Treasury Board of Canada Secretariat
Symbol of the Government of Canada

ARCHIVED - Department of Finance Canada - Report


Warning This page has been archived.

Archived Content

Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats on the "Contact Us" page.

Minister's Message

The Honourable James M. Flaherty

I am pleased to present the 2011–12 Report on Plans and Priorities for the Department of Finance Canada, which reflects both the broad challenges and opportunities facing the country as it emerges from the global economic recession.

Canada's fiscal situation remains one of the strongest among the industrialized countries, and our economic prospects are very encouraging. Through the success of Canada's Economic Action Plan, we have created jobs, supported small and medium-sized businesses, and helped families during the worst of the global economic downturn.

However, while Canada's economic prospects are positive, particularly in relation to other nations, we cannot rest on our laurels. The recovery in the world economy remains uneven, and many challenges remain to securing the enduring prosperity that Canadians have worked hard to achieve.

To meet these challenges, we will complete the stimulus phase of Canada's Economic Action Plan to ensure that the economic recovery is sustained. As our recovery strengthens, we will implement the next phase of the Economic Action Plan, which will continue to lay the foundation for long-term, sustainable growth by maintaining the government's focus on the economy, jobs and growth and by returning Canada's books to balance.

Accordingly, during the year ahead, the Department will focus its efforts on four key priorities.

The first, sound fiscal management, focuses on implementing the plan to return to balance set out in Budget 2010. Sound fiscal management will help maintain a competitive, efficient tax system, ensure sustainability of our social infrastructure, and enable the Government of Canada to deal with future economic challenges. The Department will also work with the Bank of Canada, Crown corporations and market participants to effectively manage operations and provide advice on a prudent debt management strategy.

To address our second priority, sustainable economic growth, we will focus on developing and implementing sound macroeconomic, tax and structural policies that support the drivers of productivity and growth. In addition, the Department will maintain its efforts in promoting the competitiveness, efficiency, safety and soundness of Canada's financial sector.

The Department's third priority for the year ahead is strengthening Canada's social policy framework through such initiatives as programs related to employment insurance and pensions and assistance for seniors, persons with disabilities, veterans and children.

Our fourth priority will be achieving effective international influence. The Department will continue its active engagement with other G20 countries, working toward a more stable and secure international financial system and promoting Canada's trade and investment interests.

This Report on Plans and Priorities provides key details on the Department's strategies to ensure that Canada's recovery from the recession continues, and that our country emerges even stronger, with a competitive, efficient and fair tax system, higher levels of business investment, renewed infrastructure and skills, and a more prominent voice as a global financial sector leader.

James M. Flaherty
Minister of Finance



Section I: Departmental Overview

The Report on Plans and Priorities is a key accountability document that presents the Department of Finance Canada's financial and non-financial plans for the 2011–12 fiscal year.

Raison d'être and Responsibilities

The Department of Finance Canada is committed to making a difference for Canadians by helping the Government of Canada develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs. It plays an important role in ensuring that government spending is focused on results and delivers value for taxpayer dollars. The Department interacts extensively with other federal organizations and plays a pivotal role in the analysis and design of public policy across a wide range of issues affecting Canadians.

The Department's responsibilities include the following:

  • Preparing the federal budget and the fall updating of economic and fiscal projections;
  • 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 financial sector policy and legislation; and
  • Representing Canada in various international financial institutions and groups.

The Department also plays an important central agency role, working with other departments to ensure that the government's agenda is carried out and that ministers are supported with first-rate analysis and advice.

The Minister of Finance is accountable for ensuring that his responsibilities are fulfilled both within his portfolio and with respect to the authorities assigned through legislation.

Contribution to the Federal Sustainable Development Strategy

The Department of Finance Canada is a participant in the Federal Sustainable Development Strategy. The Federal Sustainable Development Strategy was tabled by the Government of Canada in October 2010, in accordance with the Federal Sustainable Development Act. The Strategy represents a major step forward for the Government of Canada by including environmental sustainability and strategic environmental assessment as an integral part of its decision-making processes. The Strategy identifies four priority themes, which are supported by goals, targets and implementation strategies.

The Department contributes to three of the four themes outlined in the Strategy: Addressing Climate Change and Air Quality, Protecting Nature, and Shrinking the Environmental Footprint – Beginning with Government.

For additional details on the Department's activities that support sustainable development, please visit the Department's website.[1] For complete details on the Federal Sustainable Development Strategy, please visit Environment Canada's website.[2]

The following symbols are used in this Report on Plans and Priorities to indicate the Department's activities that contribute to the themes of the Strategy:

Theme I: Addressing Climate Change and Air QualityTheme I: Addressing Climate Change and Air Quality

Theme II: Maintaining Water Quality and AvailabilityTheme II: Maintaining Water Quality and Availability

Theme III: Protecting Nature ThemeTheme III: Protecting Nature

IV: Shrinking the Environmental Footprint – Beginning with GovernmentTheme IV: Shrinking the Environmental Footprint – Beginning with Government  

Strategic Outcome and Program Activity Architecture

The Department of Finance Canada provides effective economic leadership with a clear focus on one strategic outcome, which expresses a long-term and enduring benefit for Canadians:

A strong and sustainable economy, resulting in increasing standards of living and improved quality of life for Canadians

The Report on Plans and Priorities describes how plans and commitments for 2011–12 are linked to the Department's Program Activity Architecture (PAA), for which expected results and performance indicators were developed as part of the performance measurement framework.

The PAA provides an overview of how all of the Department's program activities and subactivities aim to contribute to the achievement of the Department's strategic outcome.

The Department has four program activities, which each contain a varying number of program subactivities. The four program activities are Economic and Fiscal Policy Framework, Transfer and Taxation Payment Programs, Treasury and Financial Affairs, and Internal Services.

The Economic and Fiscal Policy Framework program activity aims to maintain a competitive and efficient tax system, and provides for the management of expenditures in line with the Budget Plan and the financial operations of the Government of Canada.

The Transfer and Taxation Payment Programs program activity supports provinces and territories with funding for health, social programs and other shared priorities. This program activity also enables 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, and provides territorial governments with funding to support public services, in recognition of the higher cost of providing programs and services in the North.

The Treasury and Financial Affairs program activity supports the government's effort to manage its operating budgets and other financial operations of the Government of Canada.

The Internal Services program activity includes a number of functions and resources that support the Department as a whole in achieving its strategic outcome. As such, it supports each program activity within the PAA.

The Department's PAA is presented below.

Department of Finance Canada Agency's Program Activity Architecture

[D]

Planning Summary

Financial Resources ($ thousands)

The financial resources presented below represent the total funds available to the Department of Finance Canada to deliver its mandate. They are composed of statutory votes and voted amounts.


2011–12 2012–13 2013–14
85,657,400.4 88,975,260.7 92,733,791.7

Budget 2010 included measures to restrain the growth of federal program expenses. First, for 2010–11, departments will be required to absorb the cost of negotiated wage increases by reallocating funds from within existing operating budgets. Additional funds will not be provided to departments for this type of expenditure. Second, for 2011–12 and 2012–13, the salary and operating budgets of departments will be frozen at 2010–11 levels.

The Department of Finance Canada is working to finalize an action plan for managing its resources under the operating freeze announced in Budget 2010.[3] The Department will be able to manage within existing resources through personnel attrition, by identifying efficiencies elsewhere in its operating budget and by using other existing control mechanisms, such as those related to executive staffing. A more detailed discussion of this action plan, including a progress report, will be included in the Department's 2010–11 Departmental Performance Report.

The Department's planned operating expenses from 2010–11 to the end of 2013–14 are presented below. The actual spending amounts for 2009–10 are included for reference.


($ thousands)
  2009–10
Actual
2010–11
Forecast
2011–12
Planned
2012–13
Planned
2013–14
Planned
Operating expenditures 121,646 127,653 100,884 91,452 91,421

The financial data presented in the Planning Summary section of the 2011–12 Report on Plans and Priorities outline the Department's total planned financial resources. These financial resources include operating expenses — such as wages, telecommunications, leases, utilities, materials and supplies — as well as other expenses, such as grants, contributions, loans, investments, payments to Crown corporations, and advances. These other expenses are not subject to the requirements of the Budget restraint measures.

Human Resources (Full-Time Equivalent, FTE)

The following table summarizes the total planned human resources for the Department for the next three fiscal years. Human resources are presented as the number of full-time equivalents (FTEs).

2011–12 2012–13 2013–14
787 780 780

 


Strategic Outcome: A strong and sustainable economy, resulting in increasing standards of living and improved quality of life for Canadians
Performance Indicators Targets
Real gross domestic product (GDP) growth No target. The goal is to compare favourably with G7 counterparts
Unemployment rate No target. The goal is to compare favourably with G7 counterparts
Annual fiscal balance as a share of GDP and debt-to-GDP ratio No target. The goal is to compare favourably with G7 counterparts

($ thousands)
Program Activity (PA)[4] Forecast Spending
2010–11
Planned Spending Alignment to Government of Canada Outcomes
2011–12 2012–13 2013–14
PA 1: Economic and Fiscal Policy Framework 99,353.1 231,374.0 61,272.0 61,074.0 Strong economic growth
PA 2: Transfer and Taxation Payment Programs 55,999,833.1 55,002,295.4 55,720,453.7 58,476,184.7 All outcomes
PA 3: Treasury and Financial Affairs 28,572,000.0 30,381,000.0 33,151,000.0 34,154,000.0 Strong economic growth[5]
PA 4: Internal Services 51,195.5 42,731.0 42,535.0 42,533.0  
Total Planned Spending 85,657,400.4 88,975,260.7 92,733,791.7  

 

Contribution of Priorities to the Strategic Outcome

This subsection identifies the operational and management priorities of the Department of Finance Canada.

The Department helps shape and deliver the Government of Canada's agenda, particularly its fiscal and economic priorities. As a central agency, it plays a key role in assisting other government departments and agencies on a wide range of policies to ensure that government outcomes are met, particularly with respect to expenditures and financial management.

In accordance with broader government priorities and plans established in the Speech from the Throne and in the last federal budget, over the planning period the Department will continue to focus on the achievement of its overarching priority, which is to return the budget back to balance as the economy recovers.

The Department will also tackle its four key ongoing operational priorities: sound fiscal management, sustainable economic growth, sound social policy framework, and effective international influence. In addition, the Department will focus on its identified management priority, namely, sound financial and human resources management. All of the Department's priorities are linked to its single strategic outcome.

Operational Priorities

Sound Fiscal Management

Type of priority: Ongoing

Over the planning period the Department of Finance Canada will continue to play a major role in ensuring that the government continues to manage spending responsibly, maximizes the benefits of government assets to Canadians and takes measures to reduce the cost of government operations while ensuring their effectiveness.

The Department will work to protect Canada's macroeconomic and fiscal framework and to ensure the sustainability of Canada's social infrastructure and its competitive, efficient and fair tax system. Maintaining a sound economic and fiscal framework is critical in the context of global economic uncertainty.

Finally, the Department will continue to manage the government's funds in accordance with the guiding principles of transparency, regularity, liquidity and prudence.

Why is sound fiscal management a priority for the Department of Finance Canada?

  • To preserve Canada’s social infrastructure and competitive, efficient and fair tax system;
  • To give the government the flexibility to deal with unforeseen economic and fiscal developments;
  • To ensure that the costs of investments and services are not passed on to future generations; and
  • To maintain Canada’s economic and fiscal performance at a level that compares favourably with other major industrialized countries.

To meet this priority, the Department plans to:

  • Ensure effective management of the fiscal framework by returning the budget to balance over the medium term;
  • Provide sound analysis and advice on fiscal and economic developments and on expenditure and tax requests;
  • Work with the Bank of Canada, Crown corporations and market participants to effectively manage operations and to provide advice on a prudent debt management strategy; and
  • Maintain the integrity of the tax system to protect the government’s revenue base while ensuring tax fairness.
Sustainable Economic Growth

Type of priority: Ongoing

Strong sustainable growth requires sound macroeconomic, tax and structural policies that support the drivers of productivity and growth: business investment and innovation, human capital formation, renewed public infrastructure and prudent financial market governance. Recent government initiatives have contributed to some of these drivers of growth by reducing taxes on individuals; by improving business tax competitiveness, efficiency and fairness; and by reducing red tape, lowering tariffs and modernizing regulation.

Why is sustainable economic growth a priority for the Department of Finance Canada?

  • To put in place sound policies and effective programs that help create the conditions necessary for both sustainable long-term economic growth and medium-term fiscal balance, thereby increasing Canadians’ standard of living; and
  • To improve consumer and business access to financing and to strengthen the financial system.

To meet this priority, the Department plans to:

  • Continue to facilitate government partnerships with the provinces and territories and the private sector in areas that contribute to a strong economy;
  • Provide high-quality research and effective and sound analysis and advice on economic and policy issues;
  • Maintain its efforts in promoting competitiveness, efficiency, safety and soundness of Canada's financial sector to ensure that domestic financial markets function well; and
  • Continue its effort to ensure the competitiveness, efficiency and fairness of the tax system to encourage investment and entrepreneurship, labour force participation, and skills and knowledge development.
Sound Social Policy Framework

Type of priority: Ongoing

A sound social policy framework requires managing current and emerging pressures related to social policy and major transfer programs to ensure that those programs remain accessible, sustainable and effective for all Canadians.

Why is a sound social policy framework a priority for the Department of Finance Canada?

  • To support the government’s efforts to promote equality of opportunity for all citizens across the country; and
  • To help the government meet its objectives for the quality of life in Canada’s communities and to help ensure sustainable and accessible health care, post-secondary education and social safety net programs.

To meet this priority, the Department plans to:

  • Ensure that agreements with provinces, territories and Aboriginal governments meet policy and administrative objectives;
  • Provide, in collaboration with other central agencies, advice and analysis on the fiscal and economic implications of the government's social policies and programs related to health care, immigration, employment insurance and pensions, and post-secondary education; its Aboriginal and cultural programs; and its programs for seniors, persons with disabilities, veterans and children; and
  • Maintain collaborative, productive relations with provincial and territorial governments.
Effective International Influence

Type of priority: Ongoing

Effective international influence requires active engagement with key economic partners on bilateral, regional and multilateral issues to leverage Canada’s strengths and to promote Canadian interests. This effort includes promoting Canada's trade and investment interests, fostering effective and innovative aid policies aimed at reducing global poverty, and working toward a more stable and secure international financial system.

Why is effective international influence a priority for the Department of Finance Canada?

  • To support the stability of the global financial system; and
  • To maintain secure and open borders, to strengthen global growth and stability, and to contribute to creating a more stable global economy, which will support Canadian prosperity.

To meet this priority, the Department plans to:

  • Continue to develop and support policies and measures designed to maintain secure and open borders and further Canada’s trade and investment interests;
  • Participate in negotiations on market access, trade rules and investment to support the implementation of the Global Commerce Strategy;
  • Advance Canada’s leadership in a wide range of international financial institutions and economic organizations;
  • Continue efforts to negotiate international tax treaties and tax information exchange agreements;
  • Continue to assist in the government’s efforts to reduce global poverty; and
  • Advance international standards to prevent abuses to the international financial system, including anti-terrorist financing measures.

Management Priority

Sound and Efficient Financial and Human Resources Management

Type of priority: Ongoing

Sound and efficient financial and human resources management helps the Department of Finance Canada effectively carry out its mandate and provides the necessary support to the Department in this period of budgetary restraint.

Why is sound and efficient financial and human resources management a priority for the Department of Finance Canada?

  • Continued fiscal restraint creates a greater need for sound and efficient management of the Department’s operational budget and its human resources, including strategic recruitment, strengthening of the workplace, knowledge transfer and succession planning.

To meet this priority, the Department plans to:

  • Focus on strategic recruitment and retention;
  • Implement new government-wide financial management policies, including internal control, quarterly financial reporting, future-oriented financial statements, and investment planning; and
  • Continue to ensure the effective alignment and implementation of the Clerk of the Privy Council’s Public Service Renewal priorities.

To effectively support the achievement of its management agenda, the Department has established an integrated planning process to ensure a systematic, transparent and fully documented approach to senior management decision making. This process assists in priority setting, commitment setting, business planning and performance reporting by establishing the necessary linkages between people, resources and actions to manage risks and achieve results. The Department’s integrated planning process fully integrates human resources planning as part of the annual planning cycle. The Report on Plans and Priorities and the Departmental Performance Report are products of the Department’s integrated planning process.

The achievement of the Department’s mandate depends significantly on the knowledge and expertise of its employees. The Department continually needs to recruit individuals with specific skills, high potential and strong commitment, while retaining corporate memory through knowledge transfer and succession planning. To achieve this goal, the Department has developed and communicated to all managers, in the context of the Integrated Planning Cycle, a forward-looking document entitled Department of Finance 2011–12 Human Resources Strategic Outlook. This document contains detailed human resources analysis, including an internal and external environmental scan, to help managers keep in mind medium- and long-term considerations affecting the Department’s workforce when conducting the integrated planning exercises. The Department is confident that it has appropriate recruitment and retention strategies and tools in place to address its current and future human resources needs, and the capacity to deliver on its priorities and plans.

Risk Analysis

The Canadian economy continues to recover from the worst global recession since the 1930s. The Canadian economy has fared much better than other major advanced economies throughout the recession and over the recovery to date, reflecting significant policy stimulus and Canada's solid economic fundamentals. Going forward, private sector economists expect that economic growth in Canada will continue to be moderate. Nevertheless, the uncertainty surrounding the global economic outlook remains elevated, posing risk to the Canadian outlook.

The Department of Finance Canada must manage the risks related to the economic recovery. It must have in place the infrastructure, resources and authorities needed to respond to an evolving economic and financial sector environment. It must manage the increased requirement for coordinated international decision making to deal with uncertain world economic conditions. It must also ensure that responsible agencies take effective coordinated action to support the soundness, integrity and reputation of the Canadian financial system.

In addition, the Department must respond to a range of challenges given the significant workload associated with implementing the government's plan to bring the budget back to balance, as well as following through on the exit strategy of Canada's Economic Action Plan. The Department must continue to assess and prioritize its operations and activities by allocating existing resources in the most effective and efficient manner possible.

Under these circumstances, the primary risks that the Department will be facing are associated with access to the highly skilled staff and tools needed to fulfill the Department's mandate. Given the nature of the Department's work and the need to respond quickly to evolving and emerging policy priorities, maintaining access to professional expertise will require vigilant priority setting and the implementation of appropriate recruitment, development and retention strategies within the context of constrained operating budgets.

The Department must also continue to have processes in place to ensure that accurate information is provided in budget documentation and other publications and to manage the risks of potential security breaches and potential failures in supporting systems and processes. The departmental Business Continuity Plan will help respond effectively to any events affecting business to ensure that the Department's core responsibilities can be carried out.

Risk management is an ongoing process that helps the Department better manage potential risks and prepare mitigation measures.

Expenditure Profile

For the 2011–12 fiscal year, the Department of Finance Canada plans to spend $85.7 billion to meet the expected results of its program activities and to contribute to its strategic outcome. The figures below illustrate the Department's spending trend by program activity from 2008–09 to 2013–14.

Expenditure Profile - Spending Trend Graph

[D]

Spending in the Economic and Fiscal Policy Framework program activity includes the establishment of a Canadian Securities Regulation regime and a Canadian Regulatory Authority as well as departmental operating expenditures and employee benefits.

The temporary increase in 2011–12 planned spending is mainly due to compensation to provinces and territories of up to $150 million for matters relating to the transition to a Canadian securities regulator provided under the Budget Implementation Act, 2009.

Payments to the Canadian Securities Regulation Regime Transition Office of $5.4 million, $11 million, and $11 million are reflected in the 2009–10 actual expenditures, the 2010–11 forecast, and the 2011–12 planned spending respectively.

Departmental operating expenditures and employee benefits decrease from $70 million in 2011–12 to $61 million in subsequent years due to the expiry of time-limited funding related to various initiatives, including government advertising programs and the 2010 Muskoka G8 Summit.

Expenditure Profile - Spending Trend Graph

[D]

*Most spending in this program activity relates to transfer payments from the federal government to other levels of government.

Spending in the Transfer and Taxation Payment Programs program activity includes transfer payments to the provinces and territories and transfers to international financial institutions for the purposes of debt relief, and financial and technical assistance to developing countries. In addition, the program activity administers taxation payments to the provinces and territories and to Aboriginal governments.

The increase from actual to forecast and planned spending is mainly due to increased transfer payments for the Canada Health Transfer, the Canada Social Transfer, Fiscal Equalization, and Territorial Formula Financing, which are forecast to grow as legislated until 2013–14. The Canada Health Transfer will grow by 6 per cent annually, and the Canada Social Transfer by 3 per cent annually. Territorial Formula Financing will grow in line with its legislated funding framework, and the Equalization program will grow in line with the economy. Transitional assistance payments to Ontario and British Columbia related to the harmonized value-added tax framework started in 2009–10 and will continue to 2011–12.

Expenditure Profile - Spending Trend Graph

[D]

Spending in the Treasury and Financial Affairs program activity includes loans to Crown corporations, interest and other costs related to the public debt, and expenditures related to domestic coinage.

In Budget 2007 the government announced that the domestic borrowing needs of Farm Credit Canada, the Business Development Bank of Canada, and the Canada Mortgage and Housing Corporation would be met through direct lending beginning April 1, 2008. Actual expenditures reflect loans to these organizations of $133.9 billion and $116.4 billion in 2008–09 and 2009–10 respectively. There is no forecast and planned spending for 2010–11 and subsequent years for direct lending to these Crown corporations.

Interest and other costs related to the public debt vary depending on changes to debt levels and interest rates. Actual expenditures reflect public debt costs of $29.9 billion and $27.0 billion in 2008–09 and 2009–10 respectively. Forecast spending includes an amount of $28.4 billion in 2010–11 and $30.3 billion in 2011–12.

Costs for the production and distribution of domestic coinage vary based on metal composition, production volumes and distribution. Actual expenditures reflect costs of $126 million and $133 million in 2008–09 and 2009–10 respectively. Forecast spending includes an amount of $140 million in 2010–11 and $130 million in 2011–12.

Expenditure Profile - Spending Trend Graph

[D]

The Internal Services program activity involves a group of related activities and resources that support program activities and other corporate obligations of the Department.

Spending for the Internal Services program activity mostly includes operating expenditures and employee benefits. The increase in forecast spending and the subsequent decrease in planned spending are mainly due to time-limited funding of various initiatives.

Estimates by Vote

For information on the Department of Finance Canada's organizational votes and statutory expenditures, please see the 2011–12 Main Estimates publication. An electronic version of the Main Estimates is available at http://www.tbs-sct.gc.ca/est-pre/2011-2012/me-bpd/info/info-eng.asp.