ARCHIVED - RPP 2007-2008
Department of Finance Canada

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Section I: Overview

Minister's Message

Canada is on the best economic and fiscal footing of any G7 nation, with the lowest debt burden and the highest employment rate in more than 30 years. To maintain our position of strength, we must respond to a complex and fast-changing world. We not only have to do things right; we must also do the right things. We must make sure we have the political will and the comprehensive programs to improve government effectiveness. In Budget 2006, we made reductions in every way the federal government taxes Canadians. We are absolutely committed to balanced budgets, debt reduction, controlled spending, and reducing the regulatory burden on business.

 

Canada's economy has been performing well in recent years, but we still face many challenges. To remain at the economic forefront, we introduced a long-term economic plan, Advantage Canada, that will shape Canada's future and improve the quality of life for families, students, workers, and seniors.

Advantage Canada recognizes the government's obligation to manage Canadians' hard-earned tax dollars effectively and efficiently—and we take that responsibility very seriously. To honour that trust, we must be fiscally prudent.

This Report on Plans and Priorities highlights the Department of Finance Canada's key strategies and goals for supporting the government's fiscal and economic priorities.

The Department plays a vital role in helping the government develop the kind of social and economic policies needed for ongoing economic growth and a better quality of life for all Canadians.

It will continue to ensure that government spending is focussed on results and delivers value for taxpayer dollars.

As this Report on Plans and Priorities makes clear, the government will continue to take the steps needed to build an even stronger economy and to make this country a world leader.

Management Representation Statement

I submit for tabling in Parliament the 2007–08 Report on Plans and Priorities (RPP) for the Department of Finance Canada.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2007–2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports.

• It adheres to the specific reporting requirements outlined in the Treasury Board of Canada Secretariat guidance.
• It is based on the Department's approved Program Activity Architecture as reflected in its Management, Resources, and Results Structure.
• It presents consistent, comprehensive, balanced, and reliable information.
• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it.
• It reports finances based on approved planned spending numbers from the Treasury Board of Canada Secretariat.

The paper version was signed by

Rob Wright
Deputy Minister
Department of Finance Canada

List of Abbreviations

The following abbreviations are used in this report:

AML	Anti-money laundering
ATF	Anti-terrorist financing
CCA	Capital cost allowance
CHT	Canada Health Transfer
CHST	Canada Health and Social Transfer
CPP	Canada Pension Plan
CST	Canada Social Transfer
EBRD	European Bank for Reconstruction and Development
FATF	Financial Action Task Force on Money Laundering
FINTRAC	Financial Transactions and Reports Analysis Centre of Canada
FSAP	Financial Sector Assessment Program
G7	Group of 7 leading industrialized countries
G8	G7 nations plus Russia
G20	The members of the G20 are the finance ministers and central bank governors of 19 countries, plus the European Union
GDP	Gross domestic product
GST/HST	Goods and Services Tax / Harmonized Sales Tax
HIPC	Heavily Indebted Poor Countries
IAE	International Assistance Envelope
IDA	International Development Association
IMF	International Monetary Fund
OECD	Organisation for Economic Co-operation and Development
PCMLTFA	Proceeds of Crime (Money Laundering) and Terrorist Financing Act
PRGF	Poverty Reduction and Growth Facility
RCM	Royal Canadian Mint
SDS	Sustainable Development Strategy
TFF	Territorial Formula Financing
WTO	World Trade Organization

Summary Information

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

Financial Resources ($ thousands)

2007–08	2008–09	2009–10
75,817,194	77,337,194	79,261,798

Human Resources (FTEs)

2007–08	2008–09	2009–10
798	789	789

Departmental Priorities

		Planned Spending ($ thousands)
Name	Type	2007–08	2008–09	2009–10
1. Sound Fiscal Management	Ongoing	34,874,916	34,824,630	34,866,557
2. Sustainable Economic Growth	Ongoing	39,206	38,060	38,193
3. Sound Social Policy Framework	Ongoing	40,345,750	41,921,260	43,834,463
4. Effective International Influence	Ongoing	557,323	553,244	522,585
Total Planned Spending		75,817,194	77,337,194	79,261,798

Program Activities by Strategic Outcome

	Expected Results	Planned Spending  ($ thousands)
		2007–08	2008–09	2009–10	Contributes to the Following Priority (Priorities)
Strategic Outcome: To create a fiscal, economic, social, and global advantage for Canada by providing appropriate policies and sound advice with respect to economic, social, and financial conditions and to the government's overall agenda.
Tax Policy	Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue	30,400	30,517	30,048	Sound Fiscal Management; Sustainable Economic Growth; Sound Social Policy Framework
	Sound fiscal relationships with provinces, Aboriginal governments, and other countries	2,288	2,297	2,262	Sound Fiscal Management; Sustainable Economic Growth; Sound Social Policy Framework
Economic and Fiscal Policy	Transparent fiscal planning and sustainable fiscal policy	6,229	6,253	6,253	Sound Fiscal Management
	Effective analysis of economic performance	8,778	8,812	8,812	Sustainable Economic Growth
Financial Sector Policy	Prudent and cost-effective treasury management of the borrowing activities of Crown corporations and the government's investment portfolios	3,370	2,971	3,067	Sound Fiscal Management
	A regulatory framework that promotes a sound, efficient, and competitive Canadian financial sector that serves the needs of individuals, businesses, and the economy	10,599	9,343	9,646	Sustainable Economic Growth
	A legislative and regulatory framework that ensures the security and viability of federally regulated defined benefit pension plans	971	856	883	Sound Social Policy Framework
	An effective anti-money laundering (AML) and anti-terrorist financing (ATF) framework	3,172	2,797	2,887	Effective International Influence
Economic Development and Corporate Finance	Sound advice to the minister on economic, funding, and policy proposals	8,289	8,321	8,321	Sound Fiscal Management; Sustainable Economic Growth; Sound Social Policy Framework
Federal-Provincial Relations and Social Policy	A principled framework to restore fiscal balance in Canada	7,032	7,060	7,059	Sound Fiscal Management
	Sound advice to the minister on government social policy priorities	5,265	5,285	5,285	Sound Social Policy Framework
International Trade and Finance	Secure access to key markets for Canadian exporters and investors	6,445	6,470	6,469	Sustainable Economic Growth
	Canadian leadership and influence in international forums on international economic, financial, development, and trade finance issues	9,433	9,469	9,469	Effective International Influence
Public Debt	Stable low-cost financing for the Government of Canada	34,597,000	34,545,000	34,585,000	Sound Fiscal Management
	A well-functioning market in Government of Canada securities	100,000	100,000	100,000	Sound Fiscal Management
Domestic Coinage	A supply of coinage at a reasonable cost	145,000	147,000	149,000	Sound Fiscal Management
Transfer Payments to Provinces and Territories	Administration of federal transfer payments to the provinces and territories, including Equalization, Territorial Formula Financing, the Canada Health Transfer, and the Canada Social Transfer	40,328,203	41,903,765	43,817,109	Sound Social Policy Framework
International Financial Organizations	Payments to international organizations and Canadian creditors consistent with our commitments	544,717	540,978	510,229	Effective International Influence
Total Department of Finance Canada		75,817,194	77,337,194	79,261,798

Note: The planned spending figures associated with each expected result are estimates based on management representation.

Departmental Plans and Priorities

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

Mandate

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

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

Mission

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

Strategic outcome

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

Program activities

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

1. Tax Policy;
2. Economic and Fiscal Policy;
3. Financial Sector Policy;
4. Economic Development and Corporate Finance;
5. Federal-Provincial Relations and Social Policy;
6. International Trade and Finance;
7. Public Debt;
8. Domestic Coinage;
9. Transfer Payments to Provinces and Territories; and
10. International Financial Organizations.

Alignment with Government of Canada outcomes

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

Operating environment

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

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

Partnerships, consultation, and collaboration

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

The government, Cabinet, and the Treasury Board

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

Parliament and parliamentary committees

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

The public and Canadian interest groups

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

Departments, agencies, and Crown corporations

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

Provincial and territorial governments

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

Financial market participants

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

International economic and finance community

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

International trade community

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

International engagement

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

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

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

Accountability and risk management

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

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

The Internal Audit and Evaluation Division (IAED) is responsible for developing risk-based audit and evaluation plans, as well as for the conduct of internal audit and evaluation engagements that meet professional standards. Internal audits and evaluationsare selected based on potential risks and exposures and areidentified annuallyin the respectiverisk-based audit and evaluation plans, which are approved by the Internal Audit and Evaluation Committee chaired by the deputy minister. The Committee also reviews and approves audit and evaluation reports, and their corresponding management action plans.

The new Treasury Board Policy on Internal Audit came into effect on April 1, 2006, that significantly increases the requirements of deputy heads, audit committees, and internal audit functions in the federal government. In response to the new Policy and additional requirements embedded in the Federal Accountability Act, the Department is undertaking significant efforts to strengthen internal audit capacity and delivery processes. Specifically, IAED has developed a comprehensive three-year plan to implement the structure and activities required to adhere to the Policy. In 2006–07, significant progress was made to develop the internal audit capacity within the Division. IAED will continue to build this capacity to ensure that the Department has a sufficient, competent, and professional internal audit function in place. Regarding program evaluation, a needs assessment review is being undertaken to identify and assess program evaluation requirements for the Department.

Priorities

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

Priority 1: Sound Fiscal Management

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

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

The Department of Finance Canada will play a major role in keeping the government focussed on what it does best: improving services and helping build a climate for the overall economy to perform better. The Department will help ensure that spending is responsible, operations are efficient, and results are effective and accountable to taxpayers.

Figure 1

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

Program Activity	Expected Results
Tax Policy	Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue Sound fiscal relationships with provinces, Aboriginal governments, and other countries
Economic and Fiscal Policy	Transparent fiscal planning and sustainable fiscal policy
Financial Sector Policy	Prudent and cost-effective treasury management of the borrowing activities of Crown corporations and the government's investment portfolios
Economic Development and Corporate Finance	Sound advice to the minister on economic, funding, and policy proposals
Federal-Provincial Relations and Social Policy	A principled framework to restore fiscal balance in Canada
Public Debt	Stable low-cost financing for the Government of Canada A well-functioning market in Government of Canada securities
Domestic Coinage	A supply of coinage at a reasonable cost

Priority 2: Sustainable Economic Growth

Government plays an important role in ensuring that Canadian people, businesses, and organizations have the advantages they need to succeed on a global scale. Therefore, the Department puts a key focus on sustainable economic growth by developing and implementing policies and programs that provide appropriate support for the drivers of productivity growth: physical, financial, and human capital and innovation.

As a key source of economic advice to the government, the Department helps ensure that the policies and programs adopted create the framework and conditions necessary for sustainable long-term economic growth by supporting physical investment, and research and development and by helping Canadians acquire skills.

Figure 2

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

Program Activity	Expected Results
Tax Policy	Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue Sound fiscal relationships with provinces, Aboriginal governments, and other countries
Economic and Fiscal Policy	Effective analysis of economic performance
Financial Sector Policy	A regulatory framework that promotes a sound, efficient, and competitive Canadian financial sector that serves the needs of individuals, businesses, and the economy
Economic Development and Corporate Finance	Sound advice to the minister on economic, funding, and policy proposals
International Trade and Finance	Secure access to key markets for Canadian exporters and investors

Priority 3: Sound Social Policy Framework

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

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

The Department will assist government partnerships with the provinces and the private sector in strategic areas that contribute to strong economies—including primary scientific research, a clean environment, and modern infrastructure.

Figure 3

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

Program Activity	Expected Results
Tax Policy	Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue Sound fiscal relationships with provinces, Aboriginal governments, and other countries
Financial Sector Policy	A legislative and regulatory framework that ensures the security and viability for federally regulated defined benefit pension plans
Economic Development and Corporate Finance	Sound advice to the minister on economic, funding, and policy proposals
Federal-Provincial Relations and Social Policy	Sound advice to the minister on government social policy priorities
Transfer Payments to Provinces and Territories	Administration of federal transfer payments to the provinces and territories, including Equalization, Territorial Formula Financing, the Canada Health Transfer, and the Canada Social Transfer

Priority 4: Effective International Influence

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

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

The Department will also assist the government in creating the right economic conditions to encourage Canadian firms to invest and flourish, and to be open to trade and foreign investment so goods, services, and technologies flow freely into Canada and Canadian firms have ready access to foreign markets to compete with the best in the world.

Figure 4

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

Program Activity	Expected Results
Financial Sector Policy	An effective anti-money laundering (AML) and anti-terrorist financing (ATF) framework
International Trade and Finance	Canadian leadership and influence in international forums on international economic, financial, development, and trade finance issues
International Financial Organizations	Payments to international organizations and Canadian creditors consistent with our commitments

 

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