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Section II: Analysis of Program Activities by Strategic Outcome

The Department of Finance Canada provides effective economic leadership with a clear focus on one strategic outcome, whichall program activities support.

The following section describes the Department of Finance Canada's program activities and identifies the expected results, performance indicators, and targets for each. This section also identifies how the Department plans to meet the expected results and the financial and non-financial resources that will be dedicated to each program activity.

Program Activity 1.1: Economic and Fiscal Policy Framework


Program Activity 1.1: Economic and Fiscal Policy Framework
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–10 2010–11 2011–12
FTEs Planned Spending FTEs Planned Spending FTEs Planned Spending
477 65,049.3 477 59,614.8 477 59,453.8


Program Activity Expected Results Performance Indicators Targets
Effective management of the government's fiscal framework Budgetary balance

Debt-to-GDP ratio
Respect Budget 2009 projections for return to budgetary surplus

Keep program spending growth in line with Budget 2009 initiatives
Canada has a sound, efficient, and competitive financial sector Soundness, efficiency, and competitiveness of Canada's financial sector Healthy, stable 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

Summary

Economic and fiscal policy making is the core function of the Department of Finance Canada. This program area prepares the government's budget and develops policy proposals to maintain a strong and sustainable economy. Sustainable economic and fiscal policies in support of Canada's fiscal framework, tax system, and financial sector are essential to a strong economy.

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 in the areas of economic, fiscal, and social policy; federal-provincial-territorial relations; financial affairs; taxation; 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. In addition, it handles the negotiation of agreements and drafting of legislation.

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.

The aim of this program area is to support the fiscal and economic framework that generates revenue for expenditures in line with the budget plan, as well as for the financial operations of the Government of Canada.

Planning highlights

Through the Economic and Fiscal Policy Frameworkprogram activity, the Department of Finance Canada will continue tomanage economic and fiscal policy issues in response to the uncertain economic outlook. This activity will primarily involve implementing the measures proposed in Budget 2009. It will also involve preparing legislation and regulations related to adjustments in major transfer programs and other legislative requirements under the responsibility of the Minister of Finance.

The Department will work with the responsible federal agencies to improve access to financing for consumers and businesses and strengthen the financial system.

Under the Extraordinary Financing Framework (EFF), the Department will take action to improve access to financing for Canadian households and businesses. Action under this framework will be taken when it is necessary to correct market failures in segments of the credit markets, mitigate systemic risks, or prevent possible competitive disadvantage to Canadian firms as a result of policy decisions made by foreign governments.

Specific initiatives that will be supported by the Department under the EFF include the expansion of the Insured Mortgage Purchase Program, the extension of the Canadian Lenders Assurance Facility, the creation of the Canadian Secured Credit Facility, and the Canadian Life Insurers Assurance Facility, as well as an increase in the flexibility and capacity of Crown corporations.

To strengthen Canada's financial system, the Department will support measures to enhance the government's ability to safeguard financial stability in Canada and address potential problems in credit markets as they arise.

The Department will also work in collaboration with other federal entities and its G7 and G20 counterparts to stabilize financial markets and restore the flow of credit in support of global economic growth.

The Department will support the government's plan, following up on the report of the Expert Panel on Securities Regulation, to work with willing provinces and territories on a Canadian securities regulator that respects constitutional jurisdiction, regional interests and expertise.

The Department will take steps to modernize Canada's financial legislative and regulatory framework through technical amendments to the legislation and consultations on financial leasing powers. Consumers of financial products will be supported by developing regulations on credit card and mortgage insurance business practices, as well as developing a national financial literacy strategy.

To address issues in the solvency funding rules arising from the financial market turmoil and other structural concerns about the legislative and regulatory framework pertaining to pension plans, the Department will support consultations on the legislative and regulatory framework for federally regulated pension plans with a view to making permanent improvements before the end of 2009.

The Department will undertake a systematic review of the government's corporate assets, including enterprise Crown corporations, real property, and other holdings.

In the international arena, the Department will do the following: work to conclude World Trade Organization negotiations, Foreign Investment Promotion and Protection Agreements, and bilateral free trade agreements in partnership with other government departments; continue to develop tariff initiatives aimed at enhancing the competitiveness of Canadian industry; prepare for Canada to host the G7 finance minister's meeting and the G8 summit in 2010; develop initiatives for more effective use of international assistance and debt management capacity; develop and promote positions that will lead to effective international cooperation on government support for trade finance; and provide high-quality advice on International Monetary Fund and World Bank initiatives.

To ensure that Canada maintains an efficient and fair tax system, the Department will develop proposals to do the following: make the personal income tax system more competitive for the highly skilled workers, thus helping Canada attract and retain these workers, driving innovation and raising standards of living for all Canadians; and further strengthen Canada's business tax advantage to encourage investment by working with the provinces to make their business tax systems more competitive.

The Department will continue to work with provinces that still have retail sales taxes to identify and evaluate potential areas where changes to the current framework for federal-provincial harmonization could facilitate provincial movement towards the creation of a more fully modernized and efficient consumption tax system in Canada. The Department will also continue to support the government's efforts to gain provincial cooperation to achieve the goal of a 25-per-cent combined federal-provincial-territorial statutory corporate income tax rate by 2012.

The Department of Finance Canada will continue to implement practices to fulfill its commitment to conduct gender-based analysis (GBA) and related activities in response to two reports prepared by the Standing Committee on the Status of Women. These activities will include offering GBA training, reporting on GBA in the annual departmental performance report, and posting additional examples of good GBA on the Department's intranet site.

Finally, adjustments will be made to the Fiscal Equalization Program in order to enhance its fairness and sustainability. The growth path will reflect a three-year moving average of nominal gross domestic product (GDP) growth, which will help to ensure stability and predictability for both orders of government while still being responsive to changes in economic conditions.


More information about the Department of Finance Canada's priorities can be found in Canada's Economic Action Plan: Budget 2009.


Benefits for Canadians

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.

The Department's role in preparing the government's annual budget and estimating the size of the budget balance is critical to ensuring that the government contributes to advancing economic growth.

Canadian leadership and influence on international economic, financial, development, and trade issues also increase financial and economic stability. Improvements to the competitiveness, efficiency, and fairness of Canada's tax system encourage investment, promote economic growth, and increases Canadians' standard of living.

Finally, long-term, predictable, formula-based transfers to provinces and territories support improved public services for Canadians, which in turn enhance Canada's productivity and economic prosperity.


Program Activity 1.2: Transfer and Taxation Payment Programs


Program Activity 1.2: Transfer and Taxation Payment Programs
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–10 2010–11 2011–12
FTEs Planned Spending FTEs Planned Spending FTEs Planned Spending
12 50,743,524.6 12 50,716,302.2 12 52,657,672.9


Program Activity Expected Results Performance Indicators Targets
Payments enable Canadian provinces and territories to provide their residents with public services; payments to international organizations promote the economic advancement of developing countries Payments are made on time and according to levels and formulas set out in legislation 100 per cent

Summary

This program activity administers transfer and taxation payments to provinces and territories. 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 covers commitments and agreements with international financial institutions aimed at aiding 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.

Planning highlights

To help Canadian provinces and territories provide their residents with reasonably comparable levels of public services at reasonably comparable levels of taxation, the Department will undertake a number of activities related to transfer payments. These include the following: continuing to implement further data refinements to improve the calculation of major transfer entitlements; implementing changes to the Fiscal Equalization Program to enhance fairness and ensure ongoing, sustainable growth; and ensuring that agreements with provinces, territories, and Aboriginal governments meet policy and administrative objectives.

The Department will continue to administer several important loans and deferral arrangements currently in place, including the Equalization Repayable Floor loan and the deferral of the effects of Census 2001 and 2002 taxation data (Equalization and Canada Health and Social Transfer).

The Department will also conduct an evaluation of Canada's participation in international debt relief initiatives to ensure that they are consistent with departmental and government-wide priorities.

The Department will administer the government's contributions to the Toronto Waterfront Revitalization Initiative (TRWI),4 including the agreement with Harbourfront Centre. The purpose of the TRWI is to revitalize Toronto waterfront through investments in both traditional infrastructure, such as local transportation and sewers, and urban development of parks and green spaces and tourism-related facilities.


More information about the Department of Finance Canada's priorities can be found in Canada's Economic Action Plan: Budget 2009.


Benefits for Canadians

Equalization payments are made to eligible provincial governments in fulfillment of the constitutional commitment to ensuring that 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 in recognition of the unique circumstances in the North.

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 the principles of comprehensiveness, universality, portability, accessibility, and public administration and the prohibitions against user fees and extra-billing.

The Canada Social Transfer (CST) provides equal per-capita cash 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 provincial priorities. It also supports the federal government's commitment to prohibiting minimum residency requirements for social assistance.

Tax collection agreements with provinces and territories allow the federal government to streamline service and reduce administrative costs by having a single tax form and a single tax collector. Tax collection agreements with Aboriginal governments allow the federal government to vacate a negotiated portion of its GST and personal income tax room, to share it with Aboriginal governments, and to administer Aboriginal tax regimes.

The Department administers Canada's international financial commitments and various related transfer payments. These activities help to reduce the debt load of developing countries, provide grants to the world's poorest countries to support poverty reduction and economic growth, and foster a transition towards open, market-oriented economies.

Investments in sustainable urban development and infrastructure renewal on the Toronto waterfront will result in both social and economic benefits for the Toronto region. The projects that form part of the Toronto Waterfront Revitalization Initiative (TWRI) will bring much-needed economic redevelopment to areas of the city that are currently under used and will draw more economic, social, and cultural activity to the waterfront. In addition, the Harbourfront Centre Funding Program allows Harbourfront Centre to provide tourists and residents with continued access to cultural, recreational, and educational programs and activities.


Program Activity 1.3: Treasury and Financial Affairs


Program Activity 1.3: Treasury and Financial Affairs
Human Resources (FTEs) and Planned Spending ($ thousands)
2009–10 2010–11 2011–12
FTEs Planned Spending FTEs Planned Spending FTEs Planned Spending
30 32,389,701.2 30 34,773,701.2 30 36,997,701.2


Program Activity Expected Results Performance Indicators Targets
Prudent and cost-effective management of the government's treasury activities and financial affairs Consultations with market participants

Required authorities obtained and risk limits respected

Debt Management Strategy and Debt Management Reports, which support transparency and accountability

Successful operations

Timely and useful input obtained for the Debt Management Strategy

Governor in Council approval of aggregate borrowing limit; exposure limits respected; action taken where warranted

Timely and useful information for Parliament and the public; reports tabled within the deadlines established under the Financial Administration Act

Effective operations ensuring sufficient funds are available to support government and Crown operations


Summary

Canada's debt and reserves management activities include the funding of government operations, which involves the payment of debt service costs and investments in financial assets that are needed to maintain a prudent liquidity position. This program activity 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 area also includes oversight of the system of circulating Canadian currency (banknotes and coins) to meet the needs of the economy.

Planning highlights

Changes in the external environment and in the government's fiscal needs pose strategic and operational challenges for debt and cash management. These challenges are addressed through the maintenance of diversified, flexible borrowing programs.

The main objectives of the 2009–10 federal debt strategy are to raise funding, to refinance maturing debt, and to cover projected 2009–10 financial requirements. These include Budget 2009 fiscal stimulus measures and further actions by the government to inject liquidity into the financial system and help sustain the availability of credit in Canada.

On an ongoing basis, the Department works closely with Crown corporations and other federal entities that engage in borrowing and lending activities backed by the full faith and credit of the government. The Department helps to ensure that their borrowing is cost-effective and that treasury management is in keeping with the leading risk management practices.

The Department provides advice to the minister on the currency system, which involves the production of banknotes by the Bank of Canada and the circulation of coinage by the Royal Canadian Mint. In 2009–10, the Department will review and amend the memorandum of understanding with the Royal Canadian Mint for the provision of domestic coinage. This arrangement allows for predictable and sufficient coinage provision and is reviewed on an annual basis for adjustments and further improvements. Other activities will include improving the coinage system and finalizing, with the Bank of Canada, the design of the next generation of bank notes.


More information about the Department of Finance Canada's priorities can be found in Canada's Economic Action Plan: Budget 2009 under Annex 4: Debt Management Strategy, 2009–10.


Benefits for Canadians

Managing public debt effectively helps keep public debt costs low and financial markets functioning well. Fiscal savings from debt management better positions Canada to weather economic storms, and improves intergenerational equity by ensuring that future generations do not have to pay for the benefits received by their predecessors.

An effective currency system also ensures efficient trade and commerce within Canada.


Program Activity 1.4: Internal Services


Financial Resources ($ thousands)
2009–10 2010–11 2011–12
42,613.8 42,511.0 42,405.0


Human Resources (FTEs)
2009–10 2010–11 2011–12
246 246 246

Internal Services covers a variety of activities, including human resources, financial management, facilities and asset management, information management, information technology services, legal services, public affairs and communications, and internal audit and evaluation. Internal Services is also responsible for the delivery of the Department's key management priorities.

Implementation of the Integrated Human Resources Plan

Implementation of the 2008–11 Integrated Human Resources Plan will focus attention on three priority areas identified by management and employees: recruitment, employee development, and employee retention. The Plan will inform the development of annual branch-specific business plans and will ensure that the planning process reflects both ongoing and changing requirements.

Implementation of the Department's conflict of interest code

Compliance with the Department's new conflict of interest code (to be finalized in early 2009) will ensure that departmental personnel continue to observe the highest standards of professional ethics and conduct. The recently established office of values and ethics will develop, implement, monitor, and ensure the continuous improvement of frameworks, plans, and processes to meet the obligations of new legislation and policies, including the conflict of interest code.

Transition to dedicated corporate services

The dedicated services transition for the Department's Corporate Services Branch (CSB) was completed on February 1, 2009. The new model will allow corporate services managers to fully focus on the needs of the Department and create clear stewardship and accountability lines for the services provided. It will also allow the branches to deliver services better tailored to specific departmental needs. The number of full-time equivalents was reduced as a result of the transfer of employees to the Treasury Board of Canada Secretariat for those services that are still shared.

Other planning priorities to be undertaken in Internal Services over 2009–10 include the following:

  • supporting ongoing communication with the public, partners, and stakeholders about the state of the economy, the current worldwide economic slowdown, and financial markets turmoil; and
  • enhancing the timeliness and quality of departmental response to access to information and privacy (ATIP) requests and ensuring that departmental officials have the knowledge and ability to process ATIP requests promptly and accurately.