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Govemmeill Publifcatibn*

VOLUME I

£UBLIC ACCOUNTS OF CANADA

for the

FISCAL YEAR ENDED MARCH 31

1972

Summary Report and Financial Statements

/•^^

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Prepared by the

RECEIVER GENERAL FOR CANADA

VOLUME l-lil

i^iin2.

PUBLIC ACCOUNTS OF CANADA

<^(?r 10 yT\^^'^

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for the r ^ V

FISCAL YEAR ENDED ^^^' ^ ^' "^^^^ MARCH 31

1972

Summary Report and Financial Statements

I

Prepared by the

RECEIVER GENERAL FOR CANADA

INFORMATION CANADA OTTAWA, 1972

© Crown Copyrights reserved

Available by mail from Information Canada, Ottawa and at the following Information Canada bookshops

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Information Canada Ottawa, 1972

To His Excellency

The Right Honourable Roland Michener, C.C,

Governor General and Commander-in-Chief of Canada.

MAY IT PLEASE YOUR EXCELLENCY:

The undersigned has the honour to present to Your Excellency the Public Accounts of Canada for the fiscal year ended March 31, 1972.

All of which is respectfully submitted.

JOHN TURNER, Minister of Finance.

OTTAWA, September 18, 1972.

9624&— li

To The Honourable John Turner, Minister of Finance.

In accordance with the provisions of Section 55 (1) of the Financial Administration Act, Revised Statutes of Canada, 1970, c. F. 10, 1 have the honour to transmit herewith the Pubhc Accounts of Canada for the fiscal year ended March 31, 1972, to be laid by you before the House of Commons.

Respectfully submitted.

JAMES RICHARDSON,

Receiver General for Canada.

OTTAWA, September 18, 1972.

To The Honourable James Richardson, Receiver General for Canada.

Sir:

I have the honour to submit the PubUc Accounts of the Government of Canada for the fiscal year ended March 31, 1972.

Under Section 55 (1) of the Financial Administration Act, Revised Statutes of Canada, 1970, c. F. 10, the Public Accounts for each fiscal year shall be prepared by the Receiver General and shall be laid before the House of Commons by the Minister of Finance on or before the thirty-first day of December next following the end of that year, or if Parliament is not then sitting, within any of the first fifteen days next thereafter that Parliament is sitting.

This annual report is presented in three volumes :

Volume I A survey of the transactions for the fiscal year, together with statements certified by the Auditor General, of the revenue and expenditure for the fiscal year ended March 31, 1972, and of the assets and Habihties of Canada as at March 31, 1972, together with a statement of the contingent liabilities, departmental summaries of appropriations and ex- penditures, those statements required by the Financial Administration Act to be published in the Public Accounts, and various other supporting schedules, explanatory notes, statements and appendices.

Volume II Details of expenditures and revenues by departments.

Volume III The financial statements of all Crown Corporations and the Auditors' reports thereon.

Respectfully submitted.

H. R. BALLS, Deputy Receiver General for Canada.

OTTAWA, September 18, 1972.

VOLUME

I

TABLE OF CONTENTS

SECTION

1. The Scope of the Public Accounts.

2. Highlights of the fiscal year.

3. Revenue.

4. Expenditure.

5. Non-budgetary transactions.

6. Financing Operations of the Government, and the Public Debt.

7. The Cash Position.

8. Assets and Liabilities.

9. Statements of revenue and expenditure.

10. Statement of assets and liabilities.

1 1 . Supplementary statements.

12. Statements as required by the Financial Administration Act.

13. Index.

9624^—2

SECTION

1

1971-72

PUBLIC ACCOUNTS

The Scope of

the Public Accounts

CONTENTS

Page

The Scope of the Public Accounts 1-2

The government's accounting system 1*3

96246— 2J

1-2

PUBLIC ACCOUNTS, 1971-72

THE SCOPE OF THE PUBLIC ACCOUNTS

The Public Accounts of Canada is the annual financial report of the Government of Canada which is prepared by the Receiver General for Canada as required by section 55 of the Financial Administration Act. The report covers the financial transactions of the Government of Canada during the fiscal year under review even although the Parliamentary authority to undertake these transactions was, in many cases, provided by legislation approved in earlier years. In addition, it includes the accounts of those crown corpora- tions and other bodies which are maintained separately from the accounts of Canada. The financial year of a number of these corporations is the calendar year rather than the fiscal year of the government.

The financial transactions of the Government of Canada include :

1. the raising of revenue through taxation, fees, sales, investment income and other revenues ;

2. expenditures on government programs, including pay- ments for goods and services, interest on the public debt, transfer payments to individuals in terms of various social programs, transfers to other levels of government under such programs as fiscal transfer payments to provinces, hospital insurance and medicare, subsidies and other assistance to business enterprises ;

3. the collection and disbursement of money in respect of the Canada Pension Plan, the Old Age Security Fund, the Unemployment Insurance Account, and annuity, insurance and pension funds :

4. the making and recovery of loans and advances to and investments in crown corporations, other governments in Canada and abroad, international organizations, departmental working capital advance accounts, and various other bodies ;

5. the provision of Canadian funds to acquire foreign exchange reserves and the return of these funds when foreign exchange so acquired is sold ;

6. the receipt and disbursement of money from deposit, trust and certain special purpose accounts ;

7. the issue and repayment of government bonds and Treasury Bills;

8. those transactions arising from the operation of the Consolidated Revenue Fund, which is the total of the deposits in the bank accounts of the Receiver General with the Bank of Canada, chartered banks in Canada and banks abroad.

All the financial transactions of the Government of Canada are reflected in the Public Accounts, irrespective of whether they are undertaken by or on behalf of a department, agency or other body such as a board, commission, council, crown corporation or fund. There are, however, a number of crown corporations and other bodies which operate their own banking facilities and produce their own accounts; the financial transactions of these organizations are reflected in the transactions of the Government of Canada only in so far as they receive money from or pay it to the government. The crown corporations and other bodies in this category are:

Air Canada

Atomic Energy of Canada Limited

Bank of Canada

Canada Deposit Insurance Corporation

Canadian Arsenals Limited

Canadian Broadcasting Corporation

Canadian Commercial Corporation

Canadian National Railways

Canadian National (West Indies) Steamships Limited

Canadian Overseas Telecommunications Corporation

Canadian Patents and Development Limited

Canadian Saltfish Corporation

The Canadian Wheat Board

Cape Breton Development Corporation

Central Mortgage and Housing Corporation

The Company of Young Canadians

Crown Assets Disposal Corporation

The Custodian

Defence Construction (1951) Limited

Eldorado Aviation Limited

Eldorado Nuclear Limited

Export Development Corporation

Farm Credit Corporation

Freshwater Fish Marketing

Industrial Development Bank

National Arts Centre Corporation

The National Battlefields Commission

National Capital Commission

National Harbours Board

Northern Canada Power Commission

Northern Transportation Company Limited

Polymer Corporation Limited

The St. Lawrence Seaway Authority

The Seaway International Bridge Corporation Limited

The Public Accounts is produced in three volumes. Volume I contains a brief outline of the principal features of the govern- ment's financial statements and accounting system; a summary of the highlights of the government's financial operations during the fiscal year ended March 31, 1972, including revenue and expenditure on a National Accounts basis; a review of budgetary revenue, expenditure and the deficit for the fiscal year 1971-72, with comments on the significant aspects of the more important items; a summary of the financing operations of the government and their effect on the unmatured debt and the cash position of the government; statements of the expenditures, revenues, assets and liabilities of Canada certified by the Auditor General; and a statement of the contingent liabilities of Canada. It also includes summaries of appropriations and expenditures for each department, the statements required by the Financial Administration Act to be published in the Public Accounts and a number of sup- porting schedules and statements. Volume II reviews the financial statements of departments in finer detail. For each department, it presents its appropriations, expenditures and unexpended balances, the total cost of each of its programs, analysis of its expenditures by programs, activities within a program and standard objects, a statement of the grants, contributions and other transfer payments which it made, a statement of revenues collected, a summary of all its receipts and outlays and any special accounts which it maintains. The appendices in Volume II provide a range of additional information, by departments, on items such as accounts

THE SCOPE OF THE PUBLIC ACCOUNTS

receivable, payments for professional and special services, the construction and the acquisition of machinery, equipment land, buildings, and v^'orks. Volume III includes the financial statement of crown corporations which produce their own accounts together with the reports of their auditors.

The Government's Accounting System

To assist the reader who is not familiar with the govern- ment's financial statements and general system of accounting, a brief outline of some of the more significant features of these and particularly of those aspects which differ from normal commercial accounting practices is given in the paragraphs which follow.

There are two generally accepted bases or systems of accounting. One is the "cash" basis under which revenues are taken into the accounts in the period in which they are received in cash and expenditures are accounted for when the actual disbursements are made; the other is the "accrual" basis under which revenues are accounted for when earned or due, even though not collected and expenditures are accounted for when the liabilities are incurred whether payment is made in that accounting period or not.

Many factors must be considered in determining how the government's voluminous and varied transactions should be recorded and brought into focus in a clear and comprehensive way. In business, the accounts are usually maintained on an accrual basis. However, the prime purpose of government accounting is to serve the requirements of Parliament and more particularly to ensure effective control by Parliament over public moneys. As parliamentary control in Canada is predicated on the operation of the consolidated revenue fund, which is by law a cash account, and on regulating the flow of cash receipts into and cash payments out of the fund, it follows that the accounts of Canada are maintained basically on a cash system. However, there is provision in the Financial Administration Act for bringing into the accounts of each fiscal year expenditures relating to that year, which on a pure cash basis would be excluded, and in addition certain modi- fications have been made to facilitate the maintenance of accounting control over certain assets and liabilities, and to provide for valuation adjustments for recorded assets in anticipation of possible losses on ultimate realization.

Revenue and expenditure

Revenues are reported on a cash basis and consequently taxes assessed and due and other revenues receivable or accrued (including interest accrued) are not normally set up as assets on the government's statement of assets and liabilities.

On the expenditure side, under the provisions of section 30 of the Financial Administration Act, for thirty days after the end of each fiscal year, payments for the discharge of debts properly applicable to the old year may be made and charged to that year. Consequently, liabilities under contracts and other accounts payable at March 31 for which cheques are issued during the month of April are charged as expenditures in the old year and appear as current liabilities on the state- ment of assets and liabilities. Th=s is a significant modification of pure "cash" accounting, and brings into the year's trans- actions the greater part of those expenditures which on the cash basis would be excluded, but which on the accrual basis

13

would be included and carried to the statement of assets and liabilities as accounts payable. In other respects the expenditure accounts reflect refinements of the cash basis. For example discounts and commissions on loans are not charged to expenditure in the year in which they are paid, but are set up as deferred charges on the statement of assets and liabilities and are amortized or written off to expenditure during the period of a loan. Also, losses on loans and advances and on other assets are not generally charged to expenditure in the year in which the loss is sustained, but from time to time parliamentary authority is obtained to charge such losses to budgetary expenditure; or the ultimate loss when determined may be charged by parliamentary authority to the general reserve for possible losses on the realization of assets.

Prior to 1951-52, it was the practice to charge interest on the public debt as it became due rather than when it was paid. This was a modification of the strict cash basis of accounting, but in 1951-52 a further modification was made whereby the charges to budgetary expenditure for interest on the public debt were made month by month as the interest accrued rather than annually or semi-annually as it became due and payable. This change is in line with the aim previously men- tioned of bringing into the accounts of the year all the expendi- tures relating to that year. No comparable change in the treatment of interest receivable was made as it was not considered appropriate to accrue interest receivable which might or might not be received or to take into it account in determining the revenue for the year before it was actually received.

These examples will serve to indicate that while revenue is reported on a cash basis, in expenditure reporting significant modifications have been made in the cash basis to achieve many of the advantages which accrual accounting would produce. The practice is essentially conservative in that on the one hand the budgetary liabilities are set up or are other- wise taken into the accounts for the year, and on the other, . tax and other revenue assessments, interest accruals (with certain exceptions) and accounts receivable are not treated, as assets or taken into revenue until collected.

Assets and liabilities

Section 55 of the Financial Administration Act directs that the Public Accounts of Canada shall include:

"A statement, certified by the Auditor General, of such of the assets and liabilities of Canada as in the opinion of the Minister are required to show the financial position of Canada as at the termination of the fiscal year."

The assets and liabilities of Canada are set out so as to disclose the amount of the net debt. In 1920, the practice was established of offsetting against the gross liabilities only what were designated as "active" assets in determining the net debt. In the budget speech of May 18, 1920, the following explana- tion was given by the Minister of Finance:

"Assets which are not readily convertible, as the reserve is convertible, or are not interest producing, are not such assets as ought to be deducted from the gross debt. They are inactive, they are items of such a character as might well be placed in a suspense account. At any rate, whatever may be their future value, however great it may be, they are

V4

^AV.'JO'yit. PUBLIC ACCOUNTS, 1971-72

not assets of such a character as to directly reduce the gross debt any more than the other capital accounts of the country ought to be deducted from it."

Since that time, there has been no fundamental change in the basic structure of the statement or in its main purpose. However, revisions have been made from time to time to improve the form or manner of presentation, with considera- tion being given continually to the possibility of further improvements. In 1970-71 a new asset category "foreign exchange reserves" and a new liability category "foreign exchange reserves" were introduced to bring together these accounts which record the government's foreign exchange transactions. Also in 1970-71 a new liability category "social security funds" was introduced to bring together those funds which have been designated as such. Another change made in 1970-71 was a regrouping of loans, investments and advances to distinguish domestic loans and loans to national govern- ments and international organizations.

With certain exceptions, taxes and revenues receivable, revenue and other asset accruals and inventories of materials, supplies and equipment are not recorded as assets (except when these are held as charges against working capital ac- counts) nor are public works and buildings or other fixed or capital assets. Following the principle that only realizable or interest- or revenue-producing assets should be offset against the gross liabilities, costs of capital works are charged to expenditures at the time of acquisition or construction. Consequently government buildings, public works, national monuments, military assets (such as aircraft, naval vessels, and army equipment) and other capital works and equipment are recorded on the statements of assets and liabilities at a nominal value of $1 as the value is not considered as a proper offset to the gross liabilities in determining the net debt of Canada.

On the liabilities side, accrued liabilities (except for interest accrued on the Public Debt) are not taken into account in determining the obligations of the government. However, under section 30 of the Financial Administration Act, liabili- ties under contracts and other accounts payable at March 31 if paid on or before April may be charged to the accounts for the year. These are recorded as accounts payable in the "current and demand liabilities" schedule to the statement of assets and liabilities.

The liabilities of the government, as shown in the statement of assets and liabilities include:

(1) current and demand liabilities, including matured debt outstanding, outstanding cheques, interest due and outstanding, interest accrued, accounts payable, non-interest-bearing notes payable to international organizations and other obligations payable on demand;

(2) obligations payable to the international monetary fund;

(3) sundry funds deposited with the Receiver General for Canada or held in trust for various purposes;

(4) social security funds;

(5) amounts to the credit of other annuity, insurance and pension accounts ;

(6) undisbursed balances of special accounts, which, in accordance with the legislation under which they are

authorized, are available for expenditure in periods subsequent to the fiscal year in which they are granted;

(7) refundable tax on cash profits of businesses paid by all corporations not exempt from tax under section 62 of the Income Tax Act and by certain types of trusts on specified types of income;

(8) provision for compound interest on Canada savings bonds;

(9) amounts due to the government but in respect of which payment has been deferred; these are contra accounts to corresponding items under "Loans to, and investments in. Crown Corporations", "Loans to national governments" and "Other loans and invest- ments" ;

(10) suspense accounts consisting of balances where some uncertainty as to disposition exists; and

(11) unmatured debt, consisting of bonds and treasury bills.

The indirect or contingent liabilities of the government are shown as a special note appearing in the body of the statement of assets and liabilities and are also set out in a detailed supple- mentary statement.

Offsetting the direct liabilities, and in a measure explaining their existence, as a substantial portion of the total debt is attributable to them, are the government's recorded assets. For the most part, these consist of assets which yield interest, profits or dividends, and very liquid assets such as cash and departmental working funds. The principal classes of assets are:

(1) current assets, including cash, and securities held for the securities investment account ;

(2) departmental working capital advances;

(3) foreign exchange reserves; including advances to exchange fund account for the acquisition of gold and foreign exchange and Canada's subscription to the capital of the International Monetary Fund;

(4) investments held for retirement of unmatured debt;

(5) Canada pension plan investment fund;

(6) loans to, and investments in, crown corporations;

(7) other loans and investments, including loans to pro- vincial and municipal governments, advances to the municipal development and loan board and a number of miscellaneous advances to veterans and others;

(8) loans to national governments and international organizations;

(9) investments in United States of America dollar securities issued by other than the Government of Canada, a category set up to record the special securities issued by the Government of the United States of America and purchased by Canada pursuant to the terms of the Columbia River Treaty between the Governments of the United States and Canada;

(10) securities held in trust for various deposit and trust and annuity, insurance and pension accounts and bonds and certified cheques held in connection with contractors' security deposits;

THE SCOPE OF THE PUBLIC ACCOUNTS

1-5

(11) deferred charges which consist of the unamortized portions of the actuarial deficiencies in the super- annuation accounts, representing that portion of the government's liability in respect of these accounts that has not been charged to budgetary expenditures and discounts, commissions, redemption bonuses and conversion premiums on loan flotations, remaining to be charged to expenditure;

(12) capital assets, a category set up to cover capital assets that are charged to budgetary expenditure at the time of acquisition or construction and which are shown on the statement of assets and liabilities at a nominal value of $1; and

(13) inactive loans and investments which are not currently yielding interest, profits or dividends.

A reserve for losses on the realization of assets is now shown as a liability but is deducted from the total of the assets.

Net debt

The excess of the gross liabilities over the net recorded assets is designated as the net debt and a separate schedule to the statement of assets and liabilities is presented showing the changes in the net debt during the fiscal year. In effect, the net debt is the overall deficit since Confederation.

.I7.iO

i\'? 'lO :

SECTION

2

1971-72

PUBLIC ACCOUNTS

Highlights of the Government's Financial Operations during 1971-72

CONTENTS

Page

Financial operations 2-2

Budgetary transactions 2-3

Non-budgetary transactions (excluding unmatured debt

transactions) 2-7

Unmatured debt transactions 2-8

Change in cash position 2-8

Change in debt position 2-8

Federal government revenue and expenditure on the National

Accounts basis 2-9

2-2

PUBLIC ACCOUNTS, 1971-72

fflGHLIGHTS OF THE GOVERNMENT'S FINANCIAL OPERATIONS DURING 1971-72

This section outlines the financial operations of the govern- ment in 1971-72 giving a brief summary of the budgetary and non-budgetary transactions, unmatured debt transactions and changes in the cash position and the debt position during the fiscal year. More detailed explanations are given in subsequent sections of this volume.

To meet the needs of those interested in the impact of the operations of the Government of Canada on the economy, its revenues and expenditures re-classified on a national ac- counts basis are also included.

Table 1 summarizes the financial transactions of the govern- ment for 1970-71 and 1971-72 and shows how they influenced

TABLE 1

THE FINANCIAL OPERATIONS OF THE GOVERNMENT OF CANADA

1970-71 and 1971-72

(in millions of dollars)

the cash balances of the Receiver General for Canada. In particular, it shows that in 1971-72 the total budgetary and non-budgetary receipts of the government, excluding receipts from operations in unmatured debt, rose by 17 per cent to $29,232 million while its total payments, excluding the repay- ment of debt, increased by 14 per cent to $30,959 million. As a result of these changes, there was a cash deficit of $1,727 million. New issues of $16,749 million of unmatured debt provided the funds to cover this deficit, to repay $14,700 million of debt and to add $322 million to the bank balances of the Receiver General.

1970-71

1971-72

I Budgetary transactions

Budgetary revenue and expenditure

Add: Receipts and revenues credited to appropriations

II Non-budgetary transactions

Social security accounts

Old age security fund

Canada pension plan

Unemployment insurance account

Other annuity, insurance and pension accounts

Loans, investments and advances

To crown corporations

To others

Foreign exchange reserves

Provincial tax collection agreements ac- count

Other transactions

Total non-budgetary

Total budgetary and non-budgetary

III Unmatured debt transactions

Marketable bonds^i*

Treasury bills

Non-marketable bonds

^ Canada savings bonds

Other

Net increase or decrease (— ) in Receiver

General bank balances

Add: Receiver General bank balances at beginning of year

Receiver General bank balances at end of year..

Surplus

Surplus

or

or

Receipts

Payments

deficit (-)

Receipts

Payments

deficit (-)

12,803

13,182

-379

14,227

14,841

-614

405

405

500

500

13,208

13,587

-379

14,727

15,341

-614

1,914

1,907

7

2,118

2,205

-87

1,024

981

43

1,102

1,077

25

771

758

13

1,189

1,361

-172

3,709

3,646

63

4,409

4,643

-234

980

293

687

1,248

334

914

415

1,536

-1,121

481

1,724

-1,243

701

939

-238

630

1,055

-425

1,116

2,475

-1,359

1,111

2,779

-1,668

1,753

3,070

-1,317

2,446

3,144

-698

1,858

1,946

-88

2,153

2,023

130

2,459

2,244

215

3,138

2,695

443

11,875

13,674

-1,799

14,505

15,618

-1,113

25,083

27,261

-2,178

29,232

30,959

-1,727

2,647

1,969

678

2,220

1,866

354

10,975

10,135

840

11,910

11,815

95

2,143

917

1,226

2,612

704

1,908

86

219

-133

7

315

-308

15,851

13,240

2,611

16,749

14,700

2,049

433

322

845

1,278

1,278

1,600

fi' Includes net purchases or sales by the Government of its own securities.

HIGHLIGHTS OF THE GOVERNMENT'S FINANCIAL OPERATIONS DURING 1971-72

2-3

TABLE 2

(in millions of dollars)

•? :■':

BUDGETARY TRANSACTIONS FOR FISCAL YEAR 1971-72

Budget forecast June 18 1971

Actual

Increase or decrease (— ) compared with June 18, 1971 Per forecast cent

Revenue

Expenditure

13,660 14,410

14,227 14,841

567 4.15 431 3.00

Deficit

750

614

-136

Budgetary transactions

Revenue increased by $1,424 million to a total of $14,227 million in 1971-72. The effect of the tax changes announced in June and October was to moderate the growth in revenue which ordinarily would accompany a period of rapid growth in the economy. The tax reform amendments which became effective January 1, 1972 had little effect on budgetary revenue in 1971-72. The major increases in revenue were $728 million

from personal income tax (including social development tax), $277 million from sales taxes, $174 million from customs import duties and $130 million from returns on investment. These were the major factors in increasing the expansion of revenue from $489 million in 1970-71 to $1,424 million in 1971-72 and its rate of growth from 3,9 per cent to 11.1 per cent per annum in the same periods.

Expenditure rose by $1,659 million, or 12.6 per cent, to $14,841 million in 1971-72; in 1970-71, the corresponding increases were $1,264 million and 10.6 per cent. The greater part of the rise in expenditure in 1971-72 was the result of increases of $442 million in expenditure on health and welfare (including $176 million in respect of the Medical Care Act), $310 million in economic development and support, $125 million in defence expenditures, $197 million in additional fiscal transfer payments, $90 million in higher public debt charges and $98 million in education assistance. These six functions of the government accovmted for $1,262 million of the increase in expenditure in 1971-72. In 1970-71, they ac- counted for $1,168 million of the increase of $1,264 million in that year.

Table 3 presents revenue by source and expenditure by function for both 1970-71 and 1971-72. It shows that the effects of the changes in revenue and expenditure just de- scribed resulted in a budgetary deficit of $614 million com- pared with a budgetary deficit of $379 million in 1970-71.

BUDGETARY REVENUE AND EXPENDITURE AND FINANCING OF CASH REQUIREMENTS

For Fiscal Year 1971-1972 Millions of Dollars

EXPENDITURE

$14,841

$)2,S62

$14,841

BUDGETARY *— DEFICIT $614

NON-TAX REVENUE

REVENUE TAX REVENUE

SOURCE OF CASH

^ r

APPLICATION OF CASH

NET INCREASE IN

UNMATURED DEBT

OUTSTANDING

IN HANDS OF PUBLIC

$2,049

$2,049

INCREASES IN RECEIVER GENERAL BANK BALANCES

NET AMOUNT REQUIRED FOR NON-BUDGETARY TRANSACTIONS

BUDGETARY OEFIOT

2-4

■v^\ 'i>yiv«:Mv ?yiOvi^"»3L«\o vkv.)

lAAUVv* PUBLIC ACCOUNTS, 1971-72

BUDGETARY SURPLUS OR DEFICIT Billions of Dollars , |

BUDGETARY REVENUE AND EXPENDITURE

Fiscal Years Ended March 31 Billions of Dollars

EXPENDITURE

12

10

1968 69 70 71 72

—I 2 0

1968

1969

1970

1971

1972

BUDGETARY REVENUE BY MAJOR SOURCE

BUDGETARY EXPENDITURE BY MAJOR FUNCTION

For Fiscal Year Ended March 31, 1972

1. Indudes additional inlerost in rospoct of tlie Public Sorvic*,

the Canadian Forces and the R.C.M.P. superannuation accounts. 2. Dees not include payments out of old age security fund.

HIGHLIGHTS OF THE GOVERNMENT'S FINANCIAL OPERATIONS DURING 1971-72

2-5

TABLE 3 M Yfl 3 Xi

BUDGETARY REVENUE BY SOURCE AND EXPENDITURE BY FUNCTION

(in millions of dollars)

Fiscal year ended

March 31 Increase

or

1971 1972 decrease (-)

REVENVE BY SOURCE Tax revenue Income tax

Personal<i> 5,263 5,991 728

Corporation 2,219 2,183 -36

On dividends, interest, etc.

going abroad 258 287 29

7,740 8,461 721

Sales and other excise taxes... 2,111 2,373 262

Customs import duties 814 989 175

Excise duties 561 607 46

Other taxes 120 132 12

11,346 12,562 1,216

Non-tax revenue 1,457 1,665 208

12^803 14,227 1.424 EXPENDITURE BY FUNCTION

Defence 1,773 1,898 125

Transportation and communi- cations 940 1,023 83

Economic development and sup- port 1,857 2,167 310

Health and welfare'2) 3,191 3,633 442

Fiscal transfer payments 1,229 1,426 197

Public debt charges 1,920 2,010 90

Education assistance 463 561 98

All other expenditures 1,809 2,123 314

13,182 14,841 1.659

Surplus or deficit (-) -379 -614 -235

ft' Including Social Development Tax $566 million in 1970-71 and $408 million in 1971-72. ^2) Excluding payments from social security accounts.

^^^ The levels of revenue, expenditure and surplus or deficit in each month of 1971-72 are shown in Table 4. This table shows that the recorded cumulative surplus varied between the limits of $545 million and $178 million between May 1971 and February 1972, and then fell sharply in the remaining period of the fiscal year.

Although there were month to month variations in both revenue and expenditure, 48 per cent of the total revenue was credited in the first six months whereas for the same period only 43 per cent of expenditure had been charged. The heavier expenditure towards the end of the fiscal year was due to three main factors: many construction contracts which were let in the early part of the year did not come up for payment until some months later; under provisions of the Financial Administration Act, expenditures properly applicable to the fiscal year 1971-72 but made in April 1972 were charged to the fiscal year 1971-72; and deficits of crown corporations and special operating accounts which were charged to 1971-72 expenditure were not known until late in the fiscal year. Expenditures in the supplementary period were $773 million or 5 per cent of total expenditure whereas revenue recorded in the same period was $235 million or 2 per cent of total revenue.

The changes in revenue, expenditure and the surplus or deficit during the last ten fiscal years are given in Table 5. This table shows that, while a surplus was produced only in 1969- 70, deficits have tended to become smaller when expressed as a proportion of budgetary expenditure. One reason for this decline is that the decade covered a long period of almost un- interrupted economic expansion in which revenues rose at a faster rate than expenditure.

TABLE 4

BUDGETARY REVENUE, EXPENDITURE AND SURPLUS OR DEFICIT BY MONTHS FOR THE FISCAL YEAR 1971-72

(in millions of dollars)

Revenue

MONTH

Expenditure

Cumulative to end of Monthly month

Per cent Amount Amount of total

Monthly

Cumulative to end of month

Per cent Amount Amount of total

Surplus or deficit (— )

Cumulative to end of Monthly month

Amount Amount

April, 1971...: 1,140

May 1,244

June 1 , 107

July 1 , 178

August 1,069

September 1 , 107

October 1 , 162

November 1 , 176

December 1,280

January, 1972 1 ,259

February 1,004

March 1 ,286

Supplementary 215

Total for year 14,227

1,140

8

833

833

6

307

307

2,384

17

1,006

1,839

12

238

545

3,491

24

1,116

2,955

20

-9

536

4,669

34

1,217

4,172

28

-39

497

5,738

40

1.078

5,250

35

-9

488

6,845

48

1,190

6,440

43

-83

405

8,007

56

1,245

7,685

52

-83

322

9,183

64

1,329

9,014

61

-153

169

10,463

73

1,209

10,223

69

71

240

11,722

82

1,155

11,378

77

104

344

12,726

89

1,170

12,548

85

-166

178

14,012

98

1,520

14,068

95

-234

-56

14,227

100

773

14,841

100

-558

-614

14,841

-614

2-6

PUBLIC ACCOUNTS, 1971-72

BUDGETARY REVENUE AND EXPENDITURE BY MONTHS

Fiscal Year Ended March 31,1972 Millions of Dollars

1500

1000

500

-1500

-1000

APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. JAN. FEB. MAR. SUPP.

BUDGETARY SURPLUS OR DEFICIT BY MONTHS

For Fiscal Year Ended March 31, 1972 Millions of Dollars

800

400

400

800

APR. . MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. JAN. FEB. MAR. SUPR

HIGHLIGHTS OF THE GOVERNMENTS FINANCIAL OPERATIONS DURING 1971-72

1-1

TABLE 5

BUDGETARY REVENUE, EXPENDITURE AND SURPLUS OR DEFiaT<»>

Revenue

Fiscal year

ended Per cent

March 31 Amount change

1963 '. 5,878.7 2.60

1964 6,253.2 6.39

1965 7,180.3 14.83

1966 7,695.8 7.18

1967 8,376.2 8.58

1968 9,076.6 8.36

1969 10,191.1 12.28

1970 12,323.9 20.93

1971 12, 803 .0 3 . 88

1972 14,226. 6 11.12

"> Prior year figures have not been adjusted in this table to account for vote-netting.

Surplus or deficit (-)

Expenditure

Asa

Per cent

percentage of

Amount

change

Amount

expenditure

6,570.3

0.76

-691.6

10.53

6,872.4

4.60

-619.2

9.01

7,218,3

5.03

-38.0

0.53

7,734.8

7.16

-39.0

0.51

8,797.7

13.74

-421.5

4.79

9,871.4

12.20

-794.8

8.05

10,767.2

9.07

-576.1

5.35

11,931.3

10.81

392.6

3.21

13,182.1

10.48

-379.1

2.88

14,840.9

12.58

-614.3

4.14

Non-budgetary transactions

(excluding unmatured debt transactions)

Social security accounts

The three social security accounts are those for the Old Age Security Fund, the Canada Pension Plan and the Unemploy- ment Insurance Account. Details of their transactions in 1970-71 and 1971-72 are given in Table 6.

The Old Age Security Fund up to and including 1971 was financed by tax receipts. The old age security taxes were eliminated after 1971 but the old age security fund remains and amounts determined by reference to the previously exist- ing old age security tax rates are credited to this fund. These

receipts were $2,118 million in 1971-72 an increase of 11 per cent over their level in 1970-71. Payments rose to $2,205 mil- lion in 1971-72 or $87 million under receipts. In 1970-71 receipts of $1,914 million exceeded disbursements by $7 million.

The Canada Pension Plan had receipts of $1,102 million in 1971-72 which exceeded its disbursements of $167 million by $935 million. The greater part of the excess was invested in purchasing $910 million of provincial and federal government bonds. At March 31, 1972 the balance in the Canada Pension Plan Investment Fund was $4,611 million as compared with $3,701 million at March 31, 1971,

The Unemployment Insurance Act, 1971, authorized the establishment in the accounts of Canada of an account to be

TABLE 6

SOCIAL SECURITY ACCOUNTS

(in millions of dollars)

RECEIPTS

1970-71 1971-72

OUTLAYS

Income tax 1 ,340

Sales tax a.

574