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Section II: Effective Economic Leadership—Building a Strong, Sustainable Economy to Benefit Canadians

Overview

This section is based on the PAA developed by the Department of Finance Canada. It is organized according to the Department's strategic outcome and the three principal program activities that support it.

The Department of Finance Canada carries out its activities with the aim of contributing to a strong and sustainable economy for Canadians. Its operations are articulated through three main activities: economic and fiscal policy making; transfer payments to provinces, territories, and international organizations; and the management of Government of Canada debt.

Department of Finance Canada's Strategic Outcome: Three Performance Indicators

A sustainable medium-term fiscal framework: Why is this important? By maintaining such a framework, the Department of Finance Canada contributes to a stable macroeconomic environment in Canada that also includes stable and predictable inflation. Placing fiscal policy in a medium-term framework ensures recognition of longer-term factors which influence the economy. It also acknowledges the importance of reducing public debt. It promotes economic stability by helping keep interest rates low, allowing Canadians to borrow, at lower cost, money for things that matter—such as new equipment and information technologies for business, or education and home renovation for families. It also strengthens our country's ability to deal with economic shocks and challenges such as the aging of the population. A competitive, efficient, and fair taxation system in Canada: Why is this important? A competitive, efficient, and fair tax system raises sufficient revenues to pay for public services, including social programs (e.g. universal health care and public safety and security) and strategic investments in areas that promote a more competitive and productive Canadian economy (e.g. education and training, basic scientific research, and infrastructure). At the same time, however, revenues must be raised in a manner that keeps tax burdens and marginal tax rates low to provide incentives to work, save, and invest as well as allowing Canadian businesses to successfully compete for investment in an increasingly integrated global capital market. Tax revenues must also be raised in a fair and simple manner so that taxpayers in similar circumstances face similar tax treatment, ensuring that the tax burden is shared in accordance with taxpayers' ability to pay. Where appropriate, the tax system may also be used to pursue specific economic and social objectives, such as savings for post-secondary education, promoting charitable giving, encouraging R&D, and helping to protect the environment. A sound Canadian financial sector: Why is this important? A strong economy must be supported by a financial system that instils confidence and efficiently provides a wide range of financial services to households and businesses. Keeping Canada's financial institutions and markets innovative and competitive, with a flexible regulatory framework founded on sound principles, will ensure that they continue to meet the needs of Canada's growing economy.

Economic and fiscal policy making is the core function of the Department of Finance Canada. This is where policy proposals to build a strong economy originate. The Department is responsible for the effective management of government's fiscal plan; it plays an important role in the soundness and competitiveness of Canada's financial sector as well as developing and maintaining a competitive, efficient, and fair tax system.

In the context of building a stronger federation, the Department of Finance Canada also has an important financial role that translates into payments to provinces and territories to help them in the delivery of public services to Canadians. The ongoing timeliness and accuracy of these payments demonstrates the Department's capacity to meet its financial obligations toward Canadians in all provinces and territories.

Finally, to fulfill its mandate, the Department borrows in financial markets to fund government operations. These borrowings, together with revenues raised through taxation and program spending, have a powerful effect on the Canadian economy. By the same token, these authorities also mean the Department is responsible for the management of the debt for the whole of the Government of Canada.

For each program activity, an overview of the program, performance indicators, and targets that measure the program activity's expected results are presented. Each section concludes with the approaches and key initiatives that will advance the program during the planning period.

Program Activity 1.1: Economic and Fiscal Policy Framework

Overview

Policy making is the core function of the Department of Finance Canada. This program area develops policy proposals to build a strong and sustainable economy and prepares the government's budget. Sustainable economic and fiscal policies, such as maintaining a competitive, efficient, and fair tax system and enabling a sound financial sector, are the underpinnings of a strong economy.

Expected Result		Performance Indicator			Target
Effective management of the government's fiscal plan		Annual debt reduction			Annual debt reduction of $3 billion
		Debt-to-GDP ratio			Reduce the federal debt-to-GDP ratio to 25 per cent by 2011–12
		Nominal growth in government program spending			Below the nominal growth in the economy on average
Canada has a sound, efficient, and competitive financial sector		Soundness, efficiency, and competitiveness of Canada's financial sector			Healthy, growing financial sector that serves the needs of Canadians
Canada has a competitive, efficient, and fair tax system		Competitiveness, efficiency, and fairness of Canada's tax system			Tax system that raises the required revenue in a manner that compares favourably to other G7 countries
Priorities	Sound Fiscal Management		Sustainable Economic Growth	Sound Social Policies		Effective International Presence

Financial Resources ($ thousands)

2008–09	2009–10	2010–11
105,779	105,788	105,488

Human Resources (FTEs)

2008–09	2009–10	2010–11
806	806	806

The Department has six subactivities within the economic and fiscal policy area. This program activity is the primary source of advice and recommendations to the Minister of Finance regarding issues, policies, and programs of the Government of Canada related to the areas of economic and social policy, federal-provincial-territorial relations, financial affairs, tax matters, and international trade and finance. The work conducted in this program area involves extensive research, analysis, and consultation and collaboration with partners in both the public and private sectors. To help develop first-rate policy and advice to ministers, the Department works with the public and Canadian interest groups; departments, agencies, and Crown corporations; provincial, territorial, and Aboriginal governments; financial market participants; the international economic and finance community; and the international trade community. In addition, the economic and fiscal policy program manages the negotiation of agreements and drafting of legislation. The aim of this program area is to create a sound and sustainable fiscal and economic framework that will generate sufficient revenues and provide for the efficient and effective management of expenditures in line with the budget plan and financial operations of the Government of Canada.

1.1.1—Taxation

This program area develops and evaluates federal taxation policies and legislation and provides advice and recommendations for changes aimed at improving the tax system while raising the required amount of revenue to finance government priorities. This program focusses on the following areas: personal income tax, business income tax, and sales and excise tax. The program is also involved with federal-provincial and federal-Aboriginal tax coordination, including developing tax legislation and negotiating international tax treaties, federal-provincial tax collection and reciprocal agreements, federal-Aboriginal tax administration agreements, and tax policy research and evaluation.

Why is this important? Improvements to the competitiveness, efficiency, and fairness of Canada's tax system reward Canadians for realizing their full potential, increase standards of living, fuel growth in the economy, encourage investment in Canada, and strengthen Canadians' confidence in the tax system.

1.1.2—Economic and Fiscal Policy, Planning, and Forecasting

This program area analyzes Canada's economic and fiscal situation, as well as the fiscal position of other levels of government and of governments in other countries, and advises on the government's economic policy framework, its budget planning framework, and spending priorities. This program is responsible for monitoring and preparing forecasts of Canada's economic and fiscal position and plays a lead role in the management of the government's fiscal framework. The program also provides analytical support on a wide range of economic and financial issues related to the government's macroeconomic and structural policies.

Why is this important? This program is necessary to help ensure that fiscal planning in the Government of Canada is transparent and supports long-term fiscal sustainability. Maintaining sound fiscal planning allows the government to reduce the amount of money that it must spend to pay interest on its debt, which in turn frees resources that can be used to reduce personal income taxes, or to invest in other priorities, such as health care. Sound economic and fiscal policies also enable the Canadian economy to perform well despite various economic shocks.

1.1.3—Economic Development Policy

This program area is responsible for fulfilling the challenge function of the Department of Finance Canada by monitoring major economic policy issues and proposals under development in the economic departments, as well as providing policy advice to the Minister regarding the financial implications and relevance of the government's microeconomic policies and programs and proposals for the funding of programs. The program focusses on monitoring world-class research and developing regional and sectoral policy analysis in the areas of knowledge-based economy, defence, transportation, public infrastructure, environment, energy and resources, agriculture, fisheries, and privatization. It also plays a lead role in advising on corporate restructuring affecting Crown corporations and other corporate holdings.

Why is this important? To prepare the government's annual budget and estimate the size of the budget balance, the Department needs to assess and make recommendations from numerous proposals for new program spending emanating from line departments. This activity is critical if the government is to make choices that contribute to advancing economic growth.

1.1.4—Federal-Provincial Relations and Social Policy

This program area is responsible for creating a system of fiscal arrangements between Canada and the provinces and territories that will enable the funding of national priorities and redistribution of support from more prosperous regions to less prosperous ones in order to maintain a fiscal balance within Canada. The program area is also responsible for fulfilling the challenge function of the Department by providing policy advice to the Minister regarding the fiscal and economic implications of the government's social policies and programs related to health care, immigration, employment insurance and pensions, post-secondary education, Aboriginal and cultural programs, and benefits, as well as programs for seniors, disabled persons, and children. The program area conducts research and provides analysis and advice to the Minister and senior government officials to assist in preparation for meetings of Cabinet and its committees, the annual budget, fiscal updates, and responsibilities with respect to Canada Pension Plan legislation. The program is also responsible for preparing legislation and regulatory changes.

Why is this important? Long-term, predictable, stable, formula-based transfer support for provinces and territories and improvements to the social policy framework contribute to improved public services for Canadians, supporting the quality of Canada's communities, health care, education, and social safety net programs and equality of opportunity for all citizens.

1.1.5—Financial Sector Policy

This program area ensures the soundness, efficiency, and competitiveness of Canada's financial sector in support of strong, sustainable growth in the Canadian economy. This program provides analysis of Canada's financial services sector and financial markets, and it develops the legislative and regulatory framework governing federally regulated financial institutions (banks, trust companies, insurance companies, and co-operative credit associations) and federally regulated defined benefit pension plans. This program also spearheads the federal strategy to combat money laundering and terrorist financing. It plays a lead role in conducting Canada's relations and negotiating Canada's commitments with foreign governments in the area of trade in financial services.

Why is this important? A sound, efficient, and competitive Canadian financial sector is necessary to support the savings and investment needs of individuals, businesses, and the economy as a whole.

1.1.6—International Trade and Finance

The aim of this program area is to secure access to key markets for Canadian exporters and investors and to reduce tariffs where possible in order to enhance the competitiveness of domestic industries and expand commercial opportunities for them. This group also manages the Department's participation in international financial institutions such as the IMF, World Bank, and the European Bank for Reconstruction and Development, and international economic coordination groups such as the G7, G20, and the Asia-Pacific Economic Co-operation forum.

Why is this important? Canada's economic performance and future prosperity depend on a strong and stable global economy, as well as trade and investment flows supported by high standards of multilateral, regional, and bilateral trade and investment agreements. Canadian leadership and influence on international economic, financial, development, and trade issues increase financial and economic stability.

Key initiatives for the planning period

To implement government commitments made in Advantage Canada, Budget 2007, and the October 2007 Economic Statement, the Department of Finance Canada's main policy making initiatives for the planning period include the following:

Supporting tax relief and prudent fiscal management

Building on the 2007 Economic Statement's significant actions to strengthen Canada's business tax advantage and making Canada's business tax environment more competitive, the Department will support the government's objective of seeking the collaboration of the provinces and territories through the following actions:

• replacing remaining provincial retail sales taxes (RST) with provincial value-added taxes harmonized with the GST; and

• reaching a 25 per cent combined federal-provincial-territorial statutory corporate income tax rate.

An internationally competitive business tax system promotes investment and economic growth, which will lead to new and better jobs and increased living standards for Canadians. The single most important action to improve tax competitiveness in Canada would be the harmonization of the remaining provincial RSTs with the GST in the five provinces that retain RSTs.

In addition to continuing the expansion and modernization of Canada's tax treaty network, the Department will assist the government in entering into comprehensive tax information exchange agreements with non-tax treaty countries. These agreements will help promote a competitive, stable, efficient, and fair tax environment to attract and retain internationally mobile capital and allow Canadian businesses to expand internationally.

Helping those who need it most is central to who we are as Canadians. The Department will support the government's initiatives in this area by assisting in the implementation of the new Registered Disability Savings Plan (RDSP). The RDSP will help parents and others save for the long-term financial security of a child with a severe disability.

To reduce interest costs to taxpayers, the Department will achieve a $10-billion reduction in federal debt in 2007–08 and a $3-billion reduction per year thereafter. As a result of these reductions, the federal debt-to-gross domestic product (GDP) ratio is expected to decline to reach the 25 per cent target by 2011–12. Interest savings from federal debt reduction will be dedicated to permanent and sustained personal income tax reductions. To achieve this expected debt reduction, the Department is committed to keeping the rate of growth of planned program spending below the rate of growth of the economy on average.

Supporting provinces and territories

In the context of the principles outlined in Budget 2006 and program changes included in Budget 2007, the Department will continue to provide advice on federal-provincial-territorial fiscal arrangements and federal-provincial-territorial relations more broadly. In particular, in consultation with provinces and territories, it will develop and implement research programs in targeted areas in preparation for the next renewal of these fiscal arrangements, which are currently legislated to 2013–14.

The Department will support the government's Northern Strategy, particularly with respect to development in Nunavut, and the devolution of natural resources and natural resources revenue sharing issues. The Department will continue to support and advise on mechanisms to facilitate the negotiation and implementation of Aboriginal specific claims agreements. It will also promote and enhance tax agreements with First Nations; for example, First Nations Goods and Services Tax agreements.

Supporting work, innovation, and skills

Both to ensure that Canada's workforce participation rate continues to increase in the context of an aging workforce and to maintain sustainable social policies, the Department will do the following:

• implement long-term and predictable support for post-secondary education and training as announced in Budget 2007;

• respond to review of student financial assistance, notably in the context of the sunsetting of the Canada Millennium Scholarship Foundation in 2010, and implement measures to improve and streamline assistance, as appropriate;

• implement the rollout of new training assistance through labour market agreements;

• respond to demographic pressures affecting labour force participation of specific groups including Aboriginal peoples, Canadians with disabilities, and older workers;

• support the development of proposals on education and economic development for Aboriginal peoples in Canada;

• support implemention measures to make it easier for Canadian-educated foreign students and temporary foreign workers to stay in Canada; and

• review the legislative and regulatory framework for federally registered defined benefit and defined contribution pension plans to continue to assess ways to strengthen its viability.

As indicated in Advantage Canada, Canada's tax burden on highly skilled workers is high relative to other countries such as the United Kingdom and the U.S. Personal income taxes are a factor in Canada's ability to attract and retain highly skilled workers and to encourage all workers to invest in training and education. In addition, reducing personal income taxes on savings would support investment and economic growth while enhancing the overall fairness and neutrality of the tax system. It would also make Canada's tax treatment of savings more competitive in relation to other countries. The Department will be examining the personal income tax system, including the treatment of savings and capital gains.

Improving work incentives for low- and modest-income Canadians is also an important priority for the government. The government's introduction of the Working Income Tax Benefit (WITB) for 2007 will help make work more rewarding and attractive for low- and modest-income Canadians. For 2008 and beyond, the Department will support the government's effort to continue working with interested jurisdictions to ensure that the WITB is effective and that it works well with other income support programs.

The Department will review and assess the results of the consultations on the Scientific Research and Experimental Development (SR&ED) tax incentive program. The SR&ED program is intended to provide broad-based support for SR&ED performed in every industrial sector in Canada and to support small businesses in the performance of SR&ED. The government's overriding objective in undertaking these consultations is to increase the level of private sector R&D by implementing cost-effective improvements to the SR&ED program and further streamlining the program's administration.

The government released a new science and technology strategy in May 2007. During 2008–09, the Department will work with Industry Canada on its implementation.

Supporting the financial system

The Department will contribute to international efforts and engage with private- and public-sector partners in Canada to analyze the fallout from credit market turbulence that began in 2007 and assess whether regulatory or policy responses are needed. To do so, it will engage with domestic and global partners to examine appropriate stability frameworks and intervention and coordination mechanisms.

To advance a competitive advantage in global capital markets, the Department will continue to follow through on the capital markets plan issued with Budget 2007 and adjust and expand this plan to meet new circumstances and new challenges for Canada. To support a sound, competitive framework for mortgage insurance—a critical underpinning to the housing sector—it will also develop a new framework for the government guarantee that backs private insurers.

To improve the effectiveness of enforcement against capital markets fraud, the Department will work on implementing recommendations of the senior expert advisor to the Integrated Market Enforcement Teams and will continue working with provinces and territories.

The Department will also continue to ensure that Canada has the Right framework to act decisively in combatting money laundering and terrorist financing and protecting the integrity of the financial system. In this regard, it will draw on the evaluation of Canada's anti-money laundering and counter-terrorist financing regime published by the FATF.

Supporting business competition, trade, and foreign investment

As a highly open economy in an increasingly global marketplace, Canada gains from more open trade and investment flows and better multilateral, regional, and bilateral trade and investment rules and agreements. Canada also benefits from a strong multilateral system of economic and financial governance.

The Department will work on modernizing Canada's competition, trade, and foreign investment policies and on promoting global growth and stability by means of the following:

• working to conclude World Trade Organization negotiations, foreign investment and protection agreements, and bilateral free trade agreements in partnership with other government departments;

• reducing tariffs where possible to improve the competitiveness of Canadian industry;

• laying a strong foundation for the Security and Prosperity Partnership of North America, particularly in regard to border efficiency, with other government departments;

• developing Canadian policy positions and proposals that improve prospects for global economic and financial stability and governance;

• contributing to the international efforts to reform the governance and operations of the IMF and the World Bank;

• developing initiatives for more effective use of international assistance and better debt management capacity in low-income countries;

• monitoring recommendations of the Competition Policy Review Panel, with a view to improving competition and investment policies to stimulate and foster the conditions that will allow Canadian firms to innovate and succeed; and

• participating in the Advisory Committee on Paperwork Burden Reduction and working with Industry Canada on options to meet a 20 per cent reduction in the federal paperwork burden on small businesses.

Environment and infrastructure

A clean environment is an important source of long-term economic strength for Canada. The government is committed to developing a regulatory structure to reduce emissions of greenhouse gases and curtail air contaminants. The Department will do the following:

• contribute to the achievement of this objective by working with other departments to implement a new approach to the environment; and

• continue to examine potential changes to the tax system to assist the government in meeting its environmental objectives.

High-quality, modern public infrastructure that allows goods and people to move freely and efficiently is essential to Canada's long-term prosperity. Budget 2007 announced a seven-year, $33-billion infrastructure plan, as well as a number of initiatives to promote the use of public-private partnerships (PPP). The Department is involved on an ongoing basis in the development of the government's long-term infrastructure agenda. It will also promote the use of PPPs by establishing a new Public-Private Partnerships Office.

In addition, the Department will support the work of three advisory panels:

• The Advisory Panel on International Tax Issues will help strengthen Canada's business tax advantage. The panel is expected, by the end of 2008, to recommend ways to enhance the fairness and competitiveness of Canada's international tax system;

• The independent Panel on Crown Share Adjustment Payments is to follow up on the offshore arrangements made with Nova Scotia in October 2007. The Panel will report back to the government. The Department will focus on implementing the government's response to the Panel's recommendations, possibly through the development and implementation of regulations; and

• A panel will advise on the content and structure of securities regulation in Canada. The panel will report back to the Minister of Finance and provincial-territorial securities ministers.

Challenges and opportunities

The Department faces a number of unique challenges and opportunities in this program activity, given the nature of the role it plays within government. For example, continual and timely updating of information in response to rapidly changing economic conditions is essential to producing accurate advice and policy recommendations. Extensive research and ongoing consultations with private-sector forecasters are undertaken to keep economic information as current as possible. With respect to the preparation of the government budget, potential uncertainty arises from the translation of economic forecasts into spending and tax revenue projections. In response to this particular challenge, sensitivity analysis is applied to fiscal projections to reflect changes to economic and fiscal assumptions.

Another current challenge is crafting an appropriate response to the U.S. subprime mortgage financial crisis, which has resulted in turbulence in global financial markets. In response to this particular development, the Department is developing long-term structural measures to deal with the competitive challenges facing the economy. It is also closely participating in international efforts to assess the stability of the overall financial framework.

The Department operates in an environment that presents diverse risks. Risks range from infrastructure risks (e.g. a security breach) to people risks (e.g. not having the Right people with the Right set of skills to deliver on responsibilities and commitments) to policy risks (e.g. uncertainties arising from legislative or legal processes). The Department must also manage the financial risks associated with the government's financial assets and liabilities. The government regularly assesses its treasury management frameworks and programs. External evaluations are carried out as part of the Department's Treasury Evaluation Program (TEP), which started in the early 1990s. The objectives of the TEP are to assess past policy and operational decisions relative to their objectives and the evolving standards and practices of other comparable entities and to support good governance by providing decision-making information for management, as well as public transparency and accountability on outcomes.

Program Activity 1.2: Transfer and Taxation Payment Programs

Overview

This program activity administers transfer and taxation payments to provinces and territories. These payments are made in accordance with legislation and negotiated agreements to enable Canadian provinces and territories to provide their residents with public services. This program activity also includes commitments and agreements with international financial institutions aimed at aiding in the economic advancement of developing countries. These commitments can result in payments, generally statutory transfer payments, to a variety of recipients including individuals, organizations, and other levels of government.

In accordance with the Federal-Provincial Fiscal Arrangements Act (FPFAA), related regulations, and negotiated agreements, this program activity administers transfer payments to provinces and territories as set out in legislation and negotiated agreements to provide for fiscal Equalization and support for health and social programs and targeted support for other shared priorities.

Equalization payments are made to eligible provincial governments in fulfillment of the constitutional commitment to ensure provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. Territorial Formula Financing achieves the same objective for all three territorial governments, recognizing the unique circumstances in the North. The payments are made in accordance with the terms and conditions established in the FPFAA and associated regulations.

The Canada Health Transfer (CHT) provides support for health care through cash and tax point transfers to provincial and territorial governments. The CHT supports the government's commitment to maintain the national criteria and conditions of the Canada Health Act (comprehensiveness, universality, portability, accessibility, and public administration and the prohibitions against user fees and extra-billing) and commitments made under 2000, 2003, and 2004 Health Accords. The payments are made in accordance with the terms and conditions established in the FPFAA and associated regulations and will provide long-term support, growing at six per cent annually until 2013–14.

The Canada Social Transfer (CST) provides support through cash and tax point transfers to provincial and territorial governments to assist them in financing social programs, post-secondary education, and programs for children. The CST gives provinces and territories the flexibility to allocate payments among supported areas according to their priorities and supports the federal government's commitment to prohibit minimum residency requirements for social assistance. The payments are made in accordance with the terms and conditions established in the FPFAA and associated regulations and will provide long-term support, growing at three per cent annually until 2013–14.

From time to time, the federal government commits to providing additional targeted support to the provinces and territories in areas of shared priority including health, social, and other sectors. For example, the government has provided support for the development and implementation of patient wait time guarantees and vaccination against human papillomavirus to protect against cervical cancer. The payments are made in accordance with the terms and conditions established in associated legislation and regulations.

The Department has entered into tax administration agreements with Aboriginal governments under which the federal government vacates and shares a negotiated portion of its GST and personal income tax room. The Department administers remittances to Aboriginal governments under these agreements.

The Department also administers Canada's international financial commitments aimed at improving outcomes in the developing economies. It administers transfer payments, in cooperation with Export Development Canada and the Canadian Wheat Board, to provide debt relief to developing countries as agreed to at the Paris Club. It also administers the issuance and encashment of demand notes and capital subscriptions for Canada's commitments with international financial institutions, such as the International Development Association, the IMF, and the European Bank for Reconstruction and Development, to provide international assistance to developing countries.

Financial Resources ($ thousands)

2008–09	2009–10	2010–11
46,023,838	47,465,829	49,721,712

 

Expected Result		Performance Indicator			Target
Payments to support Canadian provinces and territories in providing their residents with public services in areas of shared national priority; payments to international organizations to help the promotion of economic advancement of developing countries		Payments are made on time and according to levels and formulas set out in legislation and are audited by the Office of the Auditor General			100 per cent
Priorities	Sound Fiscal Management		Sustainable Economic Growth	Sound Social Policies		Effective International Presence

Key activities for the planning period

Activities under this program are ongoing.

• The Department will actively support the government's willingness to enter into tax administration agreements with Aboriginal governments. This effort will ensure greater uniformity of the federal tax system with the First Nations Goods and Services Tax and the First Nations Personal Income Tax.

• The Department will focus on implementation of new fiscal arrangements, ensuring timely and accurate payments to provincial and territorial governments, as well as a wide range of international financial organizations and Canadian creditors, consistent with the government's commitments and policy objectives.

Challenges and opportunities

Given the magnitude of the sums of money involved, the effect of this program area on other governments, on Canadians, and on the economy in general is significant. For that reason, high performance standards with respect to the timeliness and accuracy of payments are imposed. The Department has set a performance target of 100 per cent in terms of accuracy and the on-time transfer of funds to provinces and territories as well as Aboriginal governments for this program activity.

Program Activity 1.3: Treasury and Financial Affairs

Overview

Canada's debt management activities include the funding of government operations, which involves the payment of debt service costs and investments in financial assets needed to establish a prudent liquidity position. This program supports the ongoing refinancing of government debt coming to maturity, the execution of the budget plan, and other financial operations of the government, including governance of the borrowing activities of major government-backed entities such as Crown corporations. The program is also responsible for the system of circulating Canadian currency (bank notes and coins) to meet the needs of the economy.

Financial Resources ($ thousands)

2008–09	2009–10	2010–11
33,830,000	34,272,000	34,122,000

Human Resources (FTEs)

2008–09	2009–10	2010–11
29	29	29

 

Expected Result		Performance Indicator			Target
Prudent and cost-effective management of the government's treasury activities and financial affairs		Public debt structure Measures of market performance Market consultation			Well-bid and well-covered auctions Positive feedback from market participants on initiatives
Priorities	Sound Fiscal Management		Sustainable Economic Growth	Sound Social Policies		Effective International Presence

Key activities for the planning period

In its capacity as manager of Government of Canada debt, the Department will do the following:

• implement strategic plans to attain Canada's debt structure target and maintain a prudent level of liquidity;

• consolidate the borrowings of Crown corporations (Business Development and Bank of Canada, Canada Mortgage and Housing Corporation, Farm Credit Corporation) with the borrowings of the Government of Canada (further to the decision announced in Budget 2007); and

• review the coinage system composition to reduce costs in keeping with the conclusion of the Department's strategic review.

Challenges and opportunities

The government's framework for funds management plays an important role in ensuring the operational prudent management of a large market debt stock and ongoing financing program. It covers the need to develop risk mitigation strategies to deal with potential losses to the government arising from market developments or operational breaches. Reserves management plans have to identify and take requisite steps to address issues associated with the value of the Canadian dollar that might occur in the marketplace. An important element of this program activity involves ensuring that there is an adequate supply of bank notes and coinage for the needs of the Canadian economy. A particular challenge facing the government and the Bank of Canada, as issuer of banknotes approved by the Minister, is reducing the level of counterfeiting. In addition, the mix of coins in the coinage system and the extent to which the mix of coinage meets the needs of Canadians is an issue that the Department periodically reviews.

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