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Budget 2001 - Budget Plan Chapter 4 |
|
|||
---|---|---|---|
2001 |
2002 |
2003-2007 |
|
|
|||
(per cent) |
|||
Real GDP |
1.5 |
1.5 |
3.3 |
2.6 |
1.6 |
1.9 |
|
Nominal GDP growth |
4.1 |
3.1 |
5.3 |
3-month Treasury bill rate |
4.0 |
3.2 |
5.1 |
10-year government bond rate |
5.5 |
5.5 |
5.9 |
|
|||
Note: Based on a survey conducted by the Department of Finance in early October. The number of respondents declines from 19 in 2002 to 9 in 2006 and 2 in 2007. |
- The projections include the impact of the $100-billion tax reduction plan as set out in the October 2000 Economic Statement and Budget Update and the $23.4-billion agreements on health renewal and early childhood development reached by first ministers in September 2000.
- The employment insurance (EI) premium rate assumptions are those used in the 2000 budget and the October 2000 Economic Statement and Budget Update – $2.20 (employee rate per $100 of insurable earnings) for 2002, $2.10 for 2003 and $2.00 thereafter.
- The 2000 budget assumptions for direct program spending – total program spending less major transfers to persons and major cash transfers to other levels of government – are used for 2001-02, adjusted for policy decisions announced in the October 2000 Economic Statement and Budget Update. Thereafter direct program spending is assumed to grow in line with the growth in the population and inflation.
- The projections of public debt charges assume that the Contingency Reserve is not required and is applied each year to reducing the net public debt.
Table 4.2
Status Quo Fiscal Outlook:
Changes Since October 2000 Economic Statement
|
|||||
---|---|---|---|---|---|
2000-2001 | 2001-2002 |
2002-2003 | 2003-2004 |
2004-2005 | |
| |||||
(billions of dollars) |
|||||
October 2000 Economic Statement |
|||||
Budgetary surplus: private sector average |
15.2 |
14.9 |
16.5 |
17.3 |
13.5 |
Less spending and tax initiatives in 2000 Statement |
|||||
Spending initiatives |
1.8 |
0.1 |
0.1 |
0.1 |
0.1 |
Tax relief |
1.5 |
6.7 |
8.7 |
9.4 |
6.7 |
Total |
3.3 |
6.8 |
8.9 |
9.6 |
6.8 |
October 2000 Statement: budgetary surplus |
11.9 |
8.3 |
7.6 |
7.7 |
6.7 |
Spending and tax initiatives |
-2.1 |
-0.6 |
-0.5 |
-0.3 |
-0.2 |
Impact of economic developments |
7.3 |
-0.4 |
-3.3 |
-1.7 |
-0.8 |
October 2001 private sector |
|||||
Status quo budgetary surplus: |
17.1 |
7.3 |
3.8 |
5.7 |
5.7 |
|
|||||
Note: Numbers may not add due to rounding. |
Table 4.3
Spending and Tax Initiatives Announced Since the October 2000 Economic Statement and Before the 2001 Budget
|
|||||||
---|---|---|---|---|---|---|---|
2001-2002 |
2002-2003 |
2003-2004 |
2004-2005 |
2005-2006 |
2006-2007 |
Total |
|
|
|||||||
(millions of dollars) |
|||||||
Improving the quality of life for Canadians and their children |
|||||||
Community health and environment |
|||||||
Tobacco strategy |
70 |
95 |
95 |
110 |
110 |
110 |
590 |
Health commissioner1 |
7 |
8 |
15 |
||||
Addressing environmental |
77 |
44 |
42 |
41 |
8 |
8 |
220 |
Labrador Innu Healing |
19 |
33 |
30 |
81 |
|||
Culture and branding Canada abroad |
|||||||
Cultural initiatives |
114 |
167 |
175 |
106 |
562 |
||
Amateur sports |
10 |
10 |
10 |
30 |
|||
CBC3 |
60 |
60 |
120 |
||||
Canadian Television |
100 |
100 |
200 |
||||
Revitalizing Canada’s |
21 |
58 |
11 |
40 |
16 |
2 |
148 |
Crime prevention and drug strategy |
30 |
30 |
30 |
30 |
30 |
30 |
180 |
Employment insurance benefits2 |
35 |
89 |
89 |
89 |
89 |
89 |
480 |
Donations of certain publicly traded securities to charities2,4 |
70 |
70 |
75 |
75 |
75 |
365 |
|
Community safety and crime prevention2 |
23 |
32 |
45 |
45 |
45 |
45 |
235 |
Total |
565 |
796 |
596 |
537 |
372 |
359 |
3,226 |
Making Canada’s economy more innovative |
|||||||
Research and development |
|||||||
Government On-Line |
120 |
120 |
|||||
Providing essential public services |
|||||||
Economic adjustment |
|||||||
Shipbuilding2 |
1 |
46 |
43 |
30 |
30 |
150 |
|
Airline assistance2 |
160 |
160 |
|||||
Toronto waterfront1 |
2 |
55 |
75 |
100 |
150 |
120 |
502 |
Canadian Tourism Commission1 |
20 |
20 |
|||||
Asia wood product market |
0 |
2 |
2 |
1 |
4 |
||
Furthering international co-operation2 |
25 |
37 |
26 |
88 |
|||
Total |
208 |
140 |
146 |
131 |
180 |
120 |
924 |
Total |
894 |
936 |
742 |
668 |
552 |
479 |
4,270 |
Less: Tobacco tax increases |
|||||||
April 2001 increase4 |
200 |
200 |
200 |
200 |
200 |
200 |
1,200 |
November 2001 increase2, 4 |
75 |
240 |
240 |
240 |
240 |
240 |
1,275 |
Total |
275 |
440 |
440 |
440 |
440 |
440 |
2,475 |
Net fiscal impact |
619 |
496 |
302 |
228 |
112 |
39 |
1,795 |
|
|||||||
1 Revised from May 2001 Economic Update. 2 Not included in May 2001 Economic Update. 3 This budget extends funding for one more year. 4 Tax measure. |
Table 4.4
October 2001 Status Quo Fiscal Outlook Summary Statement of Transactions: Average of Private Sector Fiscal Projections
|
|||||||
---|---|---|---|---|---|---|---|
2000-2001 | 2001-2002 |
2002-2003 | 2003-2004 |
2004-2005 | 2005-2006 |
2006-2007 | |
| |||||||
(billions of dollars) |
|||||||
Budgetary revenues |
178.6 |
174.8 |
175.6 |
182.5 |
188.0 |
196.9 |
206.5 |
Program spending |
119.3 |
128.0 |
134.1 |
137.6 |
142.2 |
147.5 |
152.6 |
Operating balance |
59.2 |
46.8 |
41.4 |
44.9 |
45.7 |
49.4 |
54.0 |
Public debt charges |
42.1 |
39.5 |
37.7 |
39.2 |
40.0 |
39.8 |
39.7 |
Budgetary surplus |
17.1 |
7.3 |
3.8 |
5.7 |
5.7 |
9.7 |
14.3 |
Net public debt |
|||||||
Balanced budget |
547.4 |
547.4 |
547.4 |
547.4 |
547.4 |
547.4 |
547.4 |
Per cent of GDP |
|||||||
Budgetary revenues |
16.9 |
15.9 |
15.5 |
15.2 |
14.8 |
14.8 |
14.7 |
Program spending |
11.3 |
11.6 |
11.8 |
11.5 |
11.2 |
11.1 |
10.9 |
Public debt charges |
4.0 |
3.6 |
3.3 |
3.3 |
3.2 |
3.0 |
2.8 |
Budgetary surplus |
1.6 |
0.7 |
0.3 |
0.5 |
0.5 |
0.7 |
1.0 |
Net public debt |
|||||||
Balanced budget |
51.8 |
49.8 |
48.3 |
45.6 |
43.2 |
41.0 |
39.1 |
|
|||||||
Note: Numbers may not add due to rounding. |
Table 4.5
October 2001 Status Quo Fiscal Outlook
Budgetary Revenues: Average of Private Sector Projections
|
|||||||
---|---|---|---|---|---|---|---|
2000- |
2001- |
2002- |
2003- |
2004- |
2005- |
2006- |
|
|
|||||||
(billions of dollars) |
|||||||
Income tax |
|||||||
Personal income tax |
82.3 |
80.8 |
80.5 |
84.6 |
87.9 |
93.0 |
98.5 |
Corporate income tax |
28.2 |
26.5 |
26.0 |
26.2 |
26.0 |
26.8 |
27.7 |
Other income tax |
4.3 |
4.0 |
4.1 |
4.2 |
4.4 |
4.5 |
4.7 |
Total income tax |
114.8 |
111.3 |
110.5 |
115.1 |
118.3 |
124.3 |
130.9 |
Employment insurance revenues |
18.7 |
17.8 |
17.6 |
17.5 |
17.4 |
18.1 |
18.7 |
Excise taxes/duties |
|||||||
25.0 |
25.8 |
27.1 |
28.9 |
30.7 |
32.5 |
34.4 |
|
Customs import duties |
2.8 |
2.9 |
3.0 |
3.2 |
3.3 |
3.5 |
3.7 |
Other |
8.3 |
8.6 |
8.9 |
9.2 |
9.5 |
9.8 |
10.1 |
Total |
36.1 |
37.3 |
39.0 |
41.3 |
43.6 |
45.8 |
48.2 |
Total tax revenues |
169.7 |
166.4 |
167.1 |
173.8 |
178.3 |
188.2 |
197.8 |
Non-tax revenues |
8.9 |
8.4 |
8.5 |
8.6 |
8.7 |
8.7 |
8.8 |
Total budgetary revenues |
178.6 |
174.8 |
175.6 |
182.5 |
188.0 |
196.9 |
206.5 |
Per cent of GDP |
|||||||
7.8 |
7.3 |
7.1 |
7.1 |
6.9 |
7.0 |
7.0 |
|
2.7 |
2.4 |
2.3 |
2.2 |
2.0 |
2.0 |
2.0 |
|
Employment insurance revenues |
1.8 |
1.6 |
1.6 |
1.5 |
1.4 |
1.4 |
1.3 |
2.4 |
2.3 |
2.4 |
2.4 |
2.4 |
2.4 |
2.5 |
|
Other excise |
1.1 |
1.1 |
1.1 |
1.0 |
1.0 |
1.0 |
1.0 |
Tax revenues |
16.1 |
15.1 |
14.7 |
14.5 |
14.1 |
14.1 |
14.1 |
Non-tax revenues |
0.8 |
0.8 |
0.7 |
0.7 |
0.7 |
0.7 |
0.6 |
Total |
16.9 |
15.9 |
15.5 |
15.2 |
14.8 |
14.8 |
14.7 |
|
- restoration of full indexation of the personal income tax system;
- reductions in personal income tax rates for all taxpayers;
- elimination of the deficit reduction surtax;
- increases in the Canada Child Tax Benefit;
- a reduction in the capital gains inclusion rate; and
- a reduction in the corporate income tax rate.
Table 4.6
October 2001 Status Quo Fiscal Outlook
Program Spending: Average of Private Sector Projections
|
|||||||
---|---|---|---|---|---|---|---|
2000- | 2001- |
2002- | 2003- |
2004- | 2005- |
2006- | |
| |||||||
(billions of dollars) |
|||||||
Major transfers to persons |
|||||||
Elderly benefits |
24.3 |
25.3 |
26.4 |
27.3 |
28.4 |
29.4 |
30.6 |
Employment insurance benefits |
11.4 |
14.1 |
15.7 |
15.3 |
15.1 |
15.8 |
16.5 |
Relief for Heating Expenses |
1.5 |
||||||
Total |
37.2 |
39.3 |
42.1 |
42.6 |
43.5 |
45.3 |
47.1 |
Major transfers to other levels of government1 |
|||||||
Canada Health and Social Transfer |
13.5 |
17.3 |
18.6 |
19.3 |
20.4 |
21.0 |
21.6 |
Medical Equipment Fund |
1.0 |
||||||
Fiscal arrangements |
12.7 |
12.3 |
12.8 |
13.5 |
14.3 |
15.0 |
15.7 |
Alternative Payments for Standing Programs |
-2.5 |
-2.4 |
-2.5 |
-2.6 |
-2.7 |
-2.8 |
-2.9 |
Total |
24.7 |
27.2 |
28.9 |
30.2 |
32.0 |
33.2 |
34.4 |
Direct program spending |
57.5 |
61.4 |
63.2 |
64.8 |
66.7 |
69.0 |
71.0 |
Total program spending |
119.3 |
128.0 |
134.1 |
137.6 |
142.2 |
147.5 |
152.6 |
Per cent of GDP |
|||||||
Major transfers to persons |
|||||||
Elderly benefits |
2.3 |
2.3 |
2.3 |
2.3 |
2.2 |
2.2 |
2.2 |
Employment insurance benefits |
1.1 |
1.3 |
1.4 |
1.3 |
1.2 |
1.2 |
1.2 |
Total2 |
3.5 |
3.6 |
3.7 |
3.5 |
3.4 |
3.4 |
3.3 |
Major transfers to other levels of government |
|||||||
Canada Health and Social Transfer |
1.4 |
1.6 |
1.6 |
1.6 |
1.6 |
1.6 |
1.5 |
Fiscal arrangements |
1.2 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
Alternative Payments for Standing Programs |
-0.2 |
-0.2 |
-0.2 |
-0.2 |
-0.2 |
-0.2 |
-0.2 |
Total |
2.3 |
2.5 |
2.5 |
2.5 |
2.5 |
2.5 |
2.5 |
Direct program spending |
5.4 |
5.6 |
5.6 |
5.4 |
5.3 |
5.2 |
5.1 |
Total program spending |
11.3 |
11.6 |
11.8 |
11.5 |
11.2 |
11.1 |
10.9 |
|
|||||||
1 For those years not covered by
legislation, for planning purposes, it has been assumed that the current
provisions are extended. 2 Includes Relief for Heating Expenses. |
- Nearly half of this increase is attributable to the impact of the September 2000 agreements on health renewal and early childhood development, which resulted in an increase of $3.8 billion in cash transfers under the Canada Health and Social Transfer.
- EI benefits are expected to increase significantly by $2.7 billion, reflecting the impact of the slowdown on economic growth as well as the effect of program enhancements. In addition, elderly benefits are estimated to increase by $1 billion, reflecting increases in the number of people eligible for benefits and higher average benefits, which are indexed to inflation.
- Direct program spending is expected to be up $3.9 billion, primarily reflecting developments that lowered spending in 2000-01 as well as the impact of policy initiatives announced before this budget.
- Partially offsetting the impact of these factors are a number of one-time spending initiatives in 2000-01. These include the $1.5-billion Relief for Heating Expenses, $1.25-billion transfer to the Canada Foundation for Innovation, $1-billion payment to the Medical Equipment Fund and the liability of $0.8 billion related to the lifting of the equalization ceiling for 1999-2000.
Table 4.7
October 2001 Status Quo Fiscal Outlook
Major Transfers to Persons
|
|||||||
---|---|---|---|---|---|---|---|
2000-2001 |
2001-2002 |
2002-2003 |
2003-2004 |
2004-2005 |
2005-2006 |
2006-2007 |
|
|
|||||||
(billions of dollars) | |||||||
Elderly benefits |
24.3 |
25.3 |
26.4 |
27.3 |
28.4 |
29.4 |
30.6 |
Employment insurance benefits |
11.4 |
14.1 |
15.7 |
15.3 |
15.1 |
15.8 |
16.5 |
Relief for Heating Expenses |
1.5 |
||||||
Total |
37.2 |
39.3 |
42.1 |
42.6 |
43.5 |
45.3 |
47.1 |
|
- Elderly benefits consist of Old Age Security pensions, the Guaranteed Income Supplement and the spouse’s allowance.
- Growth in elderly benefits is largely determined by the growth in the elderly population and average benefits, which are fully indexed to quarterly changes in consumer prices.
- Growth in elderly benefits will be moderate until 2010-11, given the relatively small size of the generation born in the Depression years of the 1930s and during World War II.
- The largest and most variable component, accounting for about two-thirds of EI benefits, is regular benefits. With the slowing in the economy and the accompanying increase in the number of unemployed, regular benefits are expected to increase significantly in both 2001-02 and 2002-03.
- The profile of EI benefits is also affected by the extension of and related changes to parental benefits and modifications to the intensity and clawback provisions.
Table 4.8
October 2001 Status Quo Fiscal Outlook
Major Transfers to Other Levels of Government
|
|||||||
---|---|---|---|---|---|---|---|
2000-2001 | 2001-2002 |
2002-2003 | 2003-2004 |
2004-2005 | 2005-2006 |
2006-2007 | |
| |||||||
(billions of dollars) |
|||||||
13.5 |
17.3 |
18.6 |
19.3 |
20.4 |
21.0 |
21.6 |
|
Medical Equipment Fund |
1.0 |
||||||
Fiscal arrangements |
12.7 |
12.3 |
12.8 |
13.5 |
14.3 |
15.0 |
15.7 |
Alternative Payments for Standing Programs |
-2.5 |
-2.4 |
-2.5 |
-2.6 |
-2.7 |
-2.8 |
-2.9 |
Total |
24.7 |
27.2 |
28.9 |
30.2 |
32.0 |
33.2 |
34.4 |
|
|||||||
1 Reflects profile of CHST cash as
accounted for by the federal government. CHST entitlements consist of both cash and tax transfers. The tax transfer component is projected to grow every year in line with the growth of the Canadian economy. |
- Under the agreements on health renewal and early childhood development reached by first ministers in September 2000, annual CHST cash transfers will increase from $13.5 billion in 2000-01, to $21 billion in 2005-06. For planning purposes, a continuation of the increase in 2005-06 is assumed for 2006-07.
- The largest component of fiscal transfers is equalization, whereby the federal government transfers funds to provinces with below-average revenue-raising capacities so that they can provide reasonably comparable levels of public services at reasonably comparable levels of taxation. The projection assumes that equalization transfers grow in line with the growth in nominal GDP. The final outcome for 2000-01 includes the liability related to the lifting of the equalization ceiling in 1999-2000.
Table 4.9
October 2001 Status Quo Fiscal Outlook
Direct Program Spending
|
|||||||
---|---|---|---|---|---|---|---|
2000-2001 | 2001-2002 |
2002-2003 | 2003-2004 |
2004-2005 | 2005-2006 |
2006-2007 | |
| |||||||
(billions of dollars) |
|||||||
Direct program spending |
57.5 |
61.4 |
63.2 |
64.8 |
66.7 |
69.0 |
71.0 |
|
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Last Updated: 2001-12-10 |