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ARCHIVED - RPP 2007-2008
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The Honourable James M. Flaherty
Minister of Finance





Section I: Overview

Section II: Analysis of Program Activities by Strategic Outcome

Section III: Supplementary Information

Section IV: Other Items of Interest

 




Section I: Overview

Minister's Message

James M. Flaherty Minister of Finance

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


 




Section II: Analysis of Program Activities by Strategic Outcome

Section II provides detailed information on how each of the Department of Finance Canada's 10 program activities supports the Department's strategic outcome and priorities over the reporting period.

Strategic Outcome

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.

The Department continues to maintain a balanced approach that will ensure a sustainable fiscal structure, encourage a more productive, competitive, and dynamic Canada, and support and sustain Canadian society.

Figure 5 summarizes how each of the Department's 10 program activities is linked to its four priorities.

Figure 5

Support of Departmental Priorities by Program Activity


Program Activities

Priority 1

Sound Fiscal Management

Priority 2

Sustainable Economic Growth

Priority 3

Sound Social Policy Framework

Priority 4

Effective International Influence

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

 

 

 

10. International Financial Organizations

 

 

 


Program Activity 1: Tax Policy

The Tax Policy Branch is responsible for the development and evaluation of federal taxation policies and legislation regarding personal and business income tax, sales tax, and excise tax. The Branch provides advice and recommendations for changes to improve the personal, corporate, sales, and excise tax systems while raising the required amount of revenue to finance government priorities. The Branch also provides advice on federal-provincial and federal-Aboriginal tax coordination.

Initiatives include developing tax legislation and negotiating tax treaties, federal-provincial tax collection and reciprocal agreements, federal-Aboriginal tax administration agreements, and tax policy research and evaluation.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

32,689

32,814

32,310


Human Resources (FTEs)


2007–08

2008–09

2009–10

244

248

247


Priorities

The work of the Branch and both its expected results contribute to the following three of the Department's priorities:

  1. Sound Fiscal Management;
  2. Sustainable Economic Growth; and a
  3. Sound Social Policy Framework.

The tax system contributes to these priorities by raising sufficient revenues to pay for public services, including social programs (e.g. universal health care, and public safety and security) and strategic investments in areas that promote a more competitive and productive Canadian economy (e.g. education and training, basic scientific research, and infrastructure). At the same time, however, revenues must be raised in a manner that keeps tax burdens and marginal tax rates low to provide incentives to work, save, and invest. Tax revenues must also be raised in a fair manner so that taxpayers in similar circumstances face similar tax treatment, ensuring that the tax burden is shared in accordance with the ability of taxpayers to pay. Where appropriate, the tax system may also be used to pursue specific economic and social objectives, such as savings for post-secondary education, promoting physical activity among children, encouraging research and development, and helping protect the environment.

Expected results

1. Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue

The Tax Policy Branch will continue to advise the minister of Finance over the 2007–10 planning period on potential measures to further improve the competitiveness, efficiency, and fairness of the tax system in a fiscally sustainable manner. This will include reducing the GST by an additional percentage point starting no later than January 1, 2011, and developing other measures to support implementations of Advantage Canada, the government's strategic long-term economic plan.

The Tax Policy Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Provide sound and timely advice, analysis, briefings, and recommendations to the minister and senior officials on ways to improve the tax system, including proposals to make it more attractive for Canadians to work, save, and invest; make the tax system fairer; improve the competitiveness of the tax system; and support other government priorities.
  • Meet and consult with the Canada Revenue Agency, the Department of Justice Canada, and other government departments, as well as external stakeholders, including tax professionals, business groups, and representatives of non-governmental organizations, other jurisdictions, provincial governments, Aboriginal peoples, and international organizations to listen to their concerns and views, to discuss and explain the government's policies, and to ensure the effective functioning of Canada's tax system and implementation of policy changes.
  • Conduct consultations with provinces and stakeholders on various taxation issues.
  • Manage the Air Travellers' Security Charge, the Comprehensive Integrated Tax Coordination Agreement, and the Harmonized Sales Tax provincial revenue payment mechanism.
  • Assess and manage risks associated with court challenges related to taxation matters and be prepared to take appropriate actions.
  • Evaluate various measures in the Canadian tax structure to ensure that they continue to be relevant, effective, and efficient.
  • Improve databases, research tools, and research methodologies in order to enhance the quality of analysis in the Branch.
  • Increase the use of contract research to broaden scope and improve timeliness.
  • Publish the annual tax expenditure report.
Key commitments
  • Identify initiatives for budgets and provide thorough analysis of these initiatives, including estimates of costs and effects on affected taxpayers. Among other potential policy measures that will be assessed and possibly implemented during the planning period are:
    • options to support the government's commitment to use interest savings on national debt repayments to reduce personal income taxes;
    • options for reducing taxes on new investment towards the goal of establishing a Canadian marginal effective tax rate (METR) that is the lowest in the G7—this will include aligning capital cost allowance rates with the useful life of assets and encouraging provinces to pursue policies that improve the competitiveness and efficiency of Canada's tax system;
    • options to improve the tax treatment of personal savings (including capital gains);
    • ways to help parents save for the long-term financial security of a child with severe disabilities; and
    • improved incentives to work for low-income Canadians, including the Working Income Tax Benefit.
  • Prepare and draft parts of the budget plan relating to taxation, the supplementary tax annexes, and other budget products within deadlines.
  • Implement goods and services tax / harmonized sales tax (GST/HST) measures to streamline GST/HST compliance in the financial services sector.
  • Draft income tax legislation to implement government initiatives (e.g. the Tax Fairness Plan announced in October 2006, outstanding technical amendments and measures related to foreign affiliates, and future measures to be announced both in the budget and outside the budget over the 2007–10 period) on a sound and timely basis.
  • Undertake research to support future tax policy initiatives, including the expanded use of the marginal effective tax rate methodology.

2. Sound fiscal relationships with provinces, Aboriginal governments, and other countries

In order to ensure that the tax system functions efficiently, the federal government works with provinces, Aboriginal governments, and other countries to improve tax policy coordination. It also undertakes ongoing analysis of the impact of both new and existing tax policy initiatives on these jurisdictions.

The Tax Policy Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Review new provincial tax measures administered under the tax collection agreements.
  • Review entities in Schedule A of the reciprocal taxation agreements.
  • Review set-off arrangements with provinces.
  • Make methodological improvements to payments under the tax collection agreements.
  • Evaluate and develop options that promote federal-provincial tax harmonization.
  • Manage the First Nations Sales Tax, the First Nations Goods and Services Tax, and the First Nations Personal Income Tax payment mechanism.
  • Negotiate tax elements related to more than 20 agreements in principle and four final comprehensive land claim agreements and self-governing agreements with Aboriginal peoples.
  • Negotiate new First Nations Goods and Services Tax, and First Nations Personal Income Tax agreements with Aboriginal governments.
  • Maintain Canada's network of international tax treaties.
  • Seek to obtain tax information exchange agreements with non-treaty jurisdictions.
Key commitments
  • Develop options to address the challenge set out in Advantage Canada, released in November 2006, to work with provinces to build a more competitive national tax system.
  • Enter into a corporate income tax collection agreement with Ontario consistent with the Canada–Ontario Memorandum of Agreement signed on October 6, 2006.
  • Negotiate new reciprocal taxation agreements with a number of provinces and territories.
  • Develop long-term sustainable tax policies regarding Aboriginal self-government and comprehensive land claims.
  • Develop negotiation strategies in respect of comprehensive land claim and self-government agreements.
  • Negotiate new and revised tax treaties with other countries, as appropriate.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results / Performance Measurement

1. Improving the fairness, efficiency, and competitiveness of the personal, corporate, sales, and excise tax systems while raising the required amount of tax revenue

2. Sound fiscal relationships with provinces, Aboriginal governments, and other countries

Performance Indicators

1.1 Proposals and research to improve the competitiveness, efficiency, and fairness of the personal, corporate, sales, and excise tax systems

1.2 Amount of tax revenue raised

2.1 Active negotiation of additional tax administration agreements with provincial and Aboriginal governments

2.2 Effective network of tax treaties with other countries

2.3 Effective meetings of the Federal-Provincial Tax Committee

Data Sources

Federal budgets, legislation, regulations, press releases, tax treaties, the Department's Marginal Effective Tax Rate models, Public Accounts, tax evaluations, working and research papers, and tax expenditure reports

Federal-provincial agreements, federal-provincial meetings, federal-Aboriginal agreements, and federal-Aboriginal negotiations

Frequency

Annual

Annual

Target

1.1 Proposals in the budget and throughout the year, as required, to implement the government's tax policy agenda and maintain a competitive, effective, and fair tax system

1.2 Collect sufficient tax revenues to pay for public services

1.3 Publication of the tax expenditures and evaluations report

1.4 Two published evaluations per year

Increased number of tax agreements and tax treaties signed

Target Date

Ongoing

Ongoing


Program Activity 2: Economic and Fiscal Policy

The Economic and Fiscal Policy Branch is responsible for monitoring and preparing forecasts of Canada's economic and fiscal position, and plays a lead role in the management of the government's fiscal framework. The Branch provides ongoing analysis and advice regarding the government's economic policy framework, its budget planning framework and spending priorities, as well as the fiscal positions of other levels of government and in other countries.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

15,007

15,065

15,064


Human Resources (FTEs)


2007–08

2008–09

2009–10

121

122

122


Priorities

Priority 1: Sound Fiscal Management

The Branch contributes to sound fiscal management by ensuring that budget planning is carried out in a transparent manner and supports long-term fiscal sustainability. The Economic and Fiscal Update 2006 builds on changes made in Budget 2006 to improve fiscal transparency and accountability of budget planning.

Expected results

1. Transparent fiscal planning and sustainable fiscal policy

The government's framework will help ensure that fiscal planning is transparent and supports long-term fiscal sustainability.

The Branch will undertake the following ongoing activities and key commitments in support of the expected result.

Ongoing
  • Continue to monitor and assess fiscal developments, update fiscal projections, provide fiscal policy analysis and advice, and play a lead role in the management of the fiscal framework and coordination of the Economic and Fiscal Update and the budget.
  • Provide information on the government's financial position in the monthly Fiscal Monitor.
  • As committed to in the Federal Accountability Action Plan, provide quarterly updates of the fiscal outlook for the current fiscal year.
  • Prepare the Annual Financial Report of the Government of Canada on the government's fiscal performance for the previous fiscal year.
Key commitments
  • Present in the Economic and Fiscal Update fiscal projections for the current year and the next five years to show medium-term implications of current policies. Since a short planning horizon is appropriate for budgetary decisions, the budget will continue to focus on a two-year horizon.
  • Plan for annual debt reduction of $3 billion and a reduction of the debt-to-GDP ratio to 25 per cent by 2012–13. This is the government's contribution to the goal of eliminating Canada's total government net debt by 2021.
  • Dedicate interest savings from federal debt reduction to personal income tax reductions.
  • Keep growth of spending, on average, below the rate of growth in the economy.

Priority 2: Sustainable Economic Growth

The Branch contributes to sustainable economic growth through an accurate assessment of current and future economic conditions both in Canada and abroad, an analysis of effective economic policies, and in-depth economic research.

A focus for 2007–08 will be to monitor and assess the implications for the Canadian economy of U.S. economic developments, and of fluctuations in commodity prices and the Canadian dollar. In the longer term, two areas of focus are the implications of the rise of emerging markets and population aging.

An effective assessment of these issues will enable the government to better anticipate potential fiscal constraints arising from future economic conditions and to develop effective policies to promote long-term growth.

Expected results

2. Effective analysis of economic performance

The current economic environment is one characterized by issues that are constantly changing, complex, and far-reaching. It is critical that the government understand the strengths and weaknesses of the Canadian economy now and in the future in order to develop economic policies that lead to sustained economic growth. In-depth economic research is also essential to understand and evaluate the interactions and effects of economic developments.

The government benefits from understanding past, ongoing, or proposed reforms in other countries and their implications for the economic and fiscal situation abroad. This understanding will enable the government to develop and implement economic policies that are best suited to promote sustained economic growth in Canada. International cooperation is necessary to understand and provide an accurate assessment of the economic and fiscal conditions around the world.

The Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Provide regular briefings to the minister on major macroeconomic developments in Canada and abroad, as well as informing the public of key economic developments.
  • Provide briefings on the main drivers of productivity growth, the implications of globalization and emerging economies, and population aging. This information includes chapters on economic developments and outlook in the Economic and Fiscal Update and the Budget Plan, briefing notes to the minister, and regular documents such as the Economy in Brief.
  • Consult regularly with officials from the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF) to share data and views on economic developments in Canada and the world.
  • Continue to represent Canada at OECD meetings and to provide analysis on economic policies proposed by the institution.
Key commitments
  • Conduct four private-sector surveys of the Canadian economic outlook and assess the potential risks to these outlooks.
  • Analyze and monitor key structural factors underlying Canada's economic performance.
  • Analyze possible measures to improve Canada's productivity performance.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results / Performance Measurement

1. Transparent fiscal planning and sustainable fiscal policy

2. Effective analysis of economic performance

Performance Indicators

1.1  Publication of fiscal projections

1.2  Federal debt as a share of the gross domestic product (GDP)

Canada's GDP growth relative to the G6 (G7 less Canada)

Data Sources

1.1  Federal budget and Economic and Fiscal Update

1.2 Annual Financial Report of the Government of Canada

IMF World Economic Outlook

Frequency

1.1  Twice a year

1.2 Annual

Semi-annual

Target

1.1  Publish two-year and five-year fiscal projections

1.2  Reduce the federal debt-to-GDP ratio to 25% by 2012–13

Above-average annual growth rate

Target Date

1.1  Ongoing

1.2  March 31, 2013

Ongoing


Program Activity 3: Financial Sector Policy

Under this program activity, the Financial Sector Policy Branch is responsible for providing analysis of Canada's financial services sector and financial markets, as well as developing the legislative and regulatory framework governing federally chartered financial institutions (banks, trust companies, insurance companies, and cooperative credit associations) and federally regulated defined benefit pension plans. The Branch is also responsible for issues related to anti-money laundering and anti-terrorist financing. The Branch also manages the government's cash and official international reserves, and provides support to the minister regarding Crown corporation borrowing.

The Branch is responsible for the public debt and domestic coinage programs. For more information on these programs, see Program Activities 7 and 8, Public Debt and Domestic Coinage.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

18,113

15,966

16,483


Human Resources (FTEs)


2007–08

2008–09

2009–10

129

116

118


Priorities

Priority 1: Sound Fiscal Management

The focus of Financial Sector Policy Branch activity for 2007–08 will be pursuing improvement to the borrowing framework for major government-backed entities. These activities will, among other things, contribute to reduced debt service costs for the federal government and its agencies.

Expected results

1. Prudent and cost-effective treasury management of the borrowing activities of Crown corporations and the government's investment portfolios

Under the Financial Administration Act, the minister is responsible for approving borrowing by government entities and ensuring prudent treasury management policies. A 2005 study by an outside consulting firm of the current borrowing framework for major Crown borrowers identified improvements to the existing framework and advised on the potential benefits and costs of a consolidated borrowing framework.

In addition, under the Financial Administration Act and the Currency Act, the minister is responsible for the management of the government's cash and reserve assets. Funds need to be invested with due regard for risk and return. External evaluations of cash management and reserves management conducted in 2006 identified a number of possible enhancements.

The Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Provide advice on borrowing plan approvals and on ministerial policies for prudent treasury management for major Crown borrowers.
  • Provide advice on cash and reserves investment policy, working in collaboration with the government's fiscal agent, the Bank of Canada.
Key commitments
  • Enhance the borrowing framework for major government-backed borrowers, taking into account the interests of the entities and their stakeholders, market participants, and the government as a shareholder.
  • Follow up on the recommendations of the external evaluations of cash management and reserve management.

Priority 2: Sustainable Economic Growth

Ensuring the competitiveness, efficiency, safety, and soundness of Canada's financial sector and ensuring that domestic financial markets function well are necessary to achieving sustainable growth in the Canadian economy. For 2007–08, the focus will be on making progress on more collaborative and efficient securities regulation and enforcement, and on establishing a common securities regulator in Canada, implementing and drafting regulations in the context of the 2006 review of the financial institutions statutes, implementing regulations associated with the new corporate governance legislation for financial institutions, undergoing a planned Financial Sector Assessment Program (FSAP) update by the International Monetary Fund, as a follow-up to the assessment conducted in 1999, and reviewing the mortgage insurance framework.

Expected results

2. A regulatory framework that promotes a sound, efficient, and competitive Canadian financial sector that serves the needs of individuals, businesses, and the economy

The Department advises on and develops policy, legislation, and regulations to support a leading-edge financial services sector and domestic capital market to achieve a more productive, competitive, and dynamic economy.

The Branch plans to attain the expected result through the following ongoing actions and key commitments.

Ongoing
  • Conduct policy analysis and provide advice on a broad range of financial sector issues, including:
    • payment systems;
    • financial stability issues;
    • issues related to the regulatory and supervisory framework for the financial services industry;
    • federal-provincial financial sector issues;
    • structural issues;
    • consumer issues;
    • financial services trade issues; and
    • competition issues.
  • Develop a supportive environment for financing Canadian companies by identifying areas for potential policy change.
Key commitments
  • Implement and draft regulations associated with Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.
  • Develop regulations associated with Bill C-57, An Act to amend certain Acts in relation to financial institutions.
  • Plan, coordinate, and undergo an IMF FSAP update.
  • Work with the provinces and territories to make progress on more collaborative and efficient securities regulation and enforcement, and on establishing a common securities regulator in Canada.
  • Review the mortgage insurance framework.

Priority 3: Sound Social Policy Framework

A properly designed private pension system, with appropriate incentives for both employers and employees, can contribute to the security and prosperity of Canadian workers and retirees, and support increases in living standards.

Expected results

3. A legislative and regulatory framework that ensures the security and viability of federally regulated defined benefit pension plans

The Department will continue to review and assess means to strengthen the legislative and regulatory framework for federally regulated defined benefit pension plans in order to ensure the security and viability of defined benefit pension plans.

The Branch plans to attain the expected result through the following ongoing activity.

Ongoing
  • Conduct analysis and research, draw upon consultations, and study domestic and international trends in order to provide policy advice on pension issues.

Priority 4: Effective International Influence

The Department is responsible for issues related to anti-money laundering and anti-terrorist financing. The Department's leading role in the global fight against money laundering and terrorist financing contributes to public safety in Canada and worldwide. Until July 2007, the focus will be on the continuing role of the presidency of the Financial Action Task Force (FATF). Presiding over the FATF demonstrates internationally Canada's commitment to remain at the forefront of the global fight against terrorist financing and money laundering. Throughout the year, the focus will be on enhancing Canada's anti-money laundering and anti-terrorist financing regime and establishing the permanent home of the Egmont Secretariat, the group of international financial intelligence units.

The Department is also responsible for the federal government's relations with foreign governments in the area of trade in financial services, namely the administration of Canada's commitments under the North American Free Trade Agreement and the World Trade Organization (WTO) General Agreement on Trade in Services, international trade negotiations related to these agreements, as well as other bilateral and multilateral trade initiatives.

Expected results

4. An effective anti-money laundering (AML) and anti-terrorist financing (ATF) framework

The goal of Canada's AML and ATF regime is to combat money laundering and terrorism financing by providing appropriate tools to law enforcement, while respecting the privacy of Canadians and conforming to international standards.

The Branch plans to attain the expected result through the following ongoing initiatives and key commitments.

Ongoing
  • Conduct analysis and research, and study domestic and international trends in order to provide policy advice on AML and ATF issues.
  • Coordinate the AML and ATF regime with federal partners, including the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Key commitments
  • Pursuant to the passage of Bill C-25, An Act to amend the Proceeds of Crime (MoneyLaundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act (PCMLTFA), develop regulations to fully implement and bring the regime into compliance with international standards and the recommendations of the Auditor General of Canada and Treasury Board-mandated evaluation reports.
  • Undergo an evaluation of our AML/ATF regime against the Financial Action Task Force 40+9 recommendations to combat money laundering and terrorist financing.
  • Provide effective support for Canada's presidency of the FATF until the end of June 2007. The work plan of the presidency builds on ongoing work of the FATF, including regular member assessments and improving international cooperation, and focusses on a few key priorities: actively pursuing the accession to membership by China, India, and Korea; enhancing dialogue with the private sector; and a review of the strategic direction of the organization in preparation for its mid-term review.
  • Work with FINTRAC towards the establishment of the permanent home of the Egmont Secretariat in Toronto until it is operational in 2007–08. Canada will host the permanent home of the Egmont Secretariat, the group that coordinates the exchange of information, provides training, and shares expertise among its 101 financial intelligence unit members worldwide.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results /
Performance Measurement

1. Prudent and cost-effective treasury management of the borrowing activities of Crown corporations and the government's investment portfolios

2. A regulatory framework that promotes a sound, efficient, and competitive Canadian financial sector that serves the needs of individuals, businesses, and the economy

3. An enhanced legislative and regulatory framework for federally regulated defined benefit pension plans

4. An effective anti-money laundering (AML) and anti-terrorist financing (ATF) framework

Performance Indicators

1.1 Crown borrowing costs

1.2 Net returns on liquid asset portfolios

1.3 Amount of exposure to financial risk

1.4 Administrative costs of treasury functions

Policy, legislative, and regulatory initiatives

Policy, legislative, and regulatory initiatives

4.1 Regulations

4.2 International standards and evaluation reports

4.3 Canadian presidency of the Financial Action Task Force on Money Laundering (FATF)

4.4 Establishment of the Egmont Secretariat

Data Sources

1.1 Crown annual reports and corporate plans

1.2 Public Accounts, Debt Management Report, Report on the Management of Canada's Official International Reserves

1.3 Debt Management Report, Report on the Management of Canada's Official International Reserves

1.4 Crown and Bank of Canada annual reports

Legislation, regulations, and publications

Legislation and regulations

4.1 Legislation, regulations

4.2 FATF mutual evaluation report

4.3 Report from the outgoing president

4.4 Official announcement of the Secretariat

Frequency

Annual

Legislative and regulatory amendments as needed; securities regulation work on an ongoing basis

Financial Sector Assessment Program in (FSAP) 2007

Amendments as needed

4.1 Regulations as needed

4.2 Mutual evaluation roughly every five years

4.3 Presidency is rotated among the FATF members

4.4 One time

Target

1.1 Low and stable risk-adjusted costs of borrowing and investing funds

1.2 Positive returns on investment portfolios, net of costs

1.3 Exposure to financial risks within Board- and minister-approved limits

1.4 Overhead costs in line with comparable entities

2.1 Implement and draft regulations for Bill C-37

2.2 Develop Bill C-57 regulations

2.3 Complete IMF FSAP update

2.4 Develop policies for the review of the mortgage insurance framework

Develop legislation and regulations as needed

4.1 Develop regulationsfor the Proceeds of Crime (Money Laundering) and Terrorist Financing Act

4.2 Comply with international standards and the recommendation of the Auditor General of Canada and Treasury Board-mandated evaluation reports

4.3 Deliver the FATF president's work program

4.4 Egmont Secretariat becomes operational

Target Date

Ongoing

2007–08

Ongoing

2007–08


Program Activity 4: Economic Development and Corporate Finance

Under this program activity, the Economic Development and Corporate Finance Branch is responsible for fulfilling the challenge function of the Department of Finance Canada, including providing policy analysis and advice to the minister on the financial implications of the government's microeconomic policy and programs; for providing proposals for the funding of programs; for developing regional and sectoral policy analysis in the areas of the knowledge-based economy, defence, transportation, public infrastructure, environment, energy and resources, agriculture, fisheries, and privatization; and for advising on corporate restructuring regarding Crown corporation and other corporate holdings. The Branch is also responsible for analysis and advice on other projects, such as the Smart Regulation Initiative.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

8,289

8,321

8,321


Human Resources (FTEs)


2007–08

2008–09

2009–10

67

68

67


Priorities

The work of the Branch and its expected result contribute to the following three of the Department's priorities:

  1. Sound Fiscal Management;
  2. Sustainable Economic Growth; and a
  3. Sound Social Policy Framework.

The focus of the Branch's work will be on supporting the government's microeconomic policy, including monitoring world-class research and development, creating a cleaner and healthier environment, strengthening the economic union, and outlining the government's comprehensive plan for infrastructure. The Branch will also advise the minister regarding other departments' funding and policy proposals.

Expected results

1. Sound advice to the minister on economic, funding, and policy proposals

The Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Provide weekly briefings, including policy analysis and recommendations for consideration by the minister to assist in the preparation for meetings of Cabinet and its committees, the annual budget, and fiscal updates, as required.
  • Assess operating and capital funding for key federal assets and programs.
  • Provide advice for Cabinet reviews of program spending and new policy proposals.
  • Fulfil the central agency role of the Department by identifying major policy issues and proposals under development in the economic departments.
  • Ongoing examination of policy and program options related to key government infrastructure programs.
  • Help shape regional development policies and sectoral policies such as agriculture, environment, fisheries, aerospace, and automotive.
Key commitments
  • Provide advice on potential initiatives for budgets in 2007–08, 2008–09, and 2009–10 that implement the government's economic agenda in the following areas:
    • post-secondary education, research, and commercialization;
    • support for private sector research and development;
    • improvement of the regulatory framework and reducing the paper burden on business;
    • work towards a comprehensive plan for infrastructure that includes long-term predictable funding;
    • energy and the environment; and
    • strengthening of the economic union through improved frameworks for internal trade and foreign investment.
  • Reform the government's science and technology strategy.
  • Consideration of proposals for government support for the Mackenzie Gas Project.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results /
Performance
Measurement

1. Sound advice to the minister on economic proposals

Performance Indicators

Announcement of measures that advance productivity and economic growth

Data Sources

Budget and Economic Update

Frequency

Annual

Target

Implementation of microeconomic policy directions in the government's economic agenda

Target Date

Ongoing


Program Activity 5: Federal-Provincial Relations and Social Policy

Under this program activity, the Federal-Provincial Relations and Social Policy Branch has primary responsibility for providing analysis and advice to the minister of Finance on federal-provincial-territorial fiscal arrangements, fiscal and economic relations, and Canadian social policies and programs, such as health care, employment insurance, seniors' benefits, Aboriginal programs, education programs, and cultural programs.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

12,298

12,345

12,344


Human Resources (FTEs)


2007–08

2008–09

2009–10

92

93

93


Priorities

Priority 1: Sound Fiscal Management

The focus for the 2007–08 fiscal year will be on implementing a principled framework to restore fiscal balance. In Budget 2006, the government took important first steps to restore fiscal balance. These included tax reductions, new investments, and a commitment to provide funding of $3.3 billion to provinces and territories for shared priorities.

In Budget 2006, the government also committed to bringing forward proposals to restore fiscal balance after undertaking consultations with provinces and territories, academics and experts, and individual Canadians. The government followed through on this commitment. As reported in Advantage Canada (November 2006): "The key message the Government has heard is that Canadians support a system of fiscal arrangements that funds national priorities and redistributes wealth from the more prosperous regions to the less prosperous ones—but that these arrangements must be founded on principles of fairness and predictability." The government intends to table its proposals to restore fiscal balance in Budget 2007.

Expected results

1. A principled framework to restore fiscal balance in Canada

Canada's government is committed to restoring fiscal balance, in part through the development of a principle-based transfer system, with a clearer delineation of responsibilities among different orders of government and with greater overall efficiency for governments and enhanced accountability for citizens.

The Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Implement policy and program proposals related to fiscal balance broadly, and fiscal arrangements more specifically, as per approved policy statements (e.g. consistent with Budget 2007). Provide analysis and advice, including assessments of impacts, related to those proposals.
  • Ensure well-functioning processes are in place to support ongoing federal-provincial-territorial fiscal relations and communications regarding fiscal balance and changes to federal-provincial-territorial fiscal arrangements.
Key commitments
  • Continue to work on various elements of the commitment to restore fiscal balance, including improved transparency and accountability of the Government of Canada to citizens.
  • Establish a principle-based program for Equalization and TFF to ensure all provinces and territories have access to sufficient revenues to provide reasonably comparable programs and services at reasonably comparable levels of taxation.
  • Prepare legislation and regulatory changes, and coordinate with provinces and territories to renew the Canada Social Transfer (CST). The CST expires at the end of 2007–08; therefore new legislation must be in place to allow for payments in 2008–09.

Priority 3: Sound Social Policy Framework

The focus for the 2007–08 fiscal year will be on contributing to the government's social policy priorities by providing analysis and advice to the minister of Finance and senior government officials on a wide range of social policy issues, including items outlined in Advantage Canada.

Expected results

2. Sound advice to the minister on government social policy priorities

The Federal-Provincial Relations and Social Policy Branch is responsible for the provision of analysis and advice to the minister of Finance and senior government officials on social policy issues, including early learning and childcare, post-secondary education, income security, justice and safety, health and wellness, culture, and Aboriginal opportunities.

The Branch plans to attain the expected result through the following ongoing activity and key commitments.

Ongoing
  • Provide weekly briefings, including policy analysis and recommendations for consideration by the minister to assist in the preparation for meetings of Cabinet and its committees, the annual budget, and fiscal updates, as required.
  • Assess operating and capital funding for key federal assets and programs.
  • Provide advice for Cabinet reviews of program spending and new policy proposals.
  • Fulfil the central agency role of the Department by identifying major policy issues and proposals under development in the social departments.
  • Help shape social policies and sectoral policies such as Aboriginal issues, health, justice, security, cultures, income security, labour market, and immigration.
Key commitments
  • Work with other branches of the Department, central agencies, government departments, and external stakeholders to ensure timely decisions with respect to, and implementation of, the commitment to provide long-term and predictable support for post-secondary education and training.
  • Work with other branches of the Department, central agencies, government departments, and external stakeholders to ensure timely decisions with respect to, and implementation of, the commitment to make it easier for Canadian-educated foreign students and temporary foreign workers to stay in Canada.
  • Work with other branches of the Department, central agencies, government departments and external stakeholders to ensure timely decisions with respect to, and implementation of, initiatives and related funding in the areas of social policy identified by the government as priorities.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected
Results / Performance Measurement

1. Principled framework to restore fiscal balance in Canada

2. Sound advice to the minister on government social policy priorities

Performance Indicators

Implementation of a principle-based transfer system

Announcement of measures and related funding that advance social policy priorities

Data Sources

Transfer agreements

Budget, and the Economic and Fiscal Update

Frequency

Ongoing

Annual

Target

1.1 Timely, accurate implementation of legislative and regulatory changes

1.2 New arrangements for Equalization, TFF, and the CST

1.3 Enhanced accountability and transparency of fiscal arrangements for citizens

Timely implementation of social policy priorities in the government's agenda

Target Date

1.1 Proposals for new framework intended to be brought forward as part of Budget 2007

1.2 New Equalization and TFF legislation to be tabled by spring 2007; new legislation for the CST must be in place by April 2008

1.3 Ongoing

Ongoing


Program Activity 6: International Trade and Finance

Under this program activity, the International Trade and Finance Branch:

  • supports the minister's participation in the G7, G8, and G20 and in international financial institutions;
  • conducts work related to international development assistance, export finance, and international economic and financial relations;
  • maintains responsibility for the policy management of import legislation (tariffs and trade remedies);
  • provides analytical support and policy advice on international trade and investment matters;
  • works with other members of the international community to reduce the risks of international financial and economic instability; and
  • contributes to the international effort to reform the governance and operations of the IMF.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

15,879

15,939

15,938


Human Resources (FTEs)


2007–08

2008–09

2009–10

118

120

120


Priorities

Priority 2: Sustainable Economic Growth

As a highly open economy in an increasingly integrated global marketplace, Canada's economic performance and future prosperity depend on trade and investment flows supported by high-standard multilateral, regional, and bilateral trade and investment rules and agreements. Securing access to key markets for Canadian exporters and investors, and reducing tariffs where possible will enhance the competitiveness of domestic industries and expand commercial opportunities for them.

Expected results

1. Secure access to key markets for Canadian exporters and investors

The Branch will work to improve Canada's overall economic performance by building a stronger international trade and investment system that opens markets, enhances competitiveness of domestic industries, and expands access for Canadian exports and investments in major foreign markets.

The Branch plans to attain the expected result through the following ongoing activity and key commitments.

Ongoing
  • Work to foster trade and investment liberalization through trade and investment agreements and initiatives.
Key commitments
  • Work to conclude WTO negotiations, foreign investment and protection agreements, and bilateral free trade agreements in partnership with other government departments.
  • Improve the competitiveness of Canadian industry by reducing tariffs where possible.
  • Lay a strong foundation for the North American Security and Prosperity Partnership, particularly on border efficiency, with other government departments.

Priority 4: Effective International Influence

As an open economy that benefits from a strong multilateral system of global economic and financial governance, Canada has a strong interest in promoting initiatives to strengthen the leadership of forums such as the G7 and G20, as well as in ensuring the credibility and strength of organizations such as the IMF and World Bank. In addition, Canada will work with other players in the international community to reduce the risks of international financial and economic instability. Canada also has an interest in greater security, prosperity, and economic and social progress in developing economies.

Expected results

2. Canadian leadership and influence in the international forums on international economic, financial, development, and trade finance issues

The Branch seeks to promote Canadian prosperity and economic security by reducing international financial and economic instability. It does this by advancing Canadian leadership in international forums such as the G7 and G20, and by providing policy direction to international financial institutions that is consistent with Canadian interests and policy objectives. This includes contributing to economic and social progress in developing economies, and the development and promotion of initiatives on trade finance issues.

The Branch will also work to support a strong multilateral system of global economic and financial governance by strengthening the leadership of groups such as the G7 and G20, and by ensuring the credibility and strength of organizations such as the IMF and World Bank.

The Branch plans to attain the expected result through the following ongoing activities and key commitments.

Ongoing
  • Support Canada's role in international forums on international and development issues.
  • Ensure timely and high-quality briefings at the G7, G20, and other international forums on key economic issues, on international financial and development issues, as well as on the need to ensure international financial stability.
  • Identify Canadian priorities and provide strategic advice on how to advance Canadian interests and policy positions on trade finance, debt relief, and other critical issues.
  • Pursue research programs focussing on current and emerging issues that are of importance to Canada.
  • Monitor overseas economies on an ongoing basis.
Key commitments
  • 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.
  • Provide high-quality advice on the key elements of a comprehensive IMF and World Bank reform exercise.
  • Provide advice on international financial assistance programs assembled by the IMF to assist economies in maintaining stability and avoiding financial crises.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected
Results / Performance Measurement

1. Secure access to key markets for Canadian exporters and investors

2. Canadian leadership and influence on international economic, financial, development, and trade finance issues

Performance Indicators

Progress will be measured through various domestic, regional, and multilateral trade and investment negotiations and initiatives

Outcomes of international forums and policy decisions

Data Sources

Trade and investment negotiations and agreements

Results (and communiqu├ęs) and agreements from international meetings and negotiations

Frequency

Ongoing

Ongoing

Target

Completed negotiations and agreements

Canadian policy positions and interests are reflected at international meetings and negotiations

Target Date

Ongoing

Ongoing


Program Activity 7: Public Debt

Under this program activity, the Financial Sector Policy Branch is responsible for managing the Government of Canada's debt program, including the statutory funding of interest, the service costs of the public debt, and the issuing costs of new borrowings.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

34,697,000

34,645,000

34,685,000


Human Resources (FTEs)


2007–08

2008–09

2009–10

28

22

22


Priority

Priority 1: Sound Fiscal Management

Debt service is the largest spending program of the federal government. The prudent and effective management of the government's debt continues to be an important element of the Department's strategy for sound fiscal management. The focus for 2007–08 will be on reviewing and evaluating the effectiveness of debt management and treasury management frameworks and programs. The Department also will work to implement changes to the retail debt program to enhance cost-effectiveness.

Expected results

1. Stable low-cost financing for the Government of Canada

The government's operational needs are met through borrowing from capital markets. The government's debt structure (the mix of fixed- and floating-rate debt) is managed to ensure that debt costs are kept low and stable over time.

The Branch plans to attain the expected result through the following ongoing actions and key commitments.

Ongoing
  • Plan and conduct, in conjunction with the Bank of Canada, debt and cash management operations to meet operational needs.
  • Periodically review funds management frameworks, targets, and programs to ensure the soundness of governance regimes and effectiveness of the management of financial cost and risk.
Key commitments
  • Adjust bond and bond buyback programs to continue progress toward the debt structure target of 60 per cent fixed-rate debt announced in the 2003 budget.
  • Implement a rationalized administrative structure for the retail debt program following up on the September 2006 decision to wind down the Canada Investment and Savings Agency (a special operating agency of the Department of Finance Canada) while maintaining broad availability of Canada Savings Bonds.

2. A well-functioning market in Government of Canada securities

A well-functioning wholesale market in Government of Canada securities benefits the government and a wide range of market participants. For the government as a debt issuer, a well-functioning market attracts investors and ensures that funding costs are kept low. For market participants, a liquid and active secondary market in government debt provides credit-risk-free assets for investment portfolios, a pricing benchmark for other instruments, and a primary tool for hedging risk.

The Branch plans to attain the expected result through the following ongoing activities and commitment.

Ongoing
  • Design and implement Government of Canada debt programs to provide liquidity, transparency, and regularity.
  • Consult regularly with market participants to identify adjustments to debt programs to maintain well-functioning markets in Government of Canada securities.
Key Commitment
  • Adjust debt program design to supplement supply at key maturities for market participants.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results / Performance Measurement

1. Stable low-cost financing for the Government of Canada

2. A well-functioning market in Government of Canada securities

Performance Indicators

1.1  Measures of operational performance (e.g. auction statistics)

1.2  Public debt structure

Measures of market performance (e.g. turnover, trading spreads)

Data Sources

1.1  Fiscal Monitor; Debt Management Report

1.2  Annual Financial Report of the Government of Canada and other outcomes summarized in the Debt Management Report

Debt Management Report

Frequency

Monthly; annual

Annual

Target

1.1 Well-contested auctions and operations

1.2 Debt structure target of 60% fixed-rate debt

Operational measures, in particular operational results reporting times, and secondary market indicators such as volumes and trading spreads that are in line with or better than previous years

Target Date

Ongoing

Ongoing


Program Activity 8: Domestic Coinage

Under this program activity, the Financial Sector Policy Branch is responsible for providing advice to the minister on Royal Canadian Mint initiatives and for the payment of the production and distribution costs, in the domain of domestic circulating coinage.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

145,000

147,000

149,000


Priority

Priority 1: Sound Fiscal Management

Under the Royal Canadian Mint Act, the minister of Finance is responsible for buying domestic circulating coinage from the Royal Canadian Mint (RCM). The RCM distributes the coins produced to financial institutions on the minister's behalf. The overriding objective is to ensure the supply of circulating coinage meets the needs of the economy. A secondary objective is to ensure that coins are produced at reasonable cost. Coin sales earn seigniorage for the government. Seigniorage is the net revenue derived from the issuing of currency and is the difference between the face value of a coin or bank note and the cost of producing, distributing, and eventually retiring it from circulation.

Expected results

1. A supply of coinage at a reasonable cost

The Branch will work to achieve the expected result through the following ongoing activities and key commitment.

Ongoing
  • Provide analysis and advice to the minister on plans and initiatives in the domain of domestic circulating coinage, including the production of commemorative coins.
  • Pay RCM production and distribution costs for domestic circulating coinage.
Key commitment
  • Review the RCM contract and the composition of the coinage system to improve incentives for the RCM and reduce coinage costs.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected results under this program activity.


Expected Results / Performance Measurement

1. A supply of coinage at a reasonable cost

Performance Indicators

1.1 Production and demand for coinage

1.2 Seigniorage earned by the government

Data Sources

1.1 Royal Canadian Mint annual report

1.2 Public Accounts

Frequency

1.1 Annual

1.2 Annual

Target

1.1 Production of coinage meets the demand of the economy

1.2 Reduce costs and increase the amount of seigniorage earned by the government

Target Date

Ongoing


Program Activity 9: Transfer Payments to Provinces and Territories

Under this program activity, the Federal-Provincial Relations and Social Policy Branch is primarily responsible for the administration of the major transfer payments to provinces and territories.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

40,328,203

41,903,765

43,817,109


Priority

Priority 3: Sound Social Policy Framework

The focus for the 2007–08 fiscal year will be administering federal transfers to the provinces and territories, including Equalization, Territorial Formula Financing (TFF), the Canada Health Transfer (CHT), and the Canada Social Transfer (CST).

Expected results

1. Administer federal transfers to the provinces and territories including Equalization, TFF, CHT, and CST

Payments made under the various transfer programs are an important source of revenue for provincial and territorial governments. In 2007–08, an estimated $40.3 billion in cash payments will be provided to the provinces and territories.

The Branch plans to attain the expected result through the following ongoing activities.

Ongoing
  • Administer the transfer programs (see Table 8 for details on transfer payment programs), including the calculation of entitlements, provision of payments, 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.
  • Administer the various trust funds, including the five trust funds totalling $3.3 billion that were established in March 2006 using the authority of Bill C-48, the $4.25-billion Wait Times Reduction Transfer Trust announced in September 2004, and the $120-million Northern Strategy Trust Fund announced in Budget 2005.
  • Administer several important loans and deferral arrangements currently in place, including the Equalization Repayable Floor loan, deferral of the effects of Census 2001 and 2002 taxation data (Equalization, and Canada Health and Social Transfer), and deferral of the effect of the new residential net capital stock data (Equalization) on Quebec.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected result under this program activity.


Expected Result / Performance Measurement

1. Administer federal transfers to the provinces and territories, including Equalization, TFF, CHT, and CST

Performance Indicators

Timely and accurate administration of transfer payments

Data Sources

Public Accounts of Canada / departmental financial reporting system

Frequency

Annual

Target

Payments made according to levels and formulas set out in legislation and agreements

Target Date

Ongoing


Program Activity 10: International Financial Organizations

Under this program activity, the International Trade and Finance Branch is responsible for the effective administration of Canada's international commitments associated with Paris Club debt rescheduling agreements and financial assistance to the International Development Association, the International Monetary Fund, and the European Bank for Reconstruction and Development.

Financial Resources ($ thousands)


2007–08

2008–09

2009–10

544,717

540,978

510,229


Priority

Priority 4: Effective International Influence

Expected result

1. Payments to international organizations and Canadian creditors consistent with our commitments

The Branch will contribute to international initiatives to improve outcomes in the developing economies through effective use of international assistance, debt relief, and other means and will provide payments consistent with the Department's commitments.

The Branch plans to attain the expected result through the following ongoing activity.

Ongoing
  • Provide timely and accurate payments to a wide range of international financial organizations and Canadian creditors consistent with the government's commitments and policy objectives.

Performance measurement

The Department plans to apply the following performance measurement approach in monitoring and measuring performance against the expected result under this program activity.


Expected Results / Performance Measurement

1. Payments to international organizations and Canadian creditors consistent with our commitments

Performance Indicators

Timely and accurate payments

Data Sources

Public Accounts / departmental financial reporting system

Frequency

Periodic

Target

Payments made as per agreement and according to pre-determined schedule, or within 30 days of invoice being received

Target Date

Ongoing


 




Section III: Supplementary Information

Organization Chart and Program Activity Architecture

Organization Chart and Program Activity Architecture

Departmental Links to the Government of Canada Outcomes (for RPPs)


2007–08
  Budgetary
           
  Operating Grants Contributions
and Other
Transfer
Payments
Gross Respendable
Revenue
  ($ thousands)
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 Policy1

32,653     32,653 (128)

Economic and
Fiscal Policy2

14,991     14,991 (59)

Financial Sector
Policy3

18,093     18,093 (71)

Economic
Development
and Corporate
Finance4

8,280     8,280 (32)

Federal-
Provincial
Relations and
Social Policy5

12,284     12,284 (48)

International
Trade and
Finance6

15,861     15,861 (62)

Public Debt7

34,697,000     34,697,000  

Domestic
Coinage8

145,000     145,000  

Transfer
Payments to
Provinces and
Territories9

    40,328,203 40,328,203  

International
Financial
Organizations10

  176,200 363,269 539,469  

Total

34,944,162 176,200 40,691,472 75,811,834 (400)

Departmental Links to the Government of Canada Outcomes (for RPPs) (Cont'd)


2007–08
  Budgetary

 


Net

Non-budgetary

Loans,
Investments,
and Advances

Total
Main
Estimates
Adjustments
(planned
spending
not in Main
Estimates)
Total
Planned
Spending
  ($ thousands)
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 Policy1

32,525   32,525 164 32,689

Economic and
Fiscal Policy2

14,932   14,932 75 15,007

Financial Sector
Policy3

18,022   18,022 91 18,113

Economic
Development
and Corporate
Finance4

8,248   8,248 41 8,289

Federal-
Provincial
Relations and
Social Policy5

12,236   12,236 62 12,298

International
Trade and
Finance6

15,799   15,799 80 15,879

Public Debt7

34,697,000   34,697,000   34,697,000

Domestic
Coinage8

145,000   145,000   145,000

Transfer
Payments to
Provinces and
Territories9

40,328,203   40,328,203   40,328,203

International
Financial
Organizations10

539,469 5,247 544,716 1 544,717

Total

75,811,434 5,247 75,816,681 512 75,817,194

1. The program activity Tax Policy contributes to the achievement of all Government of Canada outcomes.

2. The program activity Economic and Fiscal Policy contributes to the achievement of the Government of Canada's "Strong economic growth" outcome.

3. The program activity Financial Sector Policy contributes to the achievement of the Government of Canada's "A fair and secure marketplace" outcome.

4. The program activity Economic Development and Corporate Finance contributes to the achievement of the Government of Canada's "Strong economic growth" outcome.

5. The program activity Federal-Provincial Relations and Social Policy contributes to the achievement of the Government of Canada's "A diverse society that promotes linguistic duality and social inclusion" outcome.

6. The program activity International Trade and Finance contributes to the achievement of the Government of Canada's "A prosperous Canada through global commerce" outcome.

7. The program activity Public Debt contributes to the achievement of all Government of Canada outcomes.

8. The program activity Domestic Coinage contributes to the achievement of all Government of Canada outcomes.

9. The program activity Transfer Payments to Provinces and Territories contributes to the achievement of several of the Government of Canada's outcomes, including the outcomes of "Strong economic growth" and "Healthy Canadians."

10. The program activity International Financial Organizations contributes to the achievement of the Government of Canada's "Global poverty reduction through sustainable development" outcome.

Table 1: Departmental Planned Spending and Full-time Equivalents


Forecast Spending
2006–07
Planned Spending
2007–08
Planned Spending
2008–09
Planned Spending
2009–10
 

($ thousands)

Tax Policy

30,865 32,653 32,945 32,438

Economic and Fiscal Policy

14,559 14,991 15,125 15,124

Financial Sector Policy1

20,521 18,093 16,030 16,549

Economic Development and Corporate Finance

7,784 8,280 8,354 8,354

Federal-Provincial Relations and Social Policy2

16,753 12,284 12,394 12,393

International Trade and Finance

15,555 15,861 16,003 16,002

Public Debt3

34,395,000 34,697,000 34,645,000 34,685,000

Domestic Coinage4

83,100 145,000 147,000 149,000

Transfer Payments to Provinces and Territories5

38,330,000 40,328,203 41,903,765 43,817,109

International Financial Organizations6

725,869 539,469 537,469 508,469

Budgetary Main Estimates (gross)

73,640,006 75,811,834 77,334,085 79,260,438
 

International Financial Organizations7

7,471 5,247 3,498 1,749

Non-budgetary Main Estimates (gross)

7,471 5,247 3,498 1,749
 

Less: Respendable revenue

400 400 400 400

Total Main Estimates

73,647,077 75,816,681 77,337,183 79,261,787

Adjustments

       

Procurement Savings

       

Tax Policy

(207)      
Economic and Fiscal Policy (97)      
Financial Sector Policy (137)      
Economic Development and Corporate Finance (52)      
Federal-Provincial Relations and Social Policy (112)      
International Trade and Finance (104)      

Supplementary Estimates

       

Operating Budget Carry Forward

4,233      

Advertising campaigns

4,100      

Cost of New Ministry—Regional Responsibilities

25      

Transfer to Foreign Affairs and International Trade Canada for Beijing Councillor Position

(393)      

Transfer to the Canadian International Development Agency for Multilateral Debt Initiative8

(5,595)      

Public Debt—Interest and Other Costs9

209,000      

Equalization and Territorial Formula Financing10

255,464      

Payments to territories (Data Revisions)

46,035      

Youth Allowances Recovery11

69,000      

Alternative Payments for Standing Programs12

125,000      

Domestic Coinage13

42,900      

Increase to International Development Association

1      

Other

       

Treasury Board Vote 15 (Collective Bargaining)

2,186      

Employee Benefit Plan (EBP)

437      

Payments to International Development Association14

  1    

Internal Audit15

  512 11 11

Total Adjustments

751,683 513 11 11

Total Planned Spending

74,398,760 75,817,194 77,337,194 79,261,798

Total Planned Spending

74,398,760 75,817,194 77,337,194 79,261,798

Less: Non-respendable revenue

217,840 233,517 248,766 257,518

Plus: Cost of Services Received Without Charge

14,645 15,386 15,488 15,637

Total Departmental Spending

74,195,566 75,599,063 77,103,916 79,019,917

Full-time Equivalents16

811 798 789 789

Notes

1. The decrease of $2.4 million in 2007–08 is due to the sunsetting of $1.07 million in funding for the Financial Action Task Force on Money Laundering (FATF) presidency and a decrease of $1.3 million in the redistribution of corporate administration costs.

2. The decrease of $4.5 million in 2007–08 is due to the sunsettting of the Expert Panel on Equalization and Territorial Formula Financing (TFF) of $3 million and a decrease of $1.5 million in the redistribution of corporate administration costs.

3. The change in the public debt charges is due to an increase in forecast short-term interest rates.

4. The increase in Domestic Coinage reflects the increased funding required for the cost to produce and distribute the augmented volume of domestic coinage due to higher demand for coinage from the economy.

5. The increase in the amount of transfer payments is the result of increased transfer payments to provinces and territories, including Fiscal Equalization, TFF, the Canada Health Transfer, and the Canada Social Transfer.

6. The decrease in 2007–08 in the budgetary amount of the International Financial Organizations program activity is due largely to a significant payment for debt for Cameroon, part of the Heavily Indebted Poor Countries process, which was made in 2006–07, but which will not be repeated in 2007–08.

7. The decrease in the non-budgetary amounts for the International Financial Organizations program activity is consistent with the agreed upon schedule of Canada's payments and encashment for the capital subscription of the European Bank for Reconstruction and Development (EBRD).

8. $5.6 million transferred from the Department of Finance Canada's reference level to the Canadian International Development Agency for 2006–07. This represents surplus funds from lower than expected payments under the Multilateral Debt Relief Initiative for 2006–07. The International Assistance Envelope's (IAE)'s management framework supports inter-pool flexibility to ensure that any surplus resources are reallocated to areas of need.

9. Forecasts of public debt charges for 2006–07 increased by $393 million due to an increase in expected short-term interest rates.

10. Budget 2006 provided additional funding to compensate certain provinces and territories for losses, based on updated data.

11. This is a recovery based on tax abatements for the Province of Quebec. The amount of $69 million represents a decrease in the amount to be recovered from Quebec. This decrease is related to a decrease in the value of personal income tax points compared with the data used for Main Estimates 2006–07.

12. This is a recovery from the Province of Quebec for the additional tax point transfers above and beyond the Canada Health Transfer and Canada Social Transfer tax point transfers. The decrease is related to a decrease in the value of personal income tax points compared with the data used for Main Estimates 2006–07.

13. The revised estimate for domestic coinage reflects an increase in private sector demand for coinage.

14. The adjustment is due to a discrepancy with the 2006–07 Main Estimates due to a revised forecast for payments to the International Development Association.

15. The increased funding of $512,000 for internal audit is for the creation of an internal audit committee, as well as for additional personnel and related training to assist in carrying out new requirements flowing from the new Policy on Internal Audit.

16. The decrease in FTEs is largely due to the September 2006 decision to wind down the Canada Investment and Savings Agency (a special operating agency of the Department of Finance Canada).

Table 2: Voted and Statutory Items Listed in Main Estimates


Vote or Statutory Item

Truncated Vote or Statutory Wording

2007–08
Main Estimates

2006–07
Main Estimates

($ thousands)

1

Operating expenditures1

89,343 93,135

5

Grants and Contributions2

221,200 404,200

(S)

Minister of Finance—Salary and motor car allowance

75 73

(S)

Territorial Formula Financing (Part I.1—Federal-Provincial Fiscal Arrangements Act)3

2,142,450 2,070,000

(S)

Payments to the International Development Association

318,269 318,269

(S)

Contributions to employee benefit plans

12,344 12,429

(S)

Purchase of Domestic Coinage4

145,000 83,100

(S)

Interest and Other Costs5

34,697,000 34,395,000

(S)

Statutory Subsidies (Constitution Act, 1867-1982, and Other Statutory Authorities)

32,000 32,000

(S)

Fiscal Equalization (Part I—Federal-Provincial Fiscal Arrangements Act)6

11,676,353 11,282,000

(S)

Canada Health Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)7

21,348,400 20,140,000

(S)

Canada Social Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)8

8,800,000 8,500,000

(S)

Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964)9

(661,000) (699,000)

(S)

Alternative Payments for Standing Programs (Part VI—Federal-Provincial Fiscal Arrangements Act)10

(3,010,000) (2,995,000)
  Appropriations not required    
- Pursuant to section 29 of the Financial Administration Act, to authorize the Minister on behalf of Her Majesty in Right of Canada to guarantee payment to the holders of mortgages insured by private insurers approved by the Superintendent of Financial Institutions to sell mortgage insurance in Canada of not more than 90% of the net claims of the holders of the insured mortgages in the event of the insolvency or liquidation of the private insurer, subject to the limitation that the aggregate outstanding principal amount of all mortgages covered by the guarantee shall not exceed $100,000,000,000 at any time; and to repeal Vote 16b, Appropriation Act No. 4, 2003-2004 - -
  Items not required    
- Payments to International Monetary Fund's Poverty Reduction and Growth Facility11 - 3,400
  Total budgetary 75,811,434 73,639,606

L10

Issuance and payment of demand notes to the
International Development Association

- -

(S)

Payments and encashment of notes issued to the European Bank for Reconstruction and Development—Capital Subscriptions12

5,247 7,471
  Total non-budgetary 5,247 7,471
 

Total Department

75,816,681 73,647,077

Notes

1. The decrease of $3.8 million, or 4.1%, in the operating expenditures vote is largely due to the transfer of $391,000 to Foreign Affairs and International Trade Canada for the Finance Councillor Position in Beijing, procurement savings of $710,000, the sunset of $1.07 million in funding for the Financial Action Task Force on Money Laundering (FATF) presidency and $3 million for the Expert Panel on Equalization and Territorial Formula Financing. The Department also received $1.3 million in funding in 2007–08 for compensation for collective bargaining.

2. The decrease of $183 million, or 45.3%, in the grants and contributions vote is due largely to a significant payment for debt for Cameroon, part of the Heavily Indebted Poor Countries process, which was made in 2006–07, but which will not be repeated in 2007–08. Grants and contributions amounts can fluctuate appreciably from year to year for two reasons. First, the amounts of debt relief vary from country to country so corresponding payments made on behalf of these countries will change accordingly. Second, the timing of debt treatment can change, as the schedule for debt treatment of a country benefiting from debt relief may change for reasons internal to that country.

3. The increase of $72.5 million, or 3.5%, in the Territorial Formula Financing (TFF) is a result of the October 26, 2004, New Framework for Equalization and the Territorial Formula Financing Program. The New Framework established a level of TFF for 2005–06 of $2 billion and annual increase of 3.5% until 2013–14.

4. The increase of $61.9 million, or 74.5%, in Domestic Coinage reflects the increased funding required for the cost to produce and distribute the augmented volume of domestic coinage due to higher demand for coinage from the economy.

5. Public Debt charges have increased by $302 million, or 0.9%, due to an increase in forecast short-term interest rates.

6. The increase of $394 million, or $3.5%, in transfer payments for Fiscal Equalization is a result of the October 26, 2004, New Framework for Equalization and the Territorial Formula Financing Program. The New Framework established a level for Equalization for 2005–06 of $10.9 billion and an annual increase of 3.5% until 2013–14.

7. The increase of $1.2 billion, or 6%, in the Canada Health Transfer represents the legislated amount for health transfers as per Budget 2003 and the additional funding announced in the September 2004 10-Year Plan to Strengthen Health Care.

8. The increase of $300 million, or 3.5%, in the Canada Social Transfer represents the legislated amount for social transfer. Additional funding was committed for this transfer in Budget 2003 and March 2003.

9. The decrease in the Youth Allowances Recovery of $38 million, or 5.5%, is due to a decrease in the amount to be recovered from Quebec. This decrease is related to a decrease in the value of personal income tax points compared with the data used for the 2006–07 Main Estimates.

10. The increased recovery of $15 million, or 0.5%, in the Alternative Payments for Standing Programs is attributable to an increase in the amount to be received from Quebec. This increase is related to a increase in the value of personal income tax points compared with the data used for the 2006–07 Main Estimates.

11. The decrease of $3.4 million, or 100%, to the payment to the International Monetary Fund's (IMF) Poverty Reduction and Growth Facility (PRGF) is due to lower obligations to fund the IMF's PRGF.

12. The decrease in the payments and encashment of notes to the ERBD of $2.2 million, or 30%, is consistent with the agreed upon schedule of Canada's payments and encashment for the capital subscription of the EBRD.

Table 3: Services Received Without Charge


  2007–08
  ($ thousands)

Accommodation provided by Public Works and Government Services Canada

7,284

Contributions covering the employer's share of employees' insurance premiums and expenditures paid by the Treasury Board of Canada Secretariat (excluding revolving funds)

4,669

Salary and associated expenditures of legal services provided by the Department of Justice Canada

3,432

Total 2007–08 Services Received Without Charge

15,386

Table 4: Loans, Investments, and Advances (Non-budgetary)


 

Forecast Spending 2006–07

Planned Spending 2007–08

Planned Spending 2008–09

Planned Spending 2009–10

 

($ thousands)

International Financial Organizations

 

 

 

 

Issuance and Payment of demand notes to the International Development Association (IDA)1

-

-

-

-

Issuance of demand notes to the European Bank for Reconstruction and Development (EBRD)—Capital Subscriptions1

-

-

-

-

Payments and encashment of notes issued to the EBRD—Capital Subscriptions2

7,471

5,247

3,498

1,749

Issuance of loans to the International Monetary Fund's (IMF) Poverty Reduction and Growth Facility (PRGF)1

-

-

-

-

Total

7,471

5,247

3,498

1,749


Notes

1. Zero dollar appropriations are required for parliamentary approval in the Main Estimates of the L15 Vote for the issuance of demand notes to the IDA, and as notification of the statutory issuance of demand notes for the EBRD Capital Subscription and loan to the IMF's PRGF. The encashment of each of these notes is covered under separate statutory payments in the Main Estimates.

2. The decrease in the payments and encashment of notes to the ERBD is consistent with the agreed upon schedule of Canada's payments and encashment for the capital subscription of the EBRD.

Table 5: Sources of Respendable and Non-respendable Revenue

Respendable Revenue


 

Forecast Revenue
2006–07

Planned
Revenue 2007–08

Planned Revenue
2008–09

Planned
Revenue
2009–10

 

($ thousands)

Tax Policy

 

 

 

 

Sale of Departmental Documents

117

128

131

130

Economic and Fiscal Policy

 

 

 

 

Sale of Departmental Documents

55

59

60

60

Financial Sector Policy

 

 

 

 

Sale of Departmental Documents

77

71

64

65

Economic Development and Corporate Finance

 

 

 

 

Sale of Departmental Documents

29

32

33

33

Federal-Provincial Relations and Social Policy

 

 

 

 

Sale of Departmental Documents

63

48

49

49

International Trade and Finance

 

 

 

 

Sale of Departmental Documents

59

62

63

63

Total Respendable Revenue

400

400

400

400


Non-respendable Revenue


 

Forecast Revenue
2006–07

Planned Revenue
2007–08

Planned Revenue
2008–09

Planned Revenue
2009–10

 

($ thousands)

Domestic Coinage

Domestic Coinage1

217,840

233,517

248,766

257,518

Total Non-respendable Revenue

217,840

233,517

248,766

257,518

Total Respendable and
Non-respendable Revenue

218,240

233,917

249,166

257,918


Note

1. The Domestic Coinage non-respendable revenue represents the face value of the forecast volume of coins that will be sold to financial institutions to meet trade and commerce requirements. The increase in the forecast volume of coins is due to a strong Canadian economy, a strong retail sector, and the inclusion of the Olympic program.

Table 6: Resource Requirement by Branch


2007-08

Tax Policy

Economic and Fiscal Policy

Financial Sector Policy

Economic Development and Corporate Finance

Federal- Provincial Relations and Social Policy

International Trade and Finance

  ($ thousands)

Tax Policy

32,689          

Economic and Fiscal Policy

  15,007        

Financial Sector Policy

    18,113      

Economic Development and Corporate Finance

      8,289    

Federal-Provincial Relations and Social Policy

        12,298  

International Trade and Finance

          15,879
Total 32,689 15,007 18,113 8,289 12,298 15,879

 Table 6: Resource Requirement by Branch (Cont'd)


2007-08

Public Debt

Domestic Coinage

Transfer Payments to Provinces and Territories

International Financial Organizations

Total Planned Spending

  ($ thousands)

Tax Policy

        32,689

Economic and Fiscal Policy

        15,007

Financial Sector Policy

34,697,000 145,000     34,860,113

Economic Development and Corporate Finance

        8,289

Federal-Provincial Relations and Social Policy

    40,328,203   40,340,501

International Trade and Finance

      544,717 560,596

Total

34,697,000 145,000 40,328,203 544,717 75,817,194

Table 7: Regulatory Initiatives


Regulations

Expected Results

Support consideration by Parliament of Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, with a view to passage before sunset in April 2007. Associated regulations will also be brought forward to bring the legislation into force.

Legislation adopted before sunset of existing legislation in April 2007 and regulations developed to update the financial institutions statutes and ensure the efficiency of the regulatory framework that allows for a sound, efficient, and competitive financial sector.

Regulations are being introduced pursuant to the passage of Bill C-57, which updated the corporate governance provisions in the financial institutions statutes.

Develop regulations to implement the new corporate governance provisions in the financial institutions statutes.

Amendments may be made to regulations under Part IX of the Excise Tax Act (GST/HST)Part IX of the Excise Tax Act contains a number of provisions that give regulatory powers to deal with GST/HST issues.

Through the use of regulations, the government may propose changes to address some issues in the GST/HST tax system. Amendments to the regulations are required from time to time to respond to emerging policy and technical issues, including budget-related measures.

Customs Tariff—The Tariff contains a number of provisions that allow the government to respond to the competitive needs of Canadian industry and to enforce Canada's rights and meet its obligations under international agreements and arrangements to which Canada is a party.

Through the use of orders and regulations, the government will continue to respond to the competitive needs of Canadian industry and will enforce Canada's rights and meet its obligations under international agreements and arrangements.

Income Tax Act and related regulations—The Income Tax Act contains a number of provisions that give regulatory powers to deal with income tax issues.

Through the use of regulations, the government may propose changes to address some issues in the income tax system. Amendments to the Regulations are required from time to time to address emerging policy or technical issues, including budget-related measures.

Orders in Council for the Equalization and the Territorial Formula Financing Program—Federal-Provincial Fiscal Arrangements Act.

Under current legislation, an Order in Council must be prepared in order to establish payment levels until superseded by Budget 2007 commitments.

Legislative changes expected as a result of policy changes in Budget 2007 regarding fiscal balance.

Legislation and regulatory changes will be introduced to implement a principled framework for major federal transfers, reflecting the proposals to restore fiscal balance included in Budget 2007.

Regulations to establish guidelines for the chief actuary of the Canada Pension Plan (CPP) to calculate the full cost of benefit enrichments or new benefits to the CPP, upon Royal Assent of Bill C-36, which provides for this regulation-making authority.

This would deliver on a federal-provincial-territorial agreement reached in June 2006 as part of the conclusion of the CPP's triennial review.

Amend existing regulations relating to the calculation of the default contribution rate to the CPP that provide for rounding of this rate to the nearest cent. This requires a consequential change to Bill C-36.

This would deliver on a federal-provincial-territorial agreement reached in June 2006 as part of the conclusion of the CPP's triennial review.

Budget 2005 proposed to amend regulations made under the Pension Benefits Standards Act, 1985 to remove the requirement that life income funds be used to purchase an annuity when the beneficiary reaches age 80.

Legislation and/or regulations will be introduced to repeal the requirement to purchase an annuity at age 80.

Amendments to the regulations made pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Regulations will be introduced or amended to respond to the revised Financial Action Task Force recommendations and to respond to the recommendations of the Auditor General of Canada and the Treasury Board-mandated evaluation.


Table 8: Details of Transfer Payment Programs

Over the next three years, the Department of Finance Canada will manage the following transfer payment programs in excess of $5 million:

2007–08 to 2009–10

1. Compensation to Canadian agencies or entities established by an Act of Parliament for reduction of debts of debtor countries

2. Payments to the International Development Association

3. Debt payments on behalf of poor countries to international organizations

4. Fiscal Equalization (Part I, Federal-Provincial Fiscal Arrangements Act)

5. Territorial Formula Financing (Part I.1, Federal-Provincial Fiscal Arrangements Act)

6. Canada Health Transfer (Part V.1, Federal-Provincial Fiscal Arrangements Act)

7. Canada Social Transfer (Part V.1, Federal-Provincial Fiscal Arrangements Act)

8. Statutory Subsidies (Constitution Act, 1867, Constitution Act, 1982,and other statutory authorities)

9. Youth Allowances Recovery (Federal-Provincial Revision Act, 1964)

10. Alternative Payments for Standing Programs (Part VI, Federal-Provincial Arrangements Act)

11. Wait Times Reduction Transfer (Part V.1, Federal-Provincial Fiscal Arrangements Act)

For further information on the above-mentioned transfer payment programs, see http://www.tbs-sct.gc.ca/est-pre/estime.asp.

Details on Transfer Payment Programs (TPPs) for the Department of Finance Canada

Name of Transfer Payment Program: Grants and Debt Payments on Behalf of Poor Countries to International Organizations

Start Date: 2005–06

End Date: Ongoing

Description: Payments for Canada’s commitment to the G8-led Multilateral Debt Relief Initiative

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

Expected Results: Responsible administration of financial obligations under the Multilateral Debt Relief Initiative


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: International Financial Organizations
Grants 45,605 51, 200 51,200 51,200

Planned Evaluations: Not applicable

Planned Audits: Audit of the Administrative Controls Over Subscription Payments and International Obligations


Name of Transfer Payment Program: Compensation to Canadian agencies or entities established by an Act of Parliament for reduction of debts of debtor countries

Start Date: 1991–92

End Date: Ongoing

Description: Compensate Export Development Canada (EDC) and the Canadian Wheat Board (CWB) for reduction of debts of debtor countries

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

Expected Results: Timely and accurate payments to the EDC and the CWB to compensate for debt relief to debtor countries


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: International Financial Organizations
Grants 298,000 125,000 147,000 119,000
Contributions 55,000 45,000 21,000 20,000
Total Payments 353,000 170,000 168,000 139,000

Planned Evaluations: Not applicable

Planned Audits: Audit of the Administrative Controls Over Subscription Payments and International Obligations


Name of Transfer Payment Program: Statutory Funding—Payments to the International Development Association (IDA)

Start Date: 1960–61

End Date: Ongoing

Description: Encashment of demand notes to allow the IDA to disburse concessional financing for development projects and programs in the world’s poorest countries

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

Expected Results:

  • Responsible administration of financial obligations to the IDA
  • Results of IDA operations are detailed in the report on operations under the Breton Woods and Related Agreements Act that is tabled annually in Parliament

($ thousands) Forecast
Spending
2006–07*
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: International Financial Organizations
Other Types of Transfer Payments 318,270 318,270 318,280 318,280
Total Program Activity 720,275 539,470 537,480 508,480

Planned Evaluations: Not applicable

Planned Audits: Audit of the Administrative Controls Over Subscription Payments and International Obligations

* The 2006–07 forecast spending figure includes $3.4 million for payments to the International Monetary Fund’s Poverty Reduction and Growth Facility—Exogenous Shocks Facility Trust.


Name of Transfer Payment Program: Fiscal Equalization (Part I, Federal-Provincial Fiscal Arrangements Act)

Start Date: 1957

End Date: Ongoing

Description: Equalization payments are made to provincial governments based on a formula to enable them to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. Equalization payments are unconditional. In 2006–07, eight provinces received payments under this program.

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

Expected Results: Financial support to Canadian provinces to assist them in providing public services


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments 11,535,600 11,676,353 12,085,025 12,508,001

Planned Evaluations: An evaluation of this transfer program is currently underway. This evaluation will take into account the June 2006 report of the expert panel that studied the program. Recent information about the panel is on the Department of Finance Canada website at http://www.fin.gc.ca/news05/05-074e.html.

Planned Audits: An audit of the program is not required at this time.


Name of Transfer Payment Program: Territorial Formula Financing (Part I.1, Federal-Provincial Fiscal Arrangements Act)

Start Date: 1985

End Date: Ongoing

Description: Transfer payments to territorial governments to support their budgetary revenues

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

Expected Results: Financial support for Canadian territories to assist them in providing public services


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments 2,071,864 2,142,450 2,217,436 2,295,046

Planned Evaluations: An evaluation of this transfer program is currently underway. This evaluation will take into account the June 2006 report of the expert panel that studied the program. Recent information about the panel is on the Department of Finance Canada website at http://www.fin.gc.ca/news05/05-074e.html.

Planned Audits: An audit of the program is not required at this time.


Name of Transfer Payment Program: Canada Health Transfer (Part V.1, Federal-Provincial Fiscal Arrangements Act)

Start Date: 2004

End Date: Ongoing

Description: The Canada Health Transfer (CHT) provides equal per capita support for health care through cash and tax transfers to provincial and territorial governments. The CHT supports the government’s commitment to maintain the national criteria and conditions of the Canada Health Act (comprehensiveness, universality, portability, accessibility, and public administration) and the prohibitions against user fees and extra-billing.

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

Expected Results: Financial support to Canadian provinces and territories to assist them in providing universally accessible health care services


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments 20,140,000 21,348,400 22,629,304 23,987,062

Planned Evaluations: There are no evaluations planned for this program.

Planned Audits: An audit of the program is not required at this time. An internal audit of the Canada Health and Social Transfer (CHST) was prepared in May 2002 and is available on the Department of Finance Canada website at http://www.fin.gc.ca/toce/2002/audit_transfers-e.html.


Name of Transfer Payment Program: Canada Social Transfer (Part V.1, Federal-Provincial Fiscal Arrangements Act)

Start Date: 2004

End Date: Ongoing

Description: The Canada Social Transfer (CST) provides equal per capita support through cash and tax transfers to provincial and territorial governments to assist them in financing post-secondary education, social assistance, and social services, including early childhood development and early learning, and child care services. The CST gives provinces and territories the flexibility to allocate payments among supported areas according to their own priorities and supports the government’s commitment to prohibit minimum residency requirements for social assistance.

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

Expected Results: Financial support for Canadian provinces and territories to assist them in providing post-secondary education, social assistance, and social services, including early childhood development and early learning, and child care


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments 8,500,000 8,800,000 8,800,000 8,800,000

Planned Evaluations: There are no evaluations planned for this program.

Planned Audits: An audit of the program is not required at this time. An internal audit of the Canada Health and Social Transfer (CHST) was prepared in May 2002 and is available on the Department of Finance Canada website at http://www.fin.gc.ca/toce/2002/audit_transfers-e.html.


Name of Transfer Payment Program: Statutory Subsidies (Constitution Act, 1867; Constitution Act, 1982; and other statutory authorities)

Start Date: 1867

End Date: Ongoing

Description: The statutory subsidies provide a source of funding to provinces in accordance with terms of entry into Confederation.

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

Expected Results: Financial support to provinces to assist them in providing public services


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments 32,000 32,000 32,000 32,000

Planned Evaluations: There are no evaluations planned for this program.

Planned Audits: An audit of the program is not required at this time.


Name of Transfer Payment Program: Youth Allowances Recovery (Federal-Provincial Revision Act, 1964)

Start Date: 1964

End Date: Ongoing

Description: The Youth Allowances Recovery is a recovery from the Province of Quebec for an additional tax point transfer (three points) above and beyond the Canada Health Transfer and Canada Social Transfer tax point transfer; in the 1960s, Quebec chose to use the federal government’s contracting-out arrangements for certain federal-provincial programs. Taken together, the Alternative Payments for Standing Programs and the Youth Allowances Recovery are known as the "Quebec Abatement."

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

Expected Results: Financial support for Quebec to assist that province in providing public services, universally accessible health care services, post-secondary education, and social assistance


($ thousands) Forecast
Spending
2006–07
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments -630,000 -661,000 -695,000 -730,000

Planned Evaluations: There are no evaluations planned for this program.

Planned Audits: An audit of the program is not required at this time


Name of Transfer Payment Program: Alternative Payments for Standing Programs (Part VI, Federal-Provincial Fiscal Arrangements Act)

Start Date: 1977

End Date: Ongoing

Description: The Alternative Payments for Standing Programs are a recovery from the Province of Quebec for an additional tax point transfer (13.5 points) above and beyond the Canada Health Transfer and Canada Social Transfer tax point transfer; in the 1960s, Quebec chose to use the federal government’s contracting-out arrangements for certain federal-provincial programs. Taken together, the Alternative Payments for Standing Programs and the Youth Allowances Recovery are known as the "Quebec Abatement."

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

Expected Results: Financial support for Quebec to assist that province in providing public services, universally accessible health care services, post-secondary education, and social assistance


($ thousands) Forecast
Spending
2006–07 *
Planned
Spending
2007–08
Planned
Spending
2008–09
Planned
Spending
2009–10**
Program Activity: Transfer Payments to Provinces and Territories
Other Types of Transfer Payments -2,870,000 -3,010,000 -3,165,000 -3,325,000
Total Program Activity: 38,825,499 40,328,203 41,903,765 43,817,109
Planned Evaluations: There are no evaluations planned for this program.
Planned Audits: An audit of the program is not required at this time.
TOTAL TPPs 39,545,774 40,867,673 42,441,245 44,325,589

* The total program activity figure for 2006-07 includes $46 million for payments to territorial governments, other than those provided under Territorial Formula Financing (TFF), to support their budgetary revenues.

** The program activity figure for 2009-10 includes $250 million for the Wait Times Reduction Transfer.


 

Table 9: Horizontal Initiative

Over the next three years, the Department of Finance Canada will be involved in the following horizontal initiative as the lead department:

2007–08 to 2009–10

1. National Initiative to Combat Money Laundering

For further information on the above-mentioned horizontal initiatives, see http://www.tbs-sct.gc.ca/est-pre/estime.asp.

Horizontal Initiative: Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime—formerly the National Initiative to Combat Money Laundering (NICML)

Lead Department: Department of Finance Canada

Start Date: June 2000

End Date: 2009–10

Total Funding Allocated: $429,006 (thousands)

Description:

The National Initiative to Combat Money Laundering (NICML) was formally established in 2000 as part of the government’s ongoing effort to combat money laundering in Canada. Legislation adopted that year, the Proceeds of Crime (Money Laundering) Act (PCMLA), created a mandatory reporting system for suspicious financial transactions, large cross-border currency transfers, and certain prescribed transactions. The legislation also established the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to collect and analyze these financial transaction reports and to disclose pertinent information to law enforcement and intelligence agencies. In December 2001, the PCMLA was amended to include measures to fight terrorist financing activities and renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

The NICML was expanded and is now known as Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. In December 2006, Bill C-25 amended the PCMLTFA to ensure Canada’s legislation remains consistent with international anti-money laundering and anti-terrorist financing standards as set out by the Financial Action Task Force (FATF) and is responsive to areas of domestic risk. Amendments include enhanced client identification requirements, the creation of a registration regime for money services businesses, and the establishment of an administrative and monetary penalties regime to deal with lesser infractions of the Act.

Shared outcome(s):

To detect and deter money laundering and the financing of terrorist activities, and to facilitate the investigation and prosecution of money laundering and terrorist financing offences.

Governance structure(s):

Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is a horizontal initiative comprised of both funded and non-funded partners. The funded partners include the Department of Finance Canada, the Department of Justice Canada, the Public Prosecution Service of Canada, FINTRAC, the Canada Border Services Agency (CBSA)—Immigration and Customs, the Canada Revenue Agency (CRA), and the Royal Canadian Mounted Police (RCMP); non-funded partners include Public Safety and Emergency Preparedness Canada (PSEPC), the Office of the Superintendent of Financial Institutions (OSFI), and the Canadian Security Intelligence Service (CSIS). An interdepartmental ADM-level group and working group, consisting of all partners and led by the Department of Finance Canada, has been established to direct and coordinate the government’s efforts to combat money laundering and terrorist financing activities.


Federal Partners Involved in Each Program Name of Program Total Allocation
($ thousands)
Planned Spending for 2007–08
($ thousands)
Expected Results for 2007–08
Department of Finance Canada Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 3,000 300 1. Consultations with public and private sector stakeholders to refine regulatory proposals.

2. Published regulations pursuant to the amended PCMLTFA.

3. Finalizing of the FATF mutual evaluation of the anti-money laundering and anti-terrorist financing regime.

4. Effective oversight of Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime.

5. Support for the 2006–07 Canadian presidency of the FATF.

 
Department of Justice Canada Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 9,300 100 The Criminal Division of the Department of Justice Canada plays a significant role in the regime. For 2007–08, it is anticipated that the Criminal Division will use the resources it receives to carry out work related to the FATF, including attending FATF-related international meetings, which will total five (5) over the relevant period. Attendance at the meetings is of particular importance during 2007, as Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime is being evaluated this year against the FATF’s 40+9 recommendations and our presence is necessary to ensure proper discussions of the Canadian evaluation report. In addition, the Criminal Division will be the relevant authority to respond to all legal issues that develop out of that evaluation. Resources will also be allocated to ensure the Criminal Division’s continued involvement in policy development relating to money laundering and terrorist financing. Finally, the Human Rights Law Section will receive money to deal with any ancillary constitutional issue raised during the prosecutions.
 
Public Prosecution Service of Canada Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 6,900 2,300 The Public Prosecution Service of Canada (PPSC) plays a significant role in the regime. For 2007–08, it is anticipated that information provided to law enforcement by FINTRAC will result in more prosecutorial legal advice being provided to law enforcement. It will also result in additional charges being laid for money laundering and terrorist financing offences and thus result in an increased workload for prosecutors. The PPSC also has responsibilities related to the PCMLTFA. The planned work includes applications for Production Orders, increases in border seizure and forfeiture work associated with suspected proceeds of crime, and prosecutions related to offences created within the Act. In addition, resources will be used to provide training to law enforcement personnel and prosecutors and for the development and coordination of policy as it relates to money laundering and terrorist financing. Finally, PPSC resources will carry out work related to the FATF, including attending the FATF international meeting.
 
FINTRAC Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 266,591 38,595 Technology-driven financial intelligence analysis and case disclosures that are widely used by law enforcement and intelligence agencies with a program that fosters compliance by the reporting entities.

Implementation of amendments contained in Bill C-25.

 
CBSA Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 55,952 7,525,826 The CBSA is responsible for administering Part 2 of the PCMLTFA, "Reporting of Currency and Monetary Instruments." The Cross-Border Currency Reporting (CBCR) Program requires that travellers report the importation and exportation of currency and monetary instruments equal to or greater than CAD$10,000. Part 2 also provides for the enforcement element of the CBCR Program, which includes conducting searches, questioning individuals, and seizing non-reported or falsely reported currency and suspected proceeds of crime.
 
CRA Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 8,800 2,200 Projected number of audits is 105, with a projected federal tax recovery of $8,956,905.
 
RCMP (Money Laundering Units) Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 57,103 7,978 Enhanced national and international opportunities for the detection and investigation of money laundering activities.

Development of FINTRAC disclosures, as well as other intelligence, to a point where resources from Integrated Proceeds of Crime Units or elsewhere in the RCMP could then be directed towards investigations in an effort to increase seizures.

Increased resource level in Canada’s three major urban centres (Vancouver, Toronto, and Montreal) to help build up the investigative capacity in those centres to conduct investigations on leads related to Canada’s anti-money laundering regime.

 
RCMP (Anti-Terrorist Financing Team) Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime 21,360 5,340 Through the gathering and analysis of financial intelligence, the Anti-Terrorist Financing Team will focus on converting that intelligence into proactive investigations, thus enhancing our ability to detect and deter terrorist financing activities.
Total   429,006 52,899  

Results to be achieved by non-federal partners (if applicable): Not applicable

Contact:

Lynn Hemmings, Chief

Financial Crimes Section

613-992-0553

Approved by:

Serge Dupont, Assistant Deputy Minister

Financial Sector Policy Branch

613-995-5798

Date Approved:

February 15, 2007

Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime, Allocation by Year ($ thousands)


Dept./Agency 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 Total
Department of Finance Canada 300 300 300 300 300 300 300 300 300 300 3,000
Department of Justice Canada 600 1,200 1,200 1,200 1,200 1,200 2,400 100 100 100 9,300
Public Prosecution Service of Canada               2,300 2,300 2,300 6,900
FINTRAC 17,985 25,468 26,820 22,081 21,406 22,562 27,387 38,595 32,634 31,654 266,591
CBSA1 4,298 4,298 4,298 4,298 4,298 4,298 7,589 7,525 7,525 7,525 55,952
CRA             2,200 2,200 2,200 2,200 8,800
RCMP (Anti-Terrorist Financing Team)             5,340 5,340 5,340 5,340 21,360
RCMP (Anti-Money Laundering Units) 2,600 4,900 4,900 4,900 4,900 4,900 7,683 7,978 7,171 7,171 57,103
Total Allocation 25,783 36,166 37,518 32,779 32,104 33,260 52,899 64,338 57,570 56,590 429,006
1 Funding from 2000 to 2006 was for the former Canada Customs and Revenue Agency, and Citizenship and Immigration Canada.

Table 10: Sustainable Development Strategy

"Sustainable development" is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs, and it is a key commitment of all federal departments. In 1995, the Auditor General Act was amended to require each department to prepare and update a sustainable development strategy (SDS). These strategies are tabled in the House of Commons, and the Commissioner of the Environment and Sustainable Development monitors the progress toward their implementation.

An SDS is intended to outline a department's goals and action plans for integrating sustainable development into its policies, programs, and operations over three-year planning periods.

The Department of Finance Canada's Sustainable Development Strategy (SDS) for the period of 2007–09 is the department's third update of its original SDS tabled in Parliament in December 1997. The 2007–09 SDS builds upon the foundation of previous strategies, including key achievements in debt reduction, evaluating environmental tax proposals, strategic environmental assessment, and green stewardship. The Department's 1998–2000, 2001–03, 2004–06, and 2007–09 strategies can be found at http://www.fin.gc.ca/purl/susdev-e.html.

The Department's vision for sustainable development is "Economic and fiscal policy frameworks and decisions that promote equity and enhance the economic, social, and environmental well-being of current and future generations." It highlights the long-term ideal that the Department will strive to achieve. For the 2007–09 SDS, the Department has set out five long-term goals that focus on key areas where it can contribute, within its mandate, to sustainable development: (1) fiscal sustainability and a high standard of living for future generations; (2) strong social foundations; (3) integration of sustainable development considerations into policy making; (4) integration of sustainable development considerations into the economy; and (5) demonstration of the Department's commitment to sustainable development in operations.

Under each of these five goals, the Department's action plan for sustainable development sets out a number of objectives and targeted actions over the planning period. In undertaking these actions over the next three years, the Department recognizes that fully achieving sustainable development will take time and continued effort. This requires a long-term strategic approach, while continuing to commit to short-term actions that make progress toward the departmental vision for sustainable development.

A detailed outline of the Department's objectives, actions, and planned results in its SDS in 2007–08 is available at http://www.fin.gc.ca/purl/susdev-e.html.

Table 11: Internal Audits and Evaluations

Internal audits will be undertaken as required under a three-year risk-based audit plan being developed and that is to be approved by the Internal Audit and Evaluation Committee in early 2007–08.

Development of a risk-based evaluation plan is planned for 2007–08 that will identify evaluation requirements for 2007–08, 2008–09, and 2009–10.


1. Name of Internal Audit / Evaluation

2. Audit Type / Evaluation Type

3. Status

4. Expected Completion Date

5. Electronic Link to Report

Audit of Administrative Controls over the Foreign Debt Portfolio and Foreign Currency Asset Reserves

Assurance

Completed

 

http://www.fin.gc.ca/access/audit-eng.html#Internal

6. Electronic Link to Internal Audit and Evaluation Plan: Not Applicable


 




Section IV: Other Items of Interest

Business Transformation

As part of a branch-wide business transformation initiative, the Corporate Services Branch (CSB) has initiated a review of all its functional activities (Financial Management, Human Resources Management, Information Management/Information Technology, Procurement, Facilities Management, Audit, and Security services). This review was launched in September 2006. The purpose of the review is to build CSB's capability and capacity to deliver integrated corporate services to its clients. Through the business transformation exercise, CSB will:

  • clarify its strategic direction and delivery priorities;
  • increase process standardization across functional areas;
  • clarify roles and responsibilities within CSB, and between CSB and its clients and suppliers;
  • enhance the Branch's understanding of clients' needs and establish service level agreements;
  • develop a capacity to track and report on performance;
  • develop integrated tools, templates, processes, and infrastructure to support efficient and effective operational delivery;
  • develop a knowledge inventory that supports knowledge transfer, learning, and coaching; and
  • partner with the Treasury Board of Canada Secretariat to ensure that the implementation of the business transformation is aligned to emerging policies and practices.

This business transformation is being designed to achieve the following results for CSB clients:

  • increased access to integrated internal service infrastructure solutions;
  • increased ability to demonstrate business results;
  • increased ability to assure and report on compliance with Government of Canada legislation, policies, practices, and controls; and
  • increased access to advice and information for decision making.

The business transformation of the Corporate Services Branch is designed to increase the Branch's ability to support the Department's programs in meeting their commitments and aligning their results to the strategic direction of the Department and the government.

Statutory and Departmental Reports

Annual Financial Report of the Government of Canada and Fiscal Reference Tables

Annual Report to Parliament on the Operations of the Exchange Fund Account

Canada Investment and Savings Annual Report

Debt Management Report

Debt Management Strategy

Departmental Performance Report

Economic and Fiscal Update

Economy in Brief—Quarterly

Federal budget

Fiscal Monitor—Monthly

Government of Canada Securities—Quarterly

Report on Operations under the Bretton Woods and Related Agreements Act

Report on Operations under the European Bank for Reconstruction and Development Agreement Act

Report on Plans and Priorities

Sustainable Development Strategy

Tax Expenditures and Evaluations

Note

The reports listed above are available on the Department of Finance Canada website at http://www.fin.gc.ca, with the exception of the annual report for Canada Investment and Savings, which is available at http://www.csb.gc.ca.


Contacts for Further Information and Websites

Home page: http://www.fin.gc.ca

Email messages for the Minister of Finance, the Honourable James M. Flaherty, P.C., M.P: jflaherty@fin.gc.ca

Comments or questions regarding the information on the Department of Finance Canada website:

Consultations and Communications Branch
Department of Finance Canada
140 O'Connor Street
Ottawa ON K1A 0G5
Canada

Telephone: 613-992-1753
Email: consultcomm@fin.gc.ca

Printed copies of Department of Finance Canada publications:

Distribution Centre
Department of Finance Canada
140 O'Connor Street
Ottawa ON K1A 0G5
Canada

Telephone: 613-995-2855
Fax: 613-996-0518