Expenses

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Expenses consist of all charges which enter into the calculation of the annual deficit or surplus of the Government.

Accounting for expenses

The Government reports all expenses on an accrual basis.

Expenses for Government operations are recorded when goods are received or services are rendered. Transfer payments are recorded as expenses in the year the transfer is authorized and all eligibility criteria have been met by the recipient. Public debt charges are recorded when incurred. They include interest, servicing costs, costs of issuing new borrowings, amortization of premiums and discounts on market debt, as well as interest on public sector pensions and other employee and veteran future benefits.

Expenses include provisions to reflect changes in the value of assets or liabilities, including provisions for bad debts, for loans, investments and advances, as well as for inventory obsolescence. Expenses also include amortization of tangible capital assets, utilization of inventories, as well as prepaid expenses and other.

Organizations within the Government's reporting entity transact with each other on a day-to-day basis and thus contribute to the revenues and expenses recorded in the accounts. In preparing the consolidated financial statements, these “internal transactions” are eliminated so as to report on the basis of transactions with outside parties only.

Table 3.6 presents a comparative summary of external expenses by type. The table also discloses the external expenses by segment.

Table 3.6
External expenses by segment and by type
(in millions of dollars)
  Major transfer paymentsLink to Table note 1 Other transfer paymentsLink to Table note 2 Total transfer payments Other expenses Public debt chargesLink to Table note 3 Total expenses
2019 2018 2019 2018 2019 2018 2019 2018
RestatedLink to Table note 4		 2019 2018 2019 2018
Ministries
Agriculture and Agri-Food – – 1,397 1,258 1,397 1,258 1,175 1,167 – – 2,572 2,425
Canadian Heritage and MulticulturalismLink to Table note 5 – – 1,182 1,257 1,182 1,257 3,090 3,177 3 3 4,275 4,437
Crown-Indigenous Relations – – 5,543 6,483 5,543 6,483 2,357 3,226 – – 7,900 9,709
Democratic InstitutionsLink to Table note 5 – – 1 2 1 2 178 123 – – 179 125
Environment and Climate Change – – 429 222 429 222 1,946 1,807 – 1 2,375 2,030
Families, Children and Social Development 72,272 70,372 8,899 9,088 81,171 79,460 3,135 3,232 – – 84,306 82,692
Finance 70,734 68,447 1,012 411 71,746 68,858 539 527 23,012 21,623 95,297 91,008
Fisheries, Oceans and the Canadian Coast Guard – – 182 127 182 127 2,402 1,954 – – 2,584 2,081
Global AffairsLink to Table note 4 – – 4,679 4,300 4,679 4,300 2,406 2,150 – – 7,085 6,450
Health 849 – 1,930 1,631 2,779 1,631 2,269 2,223 – – 5,048 3,854
Immigration, Refugees and Citizenship – – 1,434 1,296 1,434 1,296 1,455 1,338 – – 2,889 2,634
Indigenous Services – – 9,731 8,778 9,731 8,778 1,816 1,868 – – 11,547 10,646
Infrastructure and Communities 4,341 2,072 3,330 1,536 7,671 3,608 539 540 – – 8,210 4,148
Innovation, Science and Economic DevelopmentLink to Table note 5 – – 2,636 2,851 2,636 2,851 2,632 2,540 – – 5,268 5,391
Justice – – 400 381 400 381 1,425 1,352 – – 1,825 1,733
National Defence – – 209 155 209 155 31,714 32,077 74 79 31,997 32,311
National Revenue 23,865 23,419 4,401 3,622 28,266 27,041 8,529 7,798 – – 36,795 34,839
Natural Resources – – 1,717 909 1,717 909 2,015 1,649 1 1 3,733 2,559
Office of the Governor General's Secretary – – – – – – 22 24 – – 22 24
Parliament – – 1 2 1 2 730 723 – – 731 725
Privy CouncilLink to Table note 5 – – 7 – 7 – 348 342 – – 355 342
Public Safety and Emergency Preparedness – – 1,132 918 1,132 918 11,995 11,318 1 1 13,128 12,237
Public Services and ProcurementLink to Table note 5 – – – (negative 1) – (negative 1) 4,730 4,918 133 139 4,863 5,056
ScienceLink to Table note 5 – – 2,106 1,917 2,106 1,917 93 83 – – 2,199 2,000
Transport – – 212 213 212 213 2,932 2,715 42 42 3,186 2,970
Treasury Board – – 1 1 1 1 6,720 3,881 – – 6,721 3,882
Veterans Affairs – – 21 24 21 24 1,120 960 – – 1,141 984
Women and Gender EqualityLink to Table note 5 – – 29 21 29 21 42 22 – – 71 43
Provision for valuation and other items – – (negative 204) (negative 264) (negative 204) (negative 264) 84 3,106 – – (negative 120) 2,842
Total expensesLink to Table note 6 172,061 164,310 52,417 47,138 224,478 211,448 98,438 96,840 23,266 21,889 346,182 330,177

Expenses by segment

The Government's segmented information is based on the ministerial portfolio structure. It groups the activities of departments, agencies and consolidated Crown corporations and other entities for which a Minister is responsible, as described in Note 1 to the consolidated financial statements in Section 2 of this volume.

Government's cost of operations

Government's cost of operations consists of three major types: transfer payments, other expenses, and public debt charges.

Transfer payments

The major transfer payments include payments to persons and payments to provinces and territories.

Payments to persons include payments for income support or income supplement. Assistance is based on age, family status, income, and employment criteria.

Payments to provinces and territories are made under the following major programs:

The other transfer payments include various subsidies paid through federal programs to stabilize market prices for commodities, to develop new technologies, to conduct research, to establish new jobs through support for training and to promote educational and cultural activities. Expenses of other consolidated entities and other miscellaneous payments are also included.

Other expenses

Other expenses include personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses. Public sector pensions and other employee and veteran future benefits are included in personnel expenses.

Public debt charges

Public debt charges include interest, servicing costs, costs of issuing new borrowings, amortization of premiums and discounts on market debt including amounts arising on the extinguishment of debt, as well as interest on public sector pensions and other employee and veteran future benefits.

Table 3.7
Major transfer payments by province and territory
(in millions of dollars)
  Fiscal year Old age security benefitsLink to Table note 7 Employment insurance Fiscal arrangements Quebec AbatementLink to Table note 8 Canada Health Transfer Canada Social Transfer Other major transfersLink to Table note 9 Children's benefits Total
Newfoundland and Labrador 2019 1,086 1,169 10 – 535 202 45 – 3,047
2018 1,025 1,227 14 – 536 199 31 – 3,032
Prince Edward Island 2019 263 270 419 – 158 58 20 – 1,188
2018 251 266 392 – 155 57 – – 1,121
Nova Scotia 2019 1,723 917 1,954 – 1,000 367 158 – 6,119
2018 1,638 909 1,825 – 965 357 56 – 5,750
New Brunswick 2019 1,485 977 1,876 – 814 299 65 – 5,516
2018 1,405 1,003 1,768 – 770 285 46 – 5,277
Quebec 2019 14,775 3,703 11,738 (negative 5,046) 8,679 3,185 696 – 37,730
2018 14,024 3,876 11,155 (negative 4,739) 8,487 3,144 481 – 36,428
Ontario 2019 20,158 5,953 972 – 14,851 5,450 1,148 – 48,532
2018 19,113 6,057 1,548 – 14,364 5,316 782 – 47,180
Manitoba 2019 1,797 682 2,040 – 1,413 518 103 – 6,553
2018 1,712 658 1,834 – 1,354 501 69 – 6,128
Saskatchewan 2019 1,537 647 2 – 1,203 442 89 – 3,920
2018 1,465 685 12 – 1,176 435 59 – 3,832
Alberta 2019 4,544 2,336 2 – 4,461 1,638 328 – 13,309
2018 4,226 2,675 40 – 4,325 1,601 219 – 13,086
British Columbia 2019 7,545 2,133 3 – 5,325 1,955 393 – 17,354
2018 7,108 2,261 43 – 4,868 1,807 266 – 16,353
Total provinces 2019 54,913 18,787 19,016 (negative 5,046) 38,439 14,114 3,045 – 143,268
2018 51,967 19,617 18,631 (negative 4,739) 37,000 13,702 2,009 – 138,187
Northwest Territories 2019 33 26 1,256 – 47 17 18 – 1,397
2018 94 33 1,233 – 45 17 63 – 1,485
Nunavut 2019 11 33 1,579 – 39 14 16 – 1,692
2018 10 27 1,530 – 39 14 – – 1,620
Yukon Territory 2019 32 34 950 – 43 16 17 – 1,092
2018 31 31 920 – 40 15 – – 1,037
International 2019 299 8 – – – – – – 307
2018 273 7 – – – – – – 280
Total expenses for provinces and territories 2019 55,288 18,888 22,801 (negative 5,046) 38,568 14,161 3,096 – 147,756
2018 52,375 19,715 22,314 (negative 4,739) 37,124 13,748 2,072 – 142,609
Accrual and other adjustments 2019 (negative 1,922) – 174 – – – 2,171 – 423
2018 (negative 1,731) – – – – – – – (negative 1,731)
Subtotal 2019 53,366 18,888 22,975 (negative 5,046) 38,568 14,161 5,267 – 148,179
2018 50,644 19,715 22,314 (negative 4,739) 37,124 13,748 2,072 – 140,878
Transfers made through the tax system 2019 – – – – – – – 23,882 23,882
2018 – – – – – – – 23,432 23,432
Total major transfer payments 2019 53,366 18,888 22,975 (negative 5,046) 38,568 14,161 5,267 23,882 172,061
2018 50,644 19,715 22,314 (negative 4,739) 37,124 13,748 2,072 23,432 164,310

Public debt charges

Public debt charges include the interest on unmatured debt and on pensions, other future benefits and other liabilities, the amortization of premiums and discounts on unmatured debt, and the servicing costs and the costs of issuing new borrowings.

Table 3.8 discloses the reconciling items between the total public debt charges, as reported in the ministerial section of the Department of Finance in Section 6 of Volume II of the Public Accounts of Canada, and the total expenses of the public debt indicated in Table 3.6 of this volume. The reconciling items include the interest expenses on capital leases as well as accrual and other adjustments.

Table 3.8
Public debt chargesLink to Table note 10
(in millions of dollars)
  2019 2018
Unmatured debt
Interest on:
Marketable bonds 12,952 12,440
Retail debt 16 27
Medium-term notes 49 32
Subtotal 13,017 12,499
Amortization of discounts on Canada and Treasury bills
Treasury bills 1,899 994
Canada bills 59 35
Subtotal 1,958 1,029
Amortization of premiums and discounts on all other debts
Marketable bonds 340 119
Foreign bonds 5 7
Real return bonds (negative 124) (negative 126)
Consumer price index adjustments on real return bonds 865 970
Subtotal 1,086 970
Cross-currency swap revaluation (negative 133) (negative 282)
Servicing costs and costs of issuing new borrowings 8 13
Interest on capital lease obligations 175 185
Interest on obligations under public-private partnerships 80 81
Total public debt charges related to unmatured debt 16,191 14,495
Pensions and other future benefits
Interest on:
Public sector pensions—Superannuation accounts 6,005 6,347
Allowance for pension adjustments (negative 2,319) (negative 2,169)
Consolidated Crown corporations and other entities pensions (negative 177) (negative 156)
Subtotal 3,509 4,022
Other employee and veteran future benefits
Public Service Health Care Plan and Pensioners' Dental Service Plan 800 826
Severance and other benefits 42 53
Accumulated sick leave entitlements 37 42
Worker's compensation 37 36
Veterans' disability and other future benefits 2,021 1,869
Royal Canadian Mounted Police disability and other future benefits 326 281
Consolidated Crown corporations and other entities 9 9
Subtotal 3,272 3,116
Total public debt charges related to pensions and other future benefits 6,781 7,138
Other liabilities
Canada Pension Plan 5 3
Government Annuities Account 7 8
Deposit and trust accounts 18 16
Other specified purpose accounts 153 159
Other liabilities 111 70
Total public debt charges related to other liabilities 294 256
Consolidated specified purpose accounts
Interest 8 6
Total public debt charges related to consolidated specified purpose accounts 8 6
Total public debt charges before consolidation adjustments 23,274 21,895
Less: consolidation adjustments 8 6
Total public debt chargesLink to Table note 10 Link to Table note 11 23,266 21,889
Comprised of:
Total public debt charges under statutory authorities before accrual and other adjustments and consolidation adjustments 22,243 20,838
Accrual and other adjustments 1,031 1,057
Consolidation adjustments (negative 8) (negative 6)
Total public debt charges 23,266 21,889

Expenses by object

Table 3.9 reconciles the total net expenditures by object initially recorded by departments under the partial accrual method of accounting to the total expenses which is based on the full accrual method of accounting. Reconciliation items represent the effect of consolidation and full accrual accounting.

Table 3.9
Total expenses by objectLink to Table note 12
(in millions of dollars)
  Total net expenditures Reconciliation Total expenses
Transfer payments 174,523 49,955 224,478
Other expenses
Personnel 46,132 11,550 57,682
Transportation and communications 3,070 (negative 24) 3,046
Information 387 (negative 16) 371
Professional and special services 12,940 (negative 1,904) 11,036
Rentals 3,462 (negative 745) 2,717
Repair and maintenance 3,608 (negative 81) 3,527
Utilities, materials and supplies 3,050 262 3,312
Acquisition of land, buildings and works 2,378 (negative 2,378) –
Acquisition of machinery and equipment 6,307 (negative 6,307) –
Other subsidies and expenses 9,991 938 10,929
Amortization of tangible capital assets – 5,643 5,643
Net loss on disposal of assets – 175 175
Total other expenses 91,325 7,113 98,438
Public debt charges 22,454 812 23,266
Total gross expenses 288,302 57,880 346,182
Revenues netted against expenditures (negative 11,461) 11,461 –
Total expenses 276,841 69,341 346,182

Expenditures under statutory authorities

Spending authorities provided by statutory authorities are for specified purposes and for such amounts and such time periods as the acts prescribe. These spending authorities do not generally lapse at the end of the year during which they were granted. Expenditures under such authorities account for approximately half of the total program expenses each year.

Table 3.10
Expenditures under statutory authorities
(in millions of dollars)
  2019 2018
Old Age Security payments (Old Age Security Act) 40,424 38,410
Canada Health Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act) 38,567 37,124
Public debt charges 22,244 20,838
Fiscal Equalization (Part I—Federal-Provincial Fiscal Arrangements Act) 18,958 18,254
Canada Social Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act) 14,161 13,748
Guaranteed Income Supplement payments (Old Age Security Act) 12,404 11,658
Territorial Financing (Part I.1—Federal-Provincial Fiscal Arrangements Act) 3,785 3,682
Gas Tax Fund 2,200 2,100
Canada Student Grants to qualifying full and part-time students pursuant to the Canada Student Financial Assistance Act 1,538 1,323
Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act 965 798
Canada Education Savings Grant payments to Registered Education Savings Plan (RESP) trustees on behalf of RESP beneficiaries to encourage Canadians to save for post-secondary education for their children 911 899
Contribution payments for the AgriInsurance program 665 652
Distribution of fuel charge 664 –
Judges' salaries, allowances and annuities, annuities to spouses and children of judges and lump sum payments to spouses of judges who die while in office 583 556
Allowance payments (Old Age Security Act) 562 545
Payments to Canada Infrastructure Bank 553 11
Payments to International Development Association 442 442
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) (negative 914) (negative 857)
Alternative Payments for Standing Programs (Part VI—Federal-Provincial Fiscal Arrangements Act) (negative 4,132) (negative 3,883)
Total 154,580 146,300
Superannuation, supplementary retirement benefits, death benefits and other pensionsLink to Table note 13
Public Service
Government's contributions to the Public Service Pension Plan and the Retirement Compensation Arrangements Account 5,522 2,589
Government's contributions to the Canada and the Quebec pension plans 454 735
Government's contribution to the Employment Insurance Operating Account 308 290
Government's contributions to the Death Benefit Account 15 15
Total 6,299 3,629
Canadian Forces
Government's contribution to the Canadian Forces Pension Plan and the Retirement Compensation Arrangements Account 1,007 2,870
Government's contribution to the Canada and the Quebec pension plans 199 201
Government's contribution as employer to the Employment Insurance Operating Account 76 77
Statutory payments under the Supplementary Retirement Benefits Act 1 1
Government's contribution to the Death Benefit Account 2 3
Total 1,285 3,152
Royal Canadian Mounted Police
Government's contribution to the Royal Canadian Mounted Police Pension Plan and the Retirement Compensation Arrangements Account 269 276
Government's contribution to the Canada and the Quebec pension plans 61 60
Government's contribution as employer to the Employment Insurance Operating Account 20 25
Statutory payments under the Supplementary Retirement Benefits Act 5 6
Total 355 367
Shared Services Canada
Government's contribution to the Canada and the Quebec pension plans 3 3
Government's contribution to the Employment Insurance Operation Account, the Royal Canadian Mounted Police Pension Plan and the Retirement Compensation Arrangements Account 1 1
Total 4 4
All other statutory expendituresLink to Table note 14 4,534 4,263
Total ministerial expenditures under statutory authoritiesLink to Table note 15 167,057 157,715

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