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Financement Quebec (81QJ)

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Friday 25 March, 2011

Financement Quebec

Guarantor 2011-2012 Budget

RNS Number : 6802D
Financement Quebec
25 March 2011
 

Regulatory Announcement

 

Financement-Québec

● March, 2011

 

 

Re: Financement-Québec (the "Issuer")

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

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

 

Guarantor 2011-2012 Budget

Exhibits 99.16, 99.17, 99.18 and 99.19 of the Amendment dated March 23, 2011 to the Guarantor's Annual Report (on Form 18‑K/A) for the fiscal year ended March 31, 2010

 

Exhibit 99.16

 

 

TABLE B.3        

Canadian financial markets

(average annual percentage rate)


2009

2010

2011

2012

Target for the overnight rate

0.4

0.6

1.3

2.6

Treasury bills - 3-month

0.3

0.6

1.4

2.7

Bonds - 10-year

3.3

3.2

3.6

4.6

Canadian dollar (in US cents)

87.9

96.5

100.4

99.6

Sources:  Statistics Canada and Ministère des Finances du Québec.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE B.7        

Québec's economic outlook

(percentage change, unless otherwise indicated)


2010

2011

2012

Output




Real GDP

3.0

2.0

2.2

Nominal GDP

4.4

3.9

4.4

Nominal GDP ($ billion)

317.1

329.6

344.1

Components of GDP (in real terms)




Consumption

3.7

2.2

1.6

Current government expenditures

2.3

1.9

2.1

Residential investment

13.3

- 5.2

- 3.7

Non-residential business investment

8.1

10.4

6.1

Exports

- 0.3

3.4

4.4

Imports

7.0

2.9

2.2

Population and labour market




Population (thousands)

7 907

7 980

8 042

Population aged 15 years and over (thousands)

6 517

6 575

6 628

Jobs (thousands)

3 915

3 971

4 011

Job creation (thousands)

66.7

55.4

40.5

Job creation (%)

1.7

1.4

1.0

Unemployment rate (%)

8.0

7.7

7.5

Employment rate (%)

60.2

60.5

60.6

Other economic indicators




Nominal consumption

4.7

4.6

4.1

Housing starts (thousands of units)

51.4

45.1

41.0

Personal income

3.4

3.6

3.3

Wages and salaries

3.6

3.7

3.4

Corporate profits

10.5

6.5

8.3

Consumer prices

1.2

2.7

2.7

Per capita nominal GDP ($)

40 105

41 310

42 785

Per capita personal disposal income ($)

26 709

27 262

27 861

Sources:  Statistics Canada, Institut de la statistique du Québec and Ministère des Finances du Québec.

 



Exhibit 99.17

Section C

 

The Government's Financial Framework

Introduction............................................................................... C.4

1.   Staying the course on restoring budget  balance in 2013-2014 C.5

1.1    Change in the budgetary balance...................................................... C.5

1.2    Adjustments to the financial framework........................................... C.7

2.   Updating of the financial framework................................... C.10

2.1    Budgetary revenue........................................................................... C.10

2.1.1   Own-source revenue excluding government enterprises.... C.11

2.1.2   Revenue from government enterprises............................... C.14

2.1.3   Revenues from federal transfers......................................... C.15

2.2    Budgetary expenditure.................................................................... C.19

2.2.1   Adjustments to program spending...................................... C.20

2.2.2   Efforts on the part of all government departments............. C.22

2.2.3   Weight of government spending in the economy................ C.25

2.2.4   Consolidated expenditure.................................................... C.26

2.2.5   Debt service......................................................................... C.29

3.   Consolidated budgetary forecasts for revenue and expenditure..

3.1    Change in consolidated revenue and expenditure from 2010-2011 to 2012-2013                                                                                                          C.31

3.2    Consolidated entities...................................................................... C.36

3.2.1   Special funds....................................................................... C.36

3.2.2   Non-budget-funded bodies................................................... C.37

3.2.3   The health and social services and education networks..... C.40

3.2.4   Generations Fund................................................................ C.40

 

4.   Government investments...................................................... C.41

4.1    The Québec Infrastructures Plan..................................................... C.41

4.2    Investments by Québec government departments and organizations C.43

4.3    Investments by government enterprises......................................... C.43

4.4    Public investments in the economy................................................. C.44

5.   Consolidated net financial requirements.............................. C.45

6.   Consolidated non-budgetary transactions........................... C.47

Appendix 1: Details of the 2010-2015 Québec Infrastructures Plan C.50

Appendix 2: Investment projects by government enterprises....... C.53

Appendix 3: Restatement of the financial framework of the 2010-2011 Budget to take into account the creation of fort and fraf......... C.55

 

 

Introduction

This section of the Budget Plan presents the preliminary results for fiscal 2010‑2011 and the government's budgetary and financial stance for 2011‑2012 and 2012‑2013.

The information provided concerns:

consolidated financial and budgetary transactions for the period from 2010‑2011 to 2012‑2013, including the impact of the various measures announced in the present budget;

the change in budgetary revenue and expenditure, adjustments made since last year's budget, and particularly the following:

consolidated expenditure;

the results of consolidated entities, including special funds, non-budget-funded bodies and the health and social services and education networks;

government investments;

the government's consolidated net financial requirements and non-budgetary transactions.

The financial framework takes into account the creation of new special funds, namely, the Land Transportation Network Fund (FORT),, the Fund to Finance Health and Social Services Institutions (FINESSS)2 and the Tax Adminstration Fund (FRAF),3, whose purpose is to fund the Agence du revenue du Québec.4 In addition, the Act respecting the Agence du revenu du Québec stipulates that from now on the allowance for doubtful accounts will be applied against budgetary revenue, whereas previously it was recorded under program spending.

The five-year financial framework of the 2011-2012 Budget, or the five year financial projections up to 2015‑2016, is presented in Section A.

 

 

1.  Staying the course on restoring budget
balance in 2013-2014

1.1       Change in the budgetary balance

Overall, the government's budgetary situation remains the same as that presented in last year's budget. In particular, the total of projected deficits from 2009‑2010 to 2013‑2014 stands at $12.7 billion and is the same as forecast in March 2010.

The budgetary balance within the meaning of the Balanced Budget Act will be in deficit by $4.2 billion for 2010-2011, $3.8 billion for 2011‑2012 and $1.5 billion for 2012‑2013. The government is staying the course towards a balanced budget in 2013‑2014.

The deficit will be reduced through the measures contained in the plan to restore fiscal balance, primarily spending control.

In addition, to help face unforeseen events, contingency reserves totalling $800 million from 2010‑2011 to 2012‑2013 are included in the deficits.

 

TABLE C.1        

Summary of adjusted budgetary transactions - 2011‑2012 Budget

(millions of dollars)


2010‑2011

2011‑2012

2012‑2013

BUDGETARY TRANSACTIONS




Budgetary revenue

62 376

65 375

69 087

% change

5.2

4.8

5.7

Program spending

- 59 819

- 61 284

- 62 113

% change

2.4

2.4

1.4

Debt service

- 6 934

- 7 794

- 8 646

Total budgetary expenditure

- 66 753

- 69 078

- 70 759

% change

3.5

3.5

2.4

Net results of consolidated entities

1 209

1 143

1 119

Contingency reserve

- 300

- 300

- 200

Measures to be identified

¾

¾

300

DEFICIT

- 3 468

- 2 860

- 453

BALANCED BUDGET ACT




Deposits of dedicated revenues in the
Generations Fund

- 732

- 940

- 1 047

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 200

- 3 800

- 1 500

As a % of GDP

- 1.3

- 1.2

- 0.4

 
q Spending control

In 2011‑2012, the government will continue its rigorous management of program spending by limiting growth in such spending to 2.4%. In 2012‑2013, program spending growth will stand at 1.4%.

In the 2010-2011 Budget, the government undertook to assume, by 2013‑2014, 62% of the total effort identified in the plan to restore fiscal balance.

Over the past year, all of the spending measures needed to deliver on that commitment were identified. In addition, the $1.4-billion effort planned for 2010-2011 will be achieved.

The government's reporting entity includes not only program spending but also public spending as a whole, i.e. consolidated expenditure. Additional information on consolidated expenditure is given in sections 2.2.4 and 3.1.

q Contingency reserve

When the 2010‑2011 Budget was tabled, the government included a contingency reserve of $300 million in 2010‑2011 in its financial framework to guard against contingencies arising in particular from economic uncertainty. New reserves of $300 million in 2011‑2012 and $200 million in 2012‑2013 were added in fall 2010.

The 2011-2012 Budget maintains these contingency reserves, which total $800 million over these three years.

 

TABLE C.2        

Contingency reserves included in the financial framework

(millions of dollars)


2010-2011

2011-2012

2012-2013

2013-2014

2010-2011 Budget

- 300

¾

¾

¾

Adjustments

¾

- 300

- 200

¾

TOTAL - 2011-2012 BUDGET

- 300

- 300

- 200

¾


 

 

1.2       Adjustments to the financial framework

The table below presents the main factors explaining the adjustments to the deficits for the years 2010‑2011 to 2012‑2013 since the last budget. Overall, the adjustments to budgetary expenditure are offset by additional revenue generated by the good economic performance.

For 2010-2011, the budgetary deficit will be $4.2 billion, an improvement of $306 million compared with last year's budget.

The budgetary deficits for subsequent years are revised upward by $900 million in 2011‑2012 and $300 million in 2012‑2013, to $3.8 billion and $1.5 billion respectively.

 

 

 

 

 

 

 

TABLE C.3        

Total adjustments since the 2010‑2011 Budget

(millions of dollars)


2010-2011

2011-2012

2012-2013

BALANCE IN THE 2010-2011 BUDGET

- 4 506

- 2 900

- 1 200

Own-source revenue excluding government enterprises

569

800

791

Government enterprises

223

53

28

Federal transfers

126

358

271

Total budgetary revenue

918

1 211

1 090

Program spending




New actuarial valuations of the retirement plans

- 356

- 357

- 358

Increase in the allowance for doubtful accounts

- 402

- 352

- 352

Costs related to pay equity

¾

- 217

- 217

Agreement with child-care- service providers

¾

- 137

- 143

Measures in the 2011-2012 Budget

¾

- 120

- 118

Other adjustments

¾

- 159

- 37

Total program spending

- 758

- 1 342

- 1 225

Debt service

46

38

103

Total budgetary expenditure

- 712

- 1 304

- 1 122

Consolidated entities1

100

- 196

- 44

Contingency reserve

¾

- 300

- 200

Reduction in efforts to be identified

¾

- 311

- 24

Total adjustments to the budgetary balance

306

- 900

- 300

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 200

- 3 800

- 1 500

1       Excluding the Generations Fund.

 
q Adjustments to the budgetary balance in 2010-2011

The budgetary balance within the meaning of the Balanced Budget Act for 2010‑2011 is in deficit by $4.2 billion, an improvement of $306 million compared with the March 2010 Budget.

This result is mainly attributable to the upward adjustments to budgetary revenue that are greater than those to budgetary expenditure.

In addition, a $300-million contingency reserve is being maintained to deal with any additional shortfalls that could result from the change in revenue and expenditure at the end of the year.

 

TABLE C.4        

Summary of budgetary transactions in 2010‑2011

(millions of dollars)


2010‑2011

Budget1

Adjustments

Reclassification2

2011‑2012Budget

BUDGETARY TRANSACTIONS





Own-source revenue

42 543

569

- 900

42 212

Government enterprises

4 490

223


4 713

Federal transfers

15 325

126


15 451

Total budgetary revenue

62 358

918

- 900

62 376

Program spending

- 59 961

- 758

900

- 59 819

Debt service

- 6 980

46


- 6 934

Total budgetary expenditure

- 66 941

- 712

900

- 66 753

Net results of consolidated entities

1 269

- 60


1 209

Contingency reserve

- 300

¾


- 300

DEFICIT

- 3 614

146

¾

- 3 468

BALANCED BUDGET ACT





Deposits of dedicated revenues in the Generations Fund

- 892

160


- 732

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 506

306

¾

- 4 200

As a % of GDP

- 1.4



- 1.3

1    The data for the 2010-2011 Budget have been restated to reflect the creation of special funds since that budget was tabled. Appendix 3 gives the details of these restatements.

2    The Act respecting the Agence du revenu du Québec stipulates that from now on the allowance for doubtful accounts will be applied against budgetary revenue, whereas previously it was recorded under program spending.

 

 

¡ Adjustment to budgetary revenue

The government's budgetary revenue for 2010‑2011 has been revised upward by $918 million. These results are due to:

a positive adjustment of $569 million in own-source revenue excluding government enterprises, of which $290 million is from personal income tax;

a $223-million increase in revenue from government enterprises;

a $126-million rise in federal transfer revenues.

¡ Adjustment to budgetary expenditure

The government's budgetary expenditure for 2010-2011 has been revised upward by $712 million. These results can be explained by:

a $758-million upward adjustment of the program spending objective due to:

the $356-million impact of the new actuarial valuations of the retirement plans;

a $402-million increase in the allowance for doubtful accounts;

a $46-million decrease in debt service.

¡ Other elements

The $100-million improvement in the results of consolidated entities, excluding deposits of dedicated revenues in the Generations Fund, has also helped to bring down the deficit.

 

 

q 2011‑2012: a budgetary deficit of $3.8 billion

The budgetary deficit for 2011-2012 will amount to $3.8 billion, an increase of $900 million compared with last year's budget. This increase stems from:

the adjustments to budgetary revenue that are $93 million higher than the adjustments to budgetary expenditure. In this regard:

budgetary revenue is being revised upward by $1 211 million;

budgetary expenditure is being increased by $1 304 million, mainly because of the recurrence of overruns recognized in 2010-2011, coupled with certain wage costs and the impact of the budget measures;

the inclusion of a $300-million contingency reserve in the government's financial framework;

the reduction of $311 million in efforts to be identified under the plan to restore fiscal balance;

the $196-million decrease in the results of consolidated entities excluding deposits of dedicated revenues in the Generations Fund.

 

q 2012‑2013: a budgetary deficit of $1.5 billion

The budgetary deficit for 2012-2013 will amount to $1.5 billion, an increase of $300 million compared with March 2010. This revision stems essentially from:

the recurrence of adjustments to revenue and expenditure;

the creation of a $200-million contingency reserve.

 

 

2.  Updating of the financial framework

This chapter presents the updated budgetary revenue and expenditure for 2010‑2011 to 2012-2013 and the principal adjustments made since the last budget.

2.1       Budgetary revenue

The government's budgetary revenue is expected to total $65.4 billion in 2011‑2012, i.e. $50.3 billion in own-source revenue and $15.0 billion in federal transfers. Budgetary revenue should grow by 4.8% in 2011‑2012 and 5.7% in 2012‑2013.

The presentation of budgetary revenue includes the measures contained in the plan to restore fiscal balance, as well as the implementation of the special funds FORT and FRAF.

 

 

TABLE C.5        

Consolidated revenue fund

Change in budgetary revenue

(millions of dollars)


2010-2011

Budget1


2011-2012 Budget


2010-2011

Adjustments

2010-2011

2011-2012

2012-2013

Own-source revenue






Own-source revenue excluding government enterprises - according to the 2011‑2012 Budget structure

42 543

569

43 112

46 396

49 803

% change

6.7


7.4

7.6

7.3

Reclassification of the allowance for doubtful accounts against revenue

- 900

¾

- 900

- 850

- 850

Own-source revenue excluding government enterprises

41 643

569

42 212

45 546

48 953

% change

 6.9


 7.5

7.9

7.5

Government enterprises

4 490

223

4 713

4 790

4 930

% change

- 2.4


- 3.4

1.6

2.9

Total

46 133

792

46 925

50 336

53 883

% change

5.9


6.3

7.3

7.0

Federal transfers

15 325

126

15 451

15 039

15 204

% change

0.6


1.9

- 2.7

1.1

Budgetary revenue

61 458

918

62 376

65 375

69 087

% change

4.5


5.2

4.8

5.7

1    The data for the 2010-2011 Budget have been restated to reflect the creation of special funds since that budget was tabled. Appendix 3 gives the details of these restatements.

 

2.1.1     Own-source revenue excluding government enterprises

q Upward adjustments in 2010‑2011

Preliminary results for fiscal 2010‑2011 show that own-source revenue, excluding government enterprises, is adjusted upward by $569 million compared with the March 2010 Budget and posts an increase of 7.5% compared with the previous year.

¡ Adjustments to own-source revenue by source

Revenue from personal income tax is revised upward by $290 million in 2010‑2011. This revision can be explained essentially by the following factors:

the better employment performance, which resulted notably in stronger-than-anticipated growth in salaries and wages in 2010;

the recurrence of revenue higher than intially forecast for income tax payable in respect of 2009. In addition, tax instalments in respect of 2010, which are based on income tax payable in 2009, have been revised upward.

Contributions to the health services fund are adjusted upward by $20 million, reflecting the positive revision of salaries and wages in 2010 and monitoring of tax receipts.

Compared with the 2010-2011 Budget, revenue from corporate taxes is revised downward by $130 million, bringing forecast annual growth to 0.9% in 2010‑2011. This revision stems in particular from:

the downward adjustment in corporate profits in 2010;

the higher-than-expected refunds observed during the year because of past losses attributable to the 2009 recession, which put a greater-than-anticipated strain on revenue.

 

Consumption tax revenue is adjusted upward by $249 million in 2010‑2011. This adjustment is due in particular to the following factors:

revenue from the Québec sales tax (QST) was revised upward because of stronger-than-forecast household consumption in 2010 and a higher-than-expected number of housing starts;

revenue from the specific tax on tobacco products is revised upward by $120 million owing to the increase in the number of cigarettes sold legally following the stepping-up of efforts to combat the illegal trade of tobacco products.

Other revenue is adjusted upward by $140 million. This increase stems notably from higher-than-forecast revenue from natural resources and fines, forfeitures and recoveries.

 

 

 

 

 

 

 

 

TABLE C.6        

Consolidated revenue fund
Change in own-source revenue excluding government enterprises

 

(millions of dollars)

 


2010‑2011

Budget1




2011-2012 Budget


2010-2011


Adjustments


2010-2011

2011-2012

2012-2013

Personal income tax

17 726


290


18 016

18 786

19 482

% change

6.7




9.5

4.3

3.7

Health services fund

5 843


20


5 863

6 047

6 272

% change

3.5




1.2

3.1

3.7

Corporate taxes

3 763


- 130


3 633

3 885

4 356

% change

8.0




0.9

6.9

12.1

Consumption taxes

12 603


249


12 852

14 897

16 754

% change

8.4




10.9

15.9

12.5

Other revenue

1 708


140


1 848

1 931

2 089

% change

7.2




2.2

4.5

8.2

Own-source revenue excluding government enterprises

41 643


569


42 212

45 546

48 953

% change

6.9




7.5

7.9

7.5

1    The data for the 2010-2011 Budget have been restated to reflect the creation of special funds since that budget was tabled. Appendix 3 gives the details of these restatements.

 

 

 
q Change in revenue by source

In 2011-2012 and 2012-2013, own-source revenue, excluding that from government enterprises, will increase by 7.9% and 7.5% respectively. This growth, which is above that of the economy, stems from the impact of the implementation of the revenue measures provided for in the plan to restore fiscal balance.

In particular, the increases in the QST and the additional tax recovery efforts of the Agence du revenu du Québec will contribute to this impact.

Personal income tax, the main source of government revenue, is expected to increase by 4.3% in 2011-2012 and 3.7% in 2012-2013, to $18.8 billion and $19.5 billion, respectively.

These changes are compatible with the growth in personal income of 3.6%
in 2011 and 3.3% in 2012, taking into account the progressive nature of the tax system.

Contributions to the health services fund should climb by 3.1% in 2011‑2012 and 3.7% in 2012‑2013, rates similar to the growth in salaries and wages.

Revenue from corporate taxes will show a sustained increase of 6.9% and 12.1% in 2011‑2012 and 2012‑2013 respectively, on account of the following factors:

the resumption in the growth of profits will translate into an increase in taxable income and revenue from corporate taxes;

however, use of the losses accumulated by businesses during the recession will continue to attenuate growth in revenue in 2011‑2012.

In 2011‑2012 and 2012‑2013, revenue from consumption taxes should show an increase of 15.9% and 12.5% respectively. This growth reflects:

the growth of 4.6% and 4.1% in household consumption in 2011 and 2012 respectively;

the increase of one percentage point in the QST on January 1, 2011 and January 1, 2012.

q Change in revenue compatible with that of the economy

Overall, growth in own-source revenue, excluding government enterprises, is expected to be compatible with nominal economic growth for the next two years, leaving aside the financial impact of fiscal measures and the plan to restore fiscal balance.

 

 

2.1.2     Revenue from government enterprises

q Results for 2010‑2011

Revenue from government enterprises is adjusted upward by $223 million for 2010-2011. Hydro-Québec et the Société des alcools du Québec raised their forecast by $15 million and $5 million respectively, while the forecast for Loto‑Québec was revised downward.

Revenue from Loto-Québec is revised downward by $45 million, mainly on account of the decline in revenue attributable to video lottery terminals and the renovation work under way at the Casino de Montréal, as well as the costs related to the start‑up of the Espacejeux website.

Revenue from other government enterprises was re-evaluated upward mainly because of a $249-million upward adjustment of the results of the Société générale de financement du Québec. This increase is due to the higher-than-anticipated net gains on realized investments and higher-than-anticipated gains on  interests.

 

TABLE C.7        

Consolidated revenue fund
Change in revenue from government enterprises

(millions of dollars)


2010-2011 Budget


2011-2012 Budget


2010-2011

Adjustments

2010‑2011

2011‑2012

2012‑2013

Hydro-Québec

2 425

15

2 440

2 575

2 625

Loto-Québec

1 282

- 45

1 237

1 246

1 267

Société des alcools du Québec

882

5

887

940

973

Other

- 99

248

149

29

65

Revenue from government enterprises

4 490

223

4 713

4 790

4 930

% change

- 2.4


- 3.4

1.6

2.9


 

 
q Outlook for 2011‑2012 and 2012‑2013

Revenue from government enterprises for 2011-2012 and 2012-2013 will amount to $4 790 million and $4 930 million respectively. Anticipated revenue from Hydro‑Québec, Loto‑Québec and the Société des alcools du Québec will show a slight increase for these two years. The sustained effort to reduce spending and improve productivity will contribute to this result.

 

2.1.3     Revenues from federal transfers

In 2010‑2011, federal transfer revenues should reach $15.5 billion, or $126 million more than forecast in the March 2010 Budget.

Positive revisions of $45 million in health transfers and $23 million in transfers for post-secondary education and other social programs are forecast particularly because of the economic situation which reduced the value of the special Québec abatement that is subtracted from these transfers. The revision of federal transfers is also due to an $88-million increase in the offset payment for student financial assistance (see box on page C.19).

For 2011‑2012 and 2012‑2013, federal transfer revenues are expected to amount to $15.0 billion and $15.2 billion respectively.

 

TABLE C.8      

Consolidated revenue fund

Change in federal transfer revenues

(millions of dollars)


2010-2011 Budget


2011-2012 Budget


2010-2011

Adjustments

2010‑2011

2011‑2012

2012‑2013

Equalization

8 552

¾

8 552

7 639

8 040

% change

2.4


2.4

- 10.7

5.2

Protection payment




545


% change




N/A


Health transfers

4 264

45

4 309

4 516

4 817

% change

2.8


3.9

4.8

6.7

Transfers for post-secondary education and other social programs

1 432

23

1 455

1 475

1 504

% change

- 2.0


- 0.4

1.4

2.0

Other programs

1 077

58

1 135

864

843

% change

- 14.9


- 5.2

- 23.9

- 2.4

Federal transfers

15 325

126

15 451

15 039

15 204

% change

0.6


1.9

- 2.7

1.1


 

Federal transfers are expected to decline by 2.7% in 2011-2012 due to a 10.7% decrease in equalization, stemming mainly from Québec's relatively good economic performance during the 2009 recession. This delay results from the smoothing mechanism used by the federal government to determine equalization payments (three-year moving average delayed by two years).

 

 

 

 

TABLE C.9        

Smoothing mechanism used by the federal government to determine equalization payments

2007-2008


2008-2009


2009-2010


2010-2011


2011-2012


2012-2013


2013-2014

 














 














 

25%


25%


50%




Payments





 














 



25%


25%


50%




Payments



 














 





25%


25%


50%




Payments

 














 


 

This substantial drop in equalization payments is partly offset by a "protection payment" of $545 million in 2011‑2012. This payment was announced at the meeting of Finance Ministers in December 2010 and corresponds to the decrease, between 2010‑2011 and 2011‑2012, of total main federal transfers in each province (Canada Health Transfer (CHT), Canada Social Transfer (CST) and equalization). Three other provinces also qualified for a protection payment. It should be noted that Québec had indicated in Section E of the 2010‑2011 Budget Plan, that the providing of such protection payments "…should be made systematic so that Québec can qualify for them if, for example, its federal transfer revenues decline from one year to the next, as is currently forecast in 2011-2012."

As for revenue from other programs, the 23.9% decrease expected in 2011‑2012 can be explained in particular by the end of federal compensation in respect of the elimination of the tax on capital and the anticipated $40-million decrease in the offset payment for student financial assistance.

Federal transfers should increase by 1.1% in 2012‑2013. Growth in the major transfers will be slowed by the non-recurrence, in 2012‑2013, of the protection payment that will be made in 2011‑2012.

 

Offset payment for student financial assistance

Since the 1960s, Québec has exercised the right to opt out of federal student financial assistance programs. Québec offers its own program and receives, in this regard, financial compensation from the federal government under the Canada Student Financial Assistance Act.

This offset payment corresponds to the estimated cost, determined by the federal government, of applying its own programs in Québec if they were offered there instead of the program offered by Québec. In concrete terms, it corresponds to the average cost of federal programs for a person aged 18 to 24 in participating provinces, multiplied by the number of people aged 18 to 24 in Québec. Therefore, there is no link between the offset payment received from the federal government and spending by Québec on student financial assistance.

In February 2011, the federal government announced that Québec would receive an offset payment of $275 million for the 2009‑2010 school year. However, $180 million in revenue had been recorded in the 2009-2010 Public Accounts in this regard. Consequently, the $318 million in revenue forecast in 2010‑2011 includes a major adjustment for previous years. This revenue has been revised by $88 million compared with the forecast in the March 2010 Budget. For 2011-2012 and subsequent years, offset payments are expected to be in the order of $280 million annually.

The following table shows the offset and Millennium Scholarship payments received from the federal government since 1998, as well as Québec's spending on student financial assistance. It can be seen that Québec has invested, on average, more than twice as much as the federal government would have done had its financial assistance programs been offered in Québec.

 

Amounts received and spent by Québec in respect of student financial assistance

                          Offset
payments                               Millennium Scholarships (MS)                                      Total                   Spending by  Québec (including MS)  Ratio1

                          $ million                                                                                        $ million                          %

1998-99      159.1                                                               159.1                   394.8                              248.1

1999-00      124.8                          63.8                            188.5                   394.1                              209.0

2000-01      137.5                          80.3                            217.7                   380.8                              174.8

2001-02      143.2                          75.7                            219.0                   368.0                              168.1

2002-03      128.9                          73.4                            202.2                   353.0                              174.5

2003-04      158.3                          71.7                            229.9                   382.8                              166.4

2004-05      150.8                          69.8                            220.6                   318.1                              144.2

2005-06      159.5                          73.6                            233.1                   395.0                              169.5

2006-07      116.3                          90.9                            207.2                   457.0                              220.6

2007-08      112.0                          77.2                            189.2                   497.3                              262.8

2008-09      138.5                          80.0                            218.5                   485.5                              222.2

2009-102     180.1                          0.2                              180.3                   534.6                              296.5

2010-11      317.6                                                               317.6                   531.9                              167.5

1      Spending by Québec divided by total federal transfers received.

2      The replacement of the Millennium Scholarships by the Canada Student Grants Program (CSGP) on August 1, 2009 explains the increase in offset payments since 2009-2010.

Source: Québec public accounts and 2010-2011 Expenditure Budget.

This table also shows that despite major fluctuations in federal offset payments from one year to the next, Québec has always maintained a high level of spending on student financial assistance. For example, between 2005-2006 and 2006-2007, spending by Québec on student financial assistance increased even though the offset payment from the federal government fell by $43 million. Lastly, it should be noted that the portion of student financial assistance offered under the Québec program in the form of non-repayable bursaries (rather than repayable loans) is greater than that offered under the federal government programs.




 

2.2       Budgetary expenditure

The government's budgetary expenditure, which includes program spending and debt service, is expected to reach $69.1 billion in 2011‑2012, i.e. $61.3 billion for program spending and $7.8 billion for debt service. Program spending should increase by 2.4% in 2011‑2012 and 1.4% in 2012‑2013.

 

TABLEAU C.10 


Consolidated revenue fund
Change in budgetary expenditure

(millions of dollars)


2010‑2011

Budget1





Budget 2011‑2012


2010-2011


Adjustments

Reclassification2


2010‑2011

2011‑2012

2012‑2013

Program spending

59 961


758

- 900


59 819

61 284

62 113

% change

2.5





2.4

2.4

1.4

Debt service

6 980


- 46



6 934

7 794

8 646

% change

13.4





13.4

12.4

10.9

Budgetary expenditure

66 941


712

- 900


66 753

69 078

70 759

% change

3.6





3.5

3.5

2.4

1    In the 2010-2011 Budget, the program spending objective for 2010-2011 totalled $62 561 million. For purposes of comparison, the 2010‑2011 data have been restated to take into account the implementation of FORT and FRAF. For additional information, see Appendix 3.

2    The Act respecting the Agence du revenu du Québec stipulates that from now on the allowance for doubtful accounts will be applied against budgetary revenue, whereas previously it was recorded under program spending.

 



 

2.2.1     Adjustments to program spending

q 2010‑2011

Program spending in 2010‑2011 stands at $59.8 billion, up 2.4% over 2009‑2010 on a comparable basis. This represents an upward revision of $758 million.

This adjustment can be explained by:

the increase of $356 million attributable to the new actuarial valuations  of the retirement plans announced in the fall 2010 Update on Québec's Economic and Financial Situation;

the $402-million rise in the allowance for doubtful accounts.

q 2011-2012 and subsequent years

Growth in program spending for 2011‑2012 will be 2.4%.

Compared with the March 2010 Budget, the program spending objective is revised upward by $1 342 million, particularly on account of the following:

$120 million for all the spending measures announced in this budget;

$357 million attributable to the new actuarial valuations of the retirement announced in the fall 2010 Update on Québec's Economic and Financial Situation;

$352 million stemming from the increase in the allowance for doubtful accounts;

$217 million for costs related to pay equity;

$137 million for financing the costs related to the agreement with child-care-service providers.

In 2012‑2013, program spending growth will amount to 1.4%.

 

 

 

 

TABLE C.11     

Change in program spending

(millions of dollars)


2010-2011

2011-2012

2012-2013

PROGRAM SPENDING OBJECTIVE ACCORDING TO THE
2010-2011 BUDGET STRUCTURE1

59 961

60 792

61 738

% change

2.5

1.4

1.6

Measures in the 2011-2012 Budget

¾

120

118

Adjustments




New actuarial valuations of the retirement plans2

356

357

358

Increase in the allowance for doubtful accounts

402

352

352

Costs related to pay equity

¾

217

217

Agreement with child-care-service providers

¾

137

143

Other adjustments

¾

159

37

Subtotal

758

1 222

1 107

TOTAL ADJUSTMENTS SINCE THE 2010-2011 BUDGET

758

1 342

1 225

Reclassification of the allowance for doubtful accounts against revenue3

- 900

- 850

- 850

PROGRAM SPENDING OBJECTIVE IN THE
2011-2012 BUDGET

59 819

61 284

62 113

% change

2.4

2.4

1.4

1   After the implementation of FORT and FRAF.

2   Presented in the fall 2010 Update on Québec's Economic and Financial Situation.

3   The Act respecting the Agence du revenu du Québec stipulates that from now on the allowance for doubtful accounts will be applied against budgetary revenue, whereas previously it was recorded under program spending.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in spending since the 2010-2011 Budget

Change in spending since the 2010-2011 Budget

(million of dollars)


2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

Program spending in the 2010-2011 Budget

-60 769

- 62 561

- 63 907

- 65 282

- 66 686

        % change

3.8

2.9

2.2

2.2

2.2

FINESSS expenditures

-

- 180

 - 575

- 995

- 1 445







Program spending in the 2010-2011 -

Increased by FINESSS expenditures

- 60 769

- 62 741

- 64 482

- 66 277

- 68 131

        % change

3.8

3.2

2.8

2.8

2.8

Adjustments






Actuarial valuations of the retirement plans

-

- 356

- 357

- 358

- 360

Increase in the allowance for doubtful accounts

- 402

- 402

- 352

- 352

- 352

Costs related to pay equity

-

-

- 217

- 217

- 217

Agreement with child-care service providers

-

-

- 137

- 143

- 143

Other adjustments

- 408

-

- 279

- 155

- 378

Total adjustments

- 810

- 758

- 1 342

- 1 225

- 1 450

Program spending in the 2011-2012 Budget - Increased by FINESSS expenditures






Basis comparable to that of the 2010-2011 Budget

- 61 579

- 63 499

- 65 824

- 67 502

- 69 581

        % change

5.2

3.1

3.7

2.5

3.1







Impact of FORT and FRAF

2 290

2 600

3 115

3 544

3 961

Impact of FINESSS

-

180

575

995

1 445

Reclassification of the allowance for doubtful accounts against  revenue

900

900

850

850

850

Program spending in the 2011-2012 Budget

- 58 389

- 59 819

- 61 284

- 62 113

- 63 325

        % change

5.3

2.4

2.4

1.4

2.0



















Change in the program spending objective according to the presentation used in the
2010-2011 Budget

(per cent)






1        Plan to restore fiscal balance.

 

 

2.2.2     Efforts on the part of all government departments

Program spending will climb from $59.8 billion in 2010‑2011 to $61.3 billion in 2011‑2012, an increase of $1 465 million, or 2.4%.

 

TABLE C.12

Growth in program spending in 2011‑2012

(millions of dollars)





Change


2010-2011

2011-2012


$ million

%

Santé et Services sociaux

28 116

29 141


1 025

3.6

Éducation, Loisir et Sport

15 213

15 541


328

2.2

Famille et Aînés

2 250

2 387


137

6.1

Other departments

14 240

14 215


- 25

- 0.2

TOTAL

59 819

61 284


1 465

2.4

Note: Since figures are rounded, the sum of the amounts entered for each portfolio may not correspond to the total.

Source: Secrétariat du Conseil du trésor.

q Health: 3.6% increase in 2011-2012

Program spending by the Ministère de la Santé et des Services sociaux is being raised by $1 025 million, or 3.6%, for 2011-2012. This increase will make it possible to maintain current services. Moreover, total health spending in 2011‑2012 will increase to 5.0% particularly as a result of the additional contribution of $395 million from FINESSS to health-care institutions, in keeping with the government's commitment.

q Education: 2.2% budget increase

The increase of $328 million, or 2.2%, allocated to the Ministère de l'Éducation, du Loisir et du Sport, will make it possible to maintain and improve the quality of services offered in the education networks and pursue actions undertaken in recent years, in regard to student success and retention.

 
 
 
 
q Family and seniors: 6.1% budget increase

The budget of the Ministère de la Famille et des Ainés is being raised by 6.1%, or $137 million. This increase will make it possible notably to fund the agreement with child-care-service providers.

q Other departments

The budget of the other departments is being reduced by 0.2%, or $25 million, in 2011‑2012. This decrease can be explained in particular by the expiry of certain programs such as the RENFORT program and other economic support programs.

 

CHART C.1      

Breakdown of program spending growth 2011‑2012

(millions of dollars and per cent)


Source: Secrétariat du Conseil du trésor.

 
q The government's action in its essential missions

The government continues to invest in its essential missions, including health and education. From 2003-2004 to 2011‑2012, average annual spending in health and education will rise by 5.6% and 3.7% respectively, excluding the contribution of FINESSS to the growth in health spending.

In all, since 2003, the government has added $15.6 billion to the health and education budgets, i.e. $11.3 billion and $4.4 billion respectively.

 

CHART C.2      

Increase in program spending
from 2003‑20041 to 2011‑2012

(dollars and average annual growth in per cent)


1    The 2003‑2004 data have been restated to take into account the implementation of FORT and FRAF and the reclassification of the allowance for doubtful accounts following the creation of the Agence du revenue du Québec. For additional information, see Appendix 3.

 

 

 

2.2.3     Weight of government spending in the economy

The forecast for program spending in 2011‑2012 is in line with the government's overall objective to restore fiscal balance by 2013-2014.

The weight of spending in the economy should be 20.0% in 2011‑2012 prior to the implementation of FORT and FRAF and including FINESSS.

Thereafter, the government plans to stay the course of disciplined program spending management and, between now and 2014‑2015, gradually bring the weight of spending in the economy down to a proportion equal to that observed prior to the economic recession.

 

 

 

 

 

CHART C.3      

Program spending

(as a percentage of GDP)



 

2.2.4     Consolidated expenditure

When the government published the Public Accounts 2009‑2010 last December, it used for the first time line-by-line consolidation for the health and social services and education networks.

Even though network organizations had been included in the government's reporting entity at their equity value since 2006-2007, this new approach is an improvement in that it allows the level of government revenue and expenditure to be presented more accurately.

The following table shows not only the program spending of departments and budget-funded bodies, over which the government is committed to exercising tight control, but also all of the information on spending by special funds, non‑budget‑funded bodies, network organizations and specified purpose accounts. This presentation reflects the level and growth of the government's total spending, i.e. consolidated expenditure.

This information improves the presentation of the budgetary data and facilitates their comparison with the data disclosed in Québec's public accounts and with data of the other Canadian provinces.

 

 

 

TABLE C.13     

Change in consolidated expenditure1

(millions of dollars)


2010-2011

2011-2012

2012-2013

Program spending

59 819

61 284

62 113

% change

2.4

2.4

1.4

Consolidated entities




Special funds

10 234

10 862

11 939

% change

5.7

6.1

9.9

Non-budget-funded bodies

17 158

17 947

18 471

% change

4.1

4.6

2.9

Health and social services and education networks

34 748

36 305

37 924

% change

3.9

4.5

4.5

Total consolidated entities

62 140

65 114

68 334

% change

4.2

4.8

4.9

Elimination of inter-entity transactions1

- 49 936

- 51 639

- 53 214

Consolidated expenditure of departments and organizations

72 023

74 759

77 233

% change

3.9

3.8

3.3

Specified purpose accounts1

1 942

1 697

1 397

Debt service of the consolidated revenue fund

6 934

7 794

8 646

% change

13.4

12.4

10.9

Consolidated expenditure2

80 899

84 250

87 276

% change

5.73

4.1

3.6

1    Elimination of transactions between entities included in the reporting entity.

2    In 2009-2010, the consolidated expenditure shown in the public accounts was $76 566 million.

3    Excluding the $790-million increase in expenditures in respect of specified purpose accounts stemming essentially from infrastructure agreements with the federal government, growth of consolidated expenditure stands at 4.6% for 2010-2011.

q Expenditure of consolidated entities

The expenditure of consolidated entities includes spending by special funds, non-budget-funded bodies and organizations in the health and social services and education networks.

 

 

 

q Special funds

Growth in spending by special funds in 2010‑2011, 2011-2012 and 2012‑2013 amounts to 5.7%, 6.1% and 9.9% respectively. These rates include high growth in spending by certain special funds on account of their mission, such as:

FINESSS, which is devoted to financing health-care institutions;

FORT, which is devoted to financing public infrastructure;

Fonds vert (Green Fund), which is devoted to funding initiatives to combat climate change.

If growth in spending by these three funds is not included in the growth of total special fund spending for this period, the change in spending by the 32 other special funds amounts to - 1.5%, - 4.1% and 3.1% respectively in 2010‑2011, 2011-2012 and 2012‑2013.

 

TABLE C.14     

Change in spending by special funds

(millions of dollars)


2010-2011

2011-2012

2012-2013

Total special funds

10 234

10 862

11 939

% change

5.7

6.1

9.9

Including:




FINESSS

180

575

995

FORT

2 103

2 516

2 940

Fonds vert

373

507

514

Subtotal

2 656

3 598

4 449

% change

33.7

35.5

23.7

Other special funds

7 578

7 264

7 490

% change

- 1.5

- 4.1

3.1


 

 

Act to amend the special funds, among other things

A new bill will be tabled in the National Assembly this spring, notably to improve oversight of the special funds.

The purpose of the bill will be to propose legislative amendments so that:

the revenue of the special funds will be included in the consolidated revenue fund;

the expenditures and investments of the special funds will be subject to annual authorization by the members of the National Assembly.

The present budget presents the results of the special funds separately from those of non‑budget-funded bodies.


q Non-budget-funded bodies

Non-budget-funded bodies show annual spending growth of 4.1%, 4.6% and 2.9% for 2010‑2011, 2011-2012 and 2012‑2013 respectively.

As with special funds, certain non-budget-funded bodies have a mission that entails strong growth in spending. This is the case, for example, of the Société de financement des infrastructures locales du Québec, which finances municipal infrastructure.

 

q Health and social services and education networks

Since they are deemed a priority, organizations in the health and social services and education networks show spending growth of 3.9%, 4.5% and 4.5% respectively for 2010‑2011, 2011-201 and 2012‑2013.

q Consolidated expenditure of departments and organizations

The consolidated expenditure of departments and agencies consists of all spending included in the government's reporting entity for the purpose of providing services to the general public.

Growth in consolidated expenditure is expected to amount to 3.9%, 3.8 % and 3.3 % for 2010‑2011, 2011-201 and 2012‑2013 respectively. Although these growth rates are slightly higher than that of program spending because of the factors mentioned in regard to certain special funds, non-budget-funded bodies and the networks, there will be a marked slowdown in consolidated expenditure.

 
 
q Consolidated expenditure

The growth in consolidated expenditure comprises total government spending, including spending in respect of the specified purpose accounts and the debt service of the consolidated revenue fund.

Annual growth in consolidated expenditure for 2010‑2011, 2011-2012 and 2012‑2013 will amount to 5.7%, 4.1% and 3.6% respectively. This downward trend in the growth of consolidated expenditure is due mainly to control of program spending, whose growth will stand at 2.4% in 2011-2012 and 1.4% in 2012‑2013. In addition, the rate at which funds will be paid into the specified purpose accounts will be more regular by 2012-2013, particularly because of the expiry of the Canada's Economic Action Plan.

 

2.2.5     Debt service

In 2010‑2011, debt service should amount to $6.9 billion, i.e. $4.3 billion for direct debt service and $2.7 billion for interest ascribed to the retirement plans.

Overall, debt service is revised downward by $46 million compared with the March 2010 Budget mainly because of lower-than-anticipated interest rates.

In 2011-2012 and 2012-2013, debt service is expected to climb by 12.4% and 10.9% respectively. This increase can be explained by higher interest rates, the impact of the returns of the Caisse de dépôt et placement du Québec on the income of the Retirement Plans Sinking Fund, which is applied against the interest on the retirement plans account, and the rise in the debt.

 

TABLE C.15     

Consolidated revenue fund
Change in debt service

(millions of dollars)


2010-2011 Budget


2011-2012 Budget


2010-2011

Adjustments

2010‑2011

2011‑2012

2012‑2013

Direct debt service

4 398

- 112

4 286

5 007

5 574

Interest ascribed to the retirement plans

2 597

64

2 661

2 804

3 091

Interest ascribed to employee future benefits

- 15

2

- 13

- 17

- 19

Debt service

6 980

- 46

6 934

7 794

8 646

% change

13.4


13.4

12.4

10.9


 

q A smaller proportion of revenue is being devoted to servicing the debt of the consolidated revenue fund

The share of budgetary revenue devoted to the debt service of the consolidated revenue fund should stand at 12.5% in 2012‑2013, compared with 16.1% in 1998‑1999.

 

 

CHART C.4      

Debt service of the consolidated revenue fund

(as a percentage of the revenue of the consolidated revenue fund)


Note: Preliminary results for 2010-2011 and forecasts for subsequent years.

 

 

3.  Consolidated budgetary forecasts for revenue and expenditure

For the second year in a row, the government is presenting consolidated financial forecasts for its revenue and expenditure as whole. This consolidated presentation of the financial framework does not change the budgetary balance within the meaning of the Balance Budget Act presented in the preceding tables in Section C.

Essentially, the consolidated financial forecasts add the budgetary revenue and expenditure of all the entities in the government's reporting entity, including the entities in the health and social services and education networks, to the budgetary revenue and expenditure of the consolidated revenue fund. They thus provide more complete and detailed information on the government's financial projections, as well as better reconciliation with the actual results presented in the public accounts.

In this regard, it should be noted that the Public Accounts 2009‑2010 tabled by the government on last December 2 presented for the first time the health and social services and education networks consolidated line by line.

Line-by-line consolidation involves eliminating transactions between related entities, particularly transfer expenditures from the government that are paid to consolidated entities and the corresponding revenues received by these entities.

3.1       Change in consolidated revenue and expenditure from 2010-2011 to 2012-2013

Table C.16 presents the government's consolidated financial framework for fiscal 2010‑2011 to 2012‑2013.

More specifically, tables  C.17, C.18 and C.19 detail the consolidated budgetary forecasts for 2010‑2011 to 2012‑2013. The consolidation includes transactions by consolidated entities and specified purpose accounts. Financial transactions between entities in the government's reporting entity are subsequently eliminated to re-establish the consolidated revenue and expenditure levels. Since these transactions are carried out within the government, they do not affect the  budgetary balance.

 

 

 

TABLE C.16

Change in consolidated revenue and expenditure

Consolidated results by entity

(millions of dollars)


2010-2011

2011-2012

2012-2013

Revenue




Consolidated revenue fund

62 376

65 375

69 087

Special funds

10 704

11 111

11 941

Non-budget-funded bodies

17 217

17 926

18 541

Health and social services and education networks

34 696

36 280

37 924

Generations Fund

732

940

1 047

Specified purpose accounts

1 942

1 697

1 397

Less: Elimination of inter-entity transations1

- 49 936

- 51 639

- 53 214

Consolidated revenue

77 731

81 690

86 723

Expenditure




Consolidated revenue fund

- 59 819

- 61 284

- 62 113

Special funds

- 10 234

- 10 862

- 11 939

Non-budget-funded bodies

- 17 158

- 17 947

- 18 471

Health and social services and education networks

- 34 748

- 36 305

- 37 924

Less: Elimination of inter-entity transations1

49 936

51 639

53 214

Consolidated expenditure of departments
and organizations

- 72 023

- 74 759

- 77 233

Specified purpose accounts

- 1 942

- 1 697

- 1 397

Debt service of the consolidated revenue fund

- 6 934

- 7 794

- 8 646

Consolidated expenditure

- 80 899

- 84 250

- 87 276

Contingency reserve

- 300

- 300

- 200

Measures to be identified

¾

¾

300

DEFICIT

- 3 468

- 2 860

- 453

Deposits of dedicated revenues in the Generations Fund

- 732

- 940

- 1 047

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 200

- 3 800

- 1 500

1    Elimination of transactions between entities in the reporting entity.



 

TABLE C.17     

Detailed consolidated financial framework
Consolidated results by entity

(millions of dollars)


2010-2011



Consolidated entities




Consolidated revenue fund

Special funds

Non-budget-funded bodies

Health and social services and education networks

Generations Fund

Specified purpose accounts

Consolidation adjustments

Consolidated results

Revenue









Income and property taxes

27 512

1 884


1 471



- 139

30 728

Consumption taxes

12 852

1 973

93





14 918

Duties and permits

337

1 089

476

198




2 100

Miscellaneous

1 511

3 495

8 496

3 775


221

- 10 691

6 807

Government enterprises

4 713







4 713

Other revenue sources





732



732

Own-source revenue

46 925

8 441

9 065

5 444

732

221

- 10 830

59 998

Québec government transfers


1 980

8 114

29 012



- 39 106

¾

Federal transfers

15 451

283

38

240


1 721


17 733

Total revenue

62 376

10 704

17 217

34 696

732

1 942

- 49 936

77 731

Expenditure









Expenditure

- 59 819

- 9 294

- 15 852

- 33 954


- 1 942

48 819

- 72 042

Debt service

- 6 934

- 940

- 1 306

- 794



1 117

- 8 857

Total expenditure

- 66 753

- 10 234

- 17 158

- 34 748

¾

- 1 942

49 936

- 80 899

Contingency reserve

- 300







- 300

SURPLUS (DEFICIT)

- 4 677

470

59

- 52

732

¾

¾

- 3 468

Deposits of dedicated revenues in the Generations Fund





- 732



- 732

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 677

470

59

- 52

¾

¾

¾

- 4 200

Note: The public accounts will present the results according to the non-restated 2010-2011 structure.



 

TABLE C.18     

Detailed consolidated financial framework
Consolidated results by entity

(millions of dollars)


2011-2012



Consolidated entities




Consolidated revenue fund

Special funds

Non-budget-funded bodies

Health and social services and education networks

Generations Fund

Specified purpose accounts

Consolidation adjustments

Consolidated results

Revenue









Income and property taxes

28 718

2 244


1 489



- 220

32 231

Consumption taxes

14 897

2 125

103





17 125

Duties and permits

524

1 185

491

208




2 408

Miscellaneous

1 407

3 562

8 468

3 906


357

- 10 757

6 943

Government enterprises

4 790







4 790

Other revenue sources





940



940

Own-source revenue

50 336

9 116

9 062

5 603

940

357

- 10 977

64 437

Québec government transfers


1 938

8 295

30 429



- 40 662

¾

Federal transfers

15 039

57

569

248


1 340


17 253

Total revenue

65 375

11 111

17 926

36 280

940

1 697

- 51 639

81 690

Expenditure









Expenditure

- 61 284

- 9 663

- 16 692

- 35 465


- 1 697

50 411

- 74 390

Debt service

- 7 794

- 1 199

- 1 255

- 840



1 228

- 9 860

Total expenditure

- 69 078

- 10 862

- 17 947

- 36 305

¾

- 1 697

51 639

- 84 250

Contingency reserve

- 300







- 300

SURPLUS (DEFICIT)

- 4 003

249

- 21

- 25

940

¾

¾

- 2 860

Deposits of dedicated revenues in the Generations Fund





- 940



- 940

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 003

249

- 21

- 25

¾

¾

¾

- 3 800




 

TABLE C.19     

Detailed consolidated financial framework
Consolidated results by entity

(millions of dollars)


2012-2013



Consolidated entities




Consolidated revenue
fund

Special funds

Non-budget-funded bodies

Health and social services and education networks

Generations Fund

Specified purpose accounts

Consolidation adjustments

Consolidated results

Revenue









Income and property taxes

30 110

2 621


1 512



- 252

33 991

Consumption taxes

16 754

2 280

104





19 138

Duties and permits

503

1 224

497

212




2 436

Miscellaneous

1 586

3 832

9 151

4 431


359

- 11 121

8 238

Government enterprises

4 930







4 930

Other revenue sources





1 047



1 047

Own-source revenue

53 883

9 957

9 752

6 155

1 047

359

- 11 373

69 780

Québec government transfers


1 930

8 399

31 512



- 41 841

¾

Federal transfers

15 204

54

390

257


1 038


16 943

Total revenue

69 087

11 941

18 541

37 924

1 047

1 397

- 53 214

86 723

Expenditure









Expenditure

- 62 113

- 10 291

- 17 053

- 37 020


- 1 397

51 725

- 76 149

Debt service

- 8 646

- 1 648

- 1 418

- 904



1 489

- 11 127

Total expenditure

- 70 759

- 11 939

- 18 471

- 37 924

¾

- 1 397

53 214

- 87 276

Contingency reserve

- 200







- 200

Measures to be identified

300







300

SURPLUS (DEFICIT)

- 1 572

2

70

¾

1 047

¾

¾

- 453

Deposits of dedicated revenues in the Generations Fund





- 1 047



- 1 047

BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 1 572

2

70

¾

¾

¾

¾

- 1 500




 

3.2       Consolidated entities

In addition to the financial transactions of the consolidated revenue fund, the government's budgetary forecasts take into account all of the consolidated entities in the government's reporting entity:

special funds;

non-budget-funded bodies;

the health and social services and education networks;

the Generations Fund.

The following table shows the net results of each group of consolidated entities.

 

TABLE C.20     

Net results of consolidated entities

(millions of dollars)


2010-2011

2011-2012

2012-2013

Special funds

470

249

2

Non-budget-funded bodies

59

- 21

70

Health and social services and education networks

- 52

- 25

¾

Generations Fund (dedicated revenues)

732

940

1 047

NET RESULTS

1 209

1 143

1 119


3.2.1     Special funds

The special funds consist of 35 entities set up in government departments or organizations. Their mission is to deliver services and sell goods or to fund government programs. Special fund activities can be financed through fees, dedicated revenues from taxes, tax revenues or budgetary appropriations allocated annually by the National Assembly.

 

The government has decided to create new special funds. In this way, it will provide Quebecers with more transparent information on the specific allocation of certain tax revenue that is used to finance priority missions such as road infrastructure, specific health services and tax adminstration.

The table below presents the net results of the special funds for 2010‑2011, 2011-2012 and 2012‑2013. Overall, the special funds show a surplus of $470 million, $249 million and $2 million respectively for these three years.

 

TABLE C.21     

Special funds
Net results

(millions of dollars)


2010-2011

2011-2012

2012-2013

Revenue




Income and property taxes

1 884

2 244

2 621

Consumption taxes

1 973

2 125

2 280

Duties and permits

1 089

1 185

1 224

Miscellaneous

3 495

3 562

3 832

Own-source revenue

8 441

9 116

9 957

Québec government transfers

1 980

1 938

1 930

Federal transfers

283

57

54

Total revenue

10 704

11 111

11 941





Expenditure




Expenditure

- 9 294

- 9 663

- 10 291

Debt service

- 940

- 1 199

- 1 648

Total expenditure

- 10 234

- 10 862

- 11 939

NET RESULTS

470

249

2


 

 

 

List of special funds

 

Fonds d'aide à l'action communautaire autonome                   Fonds des technologies de l'information du Conseil du trésor

Fonds d'aide aux victimes d'actes criminels                             Fonds des technologies de l'information du ministère de l'Emploi et de la Solidarité sociale

Fonds d'assistance financière pour certaines régions sinistrées       Fonds d'information foncière

Fonds de développement du marché du travail                        Fonds d'information géographique

Fonds de développement régional                                            Fonds du centre financier de Montréal

Fonds de financement                                                               Fonds du développement économique1

Fonds de financement des établissements de santé et de services sociaux (Fund to Finance Health and Social Services Institutions) (FINESSS)                                                               Fonds du patrimoine culturel québécois

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

Fonds de gestion de l'équipement roulant                               Fonds du service aérien gouvernemental

Fonds de la sécurité routière                                                    Fonds forestier

Fonds de l'assurance médicaments                                          Fonds pour la promotion des saines habitudes de vie

Fonds de l'industrie des courses de chevaux                            Fonds pour le développement des jeunes enfants

Fonds de partenariat touristique                                              Fonds pour le développement du sport et de l'activité physique

Fonds de soutien aux proches aidants                                      Fonds québécois d'initiatives sociales

Fonds des pensions alimentaires                                              Fonds relatif à la tempête de verglas

Fonds des registres du ministère de la Justice                         Fonds relatif à l'administration fiscale (Tax Administration Fund) (FRAF)1

Fonds des réseaux de transport terrestre (Land Transportation Network Fund) (FORT)   Fonds vert (Green Fund)

Fonds des services de police                                                    

 

1          The Fonds du développement économique and the fonds relatif à l'administration fiscale will begin their activities on April 1, 2011.

 

 

3.2.2     Non-budget-funded bodies

The non-budget-funded bodies comprise 68 entities, which are listed in the box below.

These bodies were created to provide specific public services in sectors such as agriculture, through La Financière agricole du Québec, transportation, through the Agence métropolitaine de transport and the Société des traversiers du Québec, and culture, through museums and the Société de développement des entreprises culturelles.

 

 

 

 

 

 

 

The net results of non-budget-funded bodies stand at $59 million in 2010‑2011, - $21 million in 2011‑2012 and $70 million in 2012‑2013.

 

TABLE C.22     

Non-budget-funded bodies
Net results

(millions of dollars)


2010-2011

2011-2012

2012-2013

Revenue




Income and property taxes

¾

¾

¾

Consumption taxes

93

103

104

Duties and permits

476

491

497

Miscellaneous

8 496

8 468

9 151

Own-source revenue

9 065

9 062

9 752

Québec government transfers

8 114

8 295

8 399

Federal transfers

38

569

390

Total revenue

17 217

17 926

18 541





Expenditure




Expenditure

- 15 852

- 16 692

- 17 053

Debt service

- 1 306

- 1 255

- 1 418

Total expenditure

- 17 158

- 17 947

- 18 471

NET RESULTS

59

- 21

70


 

 

 

List of non-budget-funded bodies

 

Agence de l'efficacité énergétique                                            Institut national des mines

Agence du revenu du Québec1                                                  La Financière agricole du Québec

Agence métropolitaine de transport                                         Musée d'Art contemporain de Montréal

Autorité des marchés financiers                                               Musée de la Civilisation

Bibliothèque et Archives nationales du Québec                       Musée national des beaux-arts du Québec

Bureau de décision et de révision                                             Office de la sécurité du revenu des chasseurs et piégeurs cris

Centre de la francophonie des Amériques                                Office des professions du Québec

Centre de recherche industrielle du Québec                             Office Québec-Amériques pour la jeunesse

Centre de services partagés du Québec                                    Office Québec-Monde pour la jeunesse

Commission de la capitale nationale du Québec                      Régie de l'assurance maladie du Québec

Commission des lésions professionnelles                                 Régie de l'énergie

Commission des normes du travail                                           Régie des installations olympiques

Commission des relations du travail                                         Régie du bâtiment du Québec

Commission des services juridiques                                          Régie du cinéma

Conseil des arts et des lettres du Québec                                Services Québec

Conservatoire de musique et d'art dramatique du Québec      Société d'habitation du Québec

Corporation d'hébergement du Québec                                    Société de développement de la Baie-James

Corporation d'urgence-santé                                                     Société de développement des entreprises culturelles

École nationale de police du Québec                                        Société de financement des infrastructures locales du Québec

École nationale des pompiers du Québec                                 Société de l'assurance automobile du Québec

Financement-Québec                                                                 Société de la Place des Arts de Montréal

Fondation de la faune du Québec                                             Société de télédiffusion du Québec

Fonds d'aide aux recours collectifs                                           Société des établissements de plein air du Québec

Fonds d'assurance-prêts agricoles et forestiers                       Société des traversiers du Québec

Fonds de la recherche en santé du Québec                              Société du Centre des congrès de Québec

Fonds québécois de la recherche sur la nature et les technologies  Société du Grand Théâtre de Québec

Fonds québécois de la recherche sur la société et la culture  Société du Palais des congrès de Montréal

Héma-Québec                                                                            Société du parc industriel et portuaire de Bécancour

Immobilière SHQ                                                                        Société immobilière du Québec

Infrastructure Québec                                                                Société nationale de l'amiante

Institut de la statistique du Québec                                          Société québécoise d'assainissement des eaux

Institut de tourisme et d'hôtellerie du Québec                         Société québécoise de récupération et de recyclage

Institut national d'excellence en santé et en services sociaux          Société québécoise d'information juridique

Institut national de santé publique du Québec                         Tribunal administratif du Québec

 

1              The Agence du revenu du Québec will begin its activities on April 1, 2011.



 

3.2.3     The health and social services and education networks

The health and social services network is made up of 208 entities. These entities comprise 15 agencies and 3 regional authorities in health and social services, as well as 190 public health and social services institutions.

The education network is made of up 131 entities, including 73 school boards, 48 CEGEPs and the Université du Québec and its nine constituent universities.

The health and social services and education networks show combined deficits of $52 million in 2010-2011 and $25 million in 2011-2012. For fiscal 2012‑2013, the health and social services and education networks show balanced combined results.

The deficit of the networks in 2010-2011 can be attributed to the deficit of the health and social services network, estimated at $139 million.

However, the government has introduced various measures to eliminate this deficit over the medium term, particularly through the creation of the Fund to Finance Health and Social Services Institutions (FINESSS). Spending control measures were also provided for in Bill 100, which was passed following the March 30, 2010 Budget.

Deficits of $114 million and $89 million are forecast for the health network in 2011‑2012 and 2012‑2013 respectively.

 

 

TABLE C.23     

Health and social services and education networks
Net results

(millions of dollars)


2010‑2011

2011‑2012

2012‑2013

Revenue




School property taxes

1 471

1 489

1 512

Duties and permits

198

208

212

Miscellaneous

3 775

3 906

4 431

Own-source revenue

5 444

5 603

6 155

Québec government transfers

29 012

30 429

31 512

Federal transfers

240

248

257

Total revenue

34 696

36 280

37 924





Expenditure




Expenditure

- 33 954

- 35 465

- 37 020

Debt service

- 794

- 840

- 904

Total expenditure

- 34 748

- 36 305

- 37 924

NET RESULTS

- 52

- 25

¾


3.2.4     Generations Fund

Deposits in the Generations Fund are expected to reach $732 million for 2010‑2011.

For 2011‑2012 and 2012‑2013, total deposits in the Generations Fund are expected to amount to $940 million and $1 047 million respectively. As a result, the book value of the Generations Fund will reach $5.4 billion as at March 31, 2013. Section H presents the results of and change in the Generations Fund in greater detail.

 

TABLE C.24     

Deposits in the Generations Fund

(millions of dollars)


2010-2011 Budget




2011-2012 Budget


2010-2011


Adjustments


2010-2011

2011-2012

2012-2013

Dedicated revenues








Water-power royalties

687


- 54


633

689

733

Unclaimed property

2


9


11

7

7

Investment income

203


- 115


88

244

307

TOTAL

892


- 160


732

940

1 047


 

 

4.  Government investments

4.1       The Québec Infrastructures Plan

Over the coming years, the government will continue to invest in Québec's public infrastructure. As prescribed by the Act to promote the maintenance and renewal of public infrastructures (R.S.Q., c. M‑1.2), a substantial portion of these investments will be allocated to maintaining the quality of existing infrastructure and eliminating the maintenance deficit by 2022-2023.

Under the 2010‑2015 Québec Infrastructures Plan, the government will invest $44.6 billion over five years, which represents an increase of $1 916 million compared with the previous plan. This growth rate of 4.5% is comparable to that of the economy.

Coupled with the contribution of the Québec government's various partners in the projects included in the five-year plan, investments under the 2010-2015 Québec Infrastructures Plan will reach $57.0 billion over five years.

 

TABLE C.25     

Infrastructure investments in 2010‑2015

(millions of dollars)

2009‑2014 Québec Infrastructures Plan

42 639.4

Increase in the five-year budget: 4.5%

1 916.4

2010‑2015 Québec Infrastructures Plan

44 555.8

Contribution from partners1

12 490.8

TOTAL INFRASTRUCTURE INVESTMENTS IN 2010-2015

57 046.6

1    Federal government, municipalities and other partners.

q Investment targets for the coming years

Over the coming years, the government is committed to accelerating investments in public infrastructure, particularly to support the economy and employment.

To secure the economic recovery, the level of investment will be maintained until 2012‑2013.

Thereafter, as of 2012‑2013, the government will gradually reduce the annual level of investments while complying with the Act to promote the maintenance and renewal of public infrastructures.

 

 

 

 

 

 

 

 

CHART C.5      

Change in infrastructure investment

(Québec government contribution, billions of dollars)


1     Annual investments are detailed in Appendix 1 of this section.

4.2       Investments by Québec government departments and organizations

In addition to investments of roughly $9.6 billion in 2011-2012 under the Québec Infrastructures Plan, the Québec government will invest $1.5 billion through its various departments, agencies and special funds. These investments will include capital expenditures required for government functions and for maintaining the quality of public services.

 

TABLE C.26     

Investments by government departments, agencies and special funds

(millions of dollars)


2011-2012

Departments and budget-funded bodies

407.9

Non-budget-funded bodies

640.4

Special funds

446.4

TOTAL

1 494.7

Note: These investments exclude those made under the Québec Infrastructures Plan.

 

 

4.3       Investments by government enterprises

Government enterprises will make major investments in the coming years. In 2011‑2012, investments by Hydro‑Québec, Loto‑Québec and the Société des alcools du Québec will reach $4.9 billion. Over the period from 2010‑2011 to 2012‑2013, investments by these corporations will total $15.1 billion.

 

TABLE C.27     

Investments by government enterprises

(millions of dollars)


2010-2011

2011-2012

2012-2013

Total

Hydro-Québec

4 220.0

4 609.0

5 257.0

14 086.0

Loto-Québec

210.6

253.9

374.6

839.1

Société des alcools du Québec

55.0

65.0

45.0

165.0

TOTAL

4 485.6

4 927.9

5 676.6

15 090.1


4.4       Public investments in the economy

Public investments in Québec, including those by the Québec Infrastructures Plan, municipalities, the federal government and Hydro‑Québec will reach 6.3% of GDP in 2011, a level not seen for over 25 years.

 

 

CHART C.6      

Investments by governments1 and Hydro‑Québec in Québec

(as a percentage of GDP)


1    Québec government, federal government and municipalities.

Sources: Statistics Canada and Ministère des Finances du Québec.

 



 

In fact, the forecast average investment of $13.7 billion in 2010‑2011 to 2011‑2012 by the government under its Québec Infrastructures Plan and by Hydro-Québec will create or support close to 100 000 jobs in Québec, i.e. 2.5% of all jobs.

The increase in public investments by the Québec government and Hydro‑Québec will support 29 000 more jobs.

 

 

TABLE C.28     

Jobs supported by the Québec Infrastructures Plan1 and Hydro‑Québec


Average annual value of investments
(
$ billion)

Average annual number

of jobs2

(units)

2003-2004 to 2009-2010

8.5

65 000

Increase between the two periods

5.2

29 000

2010-2011 AND 2011-2012

13.7

94 000

1   Ministère des Finances du Québec estimates based on the intersectoral model of the Institut de la statistique du Québec.

2   Québec government contributions only.

 

 

5.  Consolidated net financial requirements

Net surpluses or financial requirements represent the difference between the government's cash inflow and disbursements. This measure takes into account not only changes in the budgetary balance on an accrual basis, but also resources or requirements arising from the government's investments through the acquisition of fixed assets, through loans, investments and advances, and through other activities such as paying accounts payable and collecting accounts receivable. The difference between the budgetary balance and net financial requirements is recognized in non-budgetary transactions.

As a whole, the government's consolidated net financial requirements stand at $6.5 billion in 2010‑2011, $7.5 billion in 2011‑2012 and $4.5 billion in 2012‑2013.

 

 

TABLE C.29     

Consolidated net financial requirements1

(millions of dollars)


2010-2011 Budget




2011-2012 Budget


2010-2011


Adjustments


2010-2011

2011-2012

2012-2013

Budgetary balance within the meaning of the Balanced Budget Act

- 4 506


306


- 4 200

- 3 800

- 1 500

Deposits of dedicated revenues in the Generations Fund

892


- 160


732

940

1 047

Total consolidated budgetary transactions

- 3 614


146


- 3 468

- 2 860

- 453

Consolidated non-budgetary transactions








Investments, loans and advances

- 1 281


- 341


- 1 622

- 2 024

- 1 101

Capital expenditures

- 4 653


- 441


- 5 094

- 4 222

- 5 373

Retirement plans and employee future benefits

2 667


697


3 364

2 720

2 597

Other accounts

- 98


448


350

- 1 148

- 121

Total consolidated non-budgetary transactions

- 3 365


363


- 3 002

- 4 674

- 3 998

CONSOLIDATED NET FINANCIAL REQUIREMENTS

- 6 979


509


- 6 470

- 7 534

- 4 451

1     A negative entry indicates a financial requirement and a positive entry, a source of financing.

 

 

The consolidated net financial requirements shown in the above table come from the following sources:

The net financial requirements of the consolidated revenue fund amount to $1.5 billion for 2010‑2011, $3.5 billion for 2011‑2012 and $600 million for 2012‑2013. These variations mainly reflect the change in the deficits forecast for the coming years and the capital funding granted by Investissement Québec to provide assistance to businesses.

The net financial requirements of consolidated entities, excluding the Generations Fund, stand at $5.7 billion for 2010‑2011, $5.0 billion for 2011‑2012 and $4.9 billion for 2012‑2013. These net financial requirements stem largely from infrastructure investments provided for by the Land Transportation Network Fund and by the health and social services and education networks.

The net financial surplus of the Generations Fund amounts to $732 million for 2010‑2011, $940 million for 2011‑2012 and $1.0 billion for 2012‑2013.

 

TABLE C.30     

Consolidated net financial requirements by entity1

(millions of dollars)


2010-2011 Budget




2011-2012 Budget

 


2010-2011


Adjustments


2010-2011

2011-2012

2012-2013

 

Consolidated revenue fund

- 3 000


1 500


- 1 500

- 3 500

- 600

 

Consolidated entities2

- 4 871


- 831


- 5 702

- 4 974

- 4 898

 

Generations Fund

892


- 160


732

940

1 047

 

CONSOLIDATED NET FINANCIAL REQUIREMENTS

- 6 979


509


- 6 470

- 7 534

- 4 451

 

1    A negative entry indicates a financial requirement and a positive entry, a source of financing.

2    Excluding the Generations Fund.

 

 

 

6.  Consolidated non-budgetary transactions

Consolidated non-budgetary transactions consist of the non-budgetary transactions of the consolidated revenue fund and those of consolidated entities. They are presented by activity:

investments, loans and advances;

capital expenditures;

retirement plans and employee future benefits;

other accounts.

For 2010‑2011, consolidated non-budgetary requirements stand at $3.0 billion, or $363 million less than forecast in the March 2010 Budget. For 2011‑2012 and 2012‑2013, consolidated non-budgetary requirements stand at $4.7 billion and $4.0 billion respectively.

 

 

 

 

TABLE C.31

Summary of consolidated non-budgetary transactions1

(millions of dollars)


2010-2011

Budget2




2011-2012 Budget


2010-2011


Adjustments


2010-2011

2011-2012

2012-2013

Consolidated revenue fund








Investments, loans and advances

- 1 103


817


- 286

- 1 118

- 968

Capital expenditures

- 266


- 76


- 342

- 369

- 376

Retirement plans and employee future benefits

2 667


697


3 364

2 720

2 597

Other accounts

585


- 144


441

- 730

- 281

Total

1 883


1 294


3 177

503

972

Consolidated entities








Investments, loans and advances

- 178


- 1 158


- 1 336

- 906

- 133

Capital expenditures

- 4 387


- 365


- 4 752

- 3 853

- 4 997

Retirement plans and employee future benefits

¾


¾


¾

¾

¾

Other accounts

- 683


592


- 91

- 418

160

Total

- 5 248


- 931


- 6 179

- 5 177

- 4 970

Consolidated non-budgetary transactions








Investments, loans and advances

- 1 281


- 341


- 1 622

- 2 024

- 1 101

Capital expenditures

- 4 653


- 441


- 5 094

- 4 222

- 5 373

Retirement plans and employee future benefits

2 667


697


3 364

2 720

2 597

Other accounts

- 98


448


350

- 1 148

- 121

TOTAL CONSOLIDATED NON-BUDGETARY TRANSACTIONS

- 3 365


363


- 3 002

- 4 674

- 3 998

1    A negative entry indicates a financial requirement and a positive entry, a source of financing.

2   The data for the 2010-2011 Budget have been restated to reflect the creation of special funds since that budget was tabled. Appendix 3 gives the details of these restatements.

 

 

 

q Investments, loans and advances

Consolidated financial requirements for investments, loans and advances for 2010‑2011 amount to $1.6 billion. The forecasts for 2011‑2012 and 2012‑2013 stand at $2.0 billion and $1.1 billion respectively.

For 2010‑2011, the investments, loans and advances of the consolidated revenue fund show financial requirements of $286 million, or $817 million less than forecast in last year's budget.

This decrease can be attributed mainly to the change in the payment schedule for capital funding granted to government enterprises. This change is due to, among other things, the merger of Investissement Québec (IQ) and the Société générale de financement du Québec (SGF).

The capital funding of $500 million provided for in 2010-2011 for the SGF will be allocated to IQ over the next two years, i.e. $400 million in 2011-2012 and $100 million in 2012‑2013.

The financial requirements of consolidated entities in regard to investments, loans and advances amount to $1.3 billion for 2010‑2011 and $906 million for 2011‑2012. The requirements for 2010-2011 arise primarily from loans by Financement-Québec to municipal entities under the municipal infrastructure low-cost loans program set up under Canada's Economic Action Plan.

q Retirement plans and employee future benefits

For 2010‑2011, the balance of non-budgetary transactions in regard to the retirement plans and employee future benefits is $3.4 billion, which reduces the government's financing needs.

For 2011‑2012 and 2012‑2013, the retirement plans and employee future benefits should help to reduce financing needs by $2.7 billion and $2.6 billion respectively.

 
q Other accounts

Net financial requirements for other accounts consist of a series of changes in assets and liabilities such as accounts receivable, accounts payable and deferred revenue.

In 2010-2011, the change in other accounts will constitute a source of financing, amounting to $350 million.

q Capital expenditures

In 2010‑2011, financial requirements associated with capital expenditures total $5.1 billion. As shown in the following table, they consist of investments of $7.9 billion minus the $2.8-billion depreciation.

Forecast financial requirements for 2011‑2012 and 2012‑2013 stand at $4.2 billion and $5.4 billion respectively.

Financial requirements in regard to consolidated entities for 2010‑2011 are largely explained by investments of $4.1 billion by special funds, including   $3.8 billion in road infrastructure. These investments also explain the increase in financial requirements for 2011‑2012 and 2012‑2013.

TABLE C.32     

Net investments in capital expenditures1

 

(millions of dollars)

 


2010-2011 Budget




2011-2012 Budget


2010‑2011


Adjustments


2010-2011

2011-2012

2012-2013

Consolidated revenue fund








Level of investment

- 518


25


- 493

- 523

- 533

Depreciation

252


- 101


151

154

157

Total -  Consolidated revenue fund

- 266


- 76


- 342

- 369

- 376

Consolidated entities








Special funds








Level of investment

- 4 260


184


- 4 076

- 3 061

- 3 253

Depreciation

1 102


- 227


875

918

1 011

Total - Special funds

- 3 158


- 43


- 3 201

- 2 143

- 2 242

Non-budget-funded bodies








Level of investment

- 668


- 201


- 869

- 1 204

- 1 726

Depreciation

499


1


500

576

631

Total - Non-budget-funded bodies

- 169


- 200


- 369

- 628

- 1 095

Health and social services and education networks








Level of investment

- 2 392


- 107


- 2 499

- 2 458

- 3 153

Depreciation

1 332


- 15


1 317

1 376

1 493

Total - Health and social services and education networks

- 1 060


- 122


- 1 182

- 1 082

- 1 660

Consolidated entities








Level of investment

- 7 320


- 124


- 7 444

- 6 723

- 8 132

Depreciation

2 933


- 241


2 692

2 870

3 135

Total - Consolidated entities

- 4 387


- 365


- 4 752

- 3 853

- 4 997

CONSOLIDATED








Level of investment

- 7 838


- 99


- 7 937

- 7 246

- 8 665

Depreciation

3 185


- 342


2 843

3 024

3 292

Total - Consolidated

- 4 653


- 441


- 5 094

- 4 222

- 5 373

1    A negative entry indicates a financial requirement and a positive entry, a source of financing.

 

 

 

 

Appendix 1: Details of the 2010-2015
Québec Infrastructures Plan

q Breakdown by activity sector

Investments of $44.6 billion from 2010-2011 to 2014-2015 under the Québec Infrastructures Plan are distributed among the various sectors of government activity:

$20.4 billion in transportation infrastructure (road network, public transit and maritime infrastructure);

$10.1 billion in health infrastructure;

$6.3 billion in education infrastructure;

$3.9 billion in municipal infrastructure;

$3.9 billion in other sectors (culture, social housing, research, justice and public security, agriculture, public dams and forest roads).

 

CHART C.7      

Breakdown of investments under the 2010‑2015
Québec Infrastructures Plan by activity sector

(Québec government contribution)


1    Includes investments in culture, social housing, research, justice and public security, agriculture, public dams and forest roads.

 

 

 

 

 

TABLE C.33     

Breakdown of investments under the 2010‑2015
Québec Infrastructures Plan by activity sector

(Québec government contribution, millions of dollars)


2010-11

2011-12

2012-13

2013-14

2014-15

Total

Road network

3 416.5

3 457.2

3 414.1

3 249.8

3 323.3

16 860.9

Public transit

534.5

984.8

623.7

413.6

396.5

2 953.1

Maritime infrastructure

99.6

147.3

158.0

152.1

25.0

582.0

Health and social services

1 714.1

1 961.6

1 951.8

2 212.1

2 234.8

10 074.4

Education

1 367.3

1 405.9

1 222.2

1 130.7

1 128.1

6 254.2

Culture

439.4

185.5

186.1

161.8

170.1

1 142.9

Municipal infrastructure

831.3

710.8

774.9

756.8

796.0

3 869.8

Social housing

212.3

264.9

312.7

173.8

100.5

1 064.2

Research

106.1

80.8

168.7

80.8

80.8

517.2

Justice and public security

166.8

299.7

284.0

191.6

80.6

1 022.7

Other1

47.0

55.3

39.8

33.0

39.3

214.4

TOTAL

8 934.9

9 553.8

9 136.0

8 556.1

8 375.0

44 555.8

1    Agriculture, public dams and forest roads.

 

 

q Breakdown by type of investment

These investments include funds allocated to maintaining assets and improving and replacing infrastructure, as well as completing projects started before the first five-year plan came into effect.

The investment budget for maintaining assets comprises the regular budget needed to meet recognized asset maintenance standards (ranging from 1% to 3% of assets' replacement value, depending on the sector) and investments allocated to eliminating the infrastructure maintenance deficit over 15 years as prescribed by the Act to promote the maintenance and renewal of public infrastructures.

 

 

 

 

 

CHART C.8      

Breakdown of investments under the 2010‑2015
Québec Infrastructures Plan by type of investment1

(Québec government contribution)


1    The difference between the total of the investments shown here and total investments under the 2010‑2015 Québec Infrastructures Plan is due to rounding of the annual amounts.

 

 

TABLE C.34     

Breakdown of investments under the 2010‑2015 Québec Infrastructures Plan by activity sector and type of investment

(Québec government contribution, millions of dollars)


Asset maintenance





Regular budget

Elimination of maintenance deficit

Improvement and replacement

Project completion

Total

Road network

9 434.6

1 957.7

2 671.8

2 796.8

16 860.9

Public transit

1 188.0

588.4

717.9

458.8

2 953.1

Maritime infrastructure

¾

¾

582.0

¾

582.0

Health and social services

4 428.5

786.7

4 340.9

518.3

10 074.4

Education

4 344.3

1 176.7

727.0

6.2

6 254.2

Culture

617.3

250.7

163.5

111.4

1 142.9

Municipal infrastructure

785.2

2 024.2

395.4

665.0

3 869.8

Social housing

279.4

216.8

380.1

187.9

1 064.2

Research

¾

¾

517.2

¾

517.2

Justice and public security

340.1

¾

682.6

¾

1 022.7

Other1

192.7

¾

21.7

¾

214.4

TOTAL

21 610.1

7 001.2

11 200.1

4 744.4

44 555.8

1    Agriculture, public dams and forest roads.

 

Appendix 2: Investment projects by
government enterprises

Certain government enterprises will continue to make substantial investments that will contribute to Québec's economic prosperity. In 2011‑2012, investments by these corporations will increase by $442 million compared with 2010‑2011 and reach $4 928 million. They will climb again by nearly $750 million in 2012‑2013, to  $5 677 million.

q Hydro-Québec

Hydro‑Québec will boost its investments by $389 million in 2011 compared with the previous year, for a total of $4 609 million. In 2012, its investments will grow by $648 million, to $5 257 million.

The funds devoted to the La Romaine complex will reach $543 million in 2011 and $872 million in 2012. As well, $512 million will be allocated to the Eastmain‑1‑A/Sarcelle/Rupert project in 2011. In addition to making a significant contribution to Québec's economy, these two projects will play an important role in securing Québec's energy future.

Renovation work on the Gentilly-2 power station will also generate major economic spinoffs, as $150 million will be devoted to this project in 2011 and $409 million in 2012.

Substantial amounts will also be allocated to boost Québec's energy efficiency, with spending in this regard amounting to $386 million in 2011 and $425 million in 2012.

Hydro-Québec's other projects will also have significant spinoffs in Québec. Overall, the investments devoted to these projects will reach $2 723 million in 2011 and $3 047 million in 2012.

 
q Loto‑Québec and the Société des alcools du Québec

Loto-Québec and the Société des alcools du Québec will also increase their investments through various projects.

Loto‑Québec's investments will reach $254 million in 2011‑2012 and $375 million in 2012‑2013. Of these amounts, $127 million will be allocated to the Casino de Montréal renovation project in 2011‑2012 and $92 million will be invested in the project in 2012‑2013. In 2012-2013 as well, $236 million will also be invested to replace video lottery machines that have reached the end of their useful life.

The Société des alcools du Québec will increase its investments to $65 million in 2011‑2012, compared with $55 million in 2010‑2011. These investments will be devoted mainly to developing or expanding its outlets, to real estate projects related to its corporate buildings, and to its computer resources. In 2012‑2013, the Société plans to invest $45 million.

 

 

TABLE C.35                 


Forecast investment by government enterprises

(millions of dollars)


2010‑2011

2011-2012

2012-2013

HYDRO-QUÉBEC1




Major projects




Eastmain-1-A/Sarcelle/Rupert

794.0

512.0

119.0

Gentilly-2 - Repair project

282.0

150.0

409.0

La Romaine complex

387.0

543.0

872.0

Transmission integration - Wind turbines (990 MW and 2 000 MW)

92.0

295.0

385.0

Global Energy Efficiency Plan

216.0

386.0

425.0

Subtotal - Major projects

1 771.0

1 886.0

2 210.0

Other projects

2 449.0

2 723.0

3 047.0

Total - Hydro-Québec

4 220.0

4 609.0

5 257.0

LOTO-QUÉBEC




Casino de Montréal

89.8

126.6

91.9

Video lottery machines

45.4

43.2

235.9

Other projects

75.4

84.1

46.8

Total - Loto-Québec

210.6

253.9

374.6

SOCIÉTÉ DES ALCOOLS DU QUÉBEC




Outlet network

15.5

17.6

10.8

Other projects2

39.5

47.4

34.2

Total - Société des alcools du Québec

55.0

65.0

45.0

TOTAL INVESTMENTS

4 485.6

4 927.9

5 676.6

1    For the fiscal year ending December 31.

2    Amount including, in 2010-2011, the expansion of the Québec City distribution centre ($11 million).

 

Appendix 3: Restatement of the financial framework of the 2010-2011 Budget to take into account the creation of fort and fraf

The following table presents the government's five-year financial framework as published in the 2010-2011 Budget. It incorporates the measures identified in the plan to restore fiscal balance. The following pages present the impact of the implementation of FORT and FRAF on the financial framework so as to make the framework comparable with that of the 2011-2012 Budget.

 

TABLEAU C.36 

Financial framework of the 2010-2011 Budget

(millions of dollars)


Preliminary data


Forecasts


Projections


2009-10


2010-11

2011-12


2012-13

2013-14

2014-15

Budgetary revenue









Own-source revenue

47 421


50 152

53 840


57 563

60 333

62 703

      % change

- 3.0


5.8

7.4


6.9

4.8

3.9

Federal transfers1

15 229


15 325

14 681


14 933

15 395

15 979

      % change

8.6


0.6

- 4.2


1.7

3.1

3.8

Total budgetary revenue

62 650


65 477

68 521


72 496

75 728

78 682

     % change

- 0.4


4.5

4.6


5.8

4.5

3.9

Budgetary expenditure









Program spending

- 60 769


- 62 561

- 63 907


- 65 282

- 66 686

- 69 282

      % change

3.8


2.9

2.2


2.2

2.2

3.9

Debt service

- 6 154


- 6 980

- 7 832


- 8 749

- 9 588

- 9 737

      % change

- 5.4


13.4

12.2


11.7

9.6

1.6

Total budgetary expenditure

- 66 923


- 69 541

- 71 739


- 74 031

- 76 274

- 79 019

     % change

2.9


3.9

3.2


3.2

3.0

3.6

Net results of consolidated entities

598


750

979


1 072

618

828

Contingency reserve

- 300


- 300






Other measures to be identified in the plan to restore fiscal balance




311


324

1 051

1 051

SURPLUS (DEFICIT)

- 3 975


- 3 614

- 1 928


- 139

1 123

1 542

Deposits in the Generations Fund

- 715


- 892

- 972


- 1 061

- 1 123

- 1 542

Stabilization reserve

433








BUDGETARY BALANCE WITHIN THE MEANING OF THE BALANCED BUDGET ACT

- 4 257


- 4 506

- 2 900


- 1 200

0

0

1   The fiscal arrangements legislation, which determines the payment formulas for equalization, the Canada Health Transfer and the Canada Social Transfer, is in force until 2013-2014. The projection for these transfers as of 2014-2015 was made using the formulas currently in effect.

q Impact of the implementation of FORT and FRAF

In its last budget, the government announced the creation of the following funds:

FORT, which provides in particular that the fuel tax, as well as driver's licence and registration fees, will be allocated to funding its infrastructures;

FRAF, which will be used to finance the Agence du revenu du Québec. The Act respecting the Agence du revenu du Québec also stipulates that from now on the allowance for doubtful accounts will be accounted for by applying it against budgetary revenue.

It is important to note that the government created these funds in order to improve the budgetary management of certain government activities. Use of dedicated funds make it possible, for example, to better finance certain types of activities such as those related to the administration of the tax system, or to facilitate the use of the user-payer principle in such cases as the funding of land transportation infrastructure.

The allocation of FORT and FRAF revenue and expenditure to the government's consolidated entities does not affect the government's budgetary balance. However, it modifies the level of own-source revenue and program spending.

 

Creation of FORT and FRAF

Given that FORT and FRAF are distinct accounting entities financed by dedicated revenues, most of the funds associated with these funds will no longer be included in both own-source revenue and program spending. For purposes of comparison, the budgetary data for 2009-2010 and 2010-2011 have been restated.

Therefore, the level of own-source revenue excluding government enterprises in 2010-2011 is reduced by $3 119 million, to $42 543 million.

 

Impact of the implementation of FORT and FRAF on own-source revenue excluding government enterprises

(millions of dollars)

                                                           2009-10    2010-11    2011-12   2012-13    2013-14    2014-15

OWN-SOURCE REVENUE IN THE
2010-2011 BUDGET                                42 819     45 662      49 103     52 661     55 271      57 247

% change                                                               - 2.4           6.6               7.5              7.2              5.0               3.6

FORT                                                                      - 2 389        - 2 512         - 2 697        - 2 889        - 3 077        - 3 126

FRAF                                                                      - 575           - 607            - 723           - 760           - 797           - 815

Subtotal                                                                 - 2 964        - 3 119         - 3 420        - 3 649        - 3 874        - 3 941

OWN-SOURCE REVENUE AFTER THE IMPLEMENTATION OF FORT AND FRAF 39 855     42 543      45 5961                                                           49 012     51 397      53 306

% change                                                               - 2.7           6.7               7.2              7.5              4.9               3.7

1       Including $87 million in non-recurring extraordinary expenditures of FRAF.

 

 

 

 

Creation of FORT and FRAF (cont.)

The creation of these two funds reduces program spending by $2 600 million, to $59 961 million, for 2010‑2011. As a result, spending growth falls from 2.9% to 2.5% in 2010‑2011. This decrease in the growth rate compared with the forecast rate of 2.9% stems from the fact that the commitments provided for under FORT increase by 16.2%, a rate much higher than the growth in other spending.

Impact of the implementation of FORT and FRAF on program spending

(millions of dollars)

                                                     2009-10      2010-11     2011-12      2012-13    2013-14    2014-15

PROGRAM SPENDING IN THE
2010-2011 BUDGET
                              60 769        62 561       63 907        65 282     66 686      69 282

                                                                       % change        3.8                 2.9                  2.2               2.2                2.2                                                                       3.9

FORT                                                               - 1 715           - 1 993          - 2 392           - 2 784        - 3 164         - 3 501

FRAF                                                              - 575              - 607             - 723              - 760           - 797            - 815

Subtotal                                                         - 2 290           - 2 600          - 3 115           - 3 544        - 3 961         - 4 316

PROGRAM SPENDING AFTER THE IMPLEMENTATION OF FORT AND FRAF 58 479      59 961     60 792      61 738                                                     62 725        64 966

                                                                       % change        4.0                 2.5                  1.4               1.6                1.6                                                                       3.6

 

The impact of the implementation of FORT and FRAF on the results of consolidated entities is due exclusively to the fact that the difference between FORT revenue and expenditure has been taken into account. Overall, therefore, the creation of these two funds does not have an impact on the government's budgetary balance.

Impact of the implementation of FORT and FRAF on the net results of consolidated entities

(millions of dollars)

                                                            2009-10    2010-11   2011-12     2012-13   2013-14   2014-15

NET RESULTS IN THE 2010-2011 BUDGET   598          750          979           1 072      618          828

FORT1                                                                       674              519              305               105             - 87             - 375

FRAF                                                                        ¾                ¾                ¾                  ¾               ¾                ¾

Subtotal                                                                   674              519              305               105             - 87             - 375

NET RESULTS AFTER THE IMPLEMENTATION OF FORT AND FRAF 1 272        1 269      1 3712      1 177                                                            531          453

1     The Fonds de conservation et d'amélioration du réseau routier, Fonds pour la vente de biens et de services du MTQ, Fonds des partenariats en matière d'infrastructures de transport and Fonds des contributions des automobilistes au transport en commun have been replaced by FORT. Since these entities have always balanced their revenue and expenditure, their exclusion from the net results of non-budget-funded bodies and special funds does not entail an adjustment of net results following the implementation of FORT.

2     Excluding $87 million in non-recurring extraordinary expenditures of FRAF.

 

 


 

 

 

Creation of FORT and FRAF (cont.)

 

Impact on the budgetary balance

(millions of dollars)

                                                            2009-10    2010-11   2011-12     2012-13  2013-14    2014-15

Own-source revenue                                                                                                                                 

FORT                                                                        - 2 389        - 2 512       - 2 697          - 2 889      - 3 077        - 3 126

FRAF                                                                        - 575           - 607          - 723             - 760         - 797           - 815

Subtotal                                                                  - 2 964        - 3 119       - 3 420          - 3 649      - 3 874        - 3 941

                                                                                                                                                                                  

Program spending                                                                                                                             

FORT                                                                        1 715           1 993          2 392             2 784         3 164           3 501

FRAF                                                                        575              607             723                760            797              815

Subtotal                                                              2 290           2 600          3 115              3 544        3 961           4 316

                                                                                                                                                                                  

Consolidated entities                                                                                                       

FORT                                                                        674              519             305                105            - 87             - 375

FRAF                                                                        ¾                ¾                ¾                  ¾               ¾                ¾

Subtotal                                                                  674              519             305                105            - 87             - 375

TOTAL                                                    0             0             0               0            0             0

 

 



The following table presents the 2010-2011 five-year financial framework in order to take into account the implementation of FORT and FRAF.

 

TABLE C.37     

Restated financial framework of the 2010‑2011 Budget taking into account the creation of FORT and FRAF - Basis comparable to that of the 2011-2012 Budget

(millions of dollars)


Preliminary data


Forecasts


Projections


2009-10


2010-11

2011-12


2012-13

2013-14

2014-15

Budgetary revenue









Own-source revenue

44 457


47 033

50 333


53 914

56 459

58 762

      % change

- 3.3


5.8

7.0


7.1

4.7

4.1

Federal transfers1

15 229


15 325

14 681


14 933

15 395

15 979

      % change

8.6


0.6

- 4.2


1.7

3.1

3.8

Total budgetary revenue

59 686


62 358

65 101


68 847

71 854

74 741

     % change

- 0.4


6.1

4.4


5.9

4.4

4.0

Budgetary expenditure









Program spending

- 58 479


- 59 961

- 60 792


- 61 738

- 62 725

- 64 966

      % change

4.0


2.5

1.4


1.6

1.6

3.6

Debt service

- 6 154


-6 980

- 7 832


- 8 749

- 9 588

- 9 737

      % change

- 5.4


13.4

12.2


11.7

9.6

1.6

Total budgetary expenditure

- 64 633


- 66 941

- 68 624


- 70 487

- 72 313

-</