Fiscal Monitor –Financial Performance for Canada – 3Q16 – September 2016

BY: PAUL YOUNG, CPA, CGADATE: DECEMBER 11, 2016

Description• This presentation looks at both economic trends as well

as government taxation and spending. The presentation is design to look both economic conditions as well as the health of Federal Government when it comes to taxation and spending.

Agenda• Economic trends• Wages• Employment• GDP by industry • GDP by expenditure

• Government • Taxation• Spending• Deficits

Economic Trends

GDP Growth

Source - Scotiabank

Commentary:• Canada will trail United Kingdom,

Mexico and United States in economic growth.

• Neither Mexico nor the United States have carbon taxation

• Mexico has become the 2nd largest trading block with the United States

• World-Wide growth is predicting to be slow for the next decade

• Carbon taxation will mean lower growth. Carbon Taxation will impact 1st and 3rd economies in Canada

• United States is moving to low tax and low regulation environment.

Wages / Canada • What is Stagnation?• Stagnation is a prolonged period of

little or no growth with wages

• What determine salary increases• Rating systems• Union contracts• Market value

Comments:• Middleclass us under pressure

around the world• UK, Canada and USA have had

similar economic growth• Wages tend to be tied to economic

growthSource: Investopedia, Stats Canada and CNN

Employment / Canada

Source – Stats Canada and CIBC

Comment:• There has been shift for close

to four decades from full-time to part-time jobs (Job quality)

• Goods producing sector struggling due to low commodity prices

• Canada needs to better align education/skills with job opening

• New carbon taxation and/or hikes to CPP will no create jobs, but could impact both wages and jobs

• Canada needs to reduced the red tape to get projects off the ground. Canada depends on FDI

• Canada needs to continue to sign fair and equitable FIPA and Trade Deals

GDP Growth

Source: Scotiabank, Cheatsheet.com, Investopedia and Stats Canada

What does GDP Growth mean?The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy.How Do Millennials spend money:• Millennials spent an average of $26,000 a year

on discretionary purchases, such as eating out and travel. This is $6,000 less per year than the average consumer.

• Millennials tend to use cash, a debit card and checks for half of their monthly spending and charge just 30% of their purchases.

• Millennials love their coffee. The only category where millennials spent more money than Generation X and baby boomers is on coffee and fast food.

GDP by Expenditure

Source: Stats Canada and http://www.environicsanalytics.ca/

• Part-time jobs do not have benefits• Most millennials are doing jobs not

necessarily related to their field of studies

• Many millennials still live at home due to housing costs and student debt

• Household spending drives the economy

Housing

Source – Scotiabank, BMO, CMHC and RBC

Comments:• You need earn

over 100K+ to be able to afford a home

• Condos can be cheaper, but come with costs, i.e. maintenance fees

• Apartment rent can vary from $850 to $1,200 a month

Canada – Finances Update

Fiscal Monitor – What it is• The Fiscal Monitor provides an overview of monthly

and year-to-date financial results for the Government of Canada. It is prepared in accordance with the same accounting policies used in the annual audited financial statements of the Government of Canada. Summary financial results reported in The Fiscal Monitor are based on financial transactions recorded in the Accounts of Canada, maintained by the Receiver General for Canada. 

Source – Government of Canada

Summary – Revenue and ExpensesComments:Taxation:• Corporate profits rise 3Q16 after fourth

straight quarter declines• Goods producing sector continues to lose

jobs in 2016• Temporary work has taken over in 2016Expenses:• Major transfers to persons were up $3.2

billion, or 7.9 per cent. Elderly benefits increased by $1.2 billion, or 5.3 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed

• Transfer payments increased by $1.6 billion, or 10.6 per cent, reflecting increases across several departments, including the accrual of liabilities for disaster assistance, claims expenses and increased funding of new and existing programs. ◦

• Other direct program expenses increased by $2.5 billion, or 6.7 per cent, due in large part to an increase in pension and other employee and veteran future benefit expenses based on the Government's latest actuarial valuations, as well as an increase in operating expenses of Crown corporations.

Source – Government of Canada

Program ExpensesComment:• Canadian Forces deploy to

the Ukraine and more peacekeeping roles (Africa)

• Global Affairs look light due to fact that Canada is looking at bringing in more immigrants as well as opening more offices

• First Nations have complained that not all the funding promised has arrived to the various bands.

• Innovation reflects money spend on SDTC as well as other initiatives in automotive

• Infrastructure money has not flowed to provinces and municipalities

• Trudeau continues give money to countries around the world

Other Sources• Job Quality -

http://www.slideshare.net/paulyoungcga/job-quality-canada-2015-analyis-and-commentary • Middle class –

http://www.slideshare.net/paulyoungcga/middle-class-analysis-and-commentary-canada • Wealthiest -

http://www.slideshare.net/paulyoungcga/top-1-wealthiest-income-earners-canada-2013-and-2014-analysis-and-comments • Carbon Tax -

http://www.slideshare.net/paulyoungcga/carbon-pricing-or-carbon-tax-impact-on-consumers-december-2016