Government finance: Revenue, expenditure and surplus

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All Canadian governments, including the Canada and Quebec pension plans, recorded a consolidated surplus in the fiscal year ending March 31, 2007.

The nation's federal, provincial, territorial and local governments, as well as the Canada/Quebec Pension Plans, recorded a combined surplus of $29 billion in 2007, up slightly from the $28-billion surplus in 2006.

The record $29-billion surplus mark was reached only twice in the last 20 years. The 2007 surplus was a result of revenues of $603 billion and expenditures of $575 billion.

Spending increased 4.9% in 2007, a somewhat faster pace than the increase in revenues of 4.7%, reversing the trend of the past few years. During the last five years, expenditures have increased by 25%, slightly lower than the growth rate of 29% in revenues.

The three main components of revenues are income taxes, consumption taxes and contributions to social insurance plans. Combined, they account for over 70% of total revenues.

Revenue from income taxes and social insurance plan contributions continued to grow strongly in 2007. However, growth in consumption taxes declined as a result of a reduction in the goods and services tax (GST) rate in 2006. Revenue from income taxes continued to be the principal contributor to total revenue, comprising 41% of total revenues.

All three components have increased substantially over the last five years: 31% for income taxes, 21% for consumption taxes and 24% for social insurance plans, which consist of the Canada Pension Plan and the Quebec Pension Plan.

Spending: Strong gain in health and education

The large majority of spending continues to be dominated by the four historically important components: health, education, social services and debt charges. They accounted for 72% of total expenditures.

Spending in education rose 10.2% to $90 billion in 2007, the largest annual percentage increase among these four components. Spending on health increased 7.9% to $107 billion.

During the last five years, health spending has increased 39%, the most dramatic gain among all four components.

However, the largest outlay was on social services, where spending amounted to $172 billion. More than two-thirds of social service spending were made by the federal government and the Canada/Quebec Pension Plans.

Debt charges represented 7.6 cents out of every dollar of government revenues in 2007, down from 7.9 cents in 2006. This continues the declining trend of the last 10 years.

During the past five years, debt charges as a percentage of total expenditures have fallen dramatically from 11.3% of expenditures in 2002 to 8.0% in 2007. This is attributable mainly to the federal government, where debt charges have fallen from 14.8% to 9.5% over the same period.

Consolidated provincial, territorial and local governments

Consolidated provincial, territorial and local governments posted a surplus of $7.4 billion in 2007, an increase from the $6.8-billion surplus of 2006.

The consolidated provincial, territorial and local surplus/deficit positions continued to fluctuate between short periods of surplus and short periods of deficit.

This fluctuation can be attributed in part to the variability of federal general and specific purpose transfers to the provinces, which strongly influence individual government surplus/deficit positions.

The largest consolidated provincial, territorial and local surpluses were in Alberta ($8.7 billion) and British Columbia ($0.6 billion). Conversely, the largest deficits were in Quebec ($2.5 billion) and Nova Scotia ($0.1 billion).

Revenue from income taxes rose 13.0% to $91 billion in 2007, the largest percentage increase of all revenue components. Income taxes comprised 24% of total revenue.

While revenue from income taxes for all governments as a whole have increased during the past five years, substantial gains in income taxes for the provinces, territories and local governments have occurred only in the last three years. Between 2004 and 2007, they increased more than 40%.

Gains in consolidated revenues for provincial, territorial and local governments can also occur as a result of changes in income from general and specific purpose transfers, essentially transfers from the federal government. These revenues have increased by 57% in the last five years.

Health and education: the major spending components for provincial, territorial and local governments

The consolidated provincial, territorial and local expenditures continue to be dominated by the health and education fields. These expenditures increased by 8.1% and 10.3% respectively in 2007.

In 2007, these expenditures alone accounted for more than 50% of total spending.

During the past five years, spending in the health field has advanced 38%, while spending on education has increased 35%.

Levels for consolidated provincial, territorial and local debt charges have fallen for the past 10 years, similar to the trend observed for all governments combined. They represented 7.0 cents out of every dollar of government revenues in 2007, down from 7.3 cents in 2006.

Available on CANSIM: tables 385-0001 to 385-0009, 385-0021 to 385-0024, 385-0027 and 385-0028.

Definitions, data sources and methods: survey numbers, including related surveys, 1709, 1713 and 1735.

Data tables on public sector finance are also available in the National economic accounts module of our website.

Data are also available through custom and special tabulation. For more information on products and services, contact Jo-Anne Thibault (613-951-0767; jo-anne.thibault@statcan.gc.ca), Public Institutions Division.

To enquire about the concepts, methods or data quality of this release, contact Mike Riem (613-951-1809; mike.riem@statcan.gc.ca) or Claude Vaillancourt (613-951-1820; claude.vaillancourt@statcan.gc.ca), Public Institutions Division.

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