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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, which all program activities support.

Department of Finance Canada Program Activity Architecture - Text Version

This section presents the Department of Finance Canada's four program activities, their expected results and performance indicators, and the financial and non-financial resources that will be dedicated to each. This section also identifies how the Department plans to meet the expected results.

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)
2010–11		2011–12		2012–13
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
535	75,831.0	499	63,493.0	499	61,593.0

 

Program Activity Expected Results	Performance Indicators	Targets
An economic, social and fiscal framework that supports financial stability, sustainable growth, productivity, competitiveness and economic prosperity	Annual fiscal balance as a share of GDP and debt-to-GDP ratio	No target. The goal is to compare favourably with G7 counterparts.
	Competitiveness and efficiency of Canada's tax system	No target. The goal is to continue to propose changes to the tax system that improve incentives to work, save, and invest.
	Stability of financial services sector	No target. The long-term goal is to contribute to low and stable interest rates.

Summary

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 involves the negotiation of agreements and drafting of legislation.

To help develop first‑rate policy and advice to ministers, the Department of Finance Canada 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.

Canada's Economic Action Plan

Canada's Economic Action Plan, introduced in January 2009, is the Government of Canada's response to the deepest global recession since the Second World War. It presents one of the most comprehensive stimulus packages in the industrialized world.

Continued implementation of Canada's Economic Action Plan remains the overarching priority for the Department of Finance Canada in 2010–11. The Department will continue to work with and support departments in the timely and effective implementation of the Plan. Furthermore, it will monitor and assess the reported progress on the Plan's stimulus measures. The Department is also playing a lead role in strengthening Canada's financial system and was instrumental in enacting and implementing tax relief measures announced in the Plan.

Planning Highlights

Supporting prudent fiscal management

In 2010–11, the Department of Finance Canada will continue to conduct transparent, timely and accurate fiscal planning and develop sustainable fiscal policy in support of the government's commitment to returning to balanced budgets. This will include the presentation of economic and fiscal projections in future budgets and economic and fiscal updates, publication of The Fiscal Monitor, management of the fiscal framework and coordination of future budgets, and preparation of the Annual Financial Report.

The Department will continue to assess Canada's current and future economic conditions by regularly monitoring and forecasting economic performance, both in Canada and other countries, conducting private sector surveys of the Canadian economic outlook and examining factors that affect future growth prospects. The Department will also continue to fulfill its central agency role by providing advice to the Minister on the economic and fiscal implications of various policy and federal program issues.

Tax relief

Regarding the government's tax policy agenda, in the coming years the Department will focus on the following:

• Supporting the government's efforts in working with provinces and territories to move Canada toward the goal of a 25-per-cent combined federal-provincial statutory corporate income tax rate by 2012 as well as continued monitoring of G7 countries to ensure that Canada achieves and maintains the goal of having the lowest overall tax rate on new business investment in the G7 by 2010;
• Continuing to work with eligible provinces to ensure timely and accurate payments of the temporary financial incentive that was introduced in Budget 2007 to encourage provinces to remove their capital taxes;
• Considering ways to improve Canada's international tax system, including taking into account the final report of the Advisory Panel on Canada's System of International Taxation (submitted to the Minister of Finance on December 10, 2008);
• Determining appropriate actions following consultations initiated by the government in Budget 2009, including those relating to accelerated capital cost allowance for assets used in carbon capture and storage;
• Supporting federal-Aboriginal tax policy by negotiating and implementing the tax aspects of treaties and self-government agreements;
• Taking required measures in support of decisions by Ontario and British Columbia to enter into the harmonized sales tax framework;
• Developing proposals to make the personal income tax system more competitive for highly skilled workers;
• Developing proposals to improve work incentives for low-income Canadians; and
• Responding to recommendations of the Auditor General of Canada concerning outstanding technical income tax amendments by improving database management and usage and by implementing a plan to finalize packages of draft technical amendments that may be recommended for release in draft form or for tabling in Parliament.

Supporting the financial system

The 2008–09 global financial crisis made it difficult for Canadian financial institutions and a wide range of other borrowers to obtain funding. Budget 2009 contained several initiatives under the Extraordinary Financing Framework (EFF) to improve access to financing for Canadian households and businesses. The Department is the lead organization for these policy initiatives, actively coordinating operations with the Bank of Canada and federal Crown corporations (Business Development Bank of Canada, Canada Mortgage and Housing Corporation, and Export Development Canada) and providing its support to the Minister of Finance's external Advisory Committee on Financing.

In conjunction with managing an exit from these extraordinary measures and improving future access to financing, the Department of Finance Canada and partner agencies will be actively engaged in efforts to rebuild well-functioning private markets. The Department will also be providing advice on the development of Canada's financial sector, with particular emphasis on protecting the interests of consumers and businesses. With respect to the protection of these interests, the Department will be addressing payment systems issues with the introduction of a Code of Conduct governing practices in the credit and debit card market and supporting the December 2010 delivery of a national strategy for improving financial literacy by the independent, external Task Force on Financial Literacy.

The Department of Finance Canada will be implementing revisions, announced in fall 2009, to the legislative framework for the regulation of federally regulated private pension plans. The Department will also continue implementing legislative frameworks to combat financial crime on both the domestic and international fronts.

With respect to financial system and financial stability, in 2010–11 the Department of Finance Canada and its partner agencies (the Bank of Canada, the Office of the Superintendent of Financial Institutions, Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada) will continue to monitor financial conditions and the financial sector regulatory framework. The Department will play an active role in supporting the work of the multinational Financial Stability Board and be prepared to make recommendations to the Minister on any policy actions that may be required to increase the resilience of the Canadian financial system. As a matter of priority, the Department will be supporting the Canadian Securities Transition Office as it works toward the establishment of a Canadian securities regulator.

Supporting business competition, trade and foreign investment

In 2010–11, the Department will see an ongoing need to cooperate internationally to find innovative approaches to respond to global economic challenges, which are affecting world trade and investment and the ability of countries to make progress in multilateral liberalization efforts. The Department will continue to play a key role in government-wide efforts to open global markets further. The government has taken steps to provide tariff relief to Canadian industries to enhance their global competitiveness and to promote open markets globally. Further initiatives in this area are under consideration.

In 2010–11, a key priority for the Department is supporting Canada's presidency of the G8 process, its co-chairing of the June 2010 G20 Summit, and G7 and G20 Finance Ministers' meetings and related officials' meetings.

In addition, the Department is committed to the following:

• Developing and promoting positions that will lead to effective international cooperation on government support for trade finance;
• Providing high-quality advice on the key elements of a comprehensive International Monetary Fund (IMF) and World Bank reform exercise;
• Providing high-quality advice and leadership in the implementation of a global framework for sustainable growth, including addressing exit strategies, global imbalances and financial sector reform; and
• Providing advice on international financial assistance programs assembled by the IMF to help economies maintain stability and avoid financial crises.

Providing funding to provinces and territories in support of national priorities

In the Department's work with the provinces and territories, a key focus for the planning period is to continue to manage current and emerging issues related to social policy and major transfer programs resulting from uncertain global and domestic outlooks.

Additional commitments for 2010–11 include the following:

• Preparing legislation and regulations related to major transfer programs and other legislative requirements under the responsibility of the Minister of Finance;
• Continuing to manage and support the Canada Pension Plan Triennial Review process;
• Continuing to work with provinces and territories in effectively implementing Canada's Economic Action Plan and assessing reported progress on the Plan's measures; and
• Working with provinces and territories to analyze retirement income issues, as agreed to by the Finance ministers.

Gender-based analysis

The Department of Finance Canada will continue to fulfill its commitment to conduct gender-based analysis (GBA) on all new tax and spending measures developed for consideration by the Minister of Finance, where appropriate and where data exist, and to support the use of quality GBA in policy development through the delivery of training and other initiatives. In keeping with the government's GBA commitments and in response to recommendations made in the 2009 Spring Report of the Auditor General, the Department will implement appropriate GBA‑related actions.

Benefits for Canadians

Sound fiscal planning provides significant benefits to Canadians and businesses in Canada. It gives the government the strength to withstand fiscal and economic challenges and ensures that the costs of investments and services are not passed on to future generations. Sound economic and fiscal policies also enable the Canadian economy to better respond to various economic shocks.

Improvements to the competitiveness, efficiency, simplicity and fairness of Canada's tax system provide a basis for Canadians and Canadian businesses to realize their full potential, thereby encouraging investment, promoting economic growth and increasing Canadians' standard of living. These improvements also strengthen Canadians' confidence in the tax system.

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

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.

Canada's economic performance and future prosperity depend on a strong and stable global economy as well as trade and investment flows that are 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.

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)
2010–11		2011–12		2012–13
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
8	54,570,801.0	0	53,974,457.0	0	55,272,231.0

 

Program Activity Expected Results	Performance Indicators	Targets
Design and administration of the provision of payments to Canadian provinces and territories, which supports delivery of public services to their residents, and to international organizations to help promote the economic advancement of developing countries	Legislation drafted to reflect changes made to transfer programs, as required	According to statutory requirements, or as determined by environment
	Timely provision of information for Government of Canada reports	No target, as materials are generated on an as-needed basis according to environment
	Percentage of reporting requirements met, including reporting to Parliament, the Office of the Auditor General of Canada, internal auditors, the IMF and the Organisation for Economic Co-operation and Development	100 per cent of requests fulfilled on time and in an accurate manner

Summary

This program activity administers transfer and taxation payments to provinces, territories and Aboriginal governments. The payments, which are made in accordance with legislation and negotiated agreements, enable Canadian provinces and territories to provide their residents with public services and to support Aboriginal self-government. This program activity also covers commitments to and agreements with international financial institutions that are 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. This program activity also includes payments to Canadian organizations for the development of social and cultural infrastructure in Toronto's waterfront area.

Planning Highlights

Fiscal arrangements with provinces and territories

Key commitments for 2010–11 include the following:

• Timely, accurate and transparent administration of major transfer programs; and
• Effective management of transfer programs, including the calculation of entitlements, the provision of payments, the provision of information for Government of Canada reports and the provision of information to federal auditors. Information concerning entitlements is provided to provincial and territorial officials, including auditors, and the Department holds ongoing consultations with provincial and territorial officials on transfer issues.

Moreover, the Department of Finance Canada willcontinue to further refine the data used in calculating major transfer entitlements, to update regulations and legislation where required and to enhance the transparancy of the federal transfer system.

Commitments to international financial organizations

The Department of Finance Canada will work to ensure that requests for transfer payments to compensate Export Development Canada and the Canadian Wheat Board for debt reduction are accurate and in accordance with the Paris Club Agreed Minutes, the Canadian Debt Initiative and the terms of reference of the signed memoranda of understanding (MOU) between the Department and the respective organizations.

The Department will also ensure that transfer payments to international organizations and Canadian creditors are processed appropriately and in a timely manner.

Tax collection and administration agreements

In 2010–11, the Department of Finance Canada will work to ensure that agreements with provinces, territories and Aboriginal governments meet policy and administrative objectives.

Toronto waterfront renewal

In 2010–11, the Department of Finance Canada will work to ensure delivery of the Toronto Waterfront Revitalization Initiative and the Harbourfront Centre Funding Program by the sunset date of March 31, 2011.

Benefits for Canadians

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 Canada Health Transfer (CHT) provides provincial and territorial governments with long-term, growing support for health care; its cash support is legislated to grow by 6 per cent annually until 2013–14. The CHT supports the government's commitment to maintain the Canada Health Act's national criteria (comprehensiveness, universality, portability, accessibility and public administration), conditions, and prohibitions against user fees and extra-billing as well as the commitments made under the 2000, 2003, and 2004 Health Accords.

The Canada Social Transfer (CST) provides provincial and territorial governments with long-term, growing support to assist them in financing social programs, post-secondary education and programs for children; its support is legislated to grow by 3 per cent annually until 2013–14. The CST gives provinces and territories the flexibility to allocate payments to those areas according to their priorities, and it supports the federal government's commitment to prohibit minimum residency requirements for social assistance.

Payments for these major transfers are made in accordance with the terms and conditions established in the Federal-Provincial Fiscal Arrangements Act and associated regulations.

Beyond the CHT and CST, on occasion the federal government commits to providing the provinces and territories with additional, time-limited support that targets areas of shared priority, including the health and social sectors. For example, the government has provided support for the development and implementation of patient wait time guarantees. These payments are made in accordance with the terms and conditions established in associated legislation and regulations.

Tax collection agreements with provinces and territories allow the government to streamline service and reduce compliance and administrative costs by having a single tax form and a single tax collector. Tax administration agreements with Aboriginal governments allow the federal government to vacate and share a negotiated portion of its goods and services tax and personal income tax room with Aboriginal governments and to administer harmonized Aboriginal taxes.

Bilateral and multilateral debt relief helps to reduce the debt load of developing countries, put them back onto a path of financial sustainability and free up resources in their national budgets to support their development objectives. This and other transfers to international financial organizations enable Canada to make a strong contribution to global stability and growth.

Investments in sustainable urban development and infrastructure renewal for Toronto's waterfront result in both social and economic benefits for the region. The projects that form part of the Toronto Waterfront Revitalization Initiative bring much-needed economic redevelopment to currently under-used areas of the city and 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)
2010–11		2011–12		2012–13
FTEs	Planned Spending	FTEs	Planned Spending	FTEs	Planned Spending
23	33,960,231.1	23	38,006,231.1	23	41,482,231.1

 

Program Activity Expected Results	Performance Indicators	Targets
Prudent and cost-effective management of the government's treasury activities and financial affairs	Achievement of operational and strategic objectives	100 per cent of program line targets achieved
	Control of financial and operational risks	Risk events do not disrupt program 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. This program area also includes oversight of the system for circulating Canadian currency (banknotes and coins) to meet the needs of the economy.

Planning Highlights

Actions taken to support access to financing, together with the funding of the budget deficit, have significantly increased the market debt stock. In 2010–11, the Department will work with Crown corporations and market participants to effectively manage operations and will provide advice on a prudent debt management strategy.

In the area of circulating currency, the Department will support the Bank of Canada's introduction of a new series of banknotes with enhanced security features to reduce the incidence of counterfeiting. The Department will also work with the Royal Canadian Mint to enhance the efficiency of the coinage circulation system, including reviewing and amending the Royal Canadian Mint MOU for the provision of domestic coinage.

Other activities for the period include the following:

• Managing the retail debt program to support key activities and reducing administrative costs in conjunction with the Bank of Canada; and
• Continuing to support and refine the consolidated borrowing framework for Crown corporations (Farm Credit Canada, Business Development Bank of Canada and the Canada Mortgage and Housing Corporation) and negotiating a cost-sharing MOU with them.

Benefits for Canadians

Managing treasury affairs means ensuring that the daily operational funding needs of the government are met without fail. This facilitates regular government payments to Canadians as well as the funding of initiatives under Canada's Economic Action Plan, such as those providing households and businesses with access to financing.

Reducing public debt helps keep interest rates down, 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. Moreover, an effective coinage circulation system ensures efficient trade and commerce across Canada.

Program Activity 1.4: Internal Services

Financial Resources ($ thousands)

2010–11	2011–12	2012–13
45,954.0	42,945.0	42,946.0

Human Resources (FTEs)

2010–11	2011–12	2012–13
251	251	251

Summary

Internal Services covers a variety of activities: departmental governance; legal services; public affairs and communications; internal audit and evaluation; and corporate services, which include human resources, financial management, facilities and asset management, information management, and information technology services.

Planning Highlights

Internal Services enables the Department to deliver its management agenda. The key priorities for 2010–11 in this program area are as follows.

As chair of the G7 and G8 in 2010, Canada will host a separate G8 Summit in June 2010 and will be looked upon to provide leadership on key international financial and economic priorities. The Department of Finance Canada will be actively engaged in effective planning and implementation of logistics in support of a number of related Ministers' and officials' meetings.

The Department of Finance Canada will continue to work in 2010–11 to ensure effective alignment and implementation of the Clerk of the Privy Council's Public Service Renewal priorities and support the Deputy Minister's accountability for people management following the changes made to human resources governance in 2009. These efforts will take place in the context of the completion of the implementation of the Department's three-year Integrated Human Resources Plan that covers the 2008–11 period and, more specifically, through the development, implementation and monitoring of the 2010–11 Department of Finance Human Resources Action Plan that is being integrated into the Department's Business Plan for 2010–11.

Over the coming year, the Department of Finance Canada will continue to implement improvements to the Department's Security Program Framework and Business Continuity Planning Program. This will include implementing the new Departmental Security Policy and Business Continuity Planning Program, as well as further incorporating business continuity planning into the integrated planning process.

Moreover, the Department will continue to advance initiatives undertaken in previous years. This will involve the following:

• Continuing implementation of the Values and Ethics Action Plan 2010–11 to 2012–2013, including requirements under the Department's Conflict of Interest Code and the Values and Ethics Code for the Public Service;
• Meeting requirements established under the new Treasury Board Policy on Evaluation and Policy on Internal Audit, which came into effect April 1, 2009, and July 1, 2009, respectively;
• Assessing and preparing for implementation of new government-wide policies on internal control, managing procurement, and departmental quarterly financial reports, among others; and
• Working to continuously improve the quality and level of corporate services provided to the Department.

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