's social safety net. A sound fiscal structure also encompasses a competitive, efficient, and fair tax system to promote economic growth, create jobs, and boost living standards in a fiscally sustainable manner.

Solid macroeconomic fundamentals have placed Canadians in a good position to capitalize on both domestic and global economic opportunities. It has allowed the government to reduce the public debt burden and, in turn, invest in important economic and social priorities, while also delivering significant tax relief to all Canadians.

Figure 1

Summary of the Department of Finance Canada's Expected Results,
Priority 1: Sound Fiscal Management


Program Activity

Expected Results

1. Tax Policy

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

High-quality research and evaluation

2. Economic and Fiscal Policy

Transparent fiscal planning and sustainable fiscal policy

3. Financial Sector Policy

Stable, low-cost financing for the Government of Canada

A well-functioning market in Government of Canada securities

Effective management of Canada's official international reserves

A sound borrowing framework for Crown entities

A supply of coinage at a reasonable cost

4. Economic Development and Corporate Finance

A thorough assessment of operating and capital funding related to economic development and policy proposals

7. Public Debt

Stable, low-cost financing for the Government of Canada

A well-functioning market in Government of Canada securities

A cost-effective retail debt program

8. Domestic Coinage

A supply of coinage at a reasonable cost


Priority 2: Sustainable economic growth

The Department strives for sustainable economic growth by developing and implementing policies and programs that provide appropriate support for the drivers of productivity growth: physical, financial, and human capital and innovation.

Individuals and businesses will make most of the investments necessary to improve productivity growth. For its part, the government must provide a policy framework to encourage Canadians to invest in the drivers of growth. As a key source of economic advice to the government, the Department helps ensure that the policies and programs adopted create the framework and conditions necessary for sustainable long-term economic growth by supporting physical investment and research and development and by helping Canadians to acquire skills.

Figure 2

Summary of the Department of Finance Canada's Expected Results,
Priority 2: Sustainable Economic Growth


Program Activity

Expected Results

1. Tax Policy

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

High-quality research and evaluation

2. Economic and Fiscal Policy

Effective monitoring and forecasting of economic performance

Effective briefing and advice on a wide selection of economic questions

3. Financial Sector Policy

A regulatory framework that promotes the soundness, efficiency, and competitiveness of Canada's financial sector and serves the needs of individuals, businesses, and the economy

4. Economic Development and Corporate Finance

Sound advice to the Minister on economic proposals

Enhanced productivity and economic growth through other governmental initiatives

Improved awareness of the requirements and departmental process for conducting strategic environmental assessments

6. International Trade and Finance

Stronger international trading system and more open markets



Priority 3: Sound social policy framework

The Department contributes, through its analysis and advice, to the government's efforts to meet its objectives for the quality of Canada's communities, health care, education, social safety net, and equality of opportunity for all citizens.

Transfer payments

The government supports social programs delivered by provinces and territories by means of transfers of resources to provincial and territorial government treasuries. The Canada Health Transfer (CHT) is the primary federal transfer in support of health care, and the Canada Social Transfer (CST) is provided in support of post-secondary education, social assistance, and social services, including early childhood development and early learning and childcare. Equalization payments enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces at reasonably comparable levels of taxation. Finally, Territorial Formula Financing (TFF) is the key unconditional transfer to the three territorial governments. The Department administers these transfers and undertakes regular consultations with provinces and territories.

Figure 3

Summary of the Department of Finance Canada's Expected Results,
Priority 3: Sound Social Policy Framework


Program Activity

Expected Results

1. Tax Policy

Competitive, efficient, and fair personal, corporate, sales, and excise tax systems

Improved coordination of the federal tax system with those of provinces, Aboriginal governments, and other countries

High-quality research and evaluation

3. Financial Sector Policy

A sound legislative and regulatory framework for federally regulated defined benefit pension plans

Effective framework for investment of CPP funds

5. Federal-Provincial Relations and Social Policy

Implementation of a new formula for Equalization and TFF

Determination of the most appropriate arrangements for post-secondary education and training

Effective implementation of government social policy priorities

9. Transfer Payments to Provinces and Territories

Financial support for Canadian provinces and territories to assist them in providing public services, universally accessible health care services, post-secondary education, and social assistance



Priority 4: Effective International Presence

Improving and sustaining the living standards and quality of life of Canadians in an increasingly competitive and integrated global economy continue to be key departmental objectives. This includes maintaining secure and open borders, working to strengthen global growth and stability, advancing Canada's trade and investment interests, and helping foster development to reduce global poverty.

In representing Canada in a wide range of international economic organizations, the Department contributes to policies and measures to increase global economic growth, promote global financial stability, encourage policies to reduce poverty in developing countries, advance international standards to prevent abuses to the international financial system, and eliminate terrorist financing.

Figure 4

Summary of the Department of Finance Canada's Expected Results,
Priority 4: Effective International Presence


Program Activity

Expected Results

2. Economic and Fiscal Policy

Understand and contribute to international economic policies and reforms

3. Financial Sector Policy

A world-class anti-money laundering (AML) and anti-terrorist financing (ATF) framework

Effective support for Canada's presidency of the FATF

6. International Trade and Finance

Policy positions and proposals that improve prospects for global economic and financial stability and better financial governance

Effective international initiatives to strengthen developing economies

10. International Financial Organizations

Payments to international organizations and Canadian creditors consistent with the Department's commitments