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Financement Quebec (81QJ)

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Thursday 05 November, 2009

Financement Quebec

Financial Statements 2008 - 2

RNS Number : 9945B
Financement Quebec
04 November 2009
 



Regulatory Announcement

 

Financement-Québec

4 November, 2009


Re: Financement-Québec (the "Issuer") 

U.S.$2,000,000,000 Euro Medium Term Note Programme 

(unconditionally and irrevocably guaranteed by Québec (the "Guarantor"))


Issuer Financial Statements 2008-2009Guarantor Public Accounts 2008-2009, Guarantor's Update and Guarantor's additionnal disclosure


Copies of :


  • the Issuer's Exhibit 99.2 of the Amendment dated October 30, 2009 to the Issuer's Annual Report (on Form 18-K/A) for the fiscal year ended March 31, 2009 (containing the Financial Statements 2008-2009) filed with the United States Securities and Exchange Commission (the "SEC") on October 30, 2009 (the "Issuer Financial Statements 2008-2009"); 

  • the Guarantor's Exhibits 99.7 and 99.8 of the Amendment dated October 30, 2009 to the Guarantor's Annual Report (on Form 18-K/A) for the fiscal year ended March 31, 2009 (containing the Consolidated Financial Statements - Volume 1 of the Public Accounts 2008-2009 and excerpts from Update on Québec's economic and financial situation) filed with the SEC on October 30, 2009 (the "Guarantor Public Accounts 2008-2009" and the "Guarantor's Update", respectively); and 

  • the Guarantor's Exhibit 99.9 of the Amendment dated November 4, 2009 to the Guarantor's Annual Report (on Form 18-K/A) for the fiscal year ended March 31, 2009 (containing additionnal disclosure) filed with the United States Securities and Exchange Commission (the "SEC") on November 4, 2009 (the "Guarantor's additionnal disclosure"); 


previously published and filed with the Financial Services Authority have been lodged with, and are available for inspection at, the Document Viewing Facility at the Financial Services Authority, 25 The North Colonnade, London E14 5HS.


Copies of the full documents can also be accessed on the links below or, alternatively, by pasting the following URLs into the address bar of your internet browser:


Issuer Financial Statements 2008-2009 

http://www.rns-pdf.londonstockexchange.com/rns/9945B_1-2009-11-4.pdf 


Guarantor Public Accounts 2008-2009

http://www.rns-pdf.londonstockexchange.com/rns/9945B_2-2009-11-4.pdf 


Excerpts from Guarantor's economic and financial situation

 

http://www.rns-pdf.londonstockexchange.com/rns/9945B_3-2009-11-4.pdf 

 


Guarantor's additionnal disclosure

http://www.rns-pdf.londonstockexchange.com/rns/9945B_4-2009-11-4.pdf 







Table of Contents



Management's Report....3

Auditor's Report....4

Financial Statements....5

Income and Accumulated Surplus....5

Statement of Financial Position....6

Cash Flows....7

Notes to the Financial Statements....8













Management's Report

The financial statements of Financement-Québec have been drawn up by the management of the Corporation, which is responsible for their preparation and their presentation, including significant judgements and estimates. This responsibility includes choosing appropriate accounting practices that satisfy Canadian generally accepted accounting principles. The financial information contained in the rest of the operational report agrees with the information given in the financial statements.


To carry out its responsibilities, the management of the Corporation maintains a system of internal accounting controls designed to provide reasonable assurance that assets are protected and that operations are correctly accounted for in a timely fashion, are duly approved and are such as to produce reliable financial statements.


The management of the Corporation acknowledges that it is responsible for managing the affairs of the Corporation in accordance with the laws and regulations that govern it.

The Board of Directors must oversee how the Corporation's management carries out the responsibilities incumbent on it in terms of financial information and it has approved the financial statements.


The Auditor General of Québec has audited the Corporation's financial statements in accordance with Canadian generally accepted auditing standards, and his report sets out the nature and extent of this audit and expresses his opinion.



_/s/ Nathalie Parenteau_______________ 

Executive Vice President 






_/s/ Bernard Turgeon__________________ 

President and Chief Executive Officer






Québec City, June 4, 2009


Auditor's Report

To the Minister of Finance,


I have audited the statement of financial position of FinancementߛQuébec as at March 31, 2009 and the statement of income and accumulated surplus as well as the statement of cash flows for the year then ended. These financial statements are the responsibility of the Corporation's management. My responsibility is to express an opinion on these financial statements based on my audit.


I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.


In my opinion, these financial statements present fairly, in all material respects, the financial position of the Corporation as at March 31, 2009 and the results of its operations and its cash flows for the year then ended, in accordance with Canadian generally accepted accounting principles. As required by the Auditor General Act (R.S.Q., c. V-5.01), I report that, in my opinion, these principles have been applied on a basis consistent with that of the preceding year. 







/s/ Renaud Lachance

Renaud Lachance, CA auditor

Auditor General of Québec



Québec City, June 4, 2009



Financial Statements

Income and Accumulated Surplus

For the fiscal year ended March 31, 2009

(Thousands of dollars)



 2009


2008

Net interest income





Interest on loans


643 229


602 250

Amortization of discounts and premiums on loans


591


639

Interest on borrowings and advances


(664 163)


(652 645)

Amortization of discounts and premiums on borrowings and advances


3 708


4 186

Interest on short-term investments


28 850


47 536



12 215


1 966

Other operations





Net issuance expenses charged to borrowers


554


6 935

Administration expenses charged to borrowers


865


2 242



419


9 177



21 634


11 143 

Operation and administration expenses 





Wages, salaries and allowances


571


394

Professional, administrative and other services


21


51

Service agreement with the Financing Fund


372


756

Other


56


26



020


1 227

Surplus for the year 


 20 614


 9 916

Accumulated surplus at the beginning


84 245


74 329

Accumulated surplus at the end


104 859


84 245


Statement of Financial Position

As at March 31, 2009

(Thousands of dollars)



2009


2008

Assets





Loans (note 3)


14 288 807 


13 397 751 

Accrued interest on loans


181 887


185 734



14 470 694


13 583 485

Cash position


48


7

Short-term investments (note 4)


369 364


1 031 762

Accounts receivable


848 


791 



14 840 954


14 616 045

Liabilities





Borrowings (note 5)


13 954 105


13 732 906

Advances from the Consolidated Revenue Fund (note 6)


602 005


614 460

Accrued interest on borrowings and advances


168 116 


172 824 

Accounts payable


715


363

Deferred income


154


1 247



14 726 095


14 521 800

Net assets 





Capital stock (note 8)


100


100

Contributed surplus


9 900


9 900

Accumulated surplus 


104 859


84 245



14 840 954


14 616 045

The notes are an integral part of the financial statements. 


For the board of directors




_/s/ Nathalie Parenteau________________

Executive Vice President





_/s/ Bernard Turgeon__________________

President and Chief Executive Officer

  Cash Flows

For the fiscal year ended March 31, 2009

(Thousands of dollars)



2009


2008

Operating activities





Surplus for the year


20 614


9 916

Adjustments for:





    Amortization of discounts and premiums on loans


(591)


(639)

    Amortization of discounts and premiums on borrowings and advances


(3 708)


(4 186) 



16 315 


5 091 

Changes in non-cash items related to operating activities:





    Accrued interest on loans


3 847


4 676

    Accounts receivable


(57)


44

    Accrued interest on borrowings and advances


(4 708)


(8 154)

    Accounts payable


352


(270)

    Deferred income


(94)


(582)



(660)


(4 286

Cash flows from operating activities


15 655


805 

Investing activities





Loans


(5 565 793)


(2 490 462

Loan repayments


4 675 328


1 189 352 

Cash flows used in investing activities


(890 465)


(1 301 110) 

Financing activities





Short-term borrowings


11 994 167


12 301 282 

Long-term borrowings


2 675 663


2 009 063 

Repayments of advances from the Consolidated Revenue Fund


(8 848)


(395 561)

Repayments of long-term borrowings


(2 037 700)


(500 000)

Repayments of short-term borrowings


(12 410 829)


(11 130 732) 

Cash flows from financing activities


212 453


2 284 052

Change in cash and cash equivalents 


(662 357)


983 747

Cash and cash equivalents at the beginning  


1 031 769


48 022

Cash and cash equivalents at the end (note 9)


369 412


1 031 769

The notes are an integral part of the financial statements.




Notes to the Financial Statements

1. Constitution, Purpose and Financing

Financement-Québec (the Corporation) was incorporated under An Act respecting Financement-Québec (R.S.Q., c. F-2.01) which entered into force on October 1, 1999. The Corporation is a legal person with share capital and is a mandatary of the State.


The Corporation's main purpose is to supply financial services to public organizations covered by its act of incorporation. It finances them directly by granting them loans or by issuing debt securities on their behalf. It advises them to facilitate their access to credit and to minimize their financing costs and, to that end, it develops financing programs. It may also manage the financial risks of these organizations, in particular cash flow risks and exchange risks. The Corporation may also provide public organizations with technical services regarding financial analysis and management.


The Corporation charges loan issuance expenses to borrowers to offset those incurred by the Corporation on borrowings made. The Corporation also charges administration expenses to borrowers. The level of expenses charged is subject to government approval.

Financement-Québec issues debt securities that are guaranteed by the Québec government. 

Financement-Québec is not subject to Québec or Canadian income tax.









  2. Accounting Principles

For the purposes of preparing its financial statements, the Corporation primarily uses the CICA Public Sector Accounting Handbook. Use of any other source of generally accepted accounting principles is consistent with that Handbook.

In accordance with Canadian generally accepted accounting principles, the preparation of the Corporation's financial statements requires that management make use of accounting estimates and assumptions. These have an impact on the recognition of assets and liabilities, the presentation of assets and contingent liabilities on the date of the financial statements and the recognition of proceeds and charges during the period covered by the financial statements. The actual results may differ from these estimates. 


Short-term Investments

Short-term investments are recorded at the lesser of cost and market value.


Borrowings and Advances from the Consolidated Revenue Fund

Borrowings and advances from the Consolidated Revenue Fund are recorded at the amount received at the time of issue, adjusted by the premium or discount amortized over the remaining term of each security using the straight-line method, to obtain the amount of principal repayable at maturity. 


Currency Translation

Borrowings and advances from the Consolidated Revenue Fund denominated in foreign currencies and repayable in Canadian currency under currency swap contracts are determined at the exchange rate stipulated in such contracts.


Cash and Cash Equivalents 

The Corporation presents, under cash and cash equivalents, bank balances and short-term investments that are easily convertible in the short term into a known amount of cash whose value is not likely to change significantly.


Financial Derivatives

Financement-Québec uses financial derivatives to manage interest rate and exchange risks. It is the policy of the Corporation not to use financial derivatives for trading or speculative purposes.


The Corporation documents in due form the relations between hedging instruments and hedged items by associating all the financial derivatives used in hedging operations with specific assets and liabilities shown on the balance sheet or the statement of cash flows. The exchange risk management strategy and objective on which the various hedging operations are based are also documented. It also methodically determines, both when implementing the hedge and subsequently, whether the derivatives used in hedging operations effectively offset the changes in fair values or cash flows of the hedged items.

Gains and losses realized on derivatives by the Corporation are posted to the income statement at the same time as those associated with the hedged assets or liabilities.


3. Loans

Borrowers

(Thousands of dollars)



March 31, 2009


March 31, 2008

School boards


4 734 271


4 794 388

General and vocational colleges


386 049


1 542 037

Health and social services institutions and agencies


5 526 629


4 833 570

University institutions and others


641 858


2 227 756



14 288 807


13 397 751




Due in
Fiscal year


March 31, 2009


March 31, 2008

2009


-


1 554 815

2010


882 000


1 682 352

2011


364 087


393 727

2012


1 949 738


2 010 104

2013


1 771 971


1 893 555

2014 


3 055 243


2 588 684

2015-2034


5 265 768


3 274 514



14 288 807


13 397 751


Loans maturing during the fiscal year ending March 31, 2010 include $335 913 227 of short-term loans. For the long-term loans, maturities and interest rates on loans made by the Corporation are, with a few exceptions, identical to those of advances received from the Consolidated Revenue Fund and the borrowings contracted for this purpose taking into consideration currency and interest rate swap contracts, if any. However, depending on the amounts available, the Corporation may make new loans from repayments of loans. These new loans are made at interest rates and maturities that may differ from the conditions of the advance or borrowing initially received. The balance of discounts and premiums on loans to be amortized over subsequent years was $ 4 638 as at March 31, 2009.

  4. Short-term Investments

 (Thousands of dollars)


March 312009


March 312008

Notes

275 384


804 662

Deposit certificates 

44 000


227 100

Commercial paper1

49 980


-

Total

369 364


1 031 762


(1)    This investment is issued by CDP Financial Inc. and guaranteed by the Caisse de dépôt et placement. 


Short-term investments bear interest at rates varying from 0.5% to 1.87%.




5. Borrowings

(Thousands of dollars)

Due in
Fiscal year


March 31, 2009


March 31, 2008



Amount


Rate (%)


Amount

Repayable in Canadian currency







2009






2 276 050


2010


2 253 888


3.849 to 4.8683 ; variable1,2


1 500 000

2011


400 000


3.779 to 4.2075


400 000

2012


1 900 000


4.16 to 5.2764 ; variable2


1 900 000

2013


1 020 000


4.134 to 5.0625


1 020 000

2014


656 000


3.135 to 5.123 ; variable2


3 056 000

2015


857 000


3.0068 to 4.7203


1 000 000

2016


1 509 400


4.082 to 6.393


509 400

2035


590 900


4.877 to 5.58


349 900



13 187 188




12 011 350

Plus: 

Currency swap contracts
in Canadian currency 

Plus (minus):

Deferred premiums and discounts on borrowings and advances


 782 000



(15 083)





1 714 200



7 356

Total in Canadian currency


13 954 105




13 732 906


Due in
Fiscal year


March 31, 2009


March 31, 2008



Amount


Rate (%)


Amount

Balance forward


13 954 105




13 732 906

Repayable in United States currency







2013 


782 000


5.391 to 5.82


782 000 

Less: 
Currency swap contracts in Canadian currency


782 000




782 000 

Total in United States currency


-




-



Repayable in euros





2009


-




932 200

Less: 

Currency swap contracts
in Canadian currency


-




932 200

Total in euros


-




-

Total borrowings


13 954 105




13 732 906 

Note: All these borrowings are repayable solely at maturity. Borrowings maturing during the fiscal year ending March 31, 2010 include $753 888 275 of short-term borrowings. All borrowings are guaranteed by the Québec government.

1    Short-term borrowings bear interest at rates varying from 0.36511% to 1.43019%.

2    Rate of 3-month bankers' acceptances plus a spread varying between minus 0.005% and plus 0.10%.




  6. Advances from the Consolidated Revenue Fund

(Thousands of dollars)

Due in
Fiscal year


March 31, 2009


March 31, 2008



Amount


Rate (%)


Amount

Repayable in Canadian currency







2009


-




5 000

2010


387 350


5.50 to 11.00


387 924

2012


61 360


9.5


62 894

2023


146 925


9.375


148 665




Plus:
Deferred premiums and discounts



595 635



6 370





604 483



9 977 

Total advances from the Consolidated Revenue Fund            





    602 005







614 460



The amounts of principal payments to be made on advances from the Consolidated Revenue Fund over the next five fiscal years are as follows:

(Thousands of dollars)

Fiscal year 


Amount

2010


390 624

2011


3 274

2012


60 032

2013


1 740

2014


1 740







  7. Financial Instruments 

Financement-Québec uses interest rate swap contracts to manage interest rate risks on its financial intermediation activities. Interest rate swap contracts give rise to the periodic exchange of interest payments without an exchange of the reference face amount on which the payments are based and are recorded as an adjustment to the interest expense on the hedged borrowing instrument. The volume of interest rate swap contracts in Canadian currency as at March 31, 2009 is $16 921 million (March 31, 2008: $17 047 million).


Financement-Québec also uses currency swap contracts to manage its risk exposure under certain borrowing instruments denominated in foreign currencies. The Corporation shows currency swap contracts as hedging of its firm commitments to pay the principal and interest on the debt denominated in foreign currencies, failing which it would be exposed to a foreign exchange risk. Exchange gains and losses on the principal covered by swap contracts are offset by corresponding exchange losses and gains on the debt denominated in foreign currencies.


The fair value of Financement-Québec's assets and liabilities as at March 31, 2009 was valued by discounting cash flows at the market rate for similar fixed-rate securities. Interest rate and currency swap contracts are used solely for hedging purposes and are valued in the same way as assets and liabilities.


(Thousands of dollars)



March 31, 2009


March 31, 2008



Book
value


Fair
value


Book value


Fair
value

Borrowings and Advances









Borrowings


13 954 105


14 262 810


13 732 906


13 900 991

Advances from the Consolidated Revenue Fund


602 005


671 293


614 460


704 317

Currency swap contracts


-


94 463


-


120 504

Interest rate swap contracts


-


401 447


-


139 666

Total for borrowings
and advances


14 556 110


15 430 013


14 347 366


14 865 478

Loans









Total for loans


14 288 807


15 067 761


13 397 751


13 886 223

The value of other asset and liability financial instruments corresponds essentially to book value in view of their nature or the short-term maturity of these instruments.

  8. Capital Stock

Description

Authorized: 

1 000 000 shares with a par value of $100 each.

Issued and paid for:

1 000 shares: $100 000

The Corporation's shares are held by the Minister of Finance of Québec.


9. Cash Flows

(Thousands of dollars)


March 31, 2009

March 31, 2008

Cash and cash equivalents 


Cash position

48

7

Short-term investments

369 364

1 031 762


369 412

1 031 769


Interest paid by the Corporation during the year amounted to $678 020 061 (2008: $655 312 807).


10. Related Party Transactions

In addition to the related party transactions already disclosed in the financial statements and recorded at exchange value, the Corporation is related to all the ministries and special funds as well as all the organizations and enterprises controlled directly or indirectly by the Québec government or subject either to joint control or to significant common influence by the Québec government. All the Corporation's business transactions with these related parties were carried out in the normal course of its activities and under usual business conditions. These transactions are not separately disclosed in the financial statements.


11. Comparative Figures

Some figures for the preceding fiscal year have been reclassified for consistency with the presentation adopted in the current fiscal year, essentially, premiums and discounts on borrowings and advances from the Consolidated Revenue Fund.


























PUBLIC ACCOUNTS 2008-2009


VOLUME 1



CONSOLIDATED FINANCIAL STATEMENTS OF THE GOUVERNEMENT DU QUÉBEC


Fiscal year ended March 31, 2009
















Published in accordance with section 86
of the 
Financial Administration Act (R.S.Q., c. A-6.001)







































Public Accounts 2008-2009- Volume 1



Legal deposit - Bibliothèque et Archives nationales du Québec

October 2009

ISBN 978-2-550-57101-8 (Printed)

ISBN 978-2-550-57102-5 (PDF)


ISSN 0706-2869


© Gouvernement du Québec, 2009

  







To His Excellency the Honourable Pierre Duchesne

Lieutenant-Governor of Québec

Parliament Building

Québec





Your Excellency,




The undersigned has the honour of presenting to Your Excellency the Public Accounts of the Gouvernement du Québec for the fiscal year ended March 31, 2009.






Raymond Bachand

Minister of Finance, 



Québec, October 2009













  [ This page intentionally left blank.]

  






Mr. Raymond Bachand

Minister of Finance 

Parliament Building

Québec




Dear Sir,




In accordance with the commission entrusted to me, I have the honour of presenting the Public Accounts of the Gouvernement du Québec for the fiscal year ended March 31, 2009. These accounts have been prepared under section 86 of the Financial Administration Act (R.S.Q., c. A-6.001), in accordance with the Government's accounting policies.



Respectfully yours,






Carole Boisvert, FCA

Comptroller of Finance



Québec, October 2009

  [ This page intentionally left blank.]




Table of contents



Presentation of the Public Accounts

Glossary


Analysis of the financial statements

1.Highlights for the 2008-2009 fiscal year

2.Overview of the 2008-2009 Budget 

3.Risks and uncertainties

4.Allocation of the annual surplus

5.Variance analysis

    5.1 Comparison of actual results with the Budget

    5.2 Comparison of actual results with the previous fiscal year 

6.Analysis of main trends

7.Results of the indicator analysis

Appendix - Financial statistics


Consolidated financial statements

Statement of responsibility

Auditor General's report

Consolidated statement of operations

Consolidated statement of accumulated deficit

Consolidated statement of financial position

Consolidated statement of change in net debt

Consolidated statement of cash flow

Notes to financial statements

  Appendices


1.    National Assembly, designated persons, Government departments and agencieswhose financial transactions were conducted within the ConsolidatedRevenue Fund

2.    Government agencies, special funds, sinking funds and other fund

3.    Organizations in the Government's health and social services and education networks

4.    Government enterprises

5.    Government department, agencies and funds which conduct fiduciary transactions that are not included in the Government's reporting entity

6.    Breakdown of revenue

7.    Breakdown of expenditure

8.    Short-term investments

9.    Accounts receivable

10.    Investment in Government enterprises

11.    Long-term investments

12.    Generations Fund

13.    Cash (Bank overdraft)

14.    Accounts payable and accrued expenses

15.    Deferred revenue

16.    Other liabilities

17.    Debts

18.    Net investment in the health and social services and education networks

19.    Fixed assets

20.    Breakdown of contractual obligations

21.    Contingencies

22.    Summary of fiduciary transactions conducted by a Government department and Government agencies and funds

23.    Stabilization reserve

24.    Segment disclosures


Presentation of the Public Accounts 



The 2008-2009 Public Accounts present the financial position of the Gouvernement du Québec and its operations. They include a financial analysis and a glossary to make them easier to understand and thus increase their usefulness and transparency. The analysis will now present the changes in the main trends for the major financial statement items. 


The Ministère des Finances is aware that the use of indicators is extremely efficient for observing changes in the state of the Government's finances. Therefore, eleven representative indicators are presented in the section "Analysis of the financial statements."


Preparing the Public Accounts requires the participation and collaboration of many employees from Government departments, agencies, funds and enterprises as well as its organizations in the health and social services and education networks. We would like to thank all of them for their help in publishing this document.


Prior to the publication of the Public Accounts, the Ministère des Finances regularly informs the public about the state of the Government's finances and the results of its financial transactions, notably through the Monthly Report on Financial Transactions.


The 2008-2009 Public Accounts present information on the actual results for fiscal 2008-2009.  The original forecasts were presented in the 2008-2009 Budget of March 13, 2008 and revised in the November 4, 2008 Update in Québec's Economic and Financial Situation. The preliminary results were presented in the 2009-2010 Budget on March 19, 2009. For the aims of the Public Accounts, when the actual results are compared to the budgetary forescasts, it is done referring to the initial budgetary data presented in the 2008-2009 Budget of March 13, 2008, as recommended by the Canadian Institute of Chartered Accountants (CICA).


The Public Accounts for the fiscal year ended March 31, 2009 have been prepared by the Comptroller of Finance for the Minister of Finance in accordance with the accounting policies established by the Conseil du trésor and pursuant to the provisions of section 86 of the Financial Administration Act 
(R.S.Q., c. A-6.001). They are published in two volumes.


Volume 1 - Consolidated financial statements of the Gouvernement du Québec 


Volume 1 presents the consolidated financial statements of the Gouvernement du Québec, as well as a financial analysis that allows a better understanding of the transactions carried out in fiscal 2008-2009.


  

The consolidated financial statements consist mainly of the following:

  • A consolidated statement of operations, which presents the annual surplus or deficit arising from operations during the fiscal year. It discloses the Government's revenue, the cost of services and other current expenses.

  • A consolidated statement of accumulated deficit, which presents the change in accumulated deficits taking into consideration the results for the year and various restatements, where applicable.

  • A consolidated statement of financial position, which presents the financial resources of the Gouvernement du Québec as well as its obligations. It shows the net debt from which the net value of non-financial assets must be subtracted to determine the accumulated deficit.

  • A consolidated statement of change in net debt, which presents the combined effect on the net debt of the results for the fiscal year, changes due to non-financial assets, items charged directly to accumulated deficits and various restatements, where applicable.  

  • A consolidated statement of cash flow, which provides information on the Government's liquid assets generated by or used for operating, investment, fixed asset investment, and financing activities.

  • Notes and appendices, which provide additional information on the items that make up the various consolidated statements and which are an integral part of the consolidated financial statements. They also include a summary of the main accounting policies used in preparing the consolidated financial statements and a consolidated statement of operations by reporting sector.


The report of the Auditor General of Québec presents his opinion on the consolidated financial statements. 


Volume 2 - Revenue, appropriations, expenditure and investments of the Consolidated Revenue Fund and financial information on the special funds of the Gouvernement du Québec 


Volume 2 is divided into three sections. The first two sections report on the operations of entities whose revenue is cashed into the Consolidated Revenue Fund or the Health Services Fund and entities whose operating activities are paid for out of these funds using appropriations allotted by Parliament. Such entities include Government departments, budget-funded agencies, the National Assembly and persons designated by it, and other portfolios. The third section presents summary financial information on the special funds and the sinking funds.


  Glossary



The following terms are used in the section "Analysis of the financial statements" and throughout the financial statements contained in this volume.


Accrual basis of accounting 

An accounting method that involves taking into account when revenue is earned and expenditures are incurred in determining an entity's net results, without considering the moment the transactions were settled through cash receipts or disbursements or in any other manner.


Advance borrowings 

Borrowings made by the Consolidated Revenue Fund during a fiscal year that will be used to meet the financial requirements of the next fiscal year.


Budget balance 

The budget balance is defined by the Balanced Budget Act (R.S.Q., c. E-12.0001), as amended by the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009, c. 38).


The budget balance for a given fiscal year is equal to the difference between revenue and expenditure as determined in conformity with the Government's accounting policies.

  • As prescribed in section 2 of the Act, the budget balance does not include the revenue and expenditure recorded for the Generations Fund and certain retroactive adjustments to revenue from Government enterprises.

  • The budget balance is generally determined by taking into account the entries posted directly to accumulated deficits, except in the case of the exceptions provided for in section 2.1 of the Act.

  • The budget balance is increased by any amount needed from the stabilization reserve to maintain a balanced budget.


Budget cycle 

The budget cycle is defined by two main principles: 

  • planning revenue and expenditure through the publication of the Budget Speech and the tabling of the Expenditure Budget; and

  • monitoring changes in revenues and implementing the expenditure budget.


  Glossary (cont'd)


Consolidated Revenue Fund 

The Consolidated Revenue Fund consists of funds collected or received from various sources and over which Parliament has a right of allocation. The fund is constituted by the National Assembly, persons designated by the National Assembly, departments, and the budget-funded agencies listed in Schedule 1 of the Financial Administration Act.


Consolidation methods

Line-by-line consolidation method 

The accounts of the Consolidated Revenue Fund and the other entities included in the Government's reporting entity, other than Government enterprises and organizations of the health and social services and education networks, are harmonized according to the Government's accounting policies and combined, line by line. Inter-entity transactions and balances are eliminated.


Modified equity method 

Investments in Government enterprises and the net investment in the health and social services and education networks are recorded using this method. 


In the case of enterprises, investments are recorded at cost, which is adjusted annually by the Government's share in the results of these enterprises, with an offsetting entry to revenue, and in the other components of their comprehensive income, with an offsetting entry to accumulated deficits. The cost of investments is reduced by declared dividends. This method requires no harmonization of the accounting policies of enterprises with those of the Government.


In the case of organizations of the health and social services and education networks, their net equity representing the total of their financial and non-financial assets less their liabilities, is recorded as a component of the net investment in the health and social services and education networks. The annual surplus or deficit of the organizations is recorded in the expenditures of the mission concerned. This consolidation is done on the basis of the financial statements of the organizations, after adjusting to eliminate certain material differences between their accounting policies and those of the Government.


Debt representing accumulated deficits

The debt representing accumulated deficits corresponds to the debt relating to the accumulation of deficits over prior fiscal years.


  Glossary (cont'd)


Derivative instruments 

Instruments whose value fluctuates depending on an underlying interest, regardless of whether the underlying interest is actually held or issued.


Financial assets 

Assets that could be allocated to repaying existing debts or to funding future activities and that are not intended to be consumed in the normal course of the Government's activities.


Financial instruments 

Liquid assets, equity securities in an entity, or contracts that are both a source of financial assets for one of the two contracting parties and a source of financial liabilities or equity instruments for the other contracting party.


Generations Fund

The Generations Fund began operations on January 1, 2007 under the Act to reduce the debt and establish the Generations Fund. Under this Act, the Minister of Finance deposits the amounts constituting the fund with the Caissde dépôt et placement du Québec. The fund is used exclusively to repay the Government's debt. 


Government accounting policies 

The Government's accounting policies define how financial transactions are recorded in its books and adequately reported to the general public. These policies were enacted by a decision of the Conseil du trésor.


Gross debt

Gross debt corresponds to the sum of debts before deferred foreign exchange gains (losses) and the liability regarding pension plans and other employee future benefits. The balance of the Generations Fund is subtracted from this amount. Advances from the Financing Fund to Government enterprises and entities not included in the Government's reporting entity are also charged against this amount.


Gross domestic product (GDP)

The value of all goods and services produced within the geographical limits of a country or a territory during a given calendar year.


  Glossary (cont'd)

Indicators

Tools of measurement that make it possible to monitor and assess the attainment of an objective, the implementation of a strategy or the accomplishment of a task or an activity.


Missions

The basic activity areas of a government that constitute its raison d'être. In Québec, there are six missions: Health and Social Services, Education and Culture, Support for Individuals and Families, Economy and Environment, Administration and Justice, and Debt Service.


Net debt

Net debt corresponds to the difference between the Government's financial assets and its liabilities. It consists of accumulated deficits and non-financial assets.


Net financial requirements

Net total cash and cash equivalents required for operating, investment and fixed asset investment activities.


Non-financial assets

Assets that do not normally generate cash capable of being used to repay existing debts.


Own-source revenue 

Total own-source revenue consists of revenue from income and property taxes, consumption taxes, duties and permits, miscellaneous revenue, Government enterprises and the Generations Fund.


Reporting entity 

The Government's reporting entity encompasses the financial transactions of the National Assembly, persons designated by the National Assembly, departments and any organizations, funds and enterprises under the Government's control. Control is defined as the power to direct the financial and administrative policies of an entity, such that its activities provide the Government with expected benefits or expose it to a risk of loss.


Retirement Plans Sinking Fund (RPSF)

Under the Financial Administration Act, the Minister of Finance may make long-term investments by depositing money from the Consolidated Revenue Fund with the Caisse de dépôt et placement du Québec, up to an amount equal to the sums recorded as the pension plans liability, in order to create a sinking fund to provide for the payment of all or part of the benefits awarded under these plans.

  Glossary (cont'd)


Total debt 

The Government's total debt, a concept used for the purposes of the Act to reduce the debt and establish the Generations Fundconsists of the debt contracted on financial markets, excluding advance borrowings and deferred exchange gains or losses, and the net pension plans liability minus the amounts accumulated in the Generations Fund. 

  • The Retirement Plans Sinking Fund, an asset created in order to pay the pension benefits of public and parapublic sector employees, is subtracted from the pension plans liability. 

  • The debt to fund the health and social services and education networks, the debt to fund the work of municipal bodies and the debt resulting from the change in the status of organizations during the December 2007 accounting reform are excluded from the total debt.


Transfer 

Funds transferred by a government to an individual, an organization or another government, on account of which the government that makes the transfer:

  • does not receive any goods or services in return, contrary to what occurs in purchase/sale transactions;

  • does not plan to receive income, as it would with an investment.

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ANALYSIS


OF THE

FINANCIAL STATEMENTS





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1.    Highlights for the 2008-2009 fiscal year


Consolidated operations

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statements, p. 69


(1)    Including $742 million in Generations Fund revenue.

(2)    Forecast investment income of $735 million for Financement-Québec and the Corporation d'hébergement du Québec, presented in the Budget under own-source revenue, has been reclassified net of expenditure to make the presentation consistent with that of actual results.

(3)    Including $587 million in Generations Fund revenue.


  • In the 2008ߛ2009 Budget, the Government committed itself to maintaining a balanced budget.

  • Accordingly, the anticipated annual deficit of $628 million was to take into account:

  • the allocation of $742 million in revenue to the Generations Fund; and

  • the use of part of the budgetary reserve, which has since become the stabilization reserve, totalling $1 370 million;

  • which led to a zero budget balance for the purposes of the Balanced Budget Act.

  • Actual results show that a balanced budget was maintained.

  • However, the annual deficit was $630 million higher than forecast, standing at $1 258 million:

  • A sum of $587 million was allocated to the Generations Fund.

  • Therefore, to achieve a zero budget balance for the purposes of the Balanced Budget Act, $1 845 million was used from the stabilization reserve, or $475 million more than anticipated in the Budget.

  1.    Highlights for the 2008-2009 fiscal year (cont'd)


  • In addition, taking other transactions into account, particularly the allocation of a residual surplus from fiscal 2006-2007 and a payment to the Generations Fund, the stablization reserve balance, which amounted to $2 301 million as at March 31, 2008, stood at $433 million as at March 31, 2009.

  • In the March 13, 2008 Budget, it was forecast that the balance of the stabilization reserve would be $447 million as at March 31, 2009. 

  • Total revenue was $68 541 million, or $448 million less than anticipated in the Budget. It was also $203 million less than in fiscal 2007-2008.

  • Consolidated expenditure amounted to $69 799 million, or $182 million more than forecast. It was also $2 705 million higher than in the previous fiscal year.

  • These differences between actual results and the 2008-2009 Budget can be explained primarily by the rapid downturn in economic conditions in late 2008 and early 2009, which led to a substantial deterioration in the Government's financial balances.

  • Real gross domestic product (GDP) for the 2008 calendar year grew by 1.0%, whereas the 
    2008-2009 Budget forecast an increase of 1.5%.

  • A decrease of 13.3% was recognized for corporate tax revenue, leading to tax receipts that were $415 million less than anticipated in the Budget.

  • Additional actions were announced in this regard in the Economic Statement of January 14, 2009, including: 

  • new measures to support the economy and employment, in particular the introduction of a refundable tax credit for home improvement and renovation and a contribution of $1 billion to the Société générale de financement du Québec for investing in Québec businesses;

  • improvement of the 2008-2013 Québec Infrastructures Plan. 


  2.    Overview of the 2008-2009 Budget 


In the 2008-2009 Budget, the Government committed itself to maintaining a balanced budget. 


Own-source revenue, excluding that from Government enterprises and that of the Generations Fund, was expected to grow by 0.1%. This weak growth, which was less than the rate of economic growth, was attributed essentially to the impact of the tax reductions announced in previous budgets, particularly the personal income tax reduction announced in the 2007-2008 Budget.


Revenue from Government enterprises was expected to fall by 8.5%. This decline, compared with the results achieved in 2007-2008, was explained mainly by the non-recurrence of a portion of the profits made by Hydro-Québec the previous yearThese additional earnings stemmed from growth in electricity sales. Loto-Québec showed a decrease in profits for 2008-2009, related in particular to the drop in video lottery machine revenue following the implementation of the reconfiguration plan to reduce the number of machines in operation.


Federal government transfer revenue was expected to climb by 3.2% in 2008-2009, mainly because of an increase in Québec's equalization entitlements. 


The 2008-2009 Budget projected that program spending would grow by 4.2%. This forecast presented a growth rate that was more than that of nominal GDP, estimated at 3.2%.


The Government continued to include health and education among its main priorities. The Budget Speech of March 13, 2008 announced an increase of more than $1.3 billion in the health budget and the addition of $612 million to the education budget. For fiscal 2008-2009, the spending forecasts for the Ministère de la Santé et des Services sociaux and the Ministère de l'Éducation, du Loisir et du Sport were $25.5 billion and $14.0 billion respectively.


The cost of debt service was expected to fall by 1.4%.  This change was attributed primarily to the decline in interest rates.


The 2008-2009 Budget also forecast that the revenue of the Generations Fund would reach $742 million, without taking into account the additional payment from the stabilization reserve. This revenue, which is recorded in the Government's financial statements, is not included, however, in the calculation of the budget balance for the purposes of the Balanced Budget Act


  3.    Risks and uncertainties 

The following factors are elements of risk and uncertainty that are not directly dependent on the Government but that can cause actual results to differ from forecast results:

  • the economic forecasts the Government uses to determine its annual budgetary revenue, particularly changes in economic growth, employment and the Consumer Price Index. For example, a 1% difference in nominal GDP has an impact of about $500 million on the Government's own-source revenue;

  • the level of program spending, whose cost is related to the economic situation. For example, changes in the labour market affect the cost of employment assistance and income security programs. Similarly, in the health sector, the aging of the population raises the risk of cost overruns for medication and public services;

  • the economic, taxation and population data the Government uses to determine revenue from federal government transfers, as well as the negotiations carried out regularly with the federal government. These data and negotiations can both affect federal government transfer revenue; 

  • unexpected situations such as work stoppages, natural catastrophes, etc.;

  • fluctuations in interest rates and in the value of the Canadian dollar in relation to other currencies that have an impact on the cost of financing;

  • the risk that a financial intermediary will default on his contractual obligations (credit risk);

  • certain claims and lawsuits the Government faces with are presented in Note 12 (p. 111) of the consolidated financial statements;

  • changes in accounting policies in Canada and internationally.

The consolidated financial statements also set forth in Note 2 (p. 85) the uncertainties to which the estimates needed to prepare them are subject.


To reduce its exposure to risk, the Government develops management strategies for some of these variables. With the help of economic, fiscal and budgetary policies, the Government has an influence on its revenue and expenditure (other than debt service) by: 

  • using forecasts that reflect the consensus of forecasters;

  • monitoring and preparing monthly reports on its budgetary revenue and expenditure;

  • and, more generally, implementing economic support measures.

  3.    Risks and uncertainties (cont'd) 


  • A government cannot prevent a recession single-handedly. However, it has the necessary means to play a stabilizing role in order to offset the effects of an economic slowdown and speed up the recovery.


In addition, financing policies also lead the Government to have an impact on its debt service through various strategies, as described in detail in Note 8 (pp. 104-105) of the consolidated financial statements.


  4.    Allocation of the annual surplus


Budget balance


The Gouvernement du Québec adopted legislation for maintaining a strict budget balance yet allowing some flexibility in order to deal with important events that might affect financial balances. 


Despite the fact that the deficit reached $1 258 million and that the Generations Fund was allocated an additional $587 million, the budget balance was balanced by using $1 845 million from the stabilization reserve.


Budget balance

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

(1)    The budget balance was determined on the basis of the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform, adopted in September 2009.

(2)     The budget balance was determined on the basis of the Balanced Budget Act, as at March 31 of the fiscal year concerned.

(3)    This amount includes an additional surplus of $484 million for fiscal 2007-2008, allocated to the budgetary reserve in the 2009-2010 Budget Speech.


  4.    Allocation of the annual surplus (cont'd)


Generations Fund


In the March 13, 2008 Budget, the Government estimated that the revenue of the Generations Fund would be $742 million in 2008-2009.  Ultimately, the fund's revenue amounted to $587 million, or $155 million less than forecast, mainly due to losses in value recorded on participation deposits. An additional payment of $132 million, taken from the stabilization reserve and arising from profits on the sale of assets of the Société immobilière du Québec in 2007-2008, was allocated to the Generations Fund. The sums accumulated in the fund reached $1 952 million as at March 31, 2009.


Revenue

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statementsp. 151



Change in fund balance

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statementsp. 152

  4.    Allocation of the annual surplus (cont'd)


Stabilization reserve


Under the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009. c. 38) adopted in September 2009, the Government created a stabilization reserve to facilitate its multi-year planning and, subsidiarily, to make it possible to pay sums into the Generations Fund. The provisions in the Act pertaining to this reserve have been in effect since April 1, 2006. 


This Act repealed the Act to establish a budgetary surplus reserve fund (R.S.Q., c. R-25.1). Accordingly, the transactions of the budgetary reserve carried out between April 1, 2006 and the adoption of the Act have become those of the stabilization reserve. In addition, the $109-million surplus balance recognized for fiscal 2006-2007 that had not been allocated to the budgetary reserve was allocated to the stabilization reserve pursuant to the Act.


The stabilization reserve is earmarked for maintaining a balanced budget; its balance is reduced by the amount needed to attain this objective. In addition, the Government may, on the conditions it determines, use the stabilization reserve to pay sums into the Generations Fund. The balance of the reserve is reduced by the amount paid into the fund.


The sums credited annually to the stabilization reserve correspond to the amount of the surplus recognized for each fiscal year, i.e. a budget balance above zero, established in accordance with the provisions of the Balanced Budget Act


The stabilization reserve stood at $433 million as at March 31, 2009, and it is slated to be used in 
2009-2010 to reduce the deficit for that fiscal year.


  4.    Allocation of the annual surplus (cont'd)


Stabilization reserve (cont'd)


Stabilization reserve

AS AT MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statements, p. 176

(1)    This amount includes an additional surplus of $484 million for fiscal 2007-2008, allocated to the budgetary reserve in the 2009-2010 Budget Speech.

(2)    The Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform, adopted in September 2009, established the reserve balance at zero as at April 1, 2006. In addition, the $109-million surplus balance recognized for fiscal 2006-2007 that had not been allocated to the budgetary reserve was allocated to the stabilization reserve pursuant to the Act.


  5.    Variance analysis 


Consolidated summary of operations

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statements, p. 69

  • Certain 2008 figures have been reclassified for consistency with the presentation adopted in 2009.

  • Forecast investment income of $735 million for Financement-Québec and the Corporation d'hébergement du Québec, presented in the Budget under "Miscellaneous", has been reclassified net of the expenditures of the "Health and Social Services" and "Education and Culture" missions  to make the presentation consistent with that of actual results. 

  • Including the contingency reserve of $200 million.


  5.    Variance analysis (cont'd) 


5.1    Comparison of actual results with the Budget


The Budget Plan presents projected results on a different basis from that used for the consolidated statement of operations. In the financial statements, the revenue and expenditure of agencies, special funds and specified purpose accounts are added line by line to those of the Consolidated Revenue Fund. In the Budget Plan, the forecasts are based on the revenue and expenditure of the Consolidated Revenue Fund, plus the net results of agencies, special funds and specified purpose accounts as a whole. The tables in this section present the results on a sectoral basis and aim to facilitate comparison of the data in the consolidated financial statements with those in the Budget.


Consolidated revenue

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

(1)    Forecast investment income of $735 million for Financement-Québec and the Corporation d'hébergement du Québec, presented in the Budget under own-source revenue, has been reclassified net of expenditure to make the presentation consistent with that of actual results.


  5.    Variance analysis (cont'd)


5.1    Comparison of actual results with the Budget (cont'd)


Consolidated revenue (cont'd)


Own-source revenue - Consolidated Revenue Fund

In the Budget, the own-source revenue of the Consolidated Revenue Fund, excluding that from Government enterprises and that of the Generations Fund, was forecast to grow by 0.1%. Since this revenue was $412 million less than forecast in March 2008, a decrease of 1.3% was observed instead, particularly because of the decline of nearly 13.3% in corporate tax revenue. 


Consolidated own-source revenue

Total own-source revenue was $224 million less than anticipated in the 2008-2009 Budget since the own-source revenue of agencies, special funds and specified purpose accounts was $188 million more than the figure announced in the Budget. This can be attributed notably to the $195 million in revenue of Immobilière SHQ, whose status was revised following the accounting reform for the purpose of consolidating this organization line by line subsequent to the preparation of the March 2008 Budget. 


Revenue from Government enterprises

Revenue from Government enterprises was supposed to decline by 8.5%, primarily on account of the non-recurrence of part of the profits made by Hydro-Québec the previous year. In the end, a decrease of 0.2% was observed since the earnings of Hydro-Québec, Loto-Québec and the Société des alcools du Québec for fiscal 2008-2009 all surpassed the Budget forecast. The increase in Hydro-Québec's earnings stems mainly from the growth in its net sales of electricity outside Québec.


Generations Fund revenue

The 2008-2009 Budget forecast that the revenue of the Generations Fund would reach $742 million, without any additional payments from the stabilization reserve. This revenue was lower than expected since investment income was down $152 million. However, an additional payment of $132 million was made into the fund from the stabilization reserve.


  5.    Variance analysis (cont'd)


5.1    Comparison of actual results with the Budget (cont'd)


Consolidated revenue (cont'd)


Consolidated federal government transfers

The total for federal government transfers was $457 million less than forecast in the 2008-2009 Budget. This decrease can be explained by delays in planned municipal infrastructure work funded in part by federal transfers, particularly through the Société de financement des infrastructures locales du Québec. The federal government transfers thus deferred represent approximately $230 million. Delays also occurred in activities related to the implementation of the plan to computerize the health and social services network, thereby deferring anticipated transfers of $83 million.


Consolidated expenditure (excluding debt service)

FISCAL YEAR ENDED MARCH 31, 2009

(In millions of dollars)

(1)    Certain 2008 figures have been reclassified for consistency with the presentation adopted in 2009.

(2)    Program spending of $56 948 million was increased by the contingency reserve of $200 million.

(3)    Forecast investment income of $735 million for Financement-Québec and the Corporation d'hébergement du Québec, presented in the Budget under own-source revenue, has been reclassified net of expenditure to make the presentation consistent with that of actual results.


  5.    Variance analysis (cont'd)


5.1    Comparison of actual results with the Budget (cont'd)


Consolidated expenditure (cont'd)


Program spending - Consolidated Revenue Fund

The 2008-2009 Budget forecast that Consolidated Revenue Fund program spending would grow by 4.2%. The actual growth was 6.8%, as spending outstripped the forecast in the 2008-2009 Budget by $1 402 million. This increase can be attributed mainly to:

  • the $414-million rise in spending with respect to the allowance for doubtful accounts at Revenu Québec, which is related to the increase in taxes receivable following the stepping up of tax recovery activities to the more difficult economic conditions;

  • the $220-million climb in spending in respect of the allowance for losses on guaranteed financial initiatives of Investissement Québec, which is due in particular to the higher financial risks associated with certain initiatives in effect;

  • the transfer of $200 million to a trust by the Ministère de l'Éducation, du Loisir et du Sport in accordance with the Government's commitment to ensure that the Université du Québec à Montréal (UQAM) is not affected by the financial impact of the Îlot Voyageur project;

  • An allowance of $200 million was included in the results of the networks in 2007-2008 in regard to this commitment. This explains for the most part the surplus realized by the networks that year. The education network recorded the payment from the department in its revenue for 
    2008-2009, while the expenditure was recorded under the allowance the previous year. 

  • the increase in the expenditures of the Ministère de la Santé et des Services sociaux and the Ministère de l'Éducation, du Loisir et du Sport to cover additional spending of $195 million incurred to harmonize the accounting policies for fixed assets of the health and social services and education networks;

  • the additional contribution of $132 million paid by the Government during the fiscal year in respect of 2006-2007 to 2008-2009, in accordance with its commitments to the Société de financement des infrastructures locales du Québec;

  • the $88-million increase in the budget envelope of the Ministère de la Santé et des Services sociaux to cover all the additional costs of health programs;

  • the $63 million in costs stemming from the general election held in December 2008. 

  5.    Variance analysis (cont'd)

5.1    Comparison of actual results with the Budget (cont'd)


Consolidated expenditure (cont'd)


Consolidated expenditure 

Total consolidated expenditure excluding debt service exceeded the Budget forecast by $788 million. Acting as a counterweight to the additional spending of the Consolidated Revenue Fund mentioned above, the following factors helped to offset these overruns:

  • the deferral of certain municipal infrastructure work receiving funding under assistance programs of the Société de financement des infrastructures locales du Québec, which offset the decline in federal government transfers mentioned earlier; 

  • the revision of the schedule for implementing the Green Fund's Climate Change Action Plan (CCAP), which deferred certain planned expenditures until next year.


Consolidated debt service 

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

Source: Consolidated financial statements, p.138 and pp. 178-179

(1)    Certain 2008 figures have been reclassified for consistency with the presentation adopted in 2009.


Debt service

In the March 2008 Budget, the cost of debt service of the Consolidated Revenue Fund was expected to fall by 1.4%. Actual results show a decrease of 7.4%, since debt service was $403 million less than anticipated. Another decrease of $203 million was observed for agencies and special funds. Overall, debt service was revised downward because interest rates were lower than forecast in the 2008-2009 Budget.

  5.    Variance analysis (cont'd)

5.2    Comparison of actual results with the previous fiscal year 

Consolidated revenue


The Government's total revenue for fiscal 2008-2009 was down $203 million from the previous fiscal year, posting a decrease of $551 million in own-source revenue and an increase of $348 million in federal government transfers.


The decline of $551 million, or 1.0%, in own-source revenue is due in particular to the following factors:

  • a $1 049-decrease in revenue from income and property taxes, caused primarily by:

  • in the case of individuals, the raising of taxable income thresholds and the indexation of non-refundable tax credits;

  • in the case of corporations, the economic slowdown and the impact of the fiscal measures announced in the 2007-2008 and 2008-2009 budgets;

  • a $449-million climb in revenue from consumption taxes, stemming notably from 4.7% growth in household personal spending during the 2008 calendar year;

  • a $12-million drop in revenue from Government enterprises;

  • This difference can be explained mainly by the increase in the allowances for losses of the Société générale de financement du Québec, whose deficit in 2008-2009 amounted to $245 million. This decline in revenue was partly offset by the $172-million rise in Hydro-Québec's net earnings, stemming notably from the growth in net sales of electricity outside Québec.

  • a $138-million increase in the revenue of the Generations Fund;

  • The water-power royalties collected by Hydro-Québec were paid in full to the Generations Fund in 2008-2009. During the first nine months of the previous fiscal year, only half of the royalties were paid.

The growth of $348 million, or 2.4%, in federal government transfers is due in particular to a 
$868-million rise in the level of equalization entitlements.

  • This increase was partly offset by the non-recurrence of revenue from trusts set up by the federal government for, among other things, patient wait time reduction, post-secondary education infrastructure and affordable housing.

  5.    Variance analysis (cont'd)

5.2    Comparison of actual results with the previous fiscal year (cont'd)

Consolidated expenditure


The increase of $3 326 million, or 5.7%, in expenditure excluding debt service can be attributed primarily to the following changes:

  • rise of $1 650 million, or 6.6%, in the "Health and Social Services" mission. This increase results notably from:

  • growth of $436 million in labour costs;

  • a $434-million rise in the cost of medical services offered, mainly because of the increase in the number and average cost of medical procedures performed;

  • a $215-million increase in the operating costs of public and private institutions under agreement, including expenses related to new facilities and equipment;

  • growth of over 10% in the number of prescriptions made out to people aged 65 or over, representing $169 million;

  • a $87-million climb in the cost of medication and medical supplies;

  • the $72-million impact of harmonizing the accounting policies of public health institutions with those of the Government;

  • an increase of $581 million, or 4.1%, in the "Education and Culture" mission. This growth stems in particular from: 

  • a $248-million rise in system costs, resulting mainly from wage indexation and certain other growth factors; 

  • a $93-million increase in conditional grants to universities;

  • payments totalling $84 million to universities, as part of the reinvestment of a total of $112 million for the 2008-2009 school year, in accordance with the Government's commitment to allocate the increase in federal transfers to post-secondary education;

  • an increase of $387 million, or 4.8%, in the "Economy and Environment" mission. This increase is due notably to:

  • the impact of roughly $179 million for upgrading and maintaining the road network;

  • growth of $124 million in spending with respect to the allowance for losses on the guaranteed financial initiatives of Investissement Québec, resulting in particular from the higher financial risks associated with certain initiatives in effect;

  5.    Variance analysis (cont'd)


5.2    Comparison of actual results with the previous fiscal year (cont'd)


Consolidated expenditure (cont'd)


  • a rise of $99 million, or 1.8%, in the "Support for Individuals and Families" mission. This increase stems mainly from family assistance measures, particularly the development of 1 813 new spaces in early childhood education and private day care centres;

  • an increase of $609 million, or 10.9%, in the "Administration and Justice" mission. This growth results notably from: 

  • the $129-rise in spending for the allowance for doubtful accounts at Revenu Québec, which is related to the increase in taxes receivable following the stepping up of tax recovery activities.

  • a $95-million rise in financial assistance paid by the Société de financement des infrastructures locales du Québec, primarily for public transit infrastructures;

  • $63 million in costs stemming from the general election held in December 2008. 


Lastly, debt service spending was down $621 million from 2007-2008, posting a decrease of $517 million in the debt service of the Consolidated Revenue Fund and of $104 million in the debt service of agencies and special funds. This decline is due essentially to the drop in interest rates in 2008-2009 compared with 2007-2008.

  6.    Analysis of main trends 

Budget balance


Change in budget balance

(in millions of dollars)


(1) Budget balance for the purposes of the Balanced Budget Act in effect on March 31 of the fiscal year concerned.


Since fiscal 1999-2000, the goal of achieving a balanced budget has been achieved. The Government has succeeded in balancing its revenue and expenditure.


Robust tax receipts, related to sustained economic growth, additional profits by Hydro-Québec and the thorough reform of the equalization program in regard to federal government transfers enabled the Québec government to post substantial surpluses in fiscal 2006-2007 and 2007-2008. The effects of the reform of the equalization program were felt primarily in the 2007-2008 fiscal year.


As a result of these surpluses, the Government was able to accumulate $2.4 billion to the stabilization reserve. The difference between the consolidated surplus (deficit) in the Public Accounts and that for the purposes of the Balanced Budget Act depends in fact on the amounts allocated to the reserve (or used from it). 

  6.    Analysis of main trends (cont'd)


Budget balance (cont'd)


However, this trend was reversed during the past fiscal year because of the worldwide economic recession. The recent economic downturn led to a substantial deterioration in the Government's financial balances. Québec incurred a consolidated deficit in 2008-2009 and this situation should continue in the coming years. According to the Government's plan, budget balance should be restored by 2013-2014. However, it is important to note that for the purposes of the Balanced Budget Act a balanced budget was maintained in 2008-2009 by using a large share of the balance accumulated in the stabilization reserve.

  6.    Analysis of main trends (cont'd)

Revenue


Change in consolidated revenue

REVENUE BY SOURCE

(in millions of dollars)


(1) Including revenue from duties and permits, miscellaneous revenue and Generations Fund revenue.


The Government's consolidated revenue rose from $46.8 to $68.5 billion from fiscal 1999-2000 to 
2008-2009. During that period, the average annualized growth of this revenue was 4.3% while that of GDP was 4.1%.


Total revenue grew constantly, except in 2001-2002 and 2008-2009, when it declined because of the decreases posted in income and property tax revenue.


Indeed, revenue from income and property taxes fell in fiscal 2001-2002 and 2002-2003. This decrease can be attributed to the fiscal measures adopted at the time, particularly the general reduction in personal income tax rates and the automatic indexation of the tax system as of 2003, and it became more pronounced with the economic slowdown that followed the events of September 11, 2001. Subsequently, tax revenue began to climb again, but then fell once more in 2008-2009 due notably to the raising of 

  6.    Analysis of main trends (cont'd)


Revenue (cont'd)


Change in consolidated revenue (cont'd)


taxable income thresholds, the indexation of non-refundable personal income tax credits and the impact of the fiscal measures announced in the 2007-2008 and 2008-2009 budgets in regard to corporate taxes.


Revenue from consumption taxes has risen continually since the 1998-1999 fiscal year. Its average annual growth rate has been 4.7% and it is linked to sustained growth in retail sales.


Revenue from federal government transfers has increased substantially in recent years on account of improvements to health transfers and the equalization program. 


As for revenue from Government enterprises, it peaked at $6 216 million in fiscal 2006-2007, before sums were allocated to the Generations Fund. It is worth recalling that Hydro-Québec realized exceptional earnings in the course of that fiscal year on account of the profits it reaped on the sale of its interest in certain foreign enterprises. An initial payment of $500 million, out of these surplus earnings, was made to the Generations Fund. 


Lastly, other revenue grew substantially from 2005-2006 to 2007-2008 owing to, among other things:

  • penalties and interest charged by Revenue Québec, given the considerable increase in assessments made in recent years as a result of efforts to combat tax evasion;

  • the addition of new line-by-line consolidated entities;

  • revenue from blood products sold by Héma-Québec to hospital centres (such products used to be subsidized); 

  • the exceptional non-recurring gain realized in 2008 by the Société immobilière du Québec on the sale of three of its buildings;

  • the addition of Generations Fund revenue as of January 1, 2007. 

  6.    Analysis of main trends (cont'd)


Expenditure 


Change in consolidated expenditure

EXPENDITURE BY MISSION

(in millions of dollars)


(1)  Including the "Economy and Environment", "Support for Individuals and Families", and "Administration and Justice" missions.


Between 1998-1999 and 2008-2009, the Government's consolidated expenditure increased by $23.0 billion, from $46.8 billion to $69.billion. The average annual growth of this spending was 4.5%, while that of GDP was 4.1%. Spending for all missions rose.


The expenditures of the "Health and Social Services" and "Education and Culture" missions climbed constantly, and this trend was even more pronounced in the health sector. As at March 31, 2009, these expenditures accounted for 59.3% of consolidated expenditure and, of that share, 38.3% was for the "Health and Social Services" mission and 21.0% for the "Education and Culture" mission. This is a direct result of the fact that health and education remain among the Government's top priorities.


The expenditures of all the other missions have also grown substantially in recent years. 

  6.    Analysis of main trends (cont'd)


Expenditure (cont'd)


Change in consolidated expenditure (cont'd)


This increase is due to many factors, particularly:  

  • the growth in financial support for early childhood education centres and other day care services;

  • the creation of new government agencies, notably La Financière agricole du Québec, to support and promote the development of the agricultural and agrifood sector, the Société de financement des infrastructures locales du Québec, to provide municipal bodies with financial assistance for carrying out their infrastructure projects, and the Green Fund, to support the implementation of measures fostering sustainable development and offer financial support to organizations active in the environment field;

  • the rise in the allowance for doubtful accounts, owing to the increase in assessments made by Revenu Québec;

  • the growth in spending on municipal affairs and the regions, particularly to facilitate access to adequate housing conditions for all Quebecers and to provide the necessary funding for building water supply and sewer systems and for treating municipal wastewater in all Québec regions;

  • the increase in the budgets allocated to public safety, notably to cover the costs related to the Sûreté du Québec, correctional services and policing affairs;

  • the addition of line-by-line consolidated entities following the change in status of certain organizations, particularly the Société de l'assurance automobile du Québec and the Société des établissements de plein air du Québec;

  • the increase in funds invested in the construction and maintenance of the road network, as well as in transportation systems.

As for spending on debt service, it increased only slightly despite the growth in the long-term debtThis can be explained in particular by favourable fluctuations in interest rates and in the value of the Canadian dollar.

  6.    Analysis of main trends (cont'd)


Fixed assets


Change in the net book value of fixed assets

(in millions of dollars)



The net book value of fixed assets has more than tripled in recent years, rising from $6.7 billion as at March 31, 2000 to $21.billion as at March 31, 2009, or by $14.8 billion. This shows that annual investments in fixed assets have outstripped the depreciation of these assets. The remaining useful life of fixed assets is thus better today than it was several years ago.


Complex networks accounted for 57% of the total net book value of fixed assets as at March 31, 2009. They consisted mainly of net investments in road infrastructures by the Road Network Preservation and Improvement Fund. The increasingly substantial increase in the value of these networks clearly reflects the Government's will to improve road network infrastructures and accelerate their upgrading.


The considerable growth in the net value of fixed assets in 2006-2007 stems essentially from organizations whose status was changed following the accounting reform, from that of a Government enterprise to that of a line-by-line consolidated, non-budget-funded body, particularly the Corporation d'hébergement du Québec and Immobilière SHQ. Therefore, this addition of $3.8 billion to the value of fixed assets was non-recurring.


  6.    Analysis of main trends (cont'd)


Gross debt


Change in gross debt

COMPONENTS FINANCED BY THE GROSS DEBT

(in millions of dollars)


(1)     For the period before the reform, the balance corresponds to the total debt.

(2)    Also includes changes in the gross debt caused by factors other than changes in non-financial assets and investments, i.e. primarily changes in financial assets and liabilities related to operations.


The gross debt consists of debts before deferred foreign exchange gains (losses) and the liabilities regarding pension plans and other employee future benefits, minus the balance of the Generations Fund. Advances from the Financing Fund to Government enterprises and to entities not included in the Government's reporting entity are excluded from this calculation. The gross debt stood at $102.1 billion as at March 31, 2000 and reached $159.5 billion as at March 31, 2009.


Three main components are financed by the gross debt, the main one of which is related to the accumulated deficits. Essentially, these deficits are the operating deficits accumulated over time.

  6.    Analysis of main trends (cont'd)


Gross debt (cont'd)


The second most important component financed by the debt is tied to investments, which include short-term investments, investments in Government enterprises and long-term investments. Investments in Government enterprises may be made through advances and direct capital outlays, and also by allowing these enterprises to keep a part of their profits for financing their own investments. Long-term investments consist of shares, capital outlays, loans, advances, bonds, and notes of entities not included in the Government's reporting entity.


The last component financed by the long-term debt is related to the acquisition of non-financial assets, primarily fixed assets. Since the 2006-2007 accounting reform, other non-financial assets have been added, such as the net investment in networks and, in much smaller proportions, inventories and prepaid expenses. The net investment in networks is essentially the loans made to the establishments of the health and social services and education networks to finance their fixed assets


It is interesting to note that it is the portion of the debt related to the accumulated deficit that has increased the least in recent years. The trend analysis shows that the increases in the debt arise mostly from the acquisition of fixed assets and investments.

  7.    Results of the indicator analysis


The financial indicator analysis aims primarily to clarify and explain the information contained in the financial statements, by measuring the state of the Québec government's finances not only in terms of the Government's financial position and the change in its financial position, but also against the backdrop of its global economic and financial environment. 


The Government presents 11 indicators to assess the state of its finances. These indicators are based on those published by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants (CICA) in statements of recommended practices.


Indicator 1: Assets (financial and non-financial) to total liabilities

This indicator illustrates the extent to which the Government finances its current operations through borrowings. A ratio of over 100% indicates that a surplus was accumulated in the past and that the value of the Government's financial and non-financial assets is higher than that of its liabilities. A ratio of less than 100% indicates that a deficit was accumulated in the past and that the value of the Government's financial and non-financial assets is lower than that of its liabilities. An upward ratio illustrates a favourable trend.


FINANCIAL AND NON-FINANCIAL ASSETS

(as a % of total liabilities)



The ratio of financial and non-financial assets to total liabilities was 33.8% in 1999-2000. After the accounting reform, it stood at 46.2% as at March 31, 2009. Taking the accumulated deficit into account, the value of assets was still lower than that of liabilities. However, a constant improvement in the ratio has been observed, showing that assets increasingly tend to climb at the same rate as liabilities. Over the past three years, borrowings have been used mainly to finance asset acquisitions.

   7.    Results of the indicator analysis (cont'd)

Indicator 2: Gross debt to total revenue

This indicator compares gross debt with the Government's revenue. A declining ratio indicates a decrease of the gross debt materiality.


GROSS DEBT 

(as a % of total revenue)



(1)    The percentages are calculated using the total debt.

(2)    The gross debt is reduced by pre-financing. 


This ratio improved considerably from 1999-2000 to 2005-2006, falling from 218.1% to 197.1%. The ratio rose with the 2006-2007 accounting reform, owing to the addition of the debt for financing establishments in the health and social services and education networks after they had been incorporated into the Government's reporting entity. The ratio stood at 220.9% in 2008-2009. The increase of the ratio in 2008-2009 is mainly due to the increase in the gross debt since total revenue remained roughly the same as the prior fiscal year. 


  7.    Results of the indicator analysis (cont'd)

Indicator 3: Expenditures by mission to total expenditure

This indicator illustrates the trend of Government spending for a particular mission over time. To ensure the sustainability of all programs, the growth of spending for one mission must not be too higher than that of total spending.


Expenditures by mission

(as a % of total expenditure)



While the expenses of the "Health and Social Services" mission grew at an average annual rate of 6.3% from 1999-2000 to 2008-2009, compared with 4.5% for total consolidated expenditure, the proportion of the mission's expenses in expenditures as a whole rose from 32.9% to 38.3%. This indicator reflects the growing importance of expenditures for the "Health and Social Services" mission and the Québec government's will to continue including this mission among its top priorities. It also demonstrates the Government's concern with regard to the increasingly important challenges posed by the aging of the population and by certain prevalent social problems. 


However, the share of total spending devoted to "Debt service" has fallen year after year, going from 15.7% as at March 31, 2000 to 11.6% at the end of fiscal 2008-2009. The average annual growth in debt service over the same period was only 1.1%. This can be attributed to favourable fluctuations in interest rates and in the value of the Canadian dollar, as well as to the control the Government has exerted over the growth of its debt in recent years. Therefore, the share of revenue available for the expenditures of missions other than "Debt service" has continued to increase.

   7.    Results of the indicator analysis (cont'd)

Indicator 3: Expenditures by mission to total expenditure (cont'd)


This indicator demonstrates that the proportion of expenditures devoted to the "Education and Culture" mission and "Other missions" has remained fairly stable throughout all of these years. 


In short, the fact that a smaller share of revenue went to "Debt service" over the past few years has made it possible to invest more in the "Health and Social Services" mission.

  7.    Results of the indicator analysis (cont'd)

Indicator 4: Gross debt to GDP

This indicator underscores the link between the Government's gross debt and the size of economy (GDP) which represents the source of revenue retained by the Government to finance its activities, including the payment of the debt service. If the ratio falls, it means a decrease in the gross debt materiality


GROSS DEBT

(as a % of GDP)


(1)    The percentages are calculated using the total debt.

(2)    The gross debt is reduced by pre-financing.


This ratio improved significantly from 2000 to 2006, falling from 48.4% to 43.6% as at March 31, 2006. The ratio rose with the 2006-2007 accounting reform, owing notably to the addition of the debt for financing establishments in the health and social services and education networks after they had been incorporated into the Government's reporting entity. However, it fell immediately the following fiscal year. The ratio climbed slightly in 2008-2009 mainly due to the increase in the gross debt. 

  7.    Results of the indicator analysis (cont'd)

Indicator 5: Debt representing accumulated deficits to GDP

This indicator shows the extent to which annual revenue has been insufficient to cover the annual cost of delivering services. It illustrates the degree of indebtedness that is tied to deficits accumulated for current operations during the past fiscal years. A debt representing accumulated deficits that grows at a rate below that of the growth of the economy in which the Government carries out its activities is a favourable situation.


DEBT REPRESENTING ACCUMULATED DEFICITS (1) (2)

(as a % of GDP)


(1)    Before taking into account the stabilization reserve.

(2)    Since 2006-2007, after taking into account Generations Fund revenue.


Since 1999, the indicator of the debt representing accumulated deficits to GDP has consistently improved, from 39.1% as at March 31, 2000 to 33.8% as at March 31, 2006. It stood at 32.3% as at March 31, 2009. This reduction of the ratio stems from the fact that a balanced budget was maintained in a context of sustained economic growth over that period. 

  7.    Results of the indicator analysis (cont'd)

Indicator 6: Program spending of the Consolidated Revenue Fund to GDP

This indicator makes it possible to compare the growth rate of Government spending over time with that of the economy. A decline in this indicator means that spending is growing less rapidly than the economy. Therefore, this indicator reveals the relative importance of the cost of public services in the economy.


PROGRAM SPENDING OF THE CONSOLIDATED REVENUE FUND

(as a % of GDP)


Program spending as a percentage of GDP has remained relatively stable over the past nine years, going from 18.0% in 1999ߛ2000 to 18.4% in 2007-2008It thus accounted for 18.1% of GDP on average over that period. However, in 2008-2009 the rate reached 19.3% because of the increase in program spending and the weak growth of GDP.

  7.    Results of the indicator analysis (cont'd)

Indicator 7: Debt service to total revenue

This indicator illustrates the extent to which the debt service represents a declining burden for the public finances. The lower the share of revenue devoted to paying interest on past borrowings, the greater the share that is left over for program spending.


DEBT SERVICE 

(as a % of total revenue)





From 1999-2000 to 2005-2006, the debt service to total revenue indicator declined considerably, from 15.7% to 12.6%. Since the accounting reform, this indicator has continued to fall, amounting to 11.9% in 2008-2009. Therefore, the share of revenue available for program spending is rising.


  7.    Results of the indicator analysis (cont'd)

Indicator 8: Net book value of fixed assets to the cost of fixed assets

This indicator shows the extent to which the estimated remaining useful life of tangible assets will enable the Government to supply its products and services in the future. 


NET BOOK VALUE OF FIXED ASSETS

(as a % of the cost of fixed assets)


The net book value to the cost of fixed assets indicator has risen significantly over the past 10 years, from 39.2% as at March 31, 2000 to 53.1% as at March 31, 2009. Although the improvement was constant over that period, it has been more pronounced in the past three years. This shows that annual investments in fixed assets have outstripped the depreciation of these assets. The remaining useful life of fixed assets is thus better today than it was several years ago, making it easier for the Government to deliver services.


  7.    Results of the indicator analysis (cont'd)

Indicator 9: Own-source revenue to GDP

This indicator shows the proportion of revenue generated by the economy, or the proportion of collective wealth that the Government collects for its own purposes, in the form of income tax and other taxes, user fees and other revenue derived from its enterprises in particular. The Government's own-source revenue actually includes all of its revenue, apart from transfers received from the federal government. The decline in this ratio over time tends to indicate a favourable situation.


OWN-SOURCE REVENUE

(as a % of GDP)



From 1999-2000 to 2001-2002, this ratio dropped steadily, from 19.1% of GDP to 17.5%. It then remained fairly stable until 2005-2006. The increase in the ratio to 18.9% in 2006-2007 was due in large part to Hydro-Québec's additional earnings, resulting from the sale of its interest in certain enterprises. Over the past two years, the ratio fell to a level similar to that from 2001-2002 to 2005-2006, thereby providing the Government with more leeway.


  7.    Results of the indicator analysis (cont'd)

Indicator 10: Transfers from the federal government to total revenue

Transfers received from the federal government comprise equalization payments, payments from transfers for health care and for post-secondary education and other social programs, and amounts transferred by the federal government under various cost-sharing agreements. This indicator measures the portion of the Québec government's revenue that is received from the federal government. 


FEDERAL GOVERNMENT TRANSFERS

(as a % of total revenue)


In 1999-2000, the proportion of federal transfers in total revenue was 13.9%, an historic low compared with the proportion of nearly 29% observed in 1983-1984. In 2000-2001 and 2001-2002, the proportion grew substantially, to 18.9%, and then it remained fairly stable until 2006-2007. In 2007-2008, the proportion of federal transfers in total revenue rose to 21.4% owing notably to a thorough reform of the equalization program. In 2008-2009, it increased slightly, to 22.0%.

  7.    Results of the indicator analysis (cont'd)

Indicator 11: Debt in foreign currency 


This indicator illustrates the sensitivity of the debt and the debt service to exchange rate fluctuations. A downward indicator means that the sensitivity decreases.


DEBT IN FOREIGN CURRENCY 

(as a % of gross debt) 



(1)    For the period before the accounting reform, the ratios are calculated using total debt plus pre-financing.


Since 1999, the proportion of the debt denominated in foreign currencies has fallen sharply, from 20.5% as at March 31, 2000 to 8.0% as at March 31, 2006. As at March 31, 2009, the ratio stood at 6.8%. This decrease over the past 10 years has made the debt service less sensitive to fluctuations in the Canadian dollar in relation to other currencies.


  APPENDIX

Financial statistics 

FISCAL YEAR ENDED MARCH 31

(in millions of dollars)

These tables present the trends observed over the past 12 years for several financial statement items. In addition, explanatory notes identify the changes made to previous financial statements. 


Historical data for financial statement items

Fical

year

Revenue (1)

Expendi-
ture 
(1)

(Deficit) or surplus

Financial assets

Liabilities

Net debt (2)

Non-financial assets (3)

Accumu-lated

deficit (4)

2008-2009

68 541   

69 799

  (1 258) (5)

53 532

(182 325)

(128 793)

30 767

(98 026)

2007-2008

68 744   

67 094

    1 650 (6)

49 016

(173 334)

(124 318)

30 147

(94 171)

2006-2007

65 361   

63 368

    1 993 (7)

47 732

(169 923)

(122 191) 

26 432

(95 759)

Before the reform of Government accounting (8)

2005-2006

60 017   

59 980

      37

40 355

(145 038)

(104 683)

12 984

(91 699)

2004-2005

56 885   

57 549

     (664)

39 258

(138 300)

(99 042)

11 818

(87 224)

2003-2004

54 530   

54 888

     (358)

35 962

(132 987)

(97 025)

10 735

(86 290)

2002-2003

52 225   

52 919

     (694)

37 071

(132 528)

(95 457) 

9 716

(85 741)

2001-2002

50 011   

50 939

     (928) (9)

34 332

(126 593)

(92 261)

8 161

(84 100)

2000-2001

50 628   

49 251

    1 377 (9)

38 620

(126 828)

(88 208) 

7 166

(81 042)

1999-2000

46 844   

46 814

      30

35 284

(124 170)

(88 886)

6 693

(82 193)

1998-1999

46 034   

45 908

      126

34 898

(123 359)

(88 461)

6 233

(82 228)

1997-1998

41 548   

43 740

  (2 192)

27 016

(115 420)

(88 404)

5 980

(82 424)


Explanatory notes

($M: millions of dollars)

(1)    Certain figures were reclassified for consistency with the presentation adopted in 2008-2009.

(2)    Net debt represents total liabilities minus financial assets, presented in the consolidated statement of financial position.

(3)    See Table A.1 (p. 59) for a breakdown of the annual change.

(4)    See Table A.2 (pp. 60-61) for explanations of the change in accumulated deficit based on factors other than the fiscal year surplus (deficit).

(5)    Does not take into account the $587 M allocated to the Generations Fund and the $1 845 M used from the stabilization reserve.

(6)    Does not take into account the $449 M allocated to the Generations Fund and the $1 201 M allocated to the budgetary reserve.

(7)    Does not take into account the $584 M allocated to the Generations Fund and the $1 300 M allocated to the budgetary reserve.

(8)    Caution must be applied in comparing the data for 2006-2007 and thereafter with those for prior years because of the impact of the December 2007 accounting reform 

(9)    Does not take the reserve of ($950 M) into account.


  APPENDIX

Financial statistics (cont'd)

Table A.1 - Breakdown of the annual change in non-financial assets

Fiscal year

Current year change

Restatements of the balance of
non
-financial assets

Total
change for fiscal year

Net book
value of fixed assets

Inventories and prepaid expenses

Net investment in the networks

Net book
value of fixed assets

Inventories and prepaid expenses

Net investment in the networks 

2008-2009

2 297

46

622

     (290) (a)


    (2 055)(b)

620

2007-2008

1 457

30

487

    1 639 (c) 


       102 (c)

3 715

2006-2007

1 219

10

1 002

    2 184 (d) 

152 (e)

     8 881 (f)

13 448

2005-2006

1 166






1 166

2004-2005

1 083






1 083

2003-2004

1 019






1 019

2002-2003

1 482



       73 (g)



1 555

2001-2002

995






995

2000-2001

473






473

1999-2000

359



       101 (h)



460

1998-1999

217



       36 (i)



 253

1997-1998

199



     5 781 (j)



5 980


(a)    Harmonization of the accounting policies of Immobilière SHQ concerning the recognition of the cost of its fixed assets under results: this is now done using the straight-line method whereas as it was previously done using the sinking fund method.

(b)    Harmonization of the accounting policies used by organizations in the health and social services network and by school boards with those of the Government, in particular, the implementation of a fixed asset capitalization and depreciation policy and the adoption of accrual accounting for all the revenue and expenditure of these organizations.

(c)    Change in the status of Immobilière SHQ, which is now consolidated line by line, whereas it used to be considered a Government enterprise.

(d)    $2 240 M arising mainly from the change in status of certain organizations that are now consolidated line by line, whereas they used to be considered Government enterprises, and ($56 M) in depreciation recapture at the Agence métropolitaine de transport.

(e)    Change in the accounting policy for recording these items.

(f)    Inclusion in the Government's reporting entity of the vast majority of organizations in the health and social services and education networks.

(g)    $57 M for capitalizing the cost of improvements to the premises of the Société Immobilière du Québec and $16 M for the change in the status of a Government enterprise.

(h)    Reassessment of fixed assets following the 1997-1998 accounting reform.

(i)    Capitalization of cadastral plan expenses.

(j)    Recording of the opening balance for fixed assets during the 1997-1998 accounting reform.

    

    

  APPENDIX

Financial statistics (cont'd)

Table A.2 - Other factors affecting the balance of accumulated deficits

Fiscal

year

Enterprises comprehensive income and other (1)

Restatements of accumulated deficits

Total for other factors

Restatement details

Government

enterprises

Departments

and

agencies

2008-2009

111


(2 708)

(597)

Departments and agencies: ($2 055 M) for harmonizing the accounting policies of organizations in the health and social services and education networks with those of the Government; ($290 M) for harmonizing the accounting policies of Immobilière SHQ with those of the Government in regard to the recognition of the cost of its fixed assets under results; ($193 M) for the change in the amortization period for the actuarial gains and losses of certain pension plans; and ($170 M) for contaminated land remediation obligations recorded as environmental liabilities.

2007-2008

303

(20)

(345)

(62)

Government enterprises($28 M) for the change to the accounting policy for recording financial instruments; $8 M for a change concerning employee future benefits. 

Departments and agencies: ($345 M) for contaminated land remediation obligations recorded as environmental liabilities.

2006-2007

11

830


(6 894)

(6 053)

Government enterprises: Change to the accounting policy for recording financial instruments.

Departments and agencies: ($6 426 M) for the accounting reform, i.e. ($3  220 M) for including in the Government's reporting entity the vast majority of organizations in the health and social services and education networks; ($1 904 M) for recording revenue from income and property taxes, consumption taxes and duties and permits using the accrual method; ($484 M) for reevaluating the time when transfer expenditures should be recognized; ($335 M) for recognizing the grant portion arising from significant advantageous conditions awarded for investments and loans granted; ($125 M) for the change to the policies for recording the Retirement Plans Sinking Fund; ($708 M) for applying the standards for financial instruments; $152 M for the change to the accounting policy for recording inventories and prepaid expenses; $198 M for the other components of the reform; and ($468 M) for the change to the accounting policy for contaminated land remediation obligations recorded as environmental liabilities.  

2005-2006

24

(25)

(4 511)

(4 512)

Government enterprises($25 M) for various items. 

Departments and agencies: ($3 384 M) for the change to the accounting policy for revenue from federal government transfers; ($270 M) for the change in the application of the accounting policy for the allowance for losses on guaranteed financial initiatives; ($264 M) for the new actuarial valuations of the pension plans; ($552 M) for the change in the recording of revenue from registration fees; and ($41 M) for harmonizing the accounting policies of consolidated organizations.

2004-2005

3


(273)

(270)

Departments and agencies: ($126 M) for the reassessment of school board subsidies and ($147 M) for the correction to the allowance for doubtful accounts.

2003-2004

(40)

(4)

(147)

(191)

Government enterprises($4 M) for various items. 

Departments and agencies: ($96 M) for the change in the application of the accounting policy for debts and ($51 M) for the adjustment to the accounts receivable of a consolidated agency.

2002-2003

(122)

(419)

(406)

(947)

Government enterprises: ($363 M) relating to the capping mechanism used in calculating deferred gains and losses on the basis of the real rate of return assumption at the Société d'assurance automobile du Québec and ($56 M) for other items. 

Departments and agencies: ($215 M) for correcting the error made by the Canada Customs and Revenue Agency; ($177 M) for recording employer contributions in respect of obligations relating to sick leave and vacations; and ($14 M) for other items.

2001-2002

88

(2 218)


(2 130)

Government enterprises: ($1 306 M) for foreign currency translation and ($912 M) for the introduction of a provision for deviations in the real rate of return.


  APPENDIX

Financial statistics (cont'd)

Table A.2 - Other factors affecting the balance of accumulated deficits (cont'd)

Fiscal

year

Enterprises comprehensive income and other (1)

Restatements of accumulated deficits

Total for other factors

Restatement details

Government

enterprises

Departments

and

agencies

2000-2001

(173)

(53)

(226)

Government enterprises: ($235 M) following the adoption of generally accepted accounting principles and $62 M for the change to the accounting policies for certain allowances and the actuarial liability.

Departments and agencies: ($12 M) for sick leave and vacations and ($41 M) for the change to the accounting policy for recording certain building repair and upgrading expenditures. 

1999-2000

26


(21)

5

Departments and agencies: $101 M for the reassessment of fixed assets following the 1997-1998 accounting reform and ($122 M) for other items.

1998-1999

7


63

70

Departments and agencies: $27 M for the accounting change in the recording of foreign exchange forward contracts and $36 M for capitalizing cadastral plan expenses.

1997-1998

24


(15 421)

(15 397)

Departments and agencies: ($13 173 M) for recording unrecorded pension plan obligations; ($6 693 M) for consolidating Government enterprises, agencies and special funds; ($731 M) for the change to the method used to record borrowings; ($461 M) for recording public sector restructuring measures; and $5 637 M for recording fixed assets. 

  • Since the 2006-2007 fiscal year, corresponds to the comprehensive income of Government enterprises. For 2001-2002 to 2005-2006, corresponded to foreign exchange gains or losses, and for 1997-1998 to 1999-2000, corresponded to the surplus of the municipal assessment for fixed assets of the Corporation d'hébergement du Québec.


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CONSOLIDATED FINANCIAL


STATEMENTS

  


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Statement of responsibility



The Government is responsible for the integrity and objectivity of the consolidated financial statements prepared by the Comptroller of Finance for the Minister of Finance under the Financial Administration Act (R.S.Q., c. A-6.001, s. 86). The statements were drawn up in accordance with the accounting policies disclosed in Note 1. The analysis of the financial statements contained in Volume 1 was also prepared by the Québec government.


To fulfil its accounting and financial reporting responsibilities, the Government maintains systems of financial management and internal control designed to provide reasonable assurance that transactions are duly authorized by Parliament and properly executed and recorded.


The Comptroller of Finance takes care of Government accounting and obtains all the information needed to meet its accounting requirements from Government departments, agencies, enterprises and funds.


The Government submits its consolidated financial statements for audit assurance to the Auditor General who, in his report to the National Assembly, states the nature and scope of his audit as well as his opinion.


The financial statements are part of the Public Accounts tabled annually in the National Assembly by the Minister of Finance.



On behalf of the Gouvernement du Québec,


    


Gilles Paquin    Carole Boisvert, FCA

Deputy Minister of Finance        Comptroller of Finance



Québec, October 12, 2009





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Auditor General's report


To the National Assembly,



I have audited the consolidated statement of the financial position of the Government of Québec as at March 31, 2009 as well as the consolidated statements of operations, accumulated deficit, change in net debt and cash flow of the fiscal year ended on that date. The Minister of Finance is responsible for the preparation of these financial statements. My responsibility is to express an opinion on these financial statements based on my audit.


I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the government, as well as evaluating the overall financial statement presentation.


In my opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Government of Québec as at March 31, 2009 as well as the results of its activities, the changes in its accumulated deficits, its net debt and its cash flow for the fiscal year then ended in accordance with Canadian generally accepted accounting principles. 


In other respects, as required by the Auditor General Act, I express the opinion that these consolidated financial statements present fairly, in all material respects, the financial position of the Government of Québec as at March 31, 2009 and the results of its activities, the changes in its accumulated deficits, its net debt and its cash flow for the fiscal year then ended in accordance with the accounting policies of the Government of Québec set out in note 1 of the consolidated financial statements. Moreover, in accordance with that Act, I report that, in my opinion, except for the retroactive application of the changes to the accounting policies explained in note 3, these accounting policies have been applied on a basis consistent with that of the preceding fiscal year.





Renaud Lachance, CA auditor

Auditor General of Québec


Québec, October 12, 2009


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Consolidated statement of operations

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)




The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.





(1)    Based on the revenue and expenditure forecasts presented in the 2008-2009 Budget of March 13, 2008. 

(2)    Forecast investment income of $735 million for Financement-Québec and the Corporation d'hébergement du Québec, presented in the Budget under "Miscellaneous", has been reclassified by decreasing $394 million in expenditures of the "Health and Social Services" mission and $341 million in expenditures of the "Education and Culture" mission to make the presentation of this income consistent with that of actual results.

(3)    Including the contingency reserve of $200 million.

Consolidated statement of accumulated deficit

FISCAL YEAR ENDED MARCH 31, 2009 

(in millions of dollars)



The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.


  Consolidated statement of financial position

AS AT MARCH 31, 2009

(in millions of dollars)


The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.

  Consolidated statement of change in net debt 

FISCAL YEAR ENDED MARCH 31, 2009 

(in millions of dollars)



The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.




(1)    Based on the revenue and expenditure forecasts presented in the 2008-2009 Budget of March 13, 2008. 


  Consolidated statement of cash flow

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

  Consolidated statement of cash flow (cont'd)

FISCAL YEAR ENDED MARCH 31, 2009 

(in millions of dollars)

The notes to the financial statements and the appendices are an integral part of the consolidated financial statements.


(1)    Liquid assets include cash in bank (Appendix 13) and short-term investments (Appendix 8).


Consolidated statement of financial requirements and financing transactions


Notes to financial statements

(in millions of dollars)


1.    Significant accounting policies


The Gouvernement du Québec accounts for its financial transactions in accordance with the accounting policies disclosed below. When necessary, the information included in the consolidated financial statements is based on best estimates and judgments.


Reporting entity


The Government's reporting entity encompasses the financial transactions of the National Assembly, persons designated by the National Assembly, departments as well as the agencies, funds and enterprises under the control of the Government. Control is defined as the power to direct the financial and administrative policies of an entity such that its activities will provide the Government with anticipated benefits or expose it to the risk of loss. The entities of the Government's reporting entity are listed in appendices 1 to 4 of the consolidated financial statements


Fiduciary transactions carried out by the entities mentioned in Appendix 5 are not included in the Government's reporting entity. 


Consolidation method


The accounts of the Consolidated Revenue Fund and the other entities included in the Government's reporting entity, with the exception of Government enterprises and organizations of the health and social services and education networks, are consolidated line by line in the financial statements. Accordingly, the accounts are harmonized according to the Government's accounting policies and combined line by line. Inter-organization transactions and balances have been eliminated.


Investment in Government enterprises is accounted for using the modified equity method. According to this method, investments are recorded at cost, which is adjusted annually by the Government's share in the results of these enterprises with an offsetting entry to revenue, and in the other items of their comprehensive income with an offsetting entry to accumulated deficits. The value of the investment is reduced by declared dividends and adjusted by the elimination of unrealized inter-organization gains and losses relating to transactions on assets that remain within the Government's reporting entity. This method requires no harmonization of enterprises' accounting policies with those of the Government. A Government enterprise has all of the following characteristics:


a)    it is a separate legal entity that has the authority to enter into contracts in its own name and to go before a court;

  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


b)    it is vested with the financial and administrative power to carry out commercial activities;

c)    its main activity is the sale of goods or the delivery of services to individuals or to organizations not included in the Government's reporting entity;

  • it may, during the normal course of its operations, pursue its activities and settle its debts using revenue from sources not included in the Government's reporting entity.


The accounts of organizations of the health and social services and education networks are accounted for using the modified equity method. This consolidation is carried out on the basis of the financial statements of the organizations, after adjustments to eliminate material differences between their accounting policies and those of the Government, in particular concerning fixed assets. According to this method, the net equity of these organizations, representing the total of their financial and non-financial assets reduced by their liabilities, is recognized as a component of the net investment in the health and social services and education networks. The annual surplus or deficit of organizations is recognized in the expenditures of the mission concerned. Where the fiscal year-end of an organization differs from that of the Government, its financial results are adjusted only if the financial transactions carried out during the interval materially affect the Government's financial position or results.


Revenue


Revenue is recorded using the accrual method, i.e. in the fiscal year during which the transactions or the events giving rise to the revenue occurred. Revenue not collected at the end of the fiscal year and refunds not yet issued are recorded on the basis of estimates established according to transactions that will take place in the three months following the end of the fiscal year. Revenue that would be too difficult to measure prior to reception is recorded at the time the funds are received. Sums received or receivable in regard to revenue that will be earned in a subsequent year are deferred and presented as deferred revenue. 


More specifically:


  • Revenue from income and property tax is recognized when the taxpayer earned the income subject to tax.  


  • Revenue from consumption taxes is recognized at the time of the sale of the products or the delivery of the services, after deducting tax credits.


  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


  • Corporate income tax revenue is recorded at the time the funds are received, because amounts receivable or refundable cannot be accurately estimated. Taxable corporate income varies significantly from year to year and the time allowed for filing corporate returns means that information cannot be obtained in time to make adjustments to revenue on the closing date of the Government's financial statements. An adjustment is made to account for notices of assessment issued before the end of the fiscal year.


  • Tax revenue does not include estimates for amounts of unreported taxes. These amounts are recorded when assessments are issued, following audits.


  • Revenues from duties and permits are recognized when receivable. Where duty or permit revenue is refundable on demand and is linked to clearly identifiable goods and services that the Government must supply to the holder of the duty or the permit, the revenue is deferred and recognized over the reference period of such duty or permit.


  • Transfers from the federal government are recorded as revenue in the fiscal year during which the events giving rise to them occur, provided the transfers were authorized, the eligibility criteria were met and it is possible to make a reasonable estimate of the amounts involved. 


  • Interest income ceases to be recorded when there is no reasonable assurance that the principal or interest will be recovered.


Expenditure


Expenditure includes the cost of goods consumed and services obtained during the fiscal year, including annual depreciation of the cost of fixed assets. 


Transfers, whether entitlements, transfers relating to shared-cost programs or grants, are recorded in the fiscal year during which the events that give rise to them occur, insofar as the transfers have been authorized and once the beneficiaries have met the eligibility criteria. The determining factor for recognizing an entitlement is the beneficiary's satisfaction of the eligibility criteria stipulated in a law or a regulation, while for a transfer relating to a shared-cost program it is the incurring by the beneficiary of eligible costs, and for a grant it is its authorization by the Government.


Debt service interest charges resulting from transactions in foreign currency are translated into Canadian dollars at the rates in effect at the time of the transactions.

  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Financial assets


Short-term investments are recorded at the lesser of cost and market value. Accounts receivable are initially recorded at cost and then brought down to their net recoverable value by means of an allowance for doubtful accounts. The annual change in this allowance is charged to expenditure.


Investment in Government enterprises is recorded using the modified equity method.


Long-term investments are recorded at cost. 


For loans and other investments with concessionary terms, their face value is discounted at the average rate of Government borrowings to determine the value of the grant component, which is recognized as a transfer expense at the time the investments are made. The discount on loans and other investments is amortized over their lifetime using the real interest method, and recognized as interest income.


Long-term investments are reduced using valuation allowances. An allowance is recorded for loans and advances where the facts or circumstances point to a future loss. For other long-term investments, an allowance is recorded when a durable loss in value is recognized. The annual change in these allowances is charged to expenditure. Any investment write-off reduces the cost of investments as well as the valuation allowance relating to such investment. The residual balance is charged to expenditure. The subsequent recovery is recorded as a reduction in expenditure.


Generations Fund


Demand and participation deposits in a particular fund of the Caisse de dépôt et placement du Québec are recorded at cost.


At the time of disposition of participation deposits, the difference between the amount received and the book value of these units established using the average cost method is charged to operations. Where participation deposits suffer a durable loss in value, their book value is reduced to reflect this decline. The reduction is taken into account in the determination of the results for the fiscal year.


The revenue and expenditure of the Generations Fund are recorded according to the Government's accounting policies.


  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Liabilities


Other liabilities


Allowance for losses on guaranteed financial initiatives 


Obligations resulting from borrowings and other financial initiatives guaranteed by the Government are recorded on the basis of probable losses. The allowance is established on the balance of the guaranteed financial initiatives reduced by the estimated realizable value of the security and surety obtained. The annual change in the allowance is charged to expenditure.


Probable losses are estimated by grouping financial initiatives into various risk classes and applying an average loss rate to each class, based on past experience and the nature of the initiatives. In the case of enterprises with an exceptionally high cumulative balance of financial initiatives guaranteed by the Government or with particular features, the estimate of probable losses relating to these initiatives is made using a case-by-case analysis, regardless of risk class. Probable losses are revised annually.


Environmental liability


The obligations resulting from the remediation of contaminated land under the Government's responsibility, or probably under its responsibility, are recorded as environmental liabilities as soon as contamination occurs or as soon as the Government is informed. An environmental liability includes the estimated cost of contaminated land management and remediation. The cost evaluation is based on the best information available and is revised annually. 


Given the difficulties inherent in evaluating this liability, the Government's obligations, which will be recognized until March 31, 2010 for contaminated land existing as at March 31, 2006, will be posted to accumulated deficit.


Pension plans and other employee future benefits


Pension plans 


Government pension plans are defined benefit pension plans. Within the context of preparing the Government's financial statements, obligations relating to vested benefits are evaluated using the actuarial projected benefit method prorated on service, according to the most probable assumptions set by the Government with regard, notably, to inflation, interest and employee remuneration. This method has been adjusted, however, to reflect the way in which benefits are earned by employees.


  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Total cost of plans 


The annual cost of vested benefits for all pension plans, including the cost of changes to the plans, and the amortization of adjustments to estimates based on actuarial gains or losses, is charged to expenditure, with an offsetting entry in the retirement plans account, i.e. pension plans liability. Changes to actuarial assumptions are included in the adjustments to estimates based on actuarial gains or losses.


In the case of the Government and Public Employees Retirement Plan (RREGOP), the Civil Service Superannuation Plan (CSSP), the Teachers Pension Plan (TPP), the Pension Plan of Certain Teachers (PPCT) and transfers from the TPP and the CSSP to RREGOP, adjustments to estimates based on actuarial gains or losses are amortized using the straight-line method over a period corresponding to the estimated average remaining years of service of participants in these plans as a whole. However, adjustments to estimates based on actuarial gains or losses for the other pension plans are amortized over a period corresponding to the estimated average remaining years of service of participants in each plan.


The total cost of the pension plans also includes interest charges on obligations relating to vested benefits, with an offsetting entry to liabilities in the retirement plans account.


Retirement Plans Sinking Fund (RPSF) and other pension plan assets


Under the Financial Administration Act (R.S.Q., c. A-6.001), the Minister of Finance may make long-term investments, by way of a deposit with the Caisse de dépôt et placement du Québec, using part of the Consolidated Revenue Fund up to an amount equal to the sums recorded as the pension plans liability, in order to create a sinking fund to provide for the payment of all or part of the benefits awarded under these plans. The sinking fund's investments are valued at an adjusted market value, where the difference between the real return based on market value and the forecast return is amortized over five years.


The annual income of the sinking fund is obtained by applying the rate of return stipulated in the actuarial valuations of the retirement plans to the fund balance. The adjustments recognized annually, arising from actuarial gains and losses attributable to the use of the stipulated rate of return, are amortized using the straight-line method over the estimated average length of the remaining active career of pension plan participants. The amortization of these adjustments is recorded as investment income of the fund.


The RPSF's investment income is subtracted in calculating interest charges on obligations relating to vested benefits.


  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Other pension plan assets, as well as revenue arising from them, are accounted for on the basis of the same accounting policies as the RPSF, with the necessary adjustments to the amortization period of the adjustments recognized annually in order to amortize them over the same period as the adjustments to the obligation relating to the vested benefits of the pension plan concerned.


Other employee future benefits


The long-term obligations arising from other benefits granted to employees are valued using actuarial methods, according to the most likely assumptions determined by the Government. The resulting obligations and corresponding expenditures are recorded on the basis of the method through which employees acquire these benefits, i.e. through services provided or through the occurrence of an event giving rise to employment-related benefits.


The cost of these employee benefits acquired during the year, the cost of changes to the provisions of these benefits, the amortization of adjustments relating to estimates arising from actuarial gains and losses and the interest charges on these obligations are charged to expenditure of the fiscal year with an offsetting entry to the "Other employee future benefits" account.


Any fund set up to provide for the payment of obligations relating to these other employee future benefits and the revenue arising from it are accounted for on the basis of the same accounting policies as the RPSF, with the necessary adjustments to the amortization period of the adjustments recognized annually in order to amortize them over a period suited to the employee future benefit concerned.


Debts


Borrowings are recorded at the amount received at the time of issue, adjusted by the premium or discount amortization to obtain the amount of principal repayable at maturity. The amortization is calculated using the effective rate for each borrowing.


Issue expenses related to borrowings are deferred and amortized over the term of each borrowing using the straight-line method. The unamortized balance is included in deferred expenses related to debts.


Borrowings in foreign currency are translated into Canadian dollars at the rates in effect on March 31.


Foreign exchange gains or losses resulting from the translation of borrowings are deferred and amortized over the remaining term of each borrowing using the straight-line method.



  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Derivative instruments 


The Government uses derivative instruments to manage foreign exchange and interest rate risks related to debts. These instruments are recorded at cost. 


Derivative instruments used to manage the foreign exchange risk associated with the repayment of interest and principal on borrowings and with the cash management transactions such risk management entails, including currency swap contracts and foreign exchange forward contracts, are translated into Canadian dollars at the rates in effect on March 31. The components of these instruments, namely, financial assets and liabilities, are offset against one another and shown as "Debts" items.


Interest rate exchanges stemming from interest rate swap contracts used to change exposure to interest rate risk over the long term are reconciled with interest charges for the borrowings with which these swap contracts are associated. 


Gains or losses on derivative instruments are deferred and amortized over the term of each contract. However, gains or losses on derivative instruments used to modify the interest rate risk are amortized over the term of the security underlying these instruments.


Debt Sinking Fund


Securities held by the sinking fund are recorded at the amount paid at the time of purchase, adjusted by the premium or discount amortization to obtain the amount of principal receivable at maturity. The amortization is calculated on the basis of the effective rate for each security.


The difference between the book value of a security and the amount received at the time of its disposal is charged to results.


Non-financial assets


Land in the public domain and natural resources, such as forests, water and mining resources, which the Government holds by virtue of the fact that they were devolved to the state and not purchased, are not recorded in the Government's consolidated financial statements. Intangible items do not constitute non-financial assets for the Government.


  1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Fixed assets


Fixed assets consist of acquired, built, developed or improved non-financial assets, whose useful life extends beyond the fiscal year and which are intended to be used on an ongoing basis for producing goods or delivering services.


They include land, buildings, facilities such as parks and outdoor recreational areas, complex networks such as dams, canals, roads and bridges, equipment such as vehicles and furniture and the development of data processing systems.


Fixed assets are recorded at cost and depreciated - except for land, which is not depreciated - using a logical and systematic method over a period corresponding to their useful life. Cost includes financing charges capitalized during their construction, improvement or development. The cost of fixed assets held under capital leases is equal to the present value of payments due. Fixed assets under construction or being developed or improved are not depreciated until they are put into service.


Some fixed assets are acquired under private-public partnership agreements. These agreements are long-term contracts by which the Government involves one or more private partners in designing, realizing and operating a public good, with or without funding from these partners. The fixed asset and the corresponding debt associated with it are accounted for in the statement of financial position when the risks and advantages associated with the ownership of the public good are devolved to the Government, for the most part, in accordance with the terms of the agreement.


The cost of a fixed asset acquired under a private-public partnership agreement is equal to the lower of the present value of the cash flows associated with the fixed asset and the fixed asset's fair value. If the cash flows associated with the fixed asset cannot be isolated from those related to its operation, its cost is determined on the basis of its fair value. The fair value of the fixed asset is estimated on the basis of the agreement's specifications.


Works of art and historic property are not recorded as fixed assets. Their cost is charged to expenditure for the fiscal year during which they are acquired.


Fixed assets acquired through donation or for a nominal fee are recorded at their fair value at the time of acquisition with an offsetting entry to deferred revenue, except for land where the offsetting entry is recognized in revenue in the year of acquisition. Contributions for the acquisition of fixed assets, received from organizations outside the reporting entity, are recorded in deferred revenue, with the exception of those intended for the purchase of land, which are recorded in revenue in the year of acquisition. Deferred revenue is amortized in revenue at the same rate as the depreciation of the cost of the corresponding fixed assets.

1.    Significant accounting policies (cont'd)

    (in millions of dollars)


Net investment in the health and social services and education networks


The net investment in the health and social services and education networks includes the net equity of the organizations of these networks included in the reporting entity, advances made to them by the Government and the sinking funds relating to their borrowings to finance fixed assets. Net equity is recorded using the modified equity method described in the "Consolidation method" section, while advances and sinking funds are recorded according to the accounting policy for long-term investments.


Inventories


Inventories consist of supplies that are consumed in the normal course of operations during the coming fiscal year(s). These inventories are valued at the lower of cost and net realizable value. Inventories intended for sale are presented as financial assets.


Prepaid expenses


Prepaid expenses represent outlays made before the end of the fiscal year for services the Government will receive during the coming fiscal year(s). These expenses are charged to expenditure when the Government receives the services acquired.

  2.    Measurement uncertainty

    (in millions of dollars)


The preparation of financial statements requires the Government to make estimates and assumptions in order to evaluate and record certain asset, liability, revenue and expenditure items. These estimates are based on the most reliable data and the most probable assumptions available at the time, and involve the Government's best judgments. They are revised annually to reflect new information as it becomes available. 


By their very nature, estimates are subject to measurement uncertainty. Therefore, revising estimates and assumptions made in future years can give rise to material differences in the amounts recognized in the financial statements.


Major estimates are made for certain financial statement items, particularly sums receivable or repayable in regard to federal government transfers, obligations relating to pension plans and other employee future benefits, the book value of fixed assets, environmental liabilities and certain allowances.


  • Federal government transfers can vary because of possible differences between the assumptions made for fiscal and population data and the actual data.


  • Obligations relating to pension plans and other employee future benefits can vary because of differences between the most probable economic and demographic assumptions made for actuarial valuation purposes and the actual results.


  • The book value of fixed assets can vary because of differences between their estimated useful life and their actual useful life.


  • Environmental liabilities related to contaminated land can vary because of differences between estimated management and remediation costs and the costs eventually incurred. 


  • The value of certain allowances can vary because of differences between the assumptions made to evaluate the probability of collection and the amount actually collected.


  3.    Accounting changes

    (in millions of dollars)


Net investment in the health and social services and education networks


Since 2006-2007, the Government has incorporated the vast majority of organizations in the health and social services and education networks into its reporting entity. Their accounts have been integrated using the modified equity method on the basis of their financial statements, after making adjustments to eliminate certain material differences between their accounting policies and those of the Government, particularly with regard to the recording of fixed assets and employee benefitsIn addition, where the fiscal year-end of an organization differs from that of the Government, the organization's financial results are adjusted only if the financial transactions carried out during the interval materially affect the Government's financial position or results.


The Public Sector Accounting Board has recommended that the line-by-line consolidation method be the only method that may be used as of the 2009-2010 fiscal year to consolidate the accounts of organizations in the health and social services and education networks, which are included in the Government's reporting entity. Due to the scope of the task that governments will have to undertake in order to implement this requirement, the board deferred by one year the date on which it was originally supposed to take effect, i.e. as of fiscal 2008-2009. Therefore, the transitional provisions allowing governments to apply either this method or the modified equity method continued to apply in 2008-2009. 


To comply with these recommendations, the organizations in both networks worked to harmonize their accounting policies with those of the Government in 2008-2009. Among other things, the accounting policies used by organizations in the health and social services network and by school boards were revised to bring them into conformity with those of the Government. This revision led in particular to the implementation of a fixed asset capitalization and depreciation policy and the adoption of accrual accounting for all the revenue and expenditure of these organizations. In addition, school boards produced financial information based on the Government's fiscal year-end. 


In 2009-2010, so as to complete their integration into the Government's financial statements based on the line-by-line consolidation method, these organizations will change other accounting policies, including those pertaining to the environmental liability and the definition of their reporting entity. For the same purpose, CEGEPs and the Université du Québec will set about harmonizing their accounting policies with those of the Government during the fiscal year.


This work complies with the recommendations of the Report of the Task Force on Government Accounting, dated November 2007, to which the Government subscribed in December 2007.

  3.    Accounting changes (cont'd)

    (in millions of dollars)


The impact of the accounting changes made by these organizations on the value of the item "Net investment in the health and social services and education networks" for transactions prior to March 31, 2008 was recorded retroactively to April 1, 2008, as an adjustment to the statement of accumulated deficit for the fiscal year ending March 31, 2009.


However, the comparative data for the fiscal year ending March 31, 2008 were not restated to take these changes into account, as the financial information needed for this purpose could not be established with reasonable effort.


This increased (decreased) the following items:


    Health and

    social

    services

     network


    Education

    network

    

    2009

    Total



Net investment in the health and social services and 

    education networks

    (511)


        (1 544)

    

    (2 055)


Accumulated deficits and net debt, beginning of year 

    511


    1 544


    2 055




Other liabilities - Environmental liability


The updating of obligations stemming from the remediation of contaminated land existing as at March 31, 2006, under the Government's responsibility or probably under its responsibility, resulted in the recognition of an additional $170 million in environmental liabilities. The impact of this accounting change was recorded retroactively to previous years, with restatement, by adjusting accumulated deficits as at April 1, 2007, in accordance with the Government's accounting policy for environmental liability.


This increased the following items:



    2009


    2008



Other liabilities


    170

    

    170


Accumulated deficits and net debt, beginning of year 


    170


    170



  3.    Accounting changes (cont'd)

    (in millions of dollars)


Fixed assets 


In 2007-2008, as part of the implementation of the accounting reform of 2006-2007, the Government changed the status of Immobilière SHQ from that of an enterprise to that of an agency in response to a recommendation of the Report of the Task Force on Government Accounting. Owing to the new status of Immobilière SHQ, its accounts had to be consolidated line by line.


This change in the way its accounts are dealt with meant that the accounting policies of Immobilière SHQ had to be harmonized with those of the Government. As a result, the cost of fixed assets of Immobilière SHQ included in the Government's consolidated financial statements are now recognized under results using the straight-line depreciation method rather than the compound interest method as was the case previously. The impact of this accounting change was recorded retroactively to previous years, with restatement. However, since the impact on the results for 2007-2008 was not material, expenditures for that fiscal year were not restated.


This increased (decreased) the following items:



    2009


    2008



Expenditure



    



    Economy and Environment


    22


    -  


Annual deficit 


    22


    -  


Fixed assets


    (312)


    (290)


Accumulated deficit, beginning of year


    290


    290


Accumulated deficit, end of year


    312


    290




Pension plans


Actuarial gains and losses related to the Pension Plan of Management Personnel (PPMP) and to transfers from the Civil Service Superannuation Plan (CSSP) and the Teachers Pension Plan (TPP) to the PPMP, are now amortized over the estimated average remaining years of service of the participants concerned by the PPMP, i.e. nine years. Previously, these actuarial gains and losses were amortized over a 14-year period, corresponding to the estimated average remaining years of service of all participants in the Government and Public Employees Retirement Plan (RREGOP), the Pension Plan of Certain Teachers (PPCT), the PPMP, the CSSP and the TPP.


  3.    Accounting changes (cont'd)

    (in millions of dollars)


The impact of this accounting change was recorded retroactively to previous years, with restatement. However, since the impact on the results for 2007-2008 was not material, expenditures for that fiscal year were not restated.


This increased (decreased) the following items:



    2009


    2008



Expenditure



    



    Health and Social Services


    18


    -  


    Education and Culture


    16


    -  


    Administration and Justice


    13


    -  


Annual deficit


    47


    -  


Pension plans and other employee future benefits


    240


    193


Accumulated deficit, beginning of year


    193


    193


Accumlated deficit, end of year


    240


    193


  4.    Income and property taxes

    (in millions of dollars)


According to applicable legislation, revenue from income and property taxes is recorded after deducting the following amounts:

  5.    Duties and permits

    (in millions of dollars)


According to applicable legislation, revenue from duties and permits is recorded after deducting the following amounts:

  6.    Federal government transfers to be repaid

    (in millions of dollars)

(1)    Represents the balance of $1 664 million ($1 902 million as at March 31, 2008) of an original amount of $2 377 million to be repaid over 10 years as of 2006-2007, in regard to the measures adopted by the federal government to mitigate the decrease in transfers in 2003-2004 and 2004-2005.


  7.    Pension plans and other employee future benefits

    (in millions of dollars)


Liability regarding pension plans and other employee future benefits

Pension plans

The Gouvernement du Québec contributes to several pension plans for its employees. Employees of the public and parapublic sectors, the Members of the National Assembly and the judges of the Court of Québec participate in these plans.

* These plans have not admitted any new participants since July 1, 1973.

  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


These plans are "defined benefit" pension plans, which means that they guarantee participants a set income upon retirement, calculated on the basis of participants' average income for the best paid years, generally five, and their number of years of service. The portion of benefits accrued prior to July 1, 1982 is usually indexed to the cost of living, while those accrued after that date are partially indexed.


There are two types of pension plans:     -    cost-sharing pension plans;

-        cost-balance pension plans.


Cost-sharing pension plans


In the case of regular service under RREGOP and the PPMP, the Government covers costs at a rate of 50% for years of service since July 1, 1982 and 58.33% (7/12) for years of service prior to July 1, 1982. The contributions of participants and independent employers are remitted to the Caisse de dépôt et placement du Québec.


In the case of the PPPOCS, the Government covers 46% of costs, while employees cover 54%. Employee contributions are paid into the Consolidated Revenue Fund.


In the case of the SPMSQ, the Government covers 2/3 of the cost of the plan for years of service since January 1, 2007. Prior to this date, the plan was a cost-balance plan. As of January 1, 2007, the contributions of participants and employers for these years of service are paid into two separate funds with the Caisse de dépôt et placement du Québec. The Government is not obliged to contribute on a monthly basis. Based on the actuarial valuations required by the Minister of Finance, the latter determines the contributions which might, from year to year but no later than every three years, be capitalized to reflect the Government's commitments to this plan for years of service after December 31, 2006. 


Cost-balance pension plans


Cost-balance pension plans are plans for which employers cover the difference between the cost of plans and the contributions paid by participants. This is the case of the TPP, the PPCT, the CSSP, the SPMSQ for years of service prior to January 1, 2007, the PPJCQ, the PPFEQ, the PPMNA and the cost of service transferred from the CSSP and the TPP to RREGOP and the PPMP.


Generally speaking, the contributions of participants and independent employers under all of these plans are paid into the Consolidated Revenue Fund. The Government covers the difference between the cost of each plan and the contributions paid by participants and independent employers.


  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Value of actuarial obligations relating to vested benefits for the pension plans as a whole


The value of actuarial obligations relating to vested benefits for the pension plans as a whole for service rendered as at a given date is determined by actuaries of the Commission administrative des régimes de retraite et d'assurances (CARRA). For this purpose, they use the actuarial projected benefit method prorated on service and take into account, among other things, the most probable long-term economic assumptions.


Economic asumptions

2009-2017


2018 and thereafter


-    Yield, net of inflation

4.75%


4.75%

-    Inflation rate

2.08%


2.75%

-    Salary escalation rate, net of inflation

0.44%


0.50%

-    Discount rate for actuarial obligations
        relating to vested benefits

6.83%


7.50%



Pension plans liability


The Government's liability with regard to the pension plans is recorded in conformity with the recommendations of the Canadian Institute of Chartered Accountants for public sector pension plans.


The liability recorded with respect to the pension plans is established on the basis of the value of actuarial obligations relating to vested benefits for the pension plans as a whole, taking into account certain adjustments stemming from actuarial gains or losses noted during the actuarial valuations prepared every three years and the extrapolations made between two valuations. These gains and losses are amortized over the estimated average remaining active career of participants, i.e. 14 years under most of the plans. The accumulated adjustments at the end of the fiscal year correspond mainly to the unamortized balance of actuarial gains and losses and to adjustments made because of the three-month gap between the date on which actuarial obligations related to vested benefits are evaluated, i.e. December 31, and the date on which the pension plans liability is evaluated.


As shown by the following table concerning the main pension plans, the Government's liability with regard to the pension plans as a whole is estimated at $65 503 million as at March 31, 2009, including $43 555 million for RREGOP and the PPMP.

  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Breakdown of the pension plans liability


Retirement Plans Sinking Fund (RPSF)


In accordance with the statutes setting up the various pension plans, the Government is not required to pay contributions into the plans, except in the case of the SPMSQ and the PPFEQ. Payment of the Government's share of benefits paid under the plans is ensured by the Consolidated Revenue Fund.


The Financial Administration Act allows the Minister of Finance to make long-term deposits from the Consolidated Revenue Fund with the Caisse de dépôt et placement du Québec in order to create a sinking fund to provide for the payment of some or all of the benefits under the pension plans, up to an amount equal to the pension plans liability.


In December 1999, under an agreement on the renewal of its employees' collective agreements, the Government set the objective that, in 2020, the sums accumulated in the sinking fund would be equal to 70% of the actuarial obligations relating to vested benefits under the pension plans.


  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Other pension plan assets


Other pension plan assets consist of funds associated with pension credits acquired by employees following transfers of supplemental pension plans to RREGOP, the fund of Government contributions to the SPMSQ, set up on January 1, 2007, and the PPFEQ fund. The latter fund consists of employee contributions, Government contributions and sums transferred by the federal government for creating the PPFEQ. All the assets of these funds, which were established pursuant to the provisions of the pension plans concerned, are deposited with the Caisse de dépôt et placement du Québec.


Change in the adjusted market value of the Retirement Plans Sinking Fund


As at March 31, 2009, the respective market values of the sinking fund's assets and the other pension plan assets, deposited with the Caisse de dépôt et placement du Québec, were $25 535 million and $706 million ($32 024 million and $919 million as at March 31, 2008)


Investment policy of the Retirement Plans Sinking Fund


This sinking fund is a major asset that is managed by the Caisse de dépôt et placement du Québec according to the investment policy set by the Minister of Finance. This policy provides for investments in a diversified portfolio that includes fixed income securities (e.g. bonds), market securities (e.g. shares) and investments in other investment categories (e.g. capital assets, private investments and infrastructure). The target allocation for the RPSF's assets is as follows:


Retirement Plans Sinking Fund reference portfolio



    2009


    2008



Fixed income securities


    30.0%


    30.0%


Market securities


    35.5


    35.5


Other investments


    34.5


    34.5




    100.0%


    100.0%


  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


In 2008-2009, the forecast return on the sinking fund's assets was 6.57% (6.83% in 2007-2008); the realized return, based on the market value of investments, was -25.70% (0.73% in 2007-2008).


Actuarial valuations and subsequent estimates


The value of actuarial obligations relating to vested benefits is determined on the basis of actuarial valuations and extrapolations made from them for years between two valuations.


The most recent extrapolations, which were filed and issued in 2009, were determined on the basis of actuarial valuations:


  • as at December 31, 2008 for the PPMNA;

  • as at December 31, 2007 for the PPJCQ, the PPFEQ and the Retirement Plan for Senior Officials included in the PPMP;

  • as at December 31, 2006 for the PPPOCS, the PPCT, the SPMSQ and service transferred from the TPP and the CSSP to RREGOP and the PPMP;

  • as at December 31, 2005 for the CSSP, the TPP and regular service under the RREGOP and the PPMP.


Total cost of pension plans

(1)    After deducting investment income of $2 196 million in 2008-2009 ($1 887 million in 2007-2008) of the Retirement Plans Sinking Fund and other pension plan assets, which takes into account a zero adjustment (deduction of $37 million in 2007-2008) related to the amortization of adjustments based on actuarial gains and losses with respect to this fund and these assets.


  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Funding of pension plans


Actuarial valuations for funding purposes for regular service under "cost-sharing" pension plans (RREGOP, PPMP AND PPPOCS)


By law, CARRA actuaries are required to prepare, every three years, an actuarial valuation for funding purposes for each of the pension plans in order to determine the rates of contribution for these plans. To that end, the actuaries take legislative provisions and collective agreements into account using the valuation method agreed upon by the parties concerned and economic assumptions that are more conservative than those used to prepare valuations for accounting purposes.


According to these valuations, the Government commitment for funding purposes is calculated as the fund that the Government would have amassed had it been required to pay contributions since 1973 on the same bases as those used to determine the rate of contribution of participants. In the case of RREGOP and the PPMP, this fund was estimated at $40 128 million at fair value and $53 311 million at cost as at December 31, 2008 ($54 368 million at fair value and $61 649 million at cost as at December 31, 2007). In the case of the PPPOCS, for which employee contributions were paid into the Consolidated Revenue Fund, the value of the fund that would have been amassed by employees and the Government was $863 million at cost as at December 31, 2008 ($1 019 million as at December 31, 2007).


The difference between these amounts and the liability recorded for these three plans represents a non-payable amount that does not have to be recorded as a liability of the Government. A number of the Government's labour-management associations submitted an application to the Québec Superior Court requesting that it recognize that this difference constitutes a Government commitment. In July 2004, the ruling handed down by the Québec Superior Court on this application concluded that:


  • in every fiscal year since 1973, the Government has disclosed, in an appropriate manner and in accordance with the standards of the Canadian Institute of Chartered Accountants, its financial commitments regarding the sharing of the cost of the Government and Public Employees Retirement Plan (RREGOP), the Pension Plan of Management Personnel (PPMP) and the Pension Plan of Peace Officers in Correctional Services (PPPOCS), as provided in the legislation concerned;


  • sharing the cost of financing the pension plans concerned, namely, RREGOP, the PPMP and the PPPOCS, does not commit the Government to using the same actuarial bases as those employed to constitute the pension funds of participating employees, especially since the evidence revealed no risk of a detrimental impact on the pension wealth of each covered participating employee at any time.

  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


The Government's labour-management associations appealed this ruling in August 2004. In January 2006, the Québec Court of Appeal suspended the appeal to allow the labour organizations of employees who participate in these plans to bring a new application before the Québec Superior Court for a declaratory judgment on this subject. An application to this effect was filed by these organizations in April 2006. Consequently, the suspension of the appeal will remain in effect until a final ruling on the new application is handed down by the Superior Court.


Other employee future benefits


In addition to the retirement plans, the Government sponsors two other programs of future benefits for its employees, namely accumulated sick leave and the survivor pension plan. These programs give rise to long-term obligations for the Government, which assumes the entire cost of the two programs.


Employees can accumulate the unused sick leave days they are entitled to annually and monetize them at 50% in case of termination of employment, retirement or death, up to an amount representing the equivalent of 66 days. In addition, employees can utilize these unused days as fully paid leave days for preretirement. 


The Act to amend the Financial Administration Act (S.Q. 2008, c. 12), passed in June 2008, authorizes the Minister of Finance to deposit money with the Caisse de dépôt et placement du Québec, up to an amount equal to the actuarial obligation relating to accumulated sick leave in order to establish an accumulated sick leave fund. The purpose of this fund is to provide for the payment of some or all of the benefits due to employees for unused sick leave. 


The survivor pension plan stipulates that a pension is paid to the spouse and dependent children following the death of an eligible person. The plan chiefly covers management and similar personnel in the public and parapublic sectors, accounting for 90% of the insured population. The Government pays amounts into a fund with the Caisse de dépôt et placement du Québec, dedicated specifically to the payment of benefits earned by plan beneficiaries.


Liability regarding other employee future benefits


Obligations relating to accumulated sick leave are vested as employees provide services to the Government. The value of these obligations is established using an actuarial method that takes into account the length of the active career of employees. This method reflects how employees earn benefits.

  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


For the survivor pension plan, an obligation is recognized when the death of an eligible person occurs. The value of the obligations is established using an actuarial method that determines the present value of pensions then acquired by beneficiaries.


Adjustments arising from actuarial gains and losses, recognized at the time of the actuarial valuations of the obligations of the two programs, are amortized, in the case of accumulated sick leave, over the estimated average remaining active career of participants and, in the case of the survivor pension plan, over the remaining average life expectancy of the beneficiaries. The aggregate adjustments at the end of the fiscal year correspond mainly to the unamortized balance of actuarial gains and losses.


Actuarial valuations and subsequent estimates


The value of the actuarial obligations regarding vested rights and pensions is established using actuarial valuations or extrapolations of such valuations for the years between two valuations. An actuarial valuation of accumulated sick leave was done as at March 31, 2006. The survivor pension plan has been established on the basis of an actuarial valuation as at December 31, 2008. For both these programs, extrapolations as at March 31, 2009 were produced. 


The value of actuarial obligations is estimated using the most likely long-term economic assumptions, as follows.



Accumulated 

sick 

leave


Survivor

pension

plan 

-    Yield, net of inflation 

4.75%


4.75%

-    Inflation rate

2.75%


2.75%

-    Salary escalation rate, net of inflation 

0.50%


─     

-    Discount rate for actuarial obligations relating to vested rights and pensions 

7.50%


7.50% 


  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Breakdown of the liability regarding other employee future benefits 

Change in the adjusted market value of funds related to other employee future benefits

As at March 31, 2009, the respective market values of the assets of the Accumulated Sick Leave Fund and the Survivor Pension Plan Fund, deposited with the Caisse de dépôt et placement du Québec, were $591 million and $314 million ($445 million as at March 31, 2008 for the Survivor Pension Plan Fund).


In 2008-2009, the forecast returns on the assets of the Accumulated Sick Leave Fund and the Survivor Pension Plan Fund both amounted to 6.75% (6.75% in 2007-2008 for the Survivor Pension Plan Fund); the respective realized returns, based on the market value of investments, were -1.32% and -25.43% (1.11% in 2007-2008 for the Survivor Pension Plan Fund).

  7.    Pension plans and other employee future benefits (cont'd)

    (in millions of dollars)


Total cost relating to other employee future benefits

(1)    After deducting Accumulated Sick Leave Fund investment income of $16 million.

(2)    After deducting Survivor Pension Plan Fund investment income of $28 million ($25 million in 2007-2008), which takes into account a zero adjustment (a deduction of $1 million in 2007-2008) related to the amortization of adjustments based on actuarial gains and losses with respect to this fund.


  8.    Risk management and derivative instruments

    (in millions of dollars)


To meet the financial requirements arising from its operations and investment activities and from the repayment of borrowings that are maturing, the Government has provided itself with an annual financing and debt-management program targeting Canadian and international financial markets.


Participation in these markets involves various types of risk. Therefore, the Government devises risk-management strategies by using the different derivative instruments at its disposal.


Foreign exchange risk


Foreign exchange risk is the risk that the cash flows needed to repay the interest and principal on loans in foreign currency will vary according to exchange market fluctuations. To manage this risk, the Government uses derivative instruments such as currency swap contracts and foreign exchange forward contracts. The purpose of such contracts is to exchange cash flows from one currency to another. These contracts mature at various dates until 2036.


After taking into account derivative instruments used to manage foreign exchange risk, the structure of the debt as at March 31, 2009 was 93.2% in Canadian dollars, 1.0% in U.S. dollars, 1.5% in yen, 2.0% in Swiss francs and 2.3% in euros (as at March 31, 2008: 92.9% in Canadian dollars, 0.9% in U.S. dollars, 1.6% in yen, 2.3 % in Swiss francs and 2.3% in euros). These rates are calculated on the basis of the Government's gross debt. A change of 1.0% in the Canadian dollar in relation to foreign currencies entails a $110-million change in the gross debt and a $21-million change in annual debt service.


For the 2008-2009 fiscal year, $8 million was posted to results as an amortization of the deferred foreign exchange gain included in debt service ($272 million for fiscal 2007-2008). 


Interest rate risk


Interest rate risk is the risk that debt service will vary unfavourably according to interest rate fluctuations. To reduce its exposure to interest rate risk, the Government uses interest rate swap contracts or short-term derivative products. Interest rate swap contracts make it possible to exchange payments of interest at fixed rates for payments of interest at variable rates or vice versa on the basis of a reference par value.


After taking into account derivative instruments used to manage interest rate risk, the structure of the debt as at March 31, 2009 was 68.6% at fixed rates and 31.4% at variable rates (as at March 31, 2008: 69.9% at fixed rates and 30.1% at variable rates). These rates are calculated on the basis of the Government's gross debt. 


The fixed-rate debt is the debt that will not mature, and whose rates will not change, over the coming year.

  8.    Risk management and derivative instruments (cont'd)

    (in millions of dollars)


Credit risk


Credit risk is the risk that a counterparty will default on his contractual obligations, an event that could entail financial losses for the Government. To protect itself from such a risk within the scope of derivative instrument transactions, the Government has adopted a credit risk management policy that limits potential losses by a counterparty.


A credit limit is set for each counterparty based mainly on his credit rating. When this limit is exceeded, a process is implemented to ensure that the amounts owed by the counterparty concerned fall within the limits set.


The Government deals with major financial institutions whose credit rating is equal to or higher than its own by using as a reference the ratings granted by major rating agencies. As at March 31, 2009, 99.9% of the derivative instrument portfolio was associated with counterparties whose credit rating was equal to or higher than that of the province of Québec with at least one of these agencies. 


Liquidity risk


Liquidity risk is the risk that the Government will not be able to meet its financial commitments over the short term. To offset this risk, the Government has obtained lines of credit totalling C$1 165 million from various Canadian banking institutions.


In addition, the Government has concluded credit agreements for U.S.$3 500 million with a Canadian and international banking syndicate.


As at March 31, 2009, $7 million was being drawn on the lines of credit with Canadian banking institutions, while no funds were being drawn on the credit agreements.

  9.    Debts

    (in millions of dollars)


(1)    The Government held $2 854 million worth of its securities as at March 31, 2009 ($2 904 million in 2008), including $2 711 million ($2 586 million as at March 31, 2008) held by the Debt Sinking Fund, $119 million ($257 million as at March 31, 2008) included in short-term investments, $11 million ($13 million as at March 31, 2008) included in long-term investments and $13 million ($48 million as at March 31, 2008) held by the sinking funds relating to borrowings by the education network.

(2)    In 2008 and 2009, other currencies included the pound sterling, the Mexican peso, the Australian dollar, the New Zealand dollar and the Hong Kong dollar. A detailed table by type of currency and debt is presented in Appendix 17.

(3)    The payments to the sinking fund arise from commitments made by the Government in prospectuses prepared when the borrowings were issued. This sinking fund was associated with $14 648 million in debt as at March 31, 2009 ($14 400 million as at March 31, 2008).

(4)    Including $4 168 million ($3 906 million as at March 31, 2008) for repaying the debt in Canadian dollars and $806 million ($735 million as at March 31, 2008) for repaying the debt in U.S. dollars.


  9.    Debts (cont'd)

    (in millions of dollars)


Weighted average interest rate (1) 


(1)    The weighted average interest rate corresponds to the effective rate of borrowings in effect on March 31, after the impact of derivative instruments.





Debt schedules after impact of derivative instruments

(in millions of dollars)

(1)    This schedule takes into account $3 317 million for Treasury bills and $2 400 million for short-term borrowings in 2010 and was drawn up considering projected repayments of $1 146 million in 2010, $747 million in 2011, $604 million in 2012, $657 million in 2013, $703 million in 2014, $2 035 million in 2015-2019 and $3 million in 2020-2024 for savings products redeemable on demand.

(2)    These schedules take into account the Sinking fund of $4 168 million for debts in Canadian dollars and $806 million for debts in U.S. dollars.


  9.    Debts (cont'd)

    (in millions of dollars)


Repayment of debt by the Sinking fund 

  10.    Fixed assets

    (in millions of dollars)


Fixed assets are recorded at cost. They are depreciated over their useful life using the following methods:


Category


Depreciation method


Useful life

Category


Depreciation method


Useful life


Buildings, including those rented under
capital leases 



Straight-line 



10 to 50 years

Facilities


Straight-line 


5 to 10 years

Complex networks (1)


Straight-line


10 to 40 years

Equipment, including that rented under capital leases 


Straight-line


3 to 30 years

Development of data processing systems


Straight-line


5 to 10 years

(1)    Except for certain Laval metro infrastructures that are depreciated on a straight-line basis over a period of 100 years.


Works of art and historic property consist mainly of paintings, sculptures, drawings, prints, photographs, installations, films and videos and their cost is charged to expenditures for the fiscal year in which they are acquired.


Fixed assets




Fixed assets are broken down in Appendix 19.

  11.    Contractual obligations 

    (in millions of dollars)


As part of its operations, the Government concluded various long-term agreements, the most important of which gave rise to the following contractual obligations:

(1)    In addition to this amount, the Government covers, through the payment of transfers to these beneficiaries, interest related to the funding of these fixed asset acquisitions.

(2)    In addition to this amount, the Government covers, through the payment of transfers, interest related to the funding of certain agreements totalling $179 million ($256 million as at March 31, 2008).

(3)    The contractual obligations related to the acquisition of fixed assets and supply of goods and services include an amount of $2 975 million ($423 million as at March 31, 2008) arising from private-public partnership agreements. Under these agreements, the Government also covers financing costs related to these fixed assets.


Schedule

Contractual obligations with regard to transfers are broken down in Appendix 20.  12.    Contingencies

    (in millions of dollars)


A)    Under its various financial assistance programs, the Government guarantees borrowings and other financial initiatives by third parties for an amount of $10 706 million as at March 31, 2009 ($10 230 million as at March 31, 2008). These net guaranteed financial initiatives are summarized in Appendix 21.


B)    A number of claims have been instituted against the Government, which is also involved in legal proceedings before the courts. These different disputes result from breaches of contract, damages suffered by individuals or property, and related elements. In some cases, the amounts claimed are mentioned; in others, no mention is made of them. The cases for which claim amounts have been established represent $1 165 million. Since the outcome of these disputes is uncertain, the Government cannot determine its potential losses. The Government records a provision to this effect under "Accounts payable and accrued expenses" only once it appears likely that these cases will give rise to disbursements and the amount can be reasonably estimated.


C)    Some of Québec's Aboriginal communities have instituted legal proceedings involving $16 371 million in damages and interest against the Government for land claims, the recognition of certain ancestral rights and other related questions. These files are at different stages (some proceedings are currently suspended or inactive) and should eventually be resolved through negotiations, rulings or the abandonment of proceedings by applicants. Since the outcome of these files is uncertain, the Government cannot determine its potential losses.


D)    Since 2006-2007, the Government has recorded an environmental liability for the cost of remediating contaminated land under its responsibility or likely to come under its responsibility to the extent that the amount can be estimated. 


A survey of contaminated lands was conducted for this purpose. As at March 31, 2009, $931 million was recorded to "Other liabilities" for approximately 733 properties inventoried. Different methods are used to estimate remediation and management costs. The amount estimated for each file is increased to take into account the degree of precision of the method used. For example, the environmental liability recorded as at March 31, 2009 takes into account an increase of $249 million in costs ($209 million as at March 31, 2008).


In some cases, the probability that the Government will have to cover the remediation cost could not be established. In others, the value of the costs it will have to assume could not be estimated. Given the difficulties inherent in evaluating this liability, the Government's obligations, which will be recognized until March 31, 2010 for contaminated land existing as at March 31, 2006, will be posted to accumulated deficits, in accordance with the accounting policy.


  13.    Asset-backed commercial paper (ABCP)

    (in millions of dollars)


Asset-backed commercial paper (ABCP) is a short-term financial instrument issued by trusts, also called "conduits", on a discount or interest-bearing basis, generally for a term of 30, 60 or 90 days. The assets, such as mortgage or consumer loans, or the exposure to risk, such as credit default swaps, which support the commercial paper, are acquired by a conduit through various types of transactions, including the purchase of financial assets and derivatives.


As at March 31, 2009, non-bank-sponsored restructured ABCP was held in investments made by certain line-by-line consolidated agencies ($211 million; $212 million as at March 31, 2008), health and social services and education network organizations ($75 million; $75 million as at March 31, 2008) and Government enterprises ($168 million; $159 million as at March 31, 2008).


ABCP of this type was also held through participation deposit units in funds entrusted to the Caisse de dépôt et placement du Québec (CDPQ). The units in question were held by the Retirement Plans 
Sinking Fund ($2 728 million; $2 689 million as at March 31, 2008), the Survivor Pension Plan Fund ($35 million; $34 million as at March 31, 2008), other pension plan assets ($35 million; $35 million as at March 31, 2008), the Generations Fund ($59 million; $58 million as at March 31, 2008) and other consolidated agencies ($45 million; $44 million as at March 31, 2008).


Restructuring


Financial instruments serving as assets for a conduit that issued ABCP generally have maturities that are longer than the maturity of the ABCP issued. Therefore, the conduit must typically have liquidity backstop facilities with a financial institution that it can avail itself of on certain conditions, in the event that it is not able to issue new ABCP securities in order to redeem those that mature or to meet the need for additional liquid assets. 


The subprime mortgage crisis in the United States caused disruption on international markets, which resulted in a liquidity crisis on the Canadian third-party ABCP market in August 2007. Consequently, neither the ABCP-holding entities of the Government's reporting entity nor the CDPQ were able to obtain payment of the sums owed to them under their third-party ABCP holdings when the latter matured.


  13.    Asset-backed commercial paper (ABCP) (cont'd)

    (in millions of dollars)


Pan-Canadian Investors Committee restructuring plan 


Third-party ABCP restructuring efforts, which began in August 2007 and in which the Québec government played an active role, led to the conclusion of an agreement on December 24, 2008 between the Pan-Canadian Investors Committee and banks that had purchased protection. The agreement was then subject to approval by the decision-making authorities of the institutions concerned, as well as to the adoption of orders-in-council. The agreement was subsequently confirmed in its proposed form and gave rise to an exchange of securities on January 21, 2009. 


Under the agreement, third-party ABCP was restructured, leading to the creation of three new trusts called "master asset vehicles" ("MAV 1", "MAV 2" and "MAV 3"). The ABCP was converted into new securities with maturities that matched those of the underlying assets. The new securities bear interest at rates that will ultimately reflect the cash flows available within the vehicles, including the cost inherent in the funding facilities included in the restructuring plan.


The first two "MAVs" consist of the transactions of ABCP conduits constituted solely of synthetic assets or of hybrid assets, which are a combination of synthetic and traditional assets. They also include the high-risk assets associated with these transactions. The main difference between "MAV 1" and "MAV 2" is that the margin funding facility is self-funded for "MAV 1" participants, whereas it is provided by third-party lenders in the case of "MAV 2". As a result of this distinction, the interest paid to holders of notes issued by "MAV 2" is less than that paid to holders of notes issued by "MAV 1". 


The margin funding facilities in "MAV 1" and "MAV 2" are provided by various lenders. In particular, the Government of Canada, the governments of Québec, Ontario and Alberta and the CDPQ are taking part in the final agreement, as senior lenders, by establishing an additional margin funding facility. These funding facilities are designed to reduce the risk that the new vehicles will not be able to meet margin calls in the event that such calls are warranted by future circumstances. An initial 18-month standstill period on margin calls, ending July 21, 2010, has been established to allow a market for these new securities to be created.


"VAC 3" consists of the transactions of ABCP conduits constituted exclusively of traditional assets and high-risk assets, namely, assets that do not fall into either of the previous two categories. All notes in this category are tied to the net return and maturities of their respective underlying assets.


  13.    Asset-backed commercial paper (ABCP) (cont'd)

    (in millions of dollars)


Impact of ABCP restructuring for the Government


In the wake of the restructuring agreements, the entities of the Government's reporting entity held the following ABCP securities as at March 31, 2009:




      Notional

    amount


    Net 

    value



Pan-Canadian Investors Committee restructuring plan






    MAV 2






Class A-1


    166


    141


Class A-2


    112


    94


Class B


    20


    4


Class C


    9


    1


Tracking notes for high-risk assets


    41


    13




    348


    253


    MAV 3






Tracking notes for traditional assets


    24


    19


Tracking notes for high-risk assets


    66


    48




    90


    67


Total


    438


    320


Other restructured ABCP 1


    15


    12




    453


    332









(1)    Certain entities in the Government's reporting entity hold bank-sponsored ABCP that was issued by financial-institution-sponsored trusts. This ABCP was also restructured in 2008, outside the Pan-Canadian Investors Committee restructuring plan.


In the case of ABCP held through participation units in funds entrusted to the CDPQ, the effects of ABCP restructuring are reflected in the valuation of these units, which is carried out in conformity with the Government's accounting policies. Entities in the Government's reporting entity do not hold ABCP investment securities per se.


Establishing the fair value of ABCP securities


Since there was no active market as at March 31, 2009 for ABCP securities issued in the wake of the restructuring efforts, entities in the Government's reporting entity that held such securities established, in accordance with CICA guidelines, fair values for the various types of ABCP securities using a valuation model based on assumptions regarding the recovery of different categories of assets, i.e., traditional, synthetic and high-risk assets. This model takes a probability-weighted approach and is based on, among other things, the valuation of cash flows and the use of certain public financial indices. The assumptions and probabilities used reflect 

  13.    Asset-backed commercial paper (ABCP) (cont'd)

    (in millions of dollars)


uncertainties regarding the amounts, the return and maturity of the cash flows, the liquidity risk, the nature and credit risk of the debt and the underlying financial assets, and credit spreads reflecting market conditions as at March 31, 2009. The assumptions, based on information available as at March 31, 2009, use observable market data, such as interest rates and credit quality and price, as much as possible. They also take into account specific aspects of the restructuring plan and are based partially on assumptions not supported by prices or rates observed on the market. A similar method was used by the CDPQ to evaluate its ABCP holdings.


Impact on the Government's results as at March 31, 2009


ABCP investments of entities in the Government's reporting entity


Following the valuation, the Government recognized, in its results for the year ending March 31, 2009, additional valuation losses of $37 million, bringing accumulated total losses recorded as at March 31, 2009 to $122 million. These losses break down as follows:


  • a valuation loss of $4 million ($35 million in 2007-2008) in regard to investments made by certain line-by-line consolidated agencies;

  • a valuation loss of $1 million ($12 million in 2007-2008) on investments recorded by organizations in the health and social services and education networks and reflected in their consolidated annual deficit posted to the Government's results;

  • a valuation loss of $32 million ($38 million in 2007-2008) on investments recorded by Government enterprises and reflected in the Government's revenue from these enterprises.


CDPQ participation units


As for ABCP included in the investment portfolios of participation deposit units with the CDPQ held by entities in the Government's reporting entity, the CDPQ recognized, in 2008-2009, unrealized valuation losses of $941 million ($422 million in 2007-2008) relating to this ABCP, bringing the cumulative amount of recognized unrealized valuation losses to $1 363 million as at March 31, 2009 ($422 million as at March 31, 2008). The amount of realized valuation losses recognized by the CDPQ in 2008-2009 was $45 million.


In addition to presenting the amounts invested in ABCP, the CDPQ said in its financial statements that it is subject to contingencies stemming from the guarantees it issued as part of the ABCP restructuring efforts. The share of these CDPQ guarantees allocated to participation units held by entities in the Government's reporting entity amounts to $1 533 million.

  13.    Asset-backed commercial paper (ABCP) (cont'd)

    (in millions of dollars)


The allowance for unrealized losses on ABCP relating to these units includes an amount of $143 million in respect of the guarantees issued by the CDPQ ($87 million as at March 31, 2008).


The valuation losses will be recognized in the Government's results, where applicable, in conformity with the Government's accounting policies. Accordingly, an amount of $6 million related to these losses was recorded in the Government's results in 2008-2009 (no amount recorded in 2007-2008).


  • In the case of units held by the Retirement Plans Sinking Fund, other pension plan assets and the Survivor Pension Plan Fund, valuation losses are taken into account in calculating the adjusted market value of these investments, where the difference between the real return based on market value and the forecast return is amortized over five years. In addition, actuarial gains and losses that arise from using the forecast rate of return to determine annual income are amortized on a straight-line basis over several years, in accordance with the periods set out in Note 7. Therefore, the valuation losses incurred by the CDPQ will affect, if applicable, the adjusted market value of investments and the Government's results for subsequent years. Accordingly, an amount of $6 million for valuation losses was recorded in the Government's results in 2008-2009.


  • The other participation deposit units held by entities in the Government's reporting entity are evaluated at cost. These units did not sustain a loss in value because the entities consider that the decline in market value of the participation units to an amount below their recorded value is not permanent, even though their market value takes into account the valuation losses incurred by the CDPQ.


Measurement uncertainty


The estimated fair value of ABCP investments as at March 31, 2009 as determined by ABCP-holding entities in the Government's reporting entity and by the CDPQ is surrounded by uncertainty and is not likely to be indicative of the definitive value or the future fair value of these investments. Although the management of these entities believes that its valuation technique is appropriate in the circumstances, changes to the main assumptions, particularly those used to determine discount rates, credit spreads, anticipated returns, the credit risk of the underlying assets and the value of various commitments and guarantees, could have a material impact on the fair value of new notes and other ABCP securities and on the establishment of the fair value of these ABCP securities in the coming fiscal years. Accordingly, resolution of these uncertainties could mean that the definitive value of these investments in subsequent periods differs considerably from the current best estimates of these entities' management. Revising this fair value could thus affect the determination of valuation losses and of the book value of the ABCP-related investments presented in the Government's consolidated financial statements.

  13.    Asset-backed commercial paper (ABCP) (cont'd)

    (in millions of dollars)


Government guarantee associated with ABCP


The maximum contribution of the Government, as a senior lender of the additional margin funding facility introduced under the Pan-Canadian Investors Committee restructuring plan, is $1 300 million. As at March 31, 2009, no amounts had been paid and no allowance for losses was recorded in connection with this guarantee. 


  14.    Comparative figures

    (in millions of dollars)


Certain comparative figures for 2008 were reclassified for consistency with the presentation adopted in 2009.


The following table presents the main reclassifications to the financial statements, notes and appendices:


Missions



    



    Health and Social Services




    (348)


    Education and Culture




    (340)


    Debt service




    688



Expenditure (Appendix 7)



    



    Debt service 




    


        Interest income on loans and advances to the health and
            social services and education network




    688


    Transfer






        Interest




    (688)



Pension plans and other employee future benefits (Note 7)



    



    Pension plans




    458


    Other pension plan assets




    458



Segment disclosures (Appendix 24)



    



    Agency and special funds






        Revenue




    (3 833)


        Expenditure




    (3 833)


    Consolidation adjustments






        Revenue




    3 833


        Expenditure




    3 833




APPENDIX 1

National Assembly, designated persons, Government departments and agencies whose financial transactions were conducted within 

the Consolidated Revenue Fund (1) 



Affaires municipales et Régions

    Commission municipale du Québec

    Régie du logement


Agriculture, Pêcheries et Alimentation

    Commission de protection du territoire agricole du Québec

    Régie des marchés agricoles et alimentaires du Québec


Assemblée nationale 


Conseil du trésor 

    Commission de la fonction publique


Conseil exécutif

    Commission d'accès à l'information


Culture, Communications et Condition féminine

    Commission des biens culturels du Québec

    Conseil du statut de la femme

    Conseil supérieur de la langue française

    Office québécois de la langue française


Développement durable, Environnement et Parcs

    Bureau d'audiences publiques sur l'environnement


Développement économique, Innovation et Exportation


Éducation, Loisir et Sport

    Commission consultative de l'enseignement privé

    Conseil supérieur de l'éducation


Emploi et Solidarité sociale


Famille et Aînés 

    Curateur public (2)


Finances 


Immigration et Communautés culturelles

    Conseil des relations interculturelles


  APPENDIX 1

National Assembly, designated persons, Government departments and agencies whose financial transactions were conducted within 

the Consolidated Revenue Fund (1) (cont'd)



Justice

    Comité de la rémunération des juges

    Commission des droits de la personne et des droits de la jeunesse

    Conseil de la magistrature

    Directeur des poursuites criminelles et pénales

    Office de la protection du consommateur

    Tribunal des droits de la personne

    Tribunal des professions


Personnes désignées par l'Assemblée nationale

    Commissaire au lobbyisme

    Directeur général des élections - Commission de la représentation

    Protecteur du citoyen

    Vérificateur général


Relations internationales


Ressources naturelles et Faune 


Revenu


Santé et Services sociaux

    Commissaire à la santé et au bien-être

    Office des personnes handicapées du Québec


Sécurité publique

    Bureau du coroner

    Commission québécoise des libérations conditionnelles

    Régie des alcools, des courses et des jeux


Services gouvernementaux


Tourisme


Transports

    Commission des transports du Québec


Travail

    Commission de l'équité salariale

    Conseil consultatif du travail et de la main-d'œuvre

    Conseil des services essentiels



(1) These entities have a fiscal year that ends on March 31.

(2) This entity also conducts fiduciary transactions that are not included in the Government's reporting entity.

  APPENDIX 2

Government agencies, special funds, sinking funds 
and other fund
 


Agencies (1)


Agence de l'efficacité énergétique

Agence des partenariats public-privé du Québec

Agence métropolitaine de transport (December 31)

Autorité des marchés financiers

Bibliothèque et Archives nationales du Québec

Bureau de décision et de révision en valeurs mobilières 

Centre de la francophonie des Amériques

Centre de recherche industrielle du Québec

Centre de services partagés du Québec

Commission de la capitale nationale du Québec

Commission de reconnaissance des associations d'artistes et des associations de producteurs

Commission des lésions professionnelles

Commission des normes du travail

Commission des relations du travail

Commission des services juridiques

Conseil des arts et des lettres du Québec

Conservatoire de musique et d'art dramatique du Québec (June 30)

Corporation d'hébergement du Québec

Corporation d'urgences-santé 

École nationale de police du Québec (2) (June 30)

École nationale des pompiers du Québec (2) (June 30)

Financement-Québec

Fondation de la faune du Québec

Fonds d'aide aux recours collectifs

Fonds d'assurance-prêts agricoles et forestiers

Fonds de la recherche en santé du Québec

Fonds québécois de la recherche sur la nature et les technologies

Fonds québécois de la recherche sur la société et la culture

Héma-Québec

Immobilière SHQ (2) (December 31)

Institut de la statistique du Québec

Institut de tourisme et d'hôtellerie du Québec (2) (June 30)

Institut national de santé publique du Québec

Investissement Québec

La Financière agricole du Québec

Musée d'art contemporain de Montréal

Musée de la civilisation

Musée national des beaux-arts du Québec

Office de la sécurité du revenu des chasseurs et piégeurs cris (June 30)

Office des professions du Québec

Office Québec-Amériques pour la jeunesse

Régie de l'assurance maladie du Québec

  APPENDIX 2

Government agencies, special funds, sinking funds 
and other fund
 (cont'd)


Agencies (1) (cont'd)


Régie de l'énergie

Régie des installations olympiques (October 31)

Régie du bâtiment du Québec

Régie du cinéma

Services Québec

Société de développement de la Baie James (December 31)

Société de développement des entreprises culturelles

Société de financement des infrastructures locales du Québec

Société de la Place des Arts de Montréal (1(August 31)

Société de l'assurance automobile du Québec (December 31)

Société de télédiffusion du Québec (Télé-Québec) (August 31)

Société des établissements de plein air du Québec

Société des parcs de sciences naturelles du Québec

Société des Traversiers du Québec

Société d'habitation du Québec 

Société du Centre des congrès de Québec

Société du Grand Théâtre de Québec (August 31)

Société du Palais des congrès de Montréal

Société du parc industriel et portuaire de Bécancour

Société immobilière du Québec

Société nationale de l'amiante

Société québécoise d'assainissement des eaux

Société québécoise de récupération et de recyclage

Société québécoise d'information juridique

Tribunal administratif du Québec




Special funds (1)


Assistance Fund for Independent Community Action

Assistance Fund for Victims of Crime

Collection Fund

Financial Assistance Fund for Certain Disaster Areas

Financing Fund

Fonds de fourniture de biens ou de services du ministère de l'Emploi et de la Solidarité sociale

Fonds de fourniture de biens ou de services du ministère du Revenu

Fonds de la sécurité routière

Fonds du centre financier de Montréal

Fonds du patrimoine culturel québécois

Fonds du patrimoine minier

Fonds québécois d'initiatives sociales

  APPENDIX 2

Government agencies, special funds, sinking funds 
and other fund
 (cont'd)


Special funds (1) (cont'd)


Forestry Fund 

Fund for the Contributions of Motorists to Public Transit

Fund for the Promotion of a Healthy Lifestyle 

Fund for the Sale of Goods and Services of the Ministère des Transports

Geographic Information Fund

Government Air Service Fund

Green Fund

Health Services Fund

Horse-Racing Industry Fund

Ice Storm Fund

Information Technology Fund of the Conseil du trésor

Information Technology Fund of the Ministère de l'Emploi et de la Solidarité sociale 

Information Technology Fund of the Ministère du Revenu

Labour Market Development Fund

Land Information Fund

Police Services Fund

Prescription Drug Insurance Fund

Regional Development Fund

Register Fund of the Ministère de la Justice

Road Network Preservation and Improvement Fund

Rolling Stock Management Fund

Sports and Physical Activity Development Fund

Support Payments Fund (3)

Tourism Partnership Fund




Sinking funds


Accumulated Sick Leave Fund

Sinking Fund relating to Borrowings by General and Vocational Colleges in Québec

Sinking Fund relating to Borrowings by Québec Health and Social Services Agencies

Sinking Fund relating to Borrowings by Québec School Boards

Sinking Fund relating to Borrowings by Québec University Establishments

Sinking Fund of Société québécoise d'assainissement des eaux 

Sinking Fund relating to Government Borrowings (Debt Sinking Fund)

Sinking Fund for Government Borrowings contracted to finance the health and social services and     education networks and Government enterprises 

Retirement Plans Sinking Fund 

Survivor Pension Plan Fund

  APPENDIX 2

Government agencies, special funds, sinking funds 
and other fund
 (cont'd)


Other fund 


Generations Fund



(1)    In general, these agencies and special funds have a fiscal year that ends on March 31. If not, their year-end date is indicated in parentheses and unaudited interim data are used for the period between the end of their fiscal year and March 31.

(2)    No data are available for the period between the end of their fiscal year and March 31.

(3)    This fund also conducts fiduciary transactions that are not included in the Government's reporting entity.

 

  APPENDIX 3

Organizations in the Government's health and social services 
and education networks



Health and social services network 


Agencies and other regional authorities (1)


Agence de la santé et des services sociaux de Chaudière-Appalaches

Agence de la santé et des services sociaux de la Capitale-Nationale

Agence de la santé et des services sociaux de la Côte-Nord

Agence de la santé et des services sociaux de la Gaspésie-Îles-de-la-Madeleine

Agence de la santé et des services sociaux de la Mauricie et du Centre-du-Québec

Agence de la santé et des services sociaux de la Montérégie

Agence de la santé et des services sociaux de l'Abitibi-Témiscamingue

Agence de la santé et des services sociaux de Lanaudière

Agence de la santé et des services sociaux de Laval

Agence de la santé et des services sociaux de l'Estrie

Agence de la santé et des services sociaux de l'Outaouais

Agence de la santé et des services sociaux de Montréal

Agence de la santé et des services sociaux des Laurentides

Agence de la santé et des services sociaux du Bas-Saint-Laurent

Agence de la santé et des services sociaux du Saguenay-Lac-St-Jean

Centre régional de santé et de services sociaux de la Baie-James (2)

Conseil Cri de la santé et des services sociaux de la Baie James (2)

Régie régionale de la santé et des services sociaux du Nunavik



Public institutions (1)


Centre André-Boudreau

Centre d'accueil Dixville inc.

Centre de protection et de réadaptation de la Côte-Nord

Centre de réadaptation Constance-Lethbridge

Centre de réadaptation de la Gaspésie (Le)

Centre de réadaptation de l'Ouest de Montréal

Centre de réadaptation en alcoolisme et toxicomanie de Chaudière-Appalaches

Centre de réadaptation en déficience intellectuelle (CRDI) Chaudière-Appalaches

Centre de réadaptation en déficience intellectuelle de Québec

Centre de réadaptation en déficience intellectuelle du Bas-Saint-Laurent

Centre de réadaptation en déficience intellectuelle du Saguenay-Lac-Saint-Jean

Centre de réadaptation en déficience intellectuelle Gabrielle-Major

Centre de réadaptation en déficience intellectuelle Montérégie-Est

Centre de réadaptation en déficience physique Chaudière-Appalaches

Centre de réadaptation en déficience physique le Bouclier


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks
 (cont'd)



Health and social services network (cont'd)


Public institutions (1) (cont'd)


Centre de réadaptation Estrie inc.

Centre de réadaptation Interval

Centre de réadaptation La Maison

Centre de réadaptation la Myriade

Centre de réadaptation Lisette-Dupras

Centre de réadaptation Ubald-Villeneuve

Centre de santé et de services sociaux Cavendish

Centre de santé et de services sociaux Champlain

Centre de santé et de services sociaux Cléophas-Claveau

Centre de santé et de services sociaux d'Ahuntsic et Montréal-Nord

Centre de santé et de services sociaux d'Antoine-Labelle

Centre de santé et de services sociaux d'Argenteuil

Centre de santé et de services sociaux d'Arthabaska-et-de-l'Érable

Centre de santé et de services sociaux de Beauce

Centre de santé et de services sociaux de Bécancour-Nicolet-Yamaska

Centre de santé et de services sociaux de Bordeaux-CartiervilleSaint-Laurent

Centre de santé et de services sociaux de Charlevoix

Centre de santé et de services sociaux de Chicoutimi

Centre de santé et de services sociaux de Dorval-Lachine-Lasalle

Centre de santé et de services sociaux de Gatineau

Centre de santé et de services sociaux de Jonquière

Centre de santé et de services sociaux de Kamouraska

Centre de santé et de services sociaux de la Baie-des-Chaleurs

Centre de santé et de services sociaux de la Basse-Côte-Nord

Centre de santé et de services sociaux de la Côte-de-Gaspé

Centre de santé et de services sociaux de la Haute-Côte-Nord

Centre de santé et de services sociaux de la Haute-Gaspésie

Centre de santé et de services sociaux de la Haute-Yamaska

Centre de santé et de services sociaux de la Matapédia

Centre de santé et de services sociaux de la Minganie

Centre de santé et de services sociaux de la Mitis

Centre de santé et de services sociaux de la Montagne

Centre de santé et de services sociaux de la MRC-de-Coaticook

Centre de santé et de services sociaux de la Pointe-de-l'Île

Centre de santé et de services sociaux de la région de Thetford

Centre de santé et de services sociaux de la Vallée-de-la-Batiscan

Centre de santé et de services sociaux de la Vallée-de-la-Gatineau

Centre de santé et de services sociaux de Lac-Saint-Jean-Est

  APPENDIX 3

Organizations in the Government's health and social services 
and education networks 
(cont'd)



Health and social services network (cont'd)


Public institutions (1) (cont'd)


Centre de santé et de services sociaux de la Vallée-de-l'Or

Centre de santé et de services sociaux de la Vieille-Capitale

Centre de santé et de services sociaux de Laval

Centre de santé et de services sociaux de l'Énergie

Centre de santé et de services sociaux de l'Hématite

Centre de santé et de services sociaux de l'Ouest-de-l'Île

Centre de santé et de services sociaux de Manicouagan

Centre de santé et de services sociaux de Maskinongé

Centre de santé et de services sociaux de Matane

Centre de santé et de services sociaux de Memphrémagog

Centre de santé et de services sociaux de Montmagny-L'Islet

Centre de santé et de services sociaux de Papineau

Centre de santé et de services sociaux de Port-Cartier

Centre de santé et de services sociaux de Portneuf

Centre de santé et de services sociaux de Québec-Nord

Centre de santé et de services sociaux de Rimouski-Neigette

Centre de santé et de services sociaux de Rivière-du-Loup

Centre de santé et de services sociaux de Rouyn-Noranda

Centre de santé et de services sociaux de Saint-Jérôme

Centre de santé et de services sociaux de Saint-Léonard et Saint-Michel

Centre de santé et de services sociaux de Sept-Îles

Centre de santé et de services sociaux de Témiscaming-et-de-Kipawa

Centre de santé et de services sociaux de Témiscouata

Centre de santé et de services sociaux de Thérèse De Blainville

Centre de santé et de services sociaux de Trois-Rivières

Centre de santé et de services sociaux de Vaudreuil-Soulanges

Centre de santé et de services sociaux des Aurores-Boréales

Centre de santé et de services sociaux des Basques

Centre de santé et de services sociaux des Collines

Centre de santé et de services sociaux des Etchemins

Centre de santé et de services sociaux des ÎIes

Centre de santé et de services sociaux des Pays-d'en-Haut

Centre de santé et de services sociaux des Sommets

Centre de santé et de services sociaux des Sources

Centre de santé et de services sociaux Domaine-du-Roy

Centre de santé et de services sociaux Drummond

Centre de santé et de services sociaux du Coeur-de-l'Île

Centre de santé et de services sociaux du Grand Littoral


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks 
(cont'd)



Health and social services network (cont'd)


Public institutions (1) (cont'd)


Centre de santé et de services sociaux du Granit

Centre de santé et de services sociaux du Haut-Saint-François

Centre de santé et de services sociaux du Haut-Saint-Laurent

Centre de santé et de services sociaux du Haut-Saint-Maurice

Centre de santé et de services sociaux du Lac-des-Deux-Montagnes

Centre de santé et de services sociaux du Lac-Témiscamingue

Centre de santé et de services sociaux du Nord de Lanaudière

Centre de santé et de services sociaux du Pontiac

Centre de santé et de services sociaux du Rocher-Percé

Centre de santé et de services sociaux du Sud de Lanaudière

Centre de santé et de services sociaux du Sud-OuestVerdun

Centre de santé et de services sociaux du Suroît

Centre de santé et de services sociaux du Val-Saint-François

Centre de santé et de services sociaux Haut-RichelieuRouville

Centre de santé et de services sociaux - Institut Universitaire de gériatrie de Sherbrooke

Centre de santé et de services sociaux Jardins-Roussillon

Centre de santé et de services sociaux Jeanne-Mance

Centre de santé et de services sociaux la Pommeraie

Centre de santé et de services sociaux les Eskers de l'Abitibi

Centre de santé et de services sociaux Lucille-Teasdale

Centre de santé et de services sociaux Maria-Chapdelaine

Centre de santé et de services sociaux Pierre-Boucher

Centre de santé et de services sociaux Pierre-De Saurel

Centre de santé et de services sociaux Richelieu-Yamaska

Centre de santé Inuulitsivik

Centre de santé Tulattavik de l'Ungava

Centre de services en déficience intellectuelle Mauricie/Centre-du-Québec

Centre de soins prolongés Grace Dart / Grace Dart Extended Care Centre

Centre d'hébergement et de soins de longue durée de St-Andrew-de-Father-Dowd-et-de-St-Margaret

Centre Dollard-Cormier (Le)

Centre du Florès

Centre hospitalier affilié universitaire de Québec

Centre hospitalier de l'Université de Montréal

Centre hospitalier de St. Mary

Centre hospitalier régional de Trois-Rivières

Centre hospitalier universitaire de Québec

Centre hospitalier universitaire de Sherbrooke

Centre hospitalier universitaire Sainte-Justine


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks
 (cont'd)



Health and social services network (cont'd)


Public institutions (1) (cont'd)


Centre Jean-Patrice-Chiasson/Maison Saint-Georges (Le)

Centre Jellinek

Centre jeunesse Chaudière-Appalaches

Centre jeunesse de la Mauricie et du Centre-du-Québec (Le)

Centre jeunesse de la Montérégie

Centre jeunesse de l'Abitibi-Témiscamingue (C.J.A.T.)

Centre jeunesse de Laval

Centre jeunesse de l'Estrie

Centre jeunesse de Montréal (Le)

Centre jeunesse de Québec

Centre jeunesse des Laurentides

Centre jeunesse du Bas-St-Laurent

Centre jeunesse du Saguenay-Lac-Saint-Jean (Le)

Centre jeunesse Gaspésie/Les Îles

CLSC Naskapi

Centre Miriam

Centre Montérégien de réadaptation

Centre Normand

Centre Notre-Dame de l'Enfant (Sherbrooke) Inc.

Centre régional de réadaptation La Ressourse

Centre régional de santé et de services sociaux de la Baie-James (2)

Centre universitaire de santé McGill

Centres de la jeunesse et de la famille Batshaw (Les)

Centres jeunesse de Lanaudière (Les)

Centres jeunesses de l'Outaouais (Les)

CHSLD Juif de Montréal

Clair Foyer Inc.

Conseil Cri de la santé et des services sociaux de la Baie James (2)

Corporation du Centre de réadaptation Lucie-Bruneau (La)

Corporation du Centre hospitalier gériatrique Maimonides (La)

Corporation du Centre hospitalier Pierre-Janet (La)

CRDI Normand-Laramée

Domrémy Mauricie/Centre-du-Québec

Hôpital Catherine Booth de l'Armée du Salut

Hôpital Charles Lemoyne

Hôpital Chinois de Montréal (1963) (L')

Hôpital Douglas

Hôpital du Sacré-Coeur de Montréal

  APPENDIX 3

Organizations in the Government's health and social services 
and education networks 
(cont'd)



Health and social services network (cont'd)


Public institutions (1) (cont'd)


Hôpital Général Juif Sir Mortimer B. Davis (L')

Hôpital Jeffery HaleSaint Brigid's 

Hôpital Juif de réadaptation

Hôpital Louis-H. Lafontaine

Hôpital Maisonneuve-Rosemont

Hôpital Mont-Sinaï

Hôpital Rivière-des-Prairies

Hôpital Santa Cabrini

Hôtel-Dieu de Lévis

Institut Canadien-Polonais du Bien-être Inc.

Institut de cardiologie de Montréal

Institut de réadaptation en déficience physique de Québec

Institut de réadaptation Gingras-Lyndsay-de-Montréal

Institut Nazareth et Louis-Braille

Institut Philippe-Pinel de Montréal

Institut Raymond-Dewar

Institut universitaire de cardiologie et de pneumologie de Québec

Institut universitaire de gériatrie de Montréal

Institut universitaire en santé mentale de Québec

La Résidence de Lachute

Pavillon du Parc Inc.

Services de réadaptation du Sud-Ouest et du Renfort

Services de réadaptation L'Intégrale

Virage, Réadaptation en alcoolisme et toxicomanie (Le)




Education network


School boards (3)


Commission scolaire au Coeur-des-Vallées

Commission scolaire Central Québec

Commission scolaire Crie

Commission scolaire de Charlevoix

Commission scolaire de Kamouraska-Rivière-du-Loup

Commission scolaire de l'Énergie

Commission scolaire de l'Estuaire


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks 
(cont'd)



Education network (cont'd)


School boards (3) (cont'd)


Commission scolaire de l'Or-et-des-Bois

Commission scolaire de la Baie-James

Commission scolaire de la Beauce-Etchemin

Commission scolaire de la Capitale

Commission scolaire de la Côte-du-Sud

Commission scolaire De La Jonquière

Commission scolaire de la Moyenne-Côte-Nord

Commission scolaire de la Pointe-de-l'Île

Commission scolaire de la Région-de-Sherbrooke

Commission scolaire de la Riveraine

Commission scolaire de la Rivière-du-Nord

Commission scolaire de la Seigneurie-des-Mille-Îles

Commission scolaire de la Vallée-des-Tisserands

Commission scolaire de Laval

Commission scolaire de Montréal

Commission scolaire de Portneuf

Commission scolaire de Rouyn-Noranda

Commission scolaire de Saint-Hyacinthe

Commission scolaire de Sorel-Tracy

Commission scolaire des Affluents

Commission scolaire des Appalaches

Commission scolaire des Bois-Francs

Commission scolaire des Chênes

Commission scolaire des Chic-Chocs

Commission scolaire des Découvreurs

Commission scolaire des Draveurs

Commission scolaire des Grandes-Seigneuries

Commission scolaire des Hautes-Rivières

Commission scolaire des Hauts-Bois-de-l'Outaouais

Commission scolaire des Hauts-Cantons

Commission scolaire des Îles

Commission scolaire des Laurentides

Commission scolaire des Monts-et-Marées

Commission scolaire des Navigateurs

Commission scolaire des Patriotes

Commission scolaire des Phares

Commission scolaire des Portages-de-l'Outaouais

Commission scolaire des Premières-Seigneuries

Commission scolaire des Rives-du-Saguenay

  APPENDIX 3

Organizations in the Government's health and social services 
and education networks 
(cont'd)



Education network (cont'd)


School boards (3) (cont'd)


Commission scolaire des Samares

Commission scolaire des Sommets

Commission scolaire des Trois-Lacs

Commission scolaire du Chemin-du-Roy

Commission scolaire du Fer

Commission scolaire du Fleuve-et-des-Lacs

Commission scolaire du Lac-Abitibi

Commission scolaire du Lac-Saint-Jean

Commission scolaire du Lac-Témiscamingue

Commission scolaire du Littoral

Commission scolaire du Pays-des-Bleuets

Commission scolaire du Val-des-Cerfs

Commission scolaire Eastern Shores

Commission scolaire Eastern Townships

Commission scolaire English-Montréal

Commission scolaire Harricana

Commission scolaire Kativik

Commission scolaire Lester-B.-Pearson

Commission scolaire Marguerite-Bourgeoys

Commission scolaire Marie-Victorin

Commission scolaire New Frontiers

Commission scolaire Pierre-Neveu

Commission scolaire René-Lévesque

Commission scolaire Riverside

Commission scolaire Sir-Wilfrid-Laurier

Commission scolaire Western Québec


Comité de gestion de la taxe scolaire de l'Île de Montréal



General and vocational colleges (CEGEPs) (4) 


Cégep André-Laurendeau

Cégep Beauce-Appalaches

Cégep d'Ahuntsic

Cégep d'Alma

Cégep de Baie-Comeau

Cégep de Bois-de-Boulogne

Cégep de Chicoutimi

Cégep de Drummondville


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks
 (cont'd)



Education network (cont'd)


General and vocational colleges (CEGEPs) (4) (cont'd)


Cégep de Granby-Haute-Yamaska

Cégep de Jonquière

Cégep de la Gaspésie et des Îles

Cégep de La Pocatière

Cégep de l'Abitibi-Témiscamingue

Cégep de Lévis-Lauzon

Cégep de Limoilou

Cégep de l'Outaouais

Cégep de Maisonneuve

Cégep de Matane

Cégep de Rimouski

Cégep de Rivière-du-Loup

Cégep de Rosemont

Cégep de Sainte-Foy

Cégep de Saint-Félicien

Cégep de Saint-Hyacinthe

Cégep de Saint-Jérôme

Cégep de Saint-Laurent

Cégep de Sept-Îles

Cégep de Sherbrooke

Cégep de Sorel-Tracy

Cégep de Thetford

Cégep de Trois-Rivières

Cégep de Valleyfield

Cégep de Victoriaville

Cégep du Vieux Montréal

Cégep Édouard Montpetit

Cégep François-Xavier Garneau

Cégep Gérald-Godin

Cégep John Abbott

Cégep Lionel Groulx

Cégep Marie-Victorin

Cégep Montmorency

Cégep régional de Lanaudière

Cégep Saint-Jean-sur-Richelieu

Champlain Regional College

Collège Dawson

Collège Héritage

Collège Shawinigan

Vanier College


  APPENDIX 3

Organizations in the Government's health and social services 
and education networks
 (cont'd)



Education network (cont'd)


Université du Québec and its branches (4)


École de technologie supérieure

École nationale d'administration publique

Institut national de la recherche scientifique

Université du Québec 

Université du Québec à Chicoutimi

Université du Québec à Montréal

Université du Québec à Rimouski

Université du Québec à Trois-Rivières

Université du Québec en Abitibi-Témiscamingue

Université du Québec en Outaouais


Trust to ensure that the Université du Québec à Montréal (UQAM) is not affected by the financial impact of the Îlot Voyageur



(1)    Entities in the health and social services network have a fiscal year that ends on March 31.

(2)    These entities act as agencies and public institutions.

(3)    School boards have a fiscal year that ends on June 30. Unaudited interim data are used for the period between the end of their fiscal year and March 31.

(4)    Colleges have a fiscal year that ends on June 30 and the Université du Québec and its branches, a fiscal year that ends on May 31. Financial results at their fiscal year-end are adjusted thereafter only if financial transactions between that date and March 31 have a significant impact on the Government's financial position or results.

  APPENDIX 4

Government enterprises (1)





Capital Financière agricole inc.

Fonds d'indemnisation du courtage immobilier (December 31)

Hydro-Québec (2) (December 31)

IQ FIER inc.

IQ Immigrants Investisseurs inc.

Loto-Québec

Société des alcools du Québec 

Société générale de financement du Québec (December 31)

Société Innovatech du Grand Montréal

Société Innovatech du Sud du Québec 

Société Innovatech Québec et Chaudière-Appalaches

Société Innovatech Régions ressources



(1)    In general, Government enterprises have a fiscal year that ends on March 31. If not, their year-end date is indicated in parentheses and unaudited interim data are used for the period between the end of their fiscal year and March 31.

(2)    This enterprise also conducts fiduciary transactions that are not included in the Government's reporting entity.


  APPENDIX 5

Government department, agencies and funds which conduct fiduciary transactions that are not included in the Government's reporting entity (1)




Caisse de dépôt et placement du Québec (December 31)

Cautionnements individuels des agents de voyages

Comité Entraide - public and parapublic sectors (December 31)

Commission administrative des régimes de retraite et d'assurances (December 31)

Commission de la construction du Québec (December 31)

Conseil de gestion de l'assurance parentale (December 31)

Curateur public (fiduciary section) (December 31)

Fonds central de soutien à la réinsertion sociale (December 31)

Fonds d'assurance parentale (December 31)

Fonds d'assurance-récolte 

Fonds d'assurance-stabilisation des revenus agricoles

Fonds de développement et de reconnaissance des compétences de la main-d'oeuvre

Fonds d'indemnisation des clients des agents de voyages

Fonds d'indemnisation des services financiers

Fonds du compte de stabilisation du revenu agricole

Guarantee Insurance Fund administered by the Régie des marchés agricoles et alimentaires du Québec

Hydro-Québec - pension plan (December 31)

Ministère du Revenu- Property under administration (December 31)

Régie des rentes du Québec 

Support Payments Fund (fiduciary section)

Trust funds

Trust funds - Goods and Services Tax




(1)    In general, these organizations and funds have a fiscal year that ends on March 31. If not, their year-end date is indicated in parentheses.

  APPENDIX 6

Breakdown of revenue

FISCAL YEAR ENDED MARCH 31, 2009

(in millions of dollars)

(1)    Based on the revenue and expenditure forecasts presented in the 2008-2009 Budget of March 13, 2008. 


  APPENDIX 7

Breakdown of expenditure

FISCAL YEAR ENDED MARCH 31, 2009 

(in millions of dollars)

(1)    Based on the revenue and expenditure forecasts presented in the 2008-2009 Budget of March 13, 2008. 

(2)    After deducting of $666 million ($720 million in 2008), including $660 million ($688 million in 2008) for interest income on loans and advances to the health and social services and education networks and $6 million ($32 million in 2008) in revenue of the sinking funds relating to borrowings by the health and social services and education networks.

(3)    Including $1 454 million ($1 290 million in 2008) for the depreciation of fixed assets.

(4)    Including $8 million ($272 million in 2008) for the amortization of the deferred foreign exchange gain. 

  APPENDIX 8

Short-term investments (1) 

AS AT MARCH 31, 2009

(in millions of dollars)

* ABCP: Asset-backed commercial paper.

(1) Rates of return on short-term investments vary mainly from 0.30% to 11.38%.  


  APPENDIX 9

Accounts receivable

AS AT MARCH 31, 2009

(in millions of dollars)

  APPENDIX 10

Investment in Government enterprises

AS AT MARCH 31, 2009

(in millions of dollars)


Investment in Government enterprises 

(1)    Equity value was determined on the basis of audited financial statements as at March 31, 2009.

(2)    Equity value was determined on the basis of audited financial statements as at December 31, 2008, and adjusted according to unaudited interim results as at March 31, 2009.

(3)    Equity value was determined on the basis of unaudited financial statements as at March 31, 2009.

(4)    Loans and advances to Hydro-Québec have no fixed maturity date, while those to IQ FIER inc. do not bear interest and mature between June 2020 and January 2024, those to Loto-Québec bear interest at rates of 1.0% to 4.1% and mature between February 2010 and December 2015, and those to Capital Financière agricole inc. bear interest at a rate of 0.7% and mature in April 2009.

(5)    Adjustments to equity value stem from the elimination of unrealized gains and losses on transactions with entities in the Government's reporting entity.

  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Summary of the financial statements of Government enterprises


(1)    On the basis of audited financial statements as at March 31, 2009.

(2)    On the basis of audited financial statements as at December 31, 2008.

(3)    On the basis of unaudited financial statements as at March 31, 2009.

(4)    The percentage of the Government's investment in this enterprise is 90.10%.

(5)    The adjustment in the enterprises' surplus stems from taking into account the unaudited interim results as at March 31, 2009 of enterprises whose fiscal year-end differs from that of the Government (decrease of $28 million), contributions by Loto-Québec to entities in the Government's reporting entity and charged to its shareholders' equity (decrease of $81 million) and the elimination of unrealized gains and losses on transactions with entities in the Government's reporting entity (decrease of $10 million).

(6)    The adjustment in the enterprises' other comprehensive income items stems from the unaudited interim results as at March 31, 2009 of enterprises whose fiscal year-end differs from that of the Government.

  






(7)    The adjustment in the enterprises' net equity stems from the unaudited interim results as at March 31, 2009 of enterprises whose fiscal year-end differs from that of the Government, which led to an increase of $1 309 million ($1 305 million in 2008), from the elimination of unrealized gains and losses on transactions with entities in the Government's reporting entity, which resulted in a decrease of $6 million, and from the issue of capital stock, which led to an increase of $250 million.

(8)    The Government guarantees the corporation's borrowings contracted in various currencies. The net value of these borrowings stands at $36 386 million ($33 811 million as at March 31, 2008). The Government has granted a financial guarantee for Gentilly-2 of $685 million ($685 million in 2008), for which Hydro-Québec has set up a trust of $50 million ($44 million in 2008).

(9)    Debts in the amount of $206 million ($288 million in 2007) and other liabilities of $10 million are guaranteed by various types of security on accounts receivable, inventories and other tangible and intangible assets and by hypothecs on the universality of property, whose book value totalled $647 million as at December 31, 2008 ($822 million in 2007).

(10) Debts with the Québec government total $483 million.

(11) The Government guarantees payment of the principal on these debts.

  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Debt schedule after the impact of derivative instruments

(1)    The schedule for these enterprises is based on the contractual amount of principal payable, whereas the enterprises evaluate their debts (presented on the previous page) at cost after amortization in their financial statements, using the effective interest rate method.

(2)    The amount for fiscal 2009-2010 was determined on the basis of debt repayments by these enterprises during their fiscal year ending December 31, 2009. The same method was used for subsequent years.


  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Main contractual obligations of enterprises 


Hydro-Québec


Hydro-Québec has provided for capital and intangible investments of about $4 700 million for the 2009 calendar year ($4 143 million in 2008). 


The corporation has made a commitment to Churchill Falls (Labrador) Corporation Limited to buy almost all of the power produced by the Churchill Falls generating station, which has a rated capacity of 5 428 MW. This contract, which expires in 2016, will be renewed automatically for a further 25 years, according to the terms and conditions already agreed upon. A contract guaranteeing the availability of 682 MW of additional power until 2041 for the November 1 to March 31 winter period has also been concluded with this enterprise.


As at December 31, 2008, the corporation was committed under 115 contracts to purchase electricity from other power producers, for an installed capacity of roughly 5 792 MW. It plans to purchase about 22 TWh of energy annually over the terms of these contracts, which extend to 2045. Most of the contracts include renewal clauses.


Taking into account electricity purchase contracts as a whole, the corporation plans to make the following minimum payments over the next five years:



December 31, 2008



2009



    

    690


2010




    1 098


2011




    1 158


2012




    1 376


2013




    1 596


Total




    5 918



IQ Immigrants Investisseurs inc.


During the normal course of its activities, this enterprise contracted commitments representing $154 million ($150 million in 2008) for non-refundable financial contributions whose cash outflow has not been authorized. This amount does not necessarily represent future cash requirements, as some of these commitments may be cancelled before they give rise to disbursements.

  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Main contractual obligations of enterprises (cont'd)


IQ FIER inc.


During the normal course of its activities, this enterprise contracted various commitments totalling $117 million ($166 million in 2008). These commitments represent investment agreements authorized by the corporation. This amount does not necessarily represent future cash requirements, as some of them will expire or may be cancelled before they give rise to disbursements.


Société générale de financement du Québec


As at December 31, 2008, the corporation was committed to acquiring tangible assets and purchasing services and raw materials aggregating $66 million over the next few years ($175 million in 2007). It was also committed to subscribing for long-term investments worth $30 million at that date, in addition to those recorded as short- and long-term liabilities in its balance sheet.


Various enterprises


Under operating and long-term leases, certain Government enterprises were committed, as at 
March 31, 2009, to making minimum undiscounted payments totalling $468 million ($509 million in 2008).


Maturing
on March 31



    Total



2010

    


    


    73


2011





    69


2012





    58


2013





    50


2014





    44







    294


2015-2018





    174







    468



Some enterprises contracted various other commitments during the normal course of their activities.  These commitments, totalling $54 million ($132 million in 2008), represent authorized commitments that had not been disbursed as at March 31, 2009. Some of them might not be paid if the events do not take place.


  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Main contingencies of enterprises


Hydro-Québec


Hydro-Québec provided the purchasers of its investments with guarantees in respect to contingent tax liabilities and certain other customary representations. These guarantees, for which no liability was recognized, will be in effect until the applicable limitation periods expire.


As at March 31, 2009, the potential maximum amount that Hydro-Québec could have had to pay under letters of credit and guarantees totalled $413 million ($365 million in 2008). Of this amount, $334 million ($288 million in 2008) was related to the purchase of energy. Some guarantees worth a total of $145 million mature between 2009 and 2019, while others in the amount of $268 million have no fixed maturity date.


Société générale de financement


During the normal course of its activities, this corporation provided significant guarantees to third parties as follows: 


  • Under the terms of its credit agreements, the corporation undertook to indemnify the holders of U.S. indebtedness in the event of changes in the laws with regard to tax withholdings. These indemnification agreements will be in effect until the expiry of the loan agreements and do not contain any limits. Given the nature of these agreements, the corporation cannot determine the maximum payment it may have to make to the holders. The corporation did not recognize an amount on the consolidated balance sheet related to these indemnification agreements.


  • When an investment is sold in whole or in part, in addition to any potential indemnification arising from the failure to execute restrictive clauses or from non-compliance with a declaration of guarantee, the corporation may agree to give a guarantee against any claim resulting from past activities. In general, the terms and conditions and amount of such indemnification are limited by agreement. As a result of the nature of these indemnification agreements, the corporation cannot estimate the maximum potential amount of future payments it could be required to make to the indemnified parties. The corporation did not recognize an amount on the consolidated balance sheet for these potential indemnifications.


  APPENDIX 10

Investment in Government enterprises (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Material transactions and balances of enterprises with departments, agencies and special funds




    2009


    2008



Inter-entity transactions






    Revenue


    192


    178


    Expenditure 


    1 361


    1 166



Inter-entity balances






    Financial assets


    3 683


    3 726


    Non-financial assets - Deferred revenue, net of fixed assets


    109


    103


    Long-term debt


    83


    96


    Other liabilities


    1 151


    1 505


    Net equity






        Capital stock issued






            Société générale de financement du Québec


    250


    ―  


        Dividends






            Hydro-Québec


    2 252


    2 095


            Loto-Québec


    1 375


    1 361


            Société des alcools du Québec


    806


    762


        Contributions to the Gouvernement du Québec

            for specified purpose accounts


    80


    76


  APPENDIX 11

Long-term investments

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    Investments with municipalities and municipal bodies bear interest at rates of up to 8.7%, loans to students bear interest at rates of 3% to 13%, and investments with enterprises, universities not included in the reporting entity, non-profit and fiduciary organizations and other organizations bear interest at rates of up to 8%, except for enterprise loans, which bear interest at rates of up to 15%.

(2)    Guarantees received for loans and advances amount to $125 million ($94 million as at March 31, 2008). Loans to municipal bodies are secured by real estate mortgages.

(3)    Loans and advances include, among others, loans with special repayment clauses based on royalties, for a total amount of $199 million ($153 million as at March 31, 2008).

(4)    These investments were reduced by $328 million ($361 million as at March 31, 2008) to reflect the grant portion relating to the concessionary terms.

(5)    Bonds and notes to universities excluded from the Government's reporting entity funded investments in fixed assets and are repayable mainly through subsequent budgetary appropriations from the Government.

(6)    Under the University Investments Act (R.S.Q., c. I-17), the Government created a sinking fund in which the amounts deposited by the responsible minister are allocated exclusively to the repayment of borrowings (principal and interest) for the funding of fixed assets of university institutions in Québec.

  APPENDIX 11

Long-term investments (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Maturity of investments

on March 31 

  APPENDIX 12

Generations Fund 

AS AT MARCH 31, 2009

(in millions of dollars)


The purpose of the Generations Fund, created on January 1, 2007 under the Act to reduce the debt and establish the Generations Fund (R.S.Q., c. R-2.2.0.1)is to reduce the Government's debt. Under this Act, the fund's assets are used exclusively to repay the Government's debt.


Revenue

for the fiscal year ended March 31, 2009

  APPENDIX 12

Generations Fund (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Change in fund balance

for the fiscal year ended March 31, 2009




_____________________________________________________________







Statement of financial position

as at March 31, 2009

(1)    Participation deposits in a specific fund at the Caisse de dépôt et placement du Québec are expressed in units. These units are repaid with prior notice according to the Caisse's settlement terms and conditions at the market value of the fund's equity at the end of each month. As at March 31, 2009, the Generations Fund had 1 741 055 participation units whose fair value was $1 374 million (1 121 149 participation units whose fair value was $1 092 million as at March 31, 2008).

  APPENDIX 13

Cash (Bank overdraft)

AS AT MARCH 31, 2009

(in millions of dollars)


  APPENDIX 14

Accounts payable and accrued expenses

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    Including an allowance of $377 million ($362 million as at March 31, 2008) for pay equity divided between "Remuneration" and "Transfers".




  APPENDIX 15

Deferred revenue

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    These amounts are encumbered by externally-sourced allocations and must be used for the following purposes:

  APPENDIX 16

Other liabilities

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    A sinking fund relating to borrowings by Québec university establishments of $146 million ($137 million in 2008) has been allocated to pay for this allowance. Information in this regard is given in Appendix 11 - Long-term investments.


  APPENDIX 17

Debts 

AS AT MARCH 31, 2009

(in millions of dollars)

  APPENDIX 17

Debts (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    Short-term borrowings in 2009 include $361 million in banker's acceptances and bank loans ($502 million in 2008), $8 million in notes at par ($13 million in 2008), $1 983 million in discounted notes ($2 845 million in 2008) and $48 million (no amount in 2008) in borrowings contracted with housing bureaus.

(2)    Including $4 168 million ($3 906 million as at March 31, 2008) for repaying the debt in Canadian dollars and $806 million ($735 million as at March 31, 2008) for repaying the debt in U.S. dollars.

  APPENDIX 17

Debts (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Sinking fund

Change in fund balance

for the fiscal year ended March 31, 2009



_____________________________________________________________



Statement of financial position

as at March 31, 2009

  APPENDIX 18

Net investment in the health and social services 

and education networks

AS AT MARCH 31, 2009

(in millions of dollars)


Net investment in the health and social services and education networks


(1)    These loans and advances funded investments in fixed assets and are repayable mainly by means of subsequent Government budgetary appropriations.

(2)    These data were derived from audited financial statements as at March 31, 2009.

(3)    These data were derived from unaudited interim financial statements as at March 31, 2009 for school boards, from audited financial statements as at June 30, 2008 for colleges and from audited financial statements as at May 31, 2008 for the Université du Québec and its branches. The financial statements of the colleges and the Université du Québec and its branches were adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(4)    These data were derived from audited financial statements as at March 31, 2008, adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(5)    These data were derived from audited financial statements as at June 30, 2007 for school boards and colleges and as at May 31, 2007 for the Université du Québec and its branches, adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(6)    The accumulated deficit will be absorbed by Government transfers as part of the application of section of 30 of the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009, c. 38), adopted in September 2009, which authorizes the Government to take the necessary sums out of the Consolidated Revenue Fund.

  APPENDIX 18

Net investment in the health and social services 

and education networks (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Summary of financial information on the health and social services and education networks

(1)    These data were derived from audited financial statements as at March 31, 2009.

(2)    These data were derived from unaudited interim financial statements as at March 31, 2009 for school boards, from audited financial statements as at June 30, 2008 for colleges and from audited financial statements as at May 31, 2008 for the Université du Québec and its branches. The financial statements of the colleges and the Université du Québec and its branches were adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(3)    These data were derived from audited financial statements as at March 31, 2008, adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(4)    These data were derived from audited financial statements as at June 30, 2007 for school boards and colleges and as at May 31, 2007 for the Université du Québec and its branches, adjusted to eliminate certain material differences between their accounting policies and those of the Government. 

(5)    The accumulated deficit will be absorbed by Government transfers as part of the application of section of 30 of the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009, c. 38), adopted in September 2009, which authorizes the Government to take the necessary sums out of the Consolidated Revenue Fund.

  APPENDIX 18

Net investment in the health and social services 

and education networks (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Summary of financial information on the health and social services and education networks 

(1)    These data were derived from audited financial statements as at March 31, 2009.

(2)    These data were derived from unaudited interim financial statements as at March 31, 2009 for school boards, from audited financial statements as at June 30, 2008 for colleges and from audited financial statements as at May 31, 2008 for the Université du Québec and its branches. The financial statements of the colleges and the Université du Québec and its branches were adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(3)    These data were derived from audited financial statements as at March 31, 2008, adjusted to eliminate certain material differences between their accounting policies and those of the Government.

(4)    These data were derived from audited financial statements as at June 30, 2007 for school boards and colleges and as at May 31, 2007 for the Université du Québec and its branches, adjusted to eliminate certain material differences between their accounting policies and those of the Government. 

(5)    Some of these borrowings have funded investments in fixed assets and are repayable using subsequent Government budgetary appropriations.

(6)    The accumulated deficit will be absorbed by Government transfers as part of the application of section of 30 of the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009, c. 38), adopted in September 2009, which authorizes the Government to take the necessary sums out of the Consolidated Revenue Fund.

  APPENDIX 18

Net investment in the health and social services 

and education networks (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Main contractual obligations of the networks


In the normal course of their activities, organizations of the health and social services and education networks enter into various contractual obligations, such as operating leases, long-term leases, supply and service contracts and contracts to acquire fixed assets. These contractual obligations totalling $4 062 million represent authorized contractual obligations that had not been disbursed as at March 31, 2009 ($4 029 million as at March 31, 2008). Some of these amounts may not be paid if the events do not take place.


The total non-discounted future minimum amounts payable under these contracts breaks down as follows:




    2009


    2008



Agencies and public institutions (1)


    1 874


    1 804


School boards (2)


    1 506


    1 481


Colleges (3)


    92


    91


Université du Québec and its branches (4)


    590


    653




    4 062


    4 029



Main contingencies of the networks


Certain organizations of the health and social services and education networks are the object of various lawsuits whose outcome cannot be determined; moreover, they provide loan guarantees to third parties. These contingencies represent a total of $382 million ($479 million as at March 31, 2008) that breaks down as follows:




    2009


    2008



Agencies and public institutions (1)


    292


    384


School boards (2)


    31


    38


Colleges (3)


    18


    17


Université du Québec and its branches (4)


    41


    40




    382


    479









(1)    As at March 31, 2009.

(2)    As at March 31, 2009 (June 30, 2007 in 2007-2008).

(3)    As at June 30, 2008.

(4)    As at May 31, 2008.

  APPENDIX 19

Fixed assets

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    The total for fixed assets includes: 

  • fixed assets rented under capital leases for $54 million, i.e. $6 million for equipment, $46 million for buildings and $2 million for facilities. The depreciation amount related to these fixed assets is $4 million;

  • fixed assets held under private-public partnership agreements for $382 million, including $379 million for complex networks. No depreciation amount was associated with these fixed assets in 2009;

  • fixed assets in the form of property under construction, improvements or development totalling $1 771 million, i.e. $204 million for buildings, $12 million for facilities, $948 million for complex networks, $269 million for equipment and $338 million for the development of data processing systems. No depreciation has been taken on these fixed assets.

(2)    Financing charges of $35 million were capitalized during the year at the cost of the fixed assets. Also during the year, fixed assets totalling $2 million were acquired by donation or for a nominal fee or were financed in whole or in part by contributions from organizations outside the Government's reporting entity.


  APPENDIX 19

Fixed assets (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    The total for fixed assets includes: 

  • fixed assets rented under capital leases for $136 million in 2008, i.e. $92 million for equipment and $44 million for buildings. The depreciation amount related to these fixed assets is $8 million;

  • fixed assets held under private-public partnership agreements totalling $79 million for complex networks. No depreciation amount was associated with these fixed assets in 2008;

  • fixed assets in the form of property under construction, improvements or development totalling $1 246 million, i.e. $182 million for buildings, $76 million for facilities, $475 million for complex networks, $186 million for equipment and $327 million for the development of data processing systems. No depreciation has been taken on these fixed assets.

(2)    Financing charges of $50 million were capitalized during the year at the cost of the fixed assets. Also during the year, fixed assets totalling $21 million were acquired by donation or for a nominal fee or were financed in whole or in part by contributions from organizations outside the Government's reporting entity.

  APPENDIX 20

Breakdown of contractual obligations

AS AT MARCH 31, 2009

(in millions of dollars)


Transfers - Funding for the acquisition of fixed assets (1)

(1)    In addition to these amounts, the Government covers, through the payment of transfers to these beneficiaries, debt service related to the funding of these fixed asset acquisitions.

(2)    Organizations that received transfers contracted borrowings with:


2009


2008



Government agencies





    Financement-Québec 

1 775


1 424


    Other Government entities

14


16



1 789


1 440


Financial institutions outside the Government

4 864


4 733


Less: Sinking Fund relating to Borrowings by Québec University Establishments

(146)


(137)



6 507


6 036


(3)    These contractual obligations represent the value of authorized amounts that have already been financed in part for realized acquisitions of fixed assets.

(4)    Contractual obligations in foreign currency are shown at their Canadian equivalent at the exchange rates in effect on March 31 and take currency swap contracts into account.

  APPENDIX 20

Breakdown of contractual obligations (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Summary schedule of transfers for repayment of the principal

on borrowings for the acquisition of fixed assets (1)

(1)    This schedule was drawn up according to the dates shown on bonds or notes at the balance sheet date. Any refinancing after that date will affect the above schedule.

  APPENDIX 20

Breakdown of contractual obligations (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Transfers - Agreements


Agreements between the Gouvernement du Québec and the Québec Cree


An agreement was signed by the Government and the Québec Cree in February 2002 to help the Cree achieve more autonomy and take charge of their development. The agreement also allows the Cree to play a greater role in economic development activities in the territory covered by the James Bay and Northern Québec Agreement (JBNQA).


The February 2002 agreement provides in particular for annual transfer payments to the James Bay Cree over a period of 50 years, i.e. from 2002-2003 to 2051-2052. In return, the Cree assume the obligations of the Gouvernement du Québec, Hydro-Québec and the Société d'énergie de la Baie James under certain provisions of the JBNQA pertaining to the Cree's economic and community development. The payments to be made in the coming years, i.e. until 2052, correspond to the higher of $70 million or that amount indexed to take into account the change in the value of hydroelectric production, mining and forest harvesting in JBNQA territory. The payment in 2009 amounted to $74 million ($71 million in 2008). Considering the indexation calculated for 2010, the minimum annual payments provided for in the coming years amount to $77 million. As at March 31, 2009, the minimum balance payable was $3 315 million ($3 083 million in 2008).


Another agreement was concluded in May 2007 between the Gouvernement du Québec, the Grand Council of the Crees and the Cree Regional Authority to improve the administration of justice for the Cree and correctional services. The minimum annual payments provided for in the coming years amount to $14 million, subject to indexation, until 2027. As at March 31, 2009, the minimum balance payable was $253 million ($257 million in 2008).


Agreement respecting global funding for the Kativik Regional Government


An agreement was signed by the Gouvernement du Québec and the Kativik Regional Government in March 2004 to simplify the payment of transfers from various Québec government departments. It also grants the Kativik Regional Government greater autonomy in allocating funds based on regional priorities.


The minimum annual payments provided for in the coming years amount to $45 million, subject to indexation, until 2028. As at March 31, 2009, the minimum balance payable was $846 million ($785 million in 2008).


  APPENDIX 20

Breakdown of contractual obligations (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Transfers - Agreements (cont'd)


Partnership agreement on economic and community development in Nunavik 


A partnership agreement on economic and community development in Nunavik was signed in April 2002 between the Gouvernement du Québec, the Makivik Corporation and the Kativik Regional Government to meet the specific needs of the people of Nunavik by funding economic and community projects and providing local communities with better economic and community development prospects. It was amended on August 1, 2006 by Order-in-Council 696-2006. 


The minimum annual payments provided for in the coming years amount to $29 million, subject to indexation, until 2027. As at March 31, 2009, the minimum balance payable was $520 million ($516 million in 2008).


Other agreements


Other agreements include notably agreements on new fiscal and financial partnerships with the municipalities for $1 418 million ($1 696 million as at March 31, 2008), the national policy on rural areas for $215 million ($250 million as at March 31, 2008), the subsidy agreement reached with the Ville de Montréal for $145 million ($220 million as at March 31, 2008), the agreement concerning block funding for northern villages in the Kativik region for $237 million ($229 million as at March 31, 2008), the agreement on the breakdown of Government reinvestment of $49 million in higher education ($101 million as at March 31, 2008), and $228 million for the Government assistance program to improve public transit services ($274 million as at March 31, 2008). They also include the agreement on the payment of $581 million in interest on a loan contracted by a company in the aluminium sector, 
the agreement on the promotion and development of Montréal for $252 million ($144 million as at March 31, 2008), the agreement on manpower training for $197 million ($187 million as at March 31, 2008), the agreement on the promotion of a healthy lifestyle for $160 million ($180 million as at March 31, 2008), the agreement on support for local development centres for $206 million and the agreement on other financial assistance for $984 million ($703 million as at March 31, 2008).

  APPENDIX 21

Contingencies

AS AT MARCH 31, 2009

(in millions of dollars)


Guaranteed financial initiatives

(1)    See additional information on following pages.


  APPENDIX 21

Contingencies (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Loan guarantees granted by Investissement Québec (1) 

(1)    The Government guarantees payment of the principal and interest on loans contracted by enterprises under the Act respecting Investissement Québec and La Financière du Québec (R.S.Q., c. I-16.1).

(2)    This amount excludes $632 million in authorized loan guarantees not in effect ($741 million as at March 31, 2008).

(3)    The total value of securities received as loan guarantees is $2 210 million ($1 276 million as at March 31, 2008).



Guarantees granted by the Société d'habitation du Québec (1)

(1)    The Société d'habitation du Québec (SHQ) grants guarantees under the Act respecting the Société d'habitation du Québec (R.S.Q., c. S-8).

(2)    Loans from financial institutions guaranteed by the SHQ and granted to non-profit organizations or cooperatives for periods of 25 or 35 years following the approval of an extension by the SHQ. The principal and interest associated with such loans are covered by the organizations concerned. The loans finance the cost of buildings.

(3)    Loans guaranteed by the Canada Mortgage and Housing Corporation (CMHC) for which the SHQ has concluded agreements under which it is committed to buying property taken over by the CMHC when a borrower defaults on a loan, for an amount equal to the value of the claim paid to the approved lender plus incidental expenses. Guarantees granted for the above-mentioned programs cover 25-year periods, except if they are related to loans granted in urban regions for NPO-Private housing programs, in which case they cover periods of 35 years. The principal and interest associated with such loans are covered by the organizations concerned. The loans finance the cost of buildings. 

  APPENDIX 21

Contingencies (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Farm and forest producer loan guarantees (1)


(1)    Corresponds to the balances of principal and interest on loans for which the Fonds d'assurance-prêts agricoles et forestiers reimburses losses and related charges.

(2)    This amount excludes $40 million in authorized loan guarantees for which the loans were not disbursed ($32 milion as at March 31, 2008).

  APPENDIX 21

Contingencies (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


Student loan guarantees (1)


(1)    The Government guarantees the reimbursement of losses of principal and interest to lending institutions under the Act respecting financial assistance for students (R.S.Q., c. A-13.3).


  APPENDIX 22

Summary of fiduciary transactions conducted 

by a Government department and Government agencies and funds

AS AT MARCH 31, 2009

(in millions of dollars)

  APPENDIX 22

Summary of fiduciary transactions conducted

by a Government department and Government agencies and funds (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)

(1)    Financial statements as at December 31, 2008.


  APPENDIX 23

Stabilization reserve

AS AT MARCH 31, 2009

(in millions of dollars)


(1)    In the 2007-2008 Public Accounts, the reserve amounted to $1 817 million. However, an additional surplus of $484 million for fiscal 2007-2008 was allocated to the budgetary reserve in the 2009-2010 Budget Speech.


Under the Act to amend the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform (2009. c. 38) adopted in September 2009, the Government created a stabilization reserve to facilitate its multi-year planning and, subsidiarily, to make it possible to pay sums into the Generations Fund. The provisions in the Act pertaining to this reserve have been in effect since April 1, 2006. 


This Act repealed the Act to establish a budgetary surplus reserve fund (R.S.Q., c. R-25.1). Accordingly, the transactions of the budgetary reserve carried out between April 1, 2006 and the adoption of the Act have become those of the stabilization reserve. In addition, the $109-million surplus balance recognized for fiscal 2006-2007 that had not been allocated to the budgetary reserve was allocated to the stabilization reserve pursuant to the Act.


The stabilization reserve is earmarked for maintaining a balanced budget; its balance is reduced by the amount needed to attain this objective.  In addition, the Government may, on the conditions it determines, use the stabilization reserve to pay sums into the Generations Fund. The balance of the reserve is reduced by the amount paid into the fund.


The sums credited annually to the stabilization reserve correspond to the amount of the surplus recognized for each fiscal year, i.e. a budget balance above zero, established in accordance with the provisions of the Balanced Budget Act.  


  APPENDIX 24

Segment disclosures

AS AT MARCH 31, 2009

(in millions of dollars)


Consolidated statement of operations by reporting sector


The consolidated statement of operations incorporates the financial results of the Government's management of its resources, obligations and financial activities as a whole. Grouping these elements provides a global financial portrait of the Government. This statement includes the financial results of a multitude of departments, agencies, funds and enterprises. All of these entities are grouped into six main sectors, according to their control and accountability relationship with the Government. Criteria such as ministerial accountability, legal framework, scope of authority delegated to management, funding method, degree of autonomy and nature of actitives are used to classify the entities in the different sectors. The following table presents the operations of each of the sectors identified.


Since it was possible to associate all revenue and expenditure items with a specific sector, it was not necessary to use allocation methods to allocate some of the items among two or more specific sectors.

  APPENDIX 24

Segment disclosures (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)



APPENDIX 24

Segment disclosures (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)

  APPENDIX 24

Segment disclosures (cont'd)

AS AT MARCH 31, 2009

(in millions of dollars)


(1)    The Consolidated Revenue Fund includes money collected or received from various sources over which Parliament has the power of appropriation, as well as the expenditures of the National Assembly, the persons designated by it, and departments and agencies administered by a minister whose budget is financed by appropriations allocated by the National Assembly. This sector also includes the activities of the Health Services Fund.

(2)    Government enterprises are distinct legal entities that have the power to carry out commercial activities. The sale of their goods and the delivery of their services target individuals or organizations not included in the Government's reporting entity. Therefore, these enterprises are financially autonomous in that their revenue from outside the reporting entity ensures that they carry out their activities and repay their debts on their own. Since their accounts are accounted for using the modified equity method, only their net surpluses for the fiscal year are presented in the table, after deducting the dividends paid into the Consolidated Revenue Fund.

(3)    Agencies and special funds depend in whole or in part on departments for their funding. However, the agencies in this sector have more autonomy than those funded by budgetary appropriations. Although these agencies also answer to a minister, the legislation grants their management more extensive funding and operating powers. Special funds, for their part, are financial management tools that make it possible, in some situations, to administer allocated resources using a management method that is different from that applied in departments. Some funds obtain financing in whole or in part through the sale of goods or services. The results of this sector do not include the activities of the Health Services Fund.

(4)    A specified purpose account is a financial management mechanism created by a Government order in council under legislative provisions. It allows a department to account in a different way for funds paid into the Consolidated Revenue Fund by a third party under a contract or an agreement that provides for the allocation of the funds to a specific purpose.

(5)    The Generations Fund, created on January 1, 2007, under the Act to reduce the debt and establish the Generations Fund, differs from other funds in that it is dedicated exclusively to repaying the Government's debt.

(6)    The health and social services and education networks include health and social services agencies, public health and social services institutions (hospital centres, health and social services centres, rehabilitation centres, child and youth protection centres), school boards, general and vocational colleges (CEGEPs) and the Université du Québec and its branches. These organizations, which are funded largely through budgetary appropriations, are autonomous in regard to the delivery of public services. They are legal entities that are vested with the financial and administrative powers needed to provide public services, and they have a board of directors made up of elected or appointed local representatives from the area or sector served by each organization. In addition, the Government's ability to dispose of their assets is subject to major restrictions. Since their accounts are accounted for using the modified equity method, only their net surpluses (deficits) for the fiscal year are presented in the table.

(7)    The consolidation adjustments are based on the elimination of, when the consolidated financial statements are prepared, inter-entity transactions and balances between entities in different sectors. Indeed, revenues and expenses in each sector are presented prior to the elimination of these elements. However, when inter-entity transactions and balances concern entities within the same sector, the eliminating entries are made before the segment amounts are determined.




















Highlights

Today, the government is releasing its fall update on the economy and public finances. Since the 2009ߛ2010 Budget was tabled last March, Québec's economy has continued to lose ground and has had to deal with a deeper global economic recession than anticipated. Nonetheless, the situation began to stabilize during the summer and the economy is showing signs of recovery. Most experts expect a gradual return to growth late this year and in 2010.

Supported by the two-year $15.5-billion economic action plan the government has implemented, Québec's economy has not suffered as much from the recession as its major trading partners, either in economic or financial terms.

Moreover, as indicated in the budget, Québec's financial situation will suffer from the repercussions of the recession. While the government will be adjusting its revenue downward, it will have to deal with the additional cost of the vigorous measures taken to support employment and maintain funding for public services. The anticipated deficits for this year and next will thus be higher than forecast, though proportionally lower than elsewhere. Accordingly, for 2009ߛ2010, compared to the last budget:

Québec now estimates its budget deficit at $4.7 billion, an increase of $749 million;

Ontario is forecasting a deficit of $24.7 billion, an increase of $10.6 billion;

the federal government has revised its deficit upward by $22.5 billion, to $55.9 billion.


CHART     

Adjusted budgetary balance for 2009-2010

(billions of dollars)

Sources:    2009-2010 Budget Plan and fiscal update of the respective jurisdictions.

  Deficit raised to $4.7 billion in 2009ߛ2010

For 2009ߛ2010, chiefly because of the additional impact of the global economic recession, the deficit is revised upward by $749 million since the budget of last March, of which more than $500 million is attributable to own-source revenue.


TABLE     

Summary of budgetary transactions in 2009ߛ2010P

(millions of dollars)


March 2009 budget

Adjustments

Fall 2009

% difference

BUDGETARY TRANSACTIONS





Own-source revenue

47 371

 502

46 869

 1.1

Federal transfers

14 841

315

15 156

2.1

Total budgetary revenue

62 212

 187

62 025

 0.3

Program spending

 59 989

 150

 60 139

0.3

Debt service

 6 104

 50

 6 154

0.8

Total budgetary expenditure

 66 093

 200

 66 293

0.3

Net results of consolidated entities

355

 200

155


Provision for revenue shortfalls 

 300

 300


DEFICIT

 3 526

 887

 4 413


BALANCED BUDGET ACT





Deposit of dedicated revenues in the Generations Fund

 715

 715


Stabilization reserve

295

138

433


BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT

 3 946

 749

 4 695


As a % of GDP

 1.3

 0.3

 1.6


P:    Projections.

However, the adjustments to the financial framework will not prevent Québec, once the recovery is well under way, from implementing the plan to return to balanced budgets by 2013ߛ2014, announced in the last budget.

The tabling of this economic and financial update is also the starting point for an expanded preߛbudget consultation that will enable the public to participate in choosing the avenues to be considered for returning to balanced budgets by 2013ߛ2014, in accordance with the legislation amending the Balanced Budget Act and various legislative provisions concerning the implementation of the accounting reform.

  Deterioration in the economic outlook since the 
2009-2010 Budget

A more significant decline in real GDP in 2009 than expected

Québec's economic situation deteriorated quickly in the winter of 2009 because global trade fell more substantially than anticipated. In particular, the contraction in American demand for foreign goods was more severe than forecast. 

Over the past year, most major advanced economies experienced the worst recession since the Great Depression. In Québec, as in Canada, the economic contraction was not as deep as in prior recessions, when real GDP declined by 3.6% in 1982 and 2.7% in 1991.

The economic situation stabilized in the summer of 2009, leading to the expectation that economic growth will return in the fall of 2009 in Québec, Canada, the United States and many European countries. 

With an expected decline in real GDP in Québec of 1.5% in 2009, the current recession will be more severe than anticipated, since an economic contraction of 1.2% had been forecast in the budget. 

Québec has been better able to resist international turmoil because of the measures taken by the government, the good performance of the housing market and the importance of the aerospace industry, which fared better than the automobile industry.


TABLE     

Outlook for economic growth

(Real GDP, percentage change)


2008

2009

2010

Québec

1.0

 1.5

1.7

Canada

0.4

 2.3

2.0

United States  

0.4

 2.6

2.0

Sources:    IHS Global Insight, Statistics Canada and ministère des Finances du Québec.


  Nonetheless, recovery is at hand

Québec's economy should return to positive, though moderate, growth in the fall of 2009. In 2010, real GDP growth should average 1.7%. The recovery in personal spending and non-residential investment, combined with the recovery under way in the United States and the rest of the world, should support economic growth in Québec over the coming quarters.

Furthermore, after gaining 2.2% in 2008, nominal GDP, on which growth in government revenue depends, will decline by 0.6% in 2009. Next year, the economic recovery and firmer commodity prices will result in a rise of 3.8% in Québec's nominal GDP. On a cumulative basis, from 2008 to 2010, nominal GDP growth will be adjusted downward by 0.8 percentage point since the budget.

  Government economic support actions

Since the fall of 2008, the government has acted a number of times to support the economy. In the 2009ߛ2010 Budget, it announced the implementation of the Plan to support jobs and prepare for economic recovery. 

As part of the fall 2009 economic and financial update, the government is announcing that the envelope of the Renfort will be increased from $1.2 billion to $2 billion. 

Accordingly, the action plan will help inject, in 2009 and 2010, $15.5 billion in Québec's economy, i.e. 5.0% of GDP, including:

$5.8 billion for businesses;

$1.4 billion for individuals;

$8.2 billion to improve infrastructures.

In the interests of transparency, the government is providing an update on:

the progress made in implementing the measures of the plan;

the initial results obtained;

the expected impact based on the most recent information available.

In short, the initial results obtained enable us to state that the Plan to support jobs and prepare for economic recovery will have a significant impact in 2009 and 2010.

More than $8.2 billion has been committed for 2009, i.e. 102.2% of the amounts stipulated last March.

Roughly $7.billion will be injected into the economy in 2010, for a total of $15.billion over two years.

  

TABLE     

The government's action plan: cash resources injected into Québec's economy in 2009 and 2010 - Fall 2009


2009

Forecast 
amount in 2010 
($ million)

Total over two years ($ million)


Commitment announced in the 2009-2010 Budget
($ million)

Revised

commitment1

($ million)

Proportion
of funds committed
 (%)

  • Additional immediate actions to support businesses and workers

2 302

2 757

119.7

1 930

4 686

  • Invest in public infrastructure

4 488

4 483

99.9

3 593

8 076

  • Support households, especially families and seniors

368

360

98.0

483

844

  • Stimulate investment by reducing the corporate tax burden

330

330

100.0

729

1 059

  • Prepare Québec for economic recovery

569

300

52.8

521

822

TOTAL

8 057

8 230

102.2

7 257

15 487

Note: Figures have been rounded off, so they may not add up to the total indicated.

1    Amounts incurred by the government to support businesses and workers in 2009.

The government's rapid response has enabled Québec to resist the repercussions of the economic and financial crisis better than many other jurisdictions in Canada and North America. Today, we can provide a status report for the five major areas of intervention.

  • Actions to support businesses and workers

  • The measures to increase cash resources and capitalization of businesses have helped mitigate the effects of the economic situation and tighter credit conditions. For example, the Renfort program, with an envelope of $2.0 billion including the increase of $800 million announced in the current update, has been very successful.

  •   The Employment Pact Plus, stipulating additional investments of $518 million, has helped a large number of workers to upgrade their skills. In just a few months, the Employment Pact Plus has contributed to keeping 21 186 workers employed with the program to support enterprises that risk being affected by the economic slowdown. In addition, EmploiߛQuébec has helped 420 937 unemployed persons under the array of measures and services offered to individuals.

  • The refundable tax credit for home renovation provides tax relief of $250 million for roughly 170 000 households (average of $1 470 per household). It should help support $3 billion in renovation work, helping to maintain the jobs of 25 000 workers in the construction industry and creating 2 000 additional jobs in this sector. According to data compiled by the Institut de la statistique du Québec, over the first two quarters of 2009, home renovation spending in Québec rose 14.7% compared to the same period last year.

  • The measures to limit the impact of the financial crisis on supplemental pension plans apply for a period of three years as of December 31, 2008. They will be applied shortly since the National Assembly has passed legislation to amend the Supplemental Pension Plans Act and other legislative provisions and the government has released, for discussion, the draft regulation stipulating the terms of application of the new funding measures for private plans.

  • The improvements to tax assistance for the cultural sector will help support almost 400 businesses with film shooting activities in Québec (local and foreign productions) and 100 Québec businesses producing shows and sound recordings.

  • The additional efforts in the forest sector will help support 2 000 jobs in 2009 in regions severely affected by the forestry crisis and ensure the production of 85 millions seedlings for coming seasons.

  • Invest in public infrastructure

    • The $7.9-billion acceleration of infrastructure investments is contributing to support the economy not only in the short term, but also in the long run by leaving future generations more functional hospitals, roads in better condition, more welcoming schools and municipal infrastructures that are once again up to standard.

  • Support households, especially families and seniors

  • The measures to support income and protect the purchasing power of households, like for example the rise in the minimum wage, the rise in the indexing rate of the personal income tax system and full indexing of last-resort assistance benefits for 2009, are benefiting a large number of households.

  •   Investments of $370 million in social and community housing have notably brought the community housing construction objective to 27 000 under the AccèsLogis Québec and Affordable Housing Québec programs. The Société d'habitation du Québec expects that most of these dwellings will be delivered and ready for occupancy towards the end of 2011. Accordingly, to support these investments, the Société d'habitation du Québec recently signed two agreements with Canada Mortgage and Housing Corporation.

  • Stimulate investment by reducing the corporate tax burden

  • The elimination of the tax on capital will reduce the corporate tax burden by $299 million in 2009 and $673 million in 2010, i.e. nearly $1 billion in two years.

  • Prepare Québec for economic recovery

  • The $825-million Teralys Capital fund has been created. The Québec government has engaged a contribution of $200 million to start financing activities. Support from partners will total $625 million over the coming years.

  • Work to improve airport infrastructures in northern Québec began this summer in Puvirnituq. In addition, studies on the preliminary route of the Otish Mountains road are under way. Investments of $347 million are planned over the next five years for the development of northern Québec.

  • Work to modernize public dams is under way in many regions of Québec, in particular the CapitaleߛNationale, Mauricie, Laurentides and Saguenay-Lac-Saint-Jean regions. This work represents investments of $22 million in 2009ߛ2010.

Rise in forecast deficits for 2009ߛ2010 and 2010ߛ2011

Real results for 2008ߛ2009

The real results of the public accounts for 2008ߛ2009 show a deficit of $1.3 billion. Nonetheless, as stipulated in the budget last March, for the purposes of the Balanced Budget Act the budget is balanced by drawing from the stabilization reserve accumulated since 2006ߛ2007.

In addition, deposits to the Generations Fund were maintained at $587 million.

  Budget deficits of $4.7 billion in 2009ߛ2010 and 2010ߛ2011

Budget deficits of $4.7 billion are now forecast for 2009ߛ2010 and 2010ߛ2011.

Moreover, in the interests of prudence, the 2009ߛ2010 deficit includes a $300-million provision to deal with possible additional revenue shortfalls.


TABLE     

Summary of adjusted budgetary transactions - Fall 2009

(millions of dollars)


2008-2009

2009-2010P

2010-2011P

BUDGETARY TRANSACTIONS




Budgetary revenue

62 916

62 025

63 585

Budgetary expenditure

 65 054

 66 293

 68 813

Net results of consolidated entities

880

155

369

Provision for revenue shortfalls

 300

Plan to return to balanced budgets



1 065

DEFICIT

 1 258

 4 413

 3 794

BALANCED BUDGET ACT




Deposit of dedicated revenues in the Generations Fund

 587

 715

 881

Stabilization reserve

1 845

433

BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT 

0

 4 695

 4 675

As a % of GDP

 1.6

 1.5

P:     Projection.

Rise in forecast deficits of $749 million in 2009ߛ2010 and $915 million in 2010ߛ2011

Compared to the 2009ߛ2010 Budget, the upward adjustments to the deficits for the next two years, resulting from the deeper global economic recession than anticipated, are essentially attributable to the following factors:

2009ߛ2010

weaker outlook for economic growth than anticipated, resulting in $475 million less in taxes;

an increase in program spending of $150 million to finance the increase in the Renfort program's envelope;

a $50-million rise in debt service;

a $300-million provision for possible revenue shortfalls;

  2010ߛ2011

the recurring impact of the economic adjustment, resulting in a decline in tax revenue of $225 million;

a negative adjustment of $300 million to forecast earnings in HydroߛQuébec's strategic plan as of 2010ߛ2011, attributable in particular to the poorer-than-expected outlook for prices on export markets, lower prices for aluminum and the appreciation of the Canadian dollar;

a downward adjustment of $225 million to forecast revenue under the equalization program;

an increase in program spending of $170 million essentially attributable to the recurrence of the rise in 2009ߛ2010;

a $118-million rise in debt service resulting in particular from higher deficits than forecast.


TABLE     

Adjustments since the 2009ߛ2010 Budget

(millions of dollars)


2009-2010

2010-2011

BUDGETARY BALANCE IN THE 2009-2010 BUDGET

 3 946

 3 760

Adjustments



Taxes

 475

 225

Hydro-Québec


 300

Equalization


 225

Program spending

 150

 170

Debt service

 50

 118

Subtotal

 675

 1 038

Provision for revenue shortfalls

 300

Stabilization reserve

138

Other factors

88

123

Total adjustments 

 749

 915

BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT 

 4 695

 4 675

As a % of GDP

 1.6

 1.5



  Impact of economic support measures on program spending

The government's budgetary expenditure is adjusted upward by $150 million in 2009ߛ2010 and by $170 million in 2010ߛ2011, for a total of $320 million. This amount essentially will fund the increase from $1.2 billion to $2 billion in the envelope of the Renfort program, which has been more successful than anticipated and is helping support the economy and employment.

$300-million provision for revenue shortfalls in 2009ߛ2010

Moreover, the financial position of all governments has changed rapidly over the past year. To better guard against such a risk, the financial framework, in 2009ߛ2010, includes a $300-million provision for revenue shortfalls.




Table 10


Economic outlook in Québec

(percentage change, unless otherwise indicated)


2008

2009

2010

PRODUCTION




Real gross domestic product

1.0

 1.5

1.7

2009-2010 Budget

0.8

 1.2

1.9

Gross domestic product

2.2

 0.6

3.8

2009-2010 Budget

2.4

 0.1

3.9

COMPONENTS OF GDP (in real terms)




Consumption

3.2

0.4

2.1

2009-2010 Budget

3.8

1.2

2.2

Non-residential investments

0.8

 15.3

6.6

2009-2010 Budget

2.6

 8.4

6.4

International exports

 3.6

 13.8

5.0

2009-2010 Budget

 3.4

 8.3

2.3

International imports

2.6

 12.2

7.4

2009-2010 Budget

1.7

 2.3

4.1

OTHER ECONOMIC INDICATORS




Nominal consumption

4.7

1.0

3.6

2009-2010 Budget

5.1

1.6

3.9

Construction starts (in thousands of units)

47.9

42.6

40.6

2009-2010 Budget

47.9

38.8

37.3

Personal income

3.4

0.7

2.8

2009-2010 Budget

3.5

1.1

2.6

Corporate profits

0.5

 22.2

13.1

2009-2010 Budget

4.4

 15.3

9.7

Consumer prices

2.1

0.7

2.3

2009-2010 Budget

2.1

0.4

2.0

LABOUR MARKET




Job creation (in thousands of units)

30.0

 42.5

9.5

2009-2010 Budget

30.0

 62.9

29.5

Unemployment rate (%)

7.2

8.7

9.3

2009-2010 Budget

7.2

8.9

9.1






Table 11

Canadian financial markets

(percentage rate)


2008

2009

2010

Overnight target rate

3.0

0.4

0.5

2009-2010 Budget

3.0

0.6

1.0

Treasury bills - 3 months

2.4

0.4

0.6

2009-2010 Budget

2.4

0.6

1.2

Bonds - 10 years

3.6

3.3

3.8

2009-2010 Budget

3.6

2.9

3.7

Sources: Statistics Canada and ministère des Finances du Québec.




















PART THREE: 

the government's financial position

  • the government's financial position

    • Higher deficits in 2009ߛ2010 and 2010ߛ2011

The Update on Québec's Economic and Financial Situation mainly shows information on the government's revenue to date, the expected adjustment to expenditure, in particular, debt service and the financial situation of organizations.

The budget remains balanced in 2008ߛ2009

The real results show that the budget was balanced in 2008ߛ2009, by drawing on the stabilization reserve.

2009-2010: an additional shortfall of $749 million

For 2009ߛ2010, negative adjustments of $749 million will raise the deficit to $4.7 billion. This result is attributable to:

a more severe economic slowdown resulting in a downward adjustment to own-source revenue of $475 million excluding government enterprises;

a decline in revenue from government enterprises of $27 million;

an increase in program spending of $150 million to fund the rise in the Renfort program's envelope;

a $50-million rise in debt service;

an upward adjustment to forecast deficits of consolidated entities of $200 million;

a $300-million provision for revenue shortfalls.

These deteriorations are partially offset by:

positive adjustments to federal transfers of $315 million;

additional drawings from the stabilization reserve of $138 million.

  2010ߛ2011: a $915-million increase in the deficit

For 2010ߛ2011, the budget deficit is $4.7 billion, an increase of $915 million as a result of:

a negative adjustment of $225 million to own-source revenue excluding government enterprises, arising from the less favourable economic outlook;

a drop in revenue from government enterprises of $283 million, mainly due to a $300ߛmillion adjustment to HydroߛQuébec's forecast net earnings, as announced in the new strategic plan released July 30, 2009;

an increase in program spending of $170 million including $150 million for the increase in the Renfort program's envelope;

a $194-million decline in profits from consolidated entities including, among others, La Financière agricole du Québec;

a $118-million rise in debt service resulting in particular from higher deficits than forecast.

These adjustments are mitigated by:

a $76-million increase in revenues from federal transfers, despite a decline in equalization revenue of $225 million.

  

TABLE 26

Summary of adjustments to the budgetary balance since the 2009ߛ2010 Budget

(millions of dollars)


2009-2010P


2010-2011P


2009-2010 Budget

Adjustments

Fall 2009


2009-2010 Budget

Adjustments

Fall 2009

BUDGETARY TRANSACTIONS








Own-source revenue excluding government enterprises








Personal income tax and Health Services Fund 

23 800

 450

23 350


25 064

 500

24 564

Consumption taxes

13 184

100

13 284


13 569

200

13 769

Corporate taxes

3 266

 125

3 141


3 268

75

3 343

Other

2 362

2 362


2 413

2 413


42 612

 475

42 137


44 314

 225

44 089

Government enterprises 








Hydro-Québec

2 700

2 700


2 700

 300

2 400

Other

2 059

 27

2 032


2 113

17

2 130


4 759

 27

4 732


4 813

 283

4 530

Federal transfers








Equalization

8 355

8 355


8 469

 225

8 244

Other

6 486

315

6 801


6 421

301

6 722


14 841

315

15 156


14 890

76

14 966

Total budgetary revenue

62 212

 187

62 025


64 017

 432

63 585

Program spending

 59 989

 150

 60 139


 61 879

 170

 62 049

Debt service 

 6 104

 50

 6 154


 6 646

 118

 6 764

Total budgetary expenditure

 66 093

 200

 66 293


 68 525

 288

 68 813

Net results of consolidated entities

355

 200

155


563

 194

369

Provision for revenue shortfalls

 300

 300





Plan to return to balanced budgets





1 065

1 065

DEFICIT

 3 526

 887

 4 413


 2 880

 914

 3 794

BALANCED BUDGET ACT








Deposit of dedicated revenues in the Generations Fund

 715

 715


 880

 1

 881

Stabilization reserve

295

138

433


BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT

 3 946

 749

 4 695


 3 760

 915

 4 675

As a % of GDP

 1.3

 0.3

 1.6


 1.2

 0.3

 1.5

Note: In the case of adjustments, a negative sign means a decline in revenue or a rise in expenditure.

P:    Projections.

  •   Results for 2008ߛ2009: the budget remains balanced

Compared to the situation forecast in the budget last March 19, the results released in the 2008ߛ2009 Public Accounts show that for the purposes of the Balanced Budget Act, the budget was balanced taking the stabilization reserve into account.

Budgetary revenue was higher by $437 million. The main reason for the increase was revenue from government enterprises, including $235 million for HydroߛQuébec. Own-source revenue, excluding government enterprises, and federal transfers were also adjusted upward by $59 million and $99 million respectively.

Moreover, program spending was $1 150 million higher than forecast in the last budget. This rise is attributable to:

the payment of $200 million to fund the trust to keep the Université du Québec à Montréal (UQAM) protected from the financial consequences of the Îlot Voyageur once the project is restructured to the government's satisfaction. In addition, there is the payment to UQAM of a conditional grant of $65 million for the years 2005ߛ2006 to 2007ߛ2008. It should be noted that these expenditure adjustments do not increase the deficit. These amounts are included in the budgetary balance of the consolidated entities;

the recognition of $637 million of expenditure relating, on the one hand, to the rise in certain accounting provisions such as the $334-million provision for doubtful accounts and the $208-million provision for losses on guaranteed financial interventions and, on the other hand, to the harmonization of the accounting standards relating to fixed assets of establishments of the health and social services and the education networks with those of the government, for an increase of $95 million;

additional spending of $248 million incurred, among others, to raise the envelope of the ministère de la Santé et des Services sociaux by $88 million to cover all the additional costs of health programs and by $50 million to maintain and improve infrastructures of the ministère des Transports.

  The debt service of the Consolidated Revenue Fund for 2008ߛ2009 is $85 million less than forecast in the budget last March. This improvement is chiefly attributable to the fact that the value of the Canadian dollar is higher than was forecast at the end of 2008ߛ2009 and the revenues of the Sinking Fund for borrowings were higher than expected. 

The results of consolidated entities improved by $675 million compared to the March 2009 forecasts. This improvement is attributable, among other things, to the creation of a $200-million trust to protect UQAM from the financial consequences of the Îlot Voyageur project. In addition, the improvement in consolidated entities stems from delays in 2009ߛ2010 in the implementation of certain projects initially planned for 2008ߛ2009. In this regard, mention should be made of certain municipal infrastructure projects financed by the Société de financement des infrastructures locales du Québec and those stipulated in the Green Fund's action plan on climate change.


TABLE 27

Adjustments to the budgetary balance for 2008ߛ2009

(millions of dollars)


2008-2009


2009-2010 Budget

Adjustments

Real results

BUDGETARY TRANSACTIONS




Own-source revenue excluding government enterprises

43 821

59

43 880

Government enterprises 

4 734

279

5 013

Federal transfers

13 924

99

14 023

Total budgetary revenue

62 479

437

62 916

Program spending

 57 400

 1 150

 58 550

Debt service 

 6 589

85

 6 504

Total budgetary expenditure

 63 989

 1 065

 65 054

Net results of consolidated entities

205

675

880

DEFICIT

 1 305

47

 1 258

BALANCED BUDGET ACT




Deposit of dedicated revenues in the Generations Fund

 569

 18

 587

Stabilization reserve

1 874

 29

1 845

BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT

0

0

0


  •   Detailed adjustments in 2009ߛ2010 and 2010ߛ2011

    • Revenue adjustments 

Budgetary revenue is adjusted downward by $187 million in 2009ߛ2010 and $432 million in 2010ߛ2011.


TABLE 28

Adjustments to budgetary revenue since the 2009-2010 Budget

(millions of dollars)


2009-2010P

2010-2011P

Adjustments to taxes



Personal income tax and Health Services Fund 

 450

 500

Consumption taxes

100

200

Corporate taxes

 125

75

Total adjustments to taxes

 475

 225

Government enterprises 

 27

 283

Total adjustments to own-source revenue

 502

 508

Federal transfers

315

76

ADJUSTMENTS TO BUDGETARY REVENUE

 187

 432

P:     Projections.


Own-source revenue

Taxes

In 2009ߛ2010, own-source revenue is adjusted downward by $502 million compared to the budget last March, including $475 million for tax revenues.

These adjustments are attributable to:

a $450-million decline in revenue from personal income tax reduction and contributions to the Health Services Fund. This adjustment stems from tax payable for taxation year 2008, which was less than expected. In addition, tax receipts since the beginning of the fiscal year are showing withholdings at source that are less than forecast;

  a positive adjustment of $100 million to consumption taxes. Despite a negative adjustment to consumption growth, receipts are higher than forecast and reflect, in particular, more housing starts than expected;

a $125-million decline in revenues from corporate taxes, mainly because corporate profits are down more than expected in 2009 and refunds early in the year are higher.

For 2010ߛ2011, own-source revenue is down $508 million, including $225 million for taxes. This adjustment stems mainly from the following factors:

revenue from personal income tax and contributions to the Health Services Fund are adjusted downward by $500 million. This adjustment is the result of the recurrence of the adjustment in 2009ߛ2010, but also stems from less rapid growth in employment and wages than expected in 2010;

revenue from consumption taxes is adjusted upward by $200 million and reflects the recurrence of the adjustment in 2009ߛ2010;

the positive adjustment of $75 million to corporate income tax is essentially attributable to the upward revision of corporate profits in 2010.

Revenue from government enterprises

In 2009-2010, profits of government enterprises are adjusted downward by $27 million.

In 2010ߛ2011, revenue from government enterprises, other than Hydro-Québec, is stable. The corporation expects its earnings to decline by $300 million as a result, in particular, of a less favourable outlook for selling prices on export markets than expected, lower aluminum prices and the appreciation of the Canadian dollar.

  •   Federal transfer revenue‎

Federal transfer revenue is adjusted upward by $315 million in 2009ߛ2010 and $76 million in 2010-2011.

These adjustments stem essentially from the signature of two new agreements. The CanadaߛQuébec Labour Market Agreement, announced April 30, 2009, results in an increase in transfer revenue of roughly $700 million over six years, i.e. $116 million per year as of 2008ߛ2009.  Moreover, the CanadaߛQuébec Base Fund Agreement (Building Canada) announced on May 22, 2009, will result in additional revenue of $175 million over two years, i.e. $100 million in 2009ߛ2010 and $75 million in 2010ߛ2011.

As well, the forecast for Québec's equalization revenue is adjusted downward by $225 million in 2010ߛ2011. According to the latest tax figures produced by the Canada Revenue Agency, the deterioration in Ontario's fiscal capacity compared to the other provinces is proving more severe than expected at the time of the budget. 

Since the changes made by the federal government to the equalization program in the fall of 2008, the dynamic of this federal program is that of a closed envelope: if the economic situation of a recipient province deteriorates compared with that of the other provinces, the additional equalization to which such province is entitled is automatically subtracted from the equalization paid to the other provinces. 

This "zero sum game" means that the current equalization program is unable to achieve the objective written into the Constitution. In this regard, the Expert Panel on Equalization and Territorial Formula Financing set up by the federal government and chaired by Al O'Brien, indicated in its 2006 report:

[…] the concept of a fixed pool runs counter to the fundamental nature of Equalization-that it is intended to respond to changes in fiscal capacity of the provinces, rather than acting as a fixed entitlement over time. Establishing a fixed pool with a growth track divorces the Equalization program from the actual financial situation in provinces and the overall need for Equalization over time. (page 44 of the O'Brien Report) 

Since the fall of 2008, Québec has sought a return to an equalization program based on a fair formula and sound principles, so that the program can play its proper role.

  •   Expenditure adjustments 

Budgetary expenditure includes program spending and debt service.

Budgetary expenditure is adjusted upward by $200 million in 2009ߛ2010 and by $288 million in 2010ߛ2011.

  • Program spending

    • 2009-2010

At the time of the last budget, the program spending objective was set at $59 989 million in 2009ߛ2010, an increase of 4.5% compared to the preliminary results for 2008ߛ2009.

In the Update on Québec's Economic and Financial Situation, the objective for 2009ߛ2010 is increased by $150 million, to $60 139 million, to better deal with the economic situation. This amount will fund the increase, from $1.2 billion to $2.0 billion, in the Renfort program's envelope, which has been more successful than expected and is helping support the economy and employment.

Despite the $150ߛmillion rise in 2009ߛ2010, the effect of the one-time items that increased spending in 2008ߛ2009 necessarily is to reduce the rate of growth of spending in 2009ߛ2010.

Consequently, forecast spending growth in 2009ߛ2010 is adjusted from 4.5% to 2.7%, even though the amount of spending is higher than in the budget.

Accordingly, over the period from 2008ߛ2009 to 2009ߛ2010, average annual growth in spending will be 4.7%, a rate equivalent to the 4.6% forecast at the time of the 2009ߛ2010 Budget.

  • 2010-2011

For 2010ߛ2011, the program spending objective is raised by $170 million, to $62 049 million. Forecast spending growth is maintained at 3.2%, a rate compatible with economic growth and taxpayers' ability to pay.

  In addition to the 2009-2010 recurrence, this amount includes $20 million for additional resources for Revenu Québec so it can achieve tax recovery goals imposed by the government.


TABLE 29

Adjustments to the program spending objective since the 
2009-2010 Budget 

(millions of dollars)


2008-2009

2009-2010P

2010-2011P

PROGRAM SPENDING OBJECTIVE OF THE 
2009-2010 BUDGET 

57 400

59 989

61 879

    % change

4.7

4.5

3.2



2008-2009 close




Trust relating to the Îlot Voyageur and conditional grant to UQAM

265

Expenditures relating to the recognition of various items

637

Other adjustments

248

Subtotal

1 150

0

0

Adjustments




Financing measures for businesses: increase
in the 
Renfort program from $1.2 billion to $2.0 billion

150

150

Additional resources to fight tax evasion and avoidance

20

Subtotal

0

150

170

Total adjustments

1 150

150

170

PROGRAM SPENDING OBJECTIVE, FALL 2009 

58 550

60 139

62 049

    % change

6.8

2.71

3.2



P:     Projections.

1    Excluding the adjustments of $1 150 million made to program spending in 2008ߛ2009 since March 19, 2009, the growth rate of program spending in 2009ߛ2010 stands at 4.8%.


  • Debt service of the Consolidated Revenue Fund

Compared to the forecast last March, debt service is adjusted upward by $50 million in 2009ߛ2010 and $118 million in 2010-2011. These adjustments are attributable, in particular, to higher financial requirements stemming from higher deficits than forecast.

  •   Reduce the relative weight of spending in the economy

In the 2009ߛ2010 Budget, the government maintained the increase in program spending in order to get through the economic slowdown. Because of the contraction in GDP, the relative weight of program spending in the economy should amount to 19.9% in 2009-2010.

In the years ahead, disciplined spending management will result in a gradual reduction of its relative weight in the economy.

As of 2010ߛ2011, the share should decline by 0.1 percentage point, to 19.8%.


CHART 44    

Program spending

(as a percentage of GDP)

Note: Forecasts for 2009ߛ2010 and 2010ߛ2011.


  •   Budgetary discipline that ranks Québec among the best

A comparison with the other provinces in Canada highlights the discipline with which Québec manages its spending. In fact, next to British Columbia, Québec is the province with the lowest growth in its program spending over the last seven years.

By comparison, average annual growth in program spending stands at 7.6% for the Canadian provinces as a whole, excluding Québec.


CHART 45    

Average annual growth in program spending 
from 2003ߛ2004 to 2009-2010

(average annual percentage)

Note: Forecasts for 2009-2010.

1    Weighted average.


  •   The government's action in its essential missions

The government continues to invest in its essential missions, including health and education. From 2003ߛ2004 to 2009ߛ2010, average annual spending in health and education will rise by 6.0% and 3.7% respectively.

In all, since 2003, the government has added nearly $12.3 billion to the health and education budgets, i.e. $9.0 billion and $3.3 billion respectively.

On their own, these expenditures account for over 75% of the increase in program spending since 2003ߛ2004.


CHART 46    

Increase in program spending from 2003-2004 to 2009-2010

(dollars and average annual percentage growth)

Note: Forecasts for 2009-2010.


  •   The revised financial framework

The following table shows the results for fiscal year 2008ߛ2009 and the government's financial projections for the current fiscal year and the next.

The real results of the public accounts for 2008ߛ2009 show a deficit of $1.3 billion. Nonetheless, as stipulated in the budget last March, the budget is balanced for the purposes of the Balanced Budget Act by drawing from the stabilization reserve accumulated since 2006ߛ2007.

Including all the adjustments described earlier, the budget deficits forecast for 2009ߛ2010 and 2010-2011 are adjusted upward to $4.7 billion per year, reflecting the effect of the recession on public finances. 

In view of the ongoing uncertainty in the economic situation, the government is incorporating a $300-million provision for revenue shortfalls in 2009-2010 in its financial framework.

As of 2010ߛ2011, the deficit includes measures totalling $1.1 billion as part of the Plan to return to balanced budgets.

Overall, the government's budgetary revenue should amount to $62.0 billion in 2009ߛ2010, down 1.4% compared to 2008ߛ2009. Of this amount, own-source revenue accounts for $46.9 billion and federal transfers, $15.1 billion. For 2010ߛ2011, budgetary revenue is expected to reach $63.6 billion, up 2.5%.

Budgetary expenditure is expected to hit $66.3 billion in 2009ߛ2010 and $68.8 billion in 2010-2011. Of this amount, program spending will total $60.1 billion in 2009-2010 and $62.0 billion in 2010-2011.

Lastly, debt service is expected to amount to $6.2 billion in 2009ߛ2010 and $6.8 billion in 2010ߛ2011.

  

TABLE 30

Summary of adjusted budgetary transactions - Fall 2009

(millions of dollars)


2008-2009

2009-2010P

2010-2011P

BUDGETARY TRANSACTIONS




Own-source revenue1

48 893

46 869

48 619

    % change

 1.2

 4.1

3.7

Federal transfers

14 023

15 156

14 966

    % change

2.9

8.1

 1.3

Total budgetary revenue

62 916

62 025

63 585

% change

 0.3

 1.4

2.5

Program spending

 58 550

 60 139

 62 049

    % change

6.8

2.7

3.2

Debt service

 6 504

 6 154

 6 764

    % change

 7.4

 5.4

9.9

Total budgetary expenditure

 65 054

 66 293

 68 813

% change

5.2

1.9

3.8

Net results of consolidated entities

880

155

369

Provision for revenue shortfalls

 300

Plan to return to balanced budgets

1 065

DEFICIT

 1 258

 4 413

 3 794

BALANCED BUDGET ACT




Deposit of dedicated revenues in the Generations Fund

 587

 715

 881

Stabilization reserve

1 845

433


BUDGETARY BALANCE FOR THE PURPOSES OF THE BALANCED BUDGET ACT

0

 4 695

 4 675

As a % of GDP

 1.6

 1.5

P:     Projections.

1    Including government enterprises.


  •   Stabilization reserve

Substantial budgetary surpluses were achieved in 2006ߛ2007 and 2007ߛ2008 as a result of which it was possible to accumulate $2.3 billion in the stabilization reserve. This reserve was used to keep the budget balanced in 2008ߛ2009 for the purposes of the Balanced Budget Act.

The balance of the reserve, $433 million, will partially offset the budget deficit expected in 2009-2010.


TABLE 31

Stabilization reserve1

(millions of dollars)


2006-2007

2007-2008

2008-2009

2009-2010P

Allocation

1 300

1 201

109

Use





Deposit to the Generations Fund

 200

 132

Maintaining a balanced budget in 2008ߛ2009 and reducing the deficit in 2009-2010

 1 845

 433

Total

1 300

1 001

 1 868

 433

BALANCE OF THE STABILIZATION RESERVE AT THE END OF THE YEAR

1 300

2 301

433

0

P:     Projections.

1    In accordance with the provisions of Bill 40 (S.Q. 2009, c. 38), assented to on September 21, 2009, the government uses a stabilization reserve to improve its multi-year budgetary planning and enable payment of amounts to the Generations Fund.

  • Provision for revenue shortfalls in 2009-2010

Moreover, in view of the economic situation, the financial position of all governments has changed rapidly over the past year. In the interests of prudence, the financial framework includes a $300ߛmillion provision for revenue shortfalls in 2009-2010.


  •   Detailed results

The following tables provide detailed information on the major items that compose the government's adjusted financial framework in relation to the revenue and the expenditure of the Consolidated Revenue Fund.


TABLE 32

Revenue of the Consolidated Revenue Fund

(millions of dollars)


2008-2009

2009-2010P

% change

2010-2011P

% change

Own-source revenue






Own-source revenue excluding government enterprises






Personal income tax

17 949

17 753

 1.1

18 776

5.8

Contributions to the Health Services Fund

5 631

5 597

 0.6

5 788

3.4

Corporate taxes

176

3 141

 24.8

3 343

6.4

Consumption taxes

13 403

13 284

 0.9

13 769

3.7

Other

721

362

 13.2

413

2.2

Subtotal

43 880

42 137

 4.0

44 089

4.6

Revenue from government enterprises

5 013

4 732

 5.6

4 530

 4.3

Total own-source revenue

48 893

46 869

 4.1

48 619

3.7

Federal transfers






Equalization

8 028

8 355

4.1

8 244

 1.3

Health transfers

740

4 159

11.2

4 279

2.9

Transfers for post-secondary education and other social programs

1 267

1 435

13.3

1 431

 0.3

Other programs

988

1 207

22.2

1 012

 16.2

Total federal transfers

14 023

15 156

8.1

14 966

 1.3

BUDGETARY REVENUE

62 916

62 025

 1.4

63 585

2.5

P:     Projections.


TABLE 33

Expenditure of the Consolidated Revenue Fund

(millions of dollars)


2008-2009

2009-2010P

% change

2010-2011P

% change

Program spending

58 550

60 139

2.7

62 049

3.2

Debt service

6 504

6 154

 5.4

764

9.9

BUDGETARY EXPENDITURE

65 054

66 293

1.9

68 813

3.8

P:     Projections.











Exhibit (99.9)



The following statements amend the Annual Report (on Form 18-K) for the fiscal year ended March 31, 2009:


The Sub-section "Hydro-Québec" on page 32 of the Exhibit 99.1 is amended by adding the following paragraphs:


On October 29, 2009, the Government of Québec and the Government of New Brunswick signed a Memorandum of Understanding (the "Memorandum") concerning the proposed sale to Hydro-Québec, through one or more subsidiaries, of most of the assets held by New Brunswick Power Holding Corporation and its subsidiaries ("NB Power") relating to the generation, transmission and distribution of electricity in New Brunswick (the "Assets").

    

Under the Memorandum, Hydro-Québec would acquire the Assets for a total amount of $4.75 billion dollars and enter into a long-term electricity supply and service agreement with the Government of New Brunswick. Parties intend to close the acquisition of the Assets on or about March 31, 2010, except for the acquisition of the Point Lepreau nuclear Facility which is expected to close on or about January 1, 2011, once its refurbishment is completed.




For further information, please contact:

Nathalie Parenteau
Executive Vice President and Secretary

Financement-Québec

Telephone Number:  1-418-691-2203

Fax Number:  1-418-643-4700

Email:  
[email protected]


 


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