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)
	2018	2017	2018	2017	2018	2017	2018	2017 Restated^{Link to footnote 3}	2018	2017 Restated^{Link to footnote 3}	2018	2017 Restated^{Link to footnote 3}
	Major transfer payments^{Link to footnote 1}		Other transfer payments		Total transfer payments		Other expenses		Public debt charges^{Link to footnote 2}		Total expenses
Ministries
Agriculture and Agri-Food	–	–	1,258	1,567	1,258	1,567	1,167	1,436	–	–	2,425	3,003
Canadian Heritage	–	–	1,278	1,204	1,278	1,204	3,199	2,884	3	–	4,480	4,088
Environment and Climate Change	–	–	222	170	222	170	1,807	1,632	1	1	2,030	1,803
Families, Children and Social Development	70,372	70,839	9,088	8,489	79,460	79,328	3,232	2,863	–	–	82,692	82,191
Finance^{Link to footnote 3}	68,447	66,550	411	495	68,858	67,045	527	499	21,623	20,956	91,008	88,500
Fisheries, Oceans and the Canadian Coast Guard	–	–	127	99	127	99	1,954	1,935	–	–	2,081	2,034
Global Affairs	–	–	4,300	4,183	4,300	4,183	4,540	4,557	–	–	8,840	8,740
Health^{Link to footnote 4}	–	–	1,631	1,589	1,631	1,589	2,223	2,088	–	–	3,854	3,677
Immigration, Refugees and Citizenship	–	–	1,296	1,177	1,296	1,177	1,338	1,127	–	–	2,634	2,304
Indigenous and Northern Affairs^{Link to footnote 4}	–	–	6,483	3,262	6,483	3,262	3,226	2,793	–	–	9,709	6,055
Indigenous Services^{Link to footnote 4}	–	–	8,778	7,852	8,778	7,852	1,868	1,599	–	–	10,646	9,451
Infrastructure and Communities	2,072	2,102	1,536	1,014	3,608	3,116	540	512	–	–	4,148	3,628
Innovation, Science and Economic Development	–	–	4,768	4,702	4,768	4,702	2,623	2,687	–	–	7,391	7,389
Justice	–	–	381	366	381	366	1,352	1,285	–	–	1,733	1,651
National Defence^{Link to footnote 3}	–	–	155	153	155	153	32,077	26,854	79	84	32,311	27,091
National Revenue	23,419	20,099	3,622	3,540	27,041	23,639	7,798	7,165	–	–	34,839	30,804
Natural Resources	–	–	909	704	909	704	1,649	1,305	1	2	2,559	2,011
Office of the Governor General's Secretary	–	–	–	–	–	–	24	22	–	–	24	22
Parliament	–	–	2	1	2	1	723	627	–	–	725	628
Privy Council	–	–	2	1	2	1	380	307	–	–	382	308
Public Safety and Emergency Preparedness	–	–	918	894	918	894	11,318	10,574	1	1	12,237	11,469
Public Services and Procurement	–	–	(negative 1)	–	(negative 1)	–	5,003	4,269	139	146	5,141	4,415
Transport	–	–	213	311	213	311	2,715	1,922	42	42	2,970	2,275
Treasury Board	–	–	1	1	1	1	3,881	3,139	–	–	3,882	3,140
Veterans Affairs	–	–	24	24	24	24	960	929	–	–	984	953
Provision for valuation and other items^{Link to footnote 3}	–	–	(negative 264)	(negative 218)	(negative 264)	(negative 218)	3,106	5,040	–	–	2,842	4,822
Total expenses^{Link to footnote 5}	164,310	159,590	47,138	41,580	211,448	201,170	99,230	90,050	21,889	21,232	332,567	312,452
Table notes 2 The dash means that the amount is 0 or is rounded to 0. Table note 1 Includes transfer payments of $50,644 million ($48,162 million in 2017) for old age security benefits, the guaranteed income supplement and the spouse's allowance; $70,519 million ($68,652 million in 2017) to other levels of government; $19,715 million ($20,711 million in 2017) for employment insurance and $23,432 million ($22,065 million in 2017) for children's benefits. Additional information is provided in Table 3.7 of this section. Return to table note 1 referrer Table note 2 Additional information is provided in Table 3.8 of this section. Return to table note 2 referrer Table note 3 Comparative figures have been restated. Details on the restatement are provided in Note 2 in Section 2 of this volume. Return to table note 3 referrer Table note 4 Comparative figures have been reclassified to conform to the current year's presentation. Return to table note 4 referrer Table note 5 Additional information is provided in Table 2a in Section 1 of Volume II of the Public Accounts of Canada. Return to table note 5 referrer

Expenses by segment

The Government's segmented information is based on the ministerial portfolio structure. It groups the activities of departments, agencies and 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 fiscal arrangements allow for unconditional fiscal transfer payments to lower income provinces including subsidies under the Constitution Acts; and
The Canada Health Transfer and the Canada Social Transfer allow for the provision of the federal share in support of social programs administered by the provinces.

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

This category covers the costs associated with programs directly delivered by the federal government such as national defence, food inspection, the Coast Guard, the federal court system, the operation of health facilities for natives and veterans, and the national parks system. It also includes the expenses of consolidated Crown corporations and other entities incurred with third parties.

Table 3.7
Major transfer payments by province and territory
(in millions of dollars)
	Fiscal year	Old age security benefits^{Link to footnote 6}	Employment insurance	Fiscal arrangements	Quebec Abatement^{Link to footnote 7}	Canada Health Transfer	Canada Social Transfer	Other major transfers^{Link to footnote 8}	Children's benefits	Total
Newfoundland and Labrador	2018	1,025	1,227	14	–	536	199	31	–	3,032
Newfoundland and Labrador	2017	979	1,173	10	–	529	196	32	–	2,919
Prince Edward Island	2018	251	266	392	–	155	57	–	–	1,121
Prince Edward Island	2017	240	258	381	–	148	55	16	–	1,098
Nova Scotia	2018	1,638	909	1,825	–	965	357	56	–	5,750
Nova Scotia	2017	1,571	906	1,768	–	946	350	56	–	5,597
New Brunswick	2018	1,405	1,003	1,768	–	770	285	46	–	5,277
New Brunswick	2017	1,345	1,009	1,710	–	753	279	46	–	5,142
Quebec	2018	14,024	3,876	11,155	(negative 4,739)	8,487	3,144	481	–	36,428
Quebec	2017	13,365	4,078	10,036	(negative 4,451)	8,279	3,062	487	–	34,856
Ontario	2018	19,113	6,057	1,548	–	14,364	5,316	782	–	47,180
Ontario	2017	18,128	6,105	2,313	–	13,913	5,145	796	–	46,400
Manitoba	2018	1,712	658	1,834	–	1,354	501	69	–	6,128
Manitoba	2017	1,640	652	1,738	–	1,313	485	70	–	5,898
Saskatchewan	2018	1,465	685	12	–	1,176	435	59	–	3,832
Saskatchewan	2017	1,406	686	2	–	1,139	423	60	–	3,716
Alberta	2018	4,226	2,675	40	–	4,325	1,601	219	–	13,086
Alberta	2017	3,983	3,399	5	–	4,187	1,558	222	–	13,354
British Columbia	2018	7,108	2,261	43	–	4,868	1,807	266	–	16,353
British Columbia	2017	6,722	2,346	4	–	4,732	1,751	269	–	15,824
Total provinces	2018	51,967	19,617	18,631	(negative 4,739)	37,000	13,702	2,009	–	138,187
Total provinces	2017	49,379	20,612	17,967	(negative 4,451)	35,939	13,304	2,054	–	134,804
Northwest Territories	2018	94	33	1,233	–	45	17	63	–	1,485
Northwest Territories	2017	29	36	1,220	–	45	16	16	–	1,362
Nunavut	2018	10	27	1,530	–	39	14	–	–	1,620
Nunavut	2017	10	24	1,489	–	36	14	16	–	1,589
Yukon Territory	2018	31	31	920	–	40	15	–	–	1,037
Yukon Territory	2017	29	31	894	–	37	14	16	–	1,021
International	2018	273	7	–	–	–	–	–	–	280
International	2017	238	8	–	–	–	–	–	–	246
Total expenses for provinces and territories	2018	52,375	19,715	22,314	(negative 4,739)	37,124	13,748	2,072	–	142,609
Total expenses for provinces and territories	2017	49,685	20,711	21,570	(negative 4,451)	36,057	13,348	2,102	–	139,022
Accrual and other adjustments	2018	(negative 1,731)	–	–	–	–	–	–	–	(negative 1,731)
Accrual and other adjustments	2017	(negative 1,523)	–	26	–	–	–	–	–	(negative 1,497)
Subtotal	2018	50,644	19,715	22,314	(negative 4,739)	37,124	13,748	2,072	–	140,878
Subtotal	2017	48,162	20,711	21,596	(negative 4,451)	36,057	13,348	2,102	–	137,525
Transfers made through the tax system	2018	–	–	–	–	–	–	–	23,432	23,432
Transfers made through the tax system	2017	–	–	–	–	–	–	–	22,065	22,065
Total major transfer payments	2018	50,644	19,715	22,314	(negative 4,739)	37,124	13,748	2,072	23,432	164,310
Total major transfer payments	2017	48,162	20,711	21,596	(negative 4,451)	36,057	13,348	2,102	22,065	159,590
Table notes 3 The dash means that the amount is 0 or is rounded to 0. Table note 6 Includes the guaranteed income supplement and the spouse's allowance. Return to table note 6 referrer Table note 7 The Quebec Abatement is comprised of federal tax abated under the Alternative Payments for Standing Programs and the Youth Allowance Program of that province. Return to table note 7 referrer Table note 8 Includes the contributions under the federal Gas Tax Fund program of $2,072 million ($2,102 million in 2017). Return to table note 8 referrer

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 charges^{Link to footnote 9}
(in millions of dollars)
Unmatured debt
	2018	2017 Restated^{Link to footnote 10}
Interest on:
Marketable bonds	12,440	12,460
Retail debt	27	45
Medium-term notes	32	22
Subtotal	12,499	12,527
Amortization of discounts on Canada and Treasury bills
Treasury bills	994	737
Canada bills	35	28
Subtotal	1,029	765
Amortization of premiums and discounts on all other debts
Marketable bonds	119	203
Foreign bonds	7	6
Real return bonds	(negative 126)	(negative 136)
Consumer price index adjustments on real return bonds	970	1,098
Subtotal	970	1,171
Cross-currency swap revaluation	(negative 282)	(negative 335)
Servicing costs and costs of issuing new borrowings	13	10
Capital lease obligations	185	200
Obligation under public-private partnerships	81	82
Total public debt charges related to unmatured debt	14,495	14,420
Pensions and other future benefits
Interest on:
Public sector pensions—Superannuation accounts	6,347	6,817
Allowance for pension adjustments	(negative 2,169)	26
Consolidated Crown corporations and other entities pensions	(negative 156)	(negative 144)
Subtotal	4,022	6,699
Other employee and veteran future benefits
Public Service Health Care Plan and Pensioners' Dental Service Plan	826	801
Severance and other benefits	53	(negative 2,805)
Accumulated sick leave entitlements	42	40
Worker's compensation	36	32
Veterans' disability and other future benefits	1,869	1,587
Royal Canadian Mounted Police disability and other future benefits	281	242
Consolidated Crown corporations and other entities	9	9
Subtotal	3,116	(negative 94)
Total public debt charges related to pensions and other future benefits	7,138	6,605
Other liabilities
Canada Pension Plan	3	1
Government Annuities Account	8	8
Deposit and trust accounts	16	16
Other specified purpose accounts	159	165
Other liabilities	70	17
Total public debt charges related to other liabilities	256	207
Consolidated specified purpose accounts
Interest	6	3
Total public debt charges related to consolidated specified purpose accounts	6	3
Total public debt charges before consolidation adjustments	21,895	21,235
Less: consolidation adjustments	6	3
Total public debt charges^{Link to footnote 9} ^{Link to footnote 11}	21,889	21,232
Comprised of:
Total public debt charges under statutory authorities before accrual and other adjustments and consolidation adjustments	20,838	21,165
Accrual and other adjustments	1,057	70
Consolidation adjustments	(negative 6)	(negative 3)
Total public debt charges	21,889	21,232
Table notes 4 Table note 9 A summary is provided in Table 2a in Section 1 of Volume II of the Public Accounts of Canada. Return to table note 9 referrer Table note 10 Certain comparative figures have been restated. Details on the restatement are provided in Note 2 in Section 2 of this volume. Return to table note 10 referrer Table note 11 Additional details are provided in Section 7 of Volume III of the Public Accounts of Canada. Return to table note 11 referrer

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 object^{Link to footnote 12}
(in millions of dollars)
Other expenses
	Total net expenditures	Reconciliation	Total expenses
Transfer payments	163,690	47,758	211,448
Personnel	45,263	15,031	60,294
Transportation and communications	2,838	(negative 38)	2,800
Information	326	(negative 27)	299
Professional and special services	12,951	(negative 2,547)	10,404
Rentals	3,183	(negative 885)	2,298
Repair and maintenance	3,428	(negative 151)	3,277
Utilities, materials and supplies	2,960	268	3,228
Acquisition of land, buildings and works	2,798	(negative 2,798)	–
Acquisition of machinery and equipment	4,905	(negative 4,905)	–
Other subsidies and expenses	10,315	943	11,258
Amortization of tangible capital assets	–	5,261	5,261
Net loss on disposal of assets	–	111	111
Total other expenses	88,967	10,263	99,230
Public debt charges	20,850	1,039	21,889
Total gross expenses	273,507	59,060	332,567
Revenues netted against expenditures	(negative 12,103)	12,103	–
Total expenses	261,404	71,163	332,567
Table notes 5 The dash means that the amount is 0 or is rounded to 0. Table note 12 Additional details are provided in Table 3a in Section 1 of Volume II of the Public Accounts of Canada. Return to table note 12 referrer

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)
Superannuation, supplementary retirement benefits, death benefits and other pensions^{Link to footnote 13}
	2018	2017
Old Age Security payments (Old Age Security Act)	38,410	36,749
Canada Health Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)	37,124	36,058
Public debt charges	20,838	21,166
Fiscal Equalization (Part I—Federal-Provincial Fiscal Arrangements Act)	18,254	17,880
Canada Social Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)	13,748	13,348
Guaranteed Income Supplement payments (Old Age Security Act)	11,658	10,922
Territorial Financing (Part I.1—Federal-Provincial Fiscal Arrangements Act)	3,682	3,603
Gas Tax Fund	2,100	2,100
Canada Student Grants to qualifying full and part-time students pursuant to the Canada Student Financial Assistance Act	1,323	975
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	899	859
Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act	798	662
Contribution payments for the AgriInsurance program	652	702
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	556	535
Allowance payments (Old Age Security Act)	545	530
Payments to International Development Association	442	442
Payments to the Newfoundland Offshore Petroleum Resource Revenues Fund	247	455
Universal Child Care Benefit (Universal Child Care Benefit Act)	12	1,976
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964)	(negative 857)	(negative 805)
Alternative Payments for Standing Programs (Part VI—Federal-Provincial Fiscal Arrangements Act)	(negative 3,883)	(negative 3,646)
Total	146,548	144,511
Public Service
Government's contributions to the Public Service Pension Plan and the Retirement Compensation Arrangements Account	2,589	2,518
Government's contributions to the Canada and the Quebec pension plans	735	701
Government's contribution to the Employment Insurance Operating Account	290	308
Government's contributions to the Death Benefit Account	15	14
Total	3,629	3,541
Canadian Forces
Government's contribution to the Canadian Forces Pension Plan and the Retirement Compensation Arrangements Account	2,870	947
Government's contribution to the Canada and the Quebec pension plans	201	186
Government's contribution as employer to the Employment Insurance Operating Account	77	80
Statutory payments under the Supplementary Retirement Benefits Act	1	2
Government's contribution to the Death Benefit Account	3	3
Total	3,152	1,218
Royal Canadian Mounted Police
Government's contribution to the Royal Canadian Mounted Police Pension Plan and the Retirement Compensation Arrangements Account	276	491
Government's contribution to the Canada and the Quebec pension plans	60	58
Government's contribution as employer to the Employment Insurance Operating Account	25	25
Statutory payments under the Supplementary Retirement Benefits Act	6	7
Total	367	581
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 expenditures^{Link to footnote 14}	4,015	3,351
Total ministerial expenditures under statutory authorities^{Link to footnote 15}	157,715	153,206
Table notes 1 Table note 13 Details related to other pension accounts, such as the Members of Parliament Retiring Allowances Account, are not included. Return to table note 13 referrer Table note 14 Comparative figures have been reclassified to conform to the current year's presentation. Return to table note 14 referrer Table note 15 Additional information on the ministerial expenditures under statutory authorities are provided in Table 7 in Section 1 of Volume II of the Public Accounts of Canada. Return to table note 15 referrer

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Date modified:: 2018-11-06

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