March 20, 1956

TABLE VII


Statement of Budgetary Expenditures by Departments and Major Classifications (In millions of dollars) Fiscal Year Ended March 31 Increase - 1956 (Estimated) 1955 or Decrease (-) Amount Per cent Amount Per cent Amount Per centNational Defence 1,740-3 39-2 1,666-0 39-0 74-3 4-5Defence Production 16-3 0-4 18-9 0-4 -2-6 -13-8Civil defence 3-8 0-1 3-1 0-1 0-7 22-8Public debt charges- 1,760-J, 39-7 1,688-0 39-5 72-i 4-3Interest on public debt 490-9 11-0 477-9 11-2 13-0 2*7Other debt charges 22-0 0-5 24-4 0-6 -2-4 -9-8Provincial subsidies and tax rental payments (including transitional grant to 612-9 11-6 602-3 11-8 10-6 8-1Newfoundland) 352-1 7-9 359-0 8-4 -6-9 -1-9Family allowances Unemployment Insurance Act-Administration and Government's contribu- 382-4 8-6 366-5 8-6 15-9 4-3tion Government contributions with respect 61-0 1-4 59-9 1-4 1-1 1-8to the superannuation account 31-5 0-7 37-4 0-9 -5-9 - 15*8Agriculture 88-1 2-0 81-8 1-9 6-3 7-7Atomic Energy 19-5 0-4 15-0 0-3 4-5 30-0Canadian Broadcasting Corporation.... 31-2 0-7 29-2 0-7 2-0 6-8Citizenship and Immigration 32-7 0-7 28-0 0-7 4-7 16-8External Affairs 45-4 1-0 43-8 1-0 1-6 3-7Finance 36-4 0-8 35-3 0-8 i-i 3-1Mines and Technical Surveys 39-5 0-9 43-7 1-0 -4-2 -9-6National Health and Welfare 153-8 3-5 127-1 2-9 26-7 21-0National Research Council 16-3 0-4 15-7 0-4 0-6 3-8National Revenue Northern Affairs and National Re- 56-7 1-3 55-0 1-3 1-7 3-1sources 25-8 0-6 20-2 0-5 5-6 27-7Post Office 126-5 2-9 123-6 2-9 2-9 2-3Public Works 140-0 3-2 130-8 3-1 9-2 7-0Royal Canadian Mounted Police 37-0 0-8 35-5 0-8 1-5 4-2Trade and Commerce 37-3 0-8 17-5 0-4 19-8 113-1Transport 135-7 3-1 159-2 3-7 -23-5 -14-8Veterans Affairs 249-1 5-6 240-1 5-6 9-0 3-7Other departments 65-8 1-5 60-7 1-4 5-1 8-4Grand total 4,437-1 100-0 4,275-3 100-0 161-8 3-8 Defence expenditures Defence expenditures consisting of expenditures of the Departments of National Defence and Defence Production and outlay for the civil defence programme are again the largest category of government expenditure. The total of $1,760 million for the fiscal year is approximately 40 per cent of the aggregate budgetary expenditures of the government. This is an increase of $72 million or 4 per cent over the 1954-55 total of $1,688 million when defence expenditures were 40 per cent of aggregate budgetary expenditures. The Budget-Appendix ^ Expenditures of the Department of National Defence are estimated at $1,740 million and those of the Department of Defence Production at $16 million, while outlays in connection with the civil defence programme are expected to total $4 million. In 1954-55 expenditures were $1,666 million, $19 million and $3 million respectively. A comparative summary of defence expenditures for 1955-56 and 1954-55 is shown in the following table:


TABLE VIII


(In millions of dollars) Defence Expenditures Fiscal Year Ended March 31 Increase or1956 (Estimated) 1955 Decrease (-)Department of National Defence- Army services 413-6 378-7 34-9Naval services 342-9 279-2 63-7Air services 682-4 641-4 41-01,488-9 1,299-8 189-6Defence research and development Mutual aid to NATO countries including contributions 65-9 49-9 16-0to military costs of NATO Government's contribution to the permanent services 175-0 260-0 - 85-0pension account 40-1 36-7 3-4Administration and general 20-4 20-1 0-31,740-3 1,666-0 74-3Department of Defence Production- Capital assistance 6-5 9-7 -3-2Administration and general 9-8 9-2 0-616-8 18-9 -2-6Civil defence programme 3-8 3-1 0-71,760-4 1,688-0 72-4 Estimated expenditures for army, naval and air services amount in the aggregate to $1,439 million, $140 million more than the total for 1954-55. Outlay for army services is $35 million more than in the previous year, that for naval services $64 million more and that for air services $41 million more. Expenditures for defence research and development are expected to amount to $66 million an increase of $16 million over the 1954-55 programme. Estimated expenditures of $175 million under the mutual aid programme and contributions to the military costs of NATO are $85 million less than the total of $260 million in the previous fiscal year. Under the provisions of section 3 of the Defence Appropriation Act, defence equipment and supplies may be transferred from Canadian stocks to other parties to the North Atlantic Treaty. The estimated replacement value of such equipment and supplies acquired by the Canadian services prior to March 31, 1950 and transferred to NATO countries is charged to this appropriation and credited to a special national defence equipment account. These credits may be used subsequently to purchase equipment or supplies for the army, naval or air services of the Canadian forces. In accordance with Vote 236 of Appropriation Act, No. 5, 1955, the estimated replacement value of equipment and supplies, acquired by the Canadian forces since March 31, 1950 and transferred as mutual aid, is credited to the appropriate service allotment instead of being credited to the special defence equipment account and may be expended during the fiscal year for purposes of the Canadian forces. 2406



The Budget-Appendix The estimated expenditures of $175 million for 1955-56 include $54 million for transfer of equipment and supplies acquired prior to March 31, 1950, which is credited to the special national defence equipment account, and $109 million in outlays for costs incurred in acquiring and supplying military equipment for and in the training in Canada of aircrews from countries which are parties to the North Atlantic Treaty. The contribution of $12 million on account of Canada's share of the NATO military budgets and infrastructure costs which is also included in this total is unchanged from the total of the corresponding outlay in 1954-55. The percentage share of these costs borne by each nation is established in the North Atlantic Council and is subject to ratification by the respective member governments. The government's contribution to the permanent services pension account during 1955-56 of an amount equal to If times the contributions by permanent services personnel is estimated to be $40 million consisting of $36 million relating to current contributions and $4 million to contributions for arrears. This is $3 million more than the 1954-55 contribution of $37 million of which $34 million related to current contributions and $3 million to contributions for arrears. The estimated expenditures of $16 million for 1955-56 for the Department of Defence Production reflect a reduction of $3 million in the programme under which capital assistance is given to private contractors, Crown plants operated on a management fee basis, and Crown corporations undertaking contracts essential to the defence programme. For 1955-56 this capital assistance is estimated at $7 million compared with $10 million in 1954-55. Civil defence expenditures, estimated at $4 million, reflect an increase of $1 million over the 1954-55 expenditures. In addition to these budgetary expenditures for defence, there are certain other cash outlays which must be considered in assessing the full effect of the defence programme on the economy of Canada. The Department of Defence Production makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment, which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. It is estimated that as a result of the transactions during 1955-56 the fund will be reduced by $3 million leaving an estimated balance in the account of $70 million at March 31, 1956. The national defence equipment account, to which is credited the estimated replacement values of equipment and supplies acquired by the Department of National Defence prior to March 31,1950 and subsequently transferred to NATO countries, and to which is charged the cost of replacement equipment, also involves cash outlays which are not reflected as budgetary expenditures. Transfers to the account during the fiscal year are estimated at $54 million while disbursements are expected to total $49 million. The balance available at March 31, 1956 for disbursement in subsequent years is estimated at $279 million compared with $274 million at March 31, 1955. Under section 11 of the National Defence Act there is provision for the sale of materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales are credited to a special account to be used for the procurement of materiel. Credits to the account during 1955-56 are estimated at $5 million and disbursements are expected to amount to $3 million. The Budget-Appendix The following table summarizes the cash disbursements for defence for the past two fiscal years. TABLE IX (In millions of dollars) Cash Outlays foe Defence Budgetary expenditures- Department of National Defence... Department of Defence Production. Civil defence programme Less: value of military equipment and supplies transferred from existing Canadian stocks to NATO countries (included in budgetary expenditures) Disbursements from- National defence equipment account Replacement of materiel account-sec. 11, National Defence Act (net) Defence production revolving fund (net) Net cash outlay for defence Fiscal Year Ended March 31 Increase or Decrease (-) 1956 (Estimated) 1955 1,740-3 1,666-0 74-316-3 18-9 -2-63-8 3-1 0-71,760-4 1,688-0 72-4-54-7 -42-5 -12-21,705-7 1,645-5 60-249-2 74-3 -251-1-5 16-2 -17-7-2-8 -7-4 4-6U-9 83-1 -38-31,750-6 1,728-6 22-0 Public debt charges Public debt charges in 1955-56 are estimated at $513 million or 11 per cent of the aggregate budgetary expenditures, compared with a total of $502 million or 12 per cent in 1954-55. They are again the second largest item of budgetary expenditure. Interest on public debt is estimated at $491 million or $13 million more than the total expenditure of $478 million in 1954-55. Interest on unmatured debt is expected to amount to $410 million compared with $406 million in 1954-55; the increase is attributable in part to interest accrued on Canada savings bonds series 10 which was issued in November 1955, and in part tc an increase in the amount of treasury bills outstanding and to higher rates of interest. Interest on annuity, insurance and pension accounts is estimated at $77 million. The increase of $8 million over the total of $69 million in 1954-55 is due to increases of $3 million in respect of the superannuation account, $2 million in respect of the permanent services pension account and $3 million on government annuities account. Other public debt charges, which include the cost of issuing new loans, the annual amortization of bond discounts and commissions, fees for the services of fiscal agents and registrars, commission for the payment of coupon and fully registered interest, and other costs of servicing public debt are estimated at $22 million for 1955-56 compared with the 1954-55 total of $24 million. The decrease of $2 million is attributable mainly to a decrease in the annual amortization of bond discounts and commissions.



The Budget-Appendix The table which follows gives a comparative summary of public debt charges for 1955-56 and the previous year:


TABLE x


(In millions of dollars) Interest and Other Public Debt Charges Fiscal Year Ended March 31 Increase1956 (Estimated) 1955 or Decrease (-)Interest on public debt- Unmatured debt and treasury bills- Payable in Canada 399-1 394-3 4-81-5 1-5 Payable in New York 9-8 9-9 -0-1410-4 405-7 4-730 3-0 Annuity, insurance, and pension accounts 77-5 69-2 8-380-5 71-S 8-8Total interest on public debt 490-9 477-9 13-0Annual amortization of bond discounts and commissions.. .. 20-2 22-4 -2-2Servicing of public debt 0-6 0-8 -0-21-2 1-2 Total public debt charges 512-9 502-3 10-6 When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1955-56 this income is estimated at $147 million as shown in Table V. This sum deducted from the gross total of $491 million for interest shown in the preceding table leaves a net amount of $344 million, the same as for the previous year. Subsidies and tax rental payments to provinces Payments to the provinces during 1955-56 for statutory subsidies, rentals under the tax rental agreements, the transitional grant to Newfoundland and the transfer of a portion of income tax receipts from certain public utility companies are estimated at $352 million compared with $359 million in 1954-55. A comparative summary of the payments for the two years is given in the following table:


TABLE XI


(In millions of dollars) Fiscal Year Ended March 31 Increase or Decrease (-) 'Subsidies and Tax Rental Payments to Provinces 1956 (Estimated) 1955 Rentals under tax rental agreements, c. 49, Statutes of 1952.. 319-7 327-4 -7-7Statutory subsidies 20-4 20-4 -0-8Transitional grant to Newfoundland 3-1 3-9 Transfer of certain public utility tax receipts- Sec. 6, c. 49, Statutes of 1952 8-9 7-3 1-6352-1 359-0 -6-9 The Budget-Appendix Payments under the tax rental agreements in 1955-56 are $8 million less than in the previous year reflecting a decrease in gross national product per capita in 1954. Statutory subsidies at $20 million in 1955-56 are unchanged from the previous year. The amount of public utility tax receipts transferred to the provinces in 1955-56 is expected to be $2 million more than in the previous year. Section 6 of the Tax Rental Agreements Act, 1952 authorizes the payment to the provinces, whether participating in the agreements or not, of a portion of the income tax collected from corporations whose main business is the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam. A summary of estimated payments, by provinces, during 1955-56 is given in the following table:


TABLE XII


(In millions of dollars) Fiscal Year Ending March 31, 1956 (Estimated) Subsidies and Tax Rental Payments to Provinces Statutory subsidies Payments under tax rental agreements Transitional grant TotalNewfoundland 1-6 12-5 31 17-22-1 19-9 22-00-7 3-7 4-41-7 16-6 18-33-3 3-33-6 138-3 141-91-8 25-7 27-52-1 26-0 28-12-2 31-6 33-813 45-4 46-7 20-4 319-7 31 343-2 Transfer of certain public utility tax receipts 8-9 352-1 Family allowances Family allowances are payable in respect of all children under sixteen resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada a year before an allowance is payable. The monthly allowance is $5 if the child is under 6 years; $6 in the age group 6 to 9; $7 in the age group 10 to 12; and $8 in the age group 13 to 15. Payments for family allowances are estimated at $382 million for 1955-56 representing 8J per cent of total expenditures for the fiscal year. The increase of $16 million over the corresponding 1954-55 outlay reflects the increase in the number of children in the eligible age groups.



The Budget-Appendix The following table presents a comparative summary of payments by provinces:


TABLE XIII


(In millions of dollars) Family Allowance Payments Fiscal Year Ended March 31 * Increase 1956 (Estimated) 1955 Newfoundland 12-5 12-0 0-5Nova Scotia 17-6 17-1 0-52-6 2*6 New Brunswick 15-4 15-1 0-3Quebec 120-4 116-1 4-3Ontario 116-6 110-5 6-1Manitoba 19-5 18-7 0-8Saskatchewan 21-4 20-9 0-5Alberta 26-7 25-4 1-3British Columbia 29-0 27-4 1-6Northwest and Yukon Territories 0-7 0-7 382-4 366-5 15-9 Unemployment Insurance Act administration and government's contribution Expenditures in 1955-56 relating to the Unemployment Insurance Act (excluding the government's payment as an employer) are estimated at $61 million compared with $60 million spent in 1954-55. Unemployment insurance benefit payments are not charged directly to budgetary expenditures but are paid from the unemployment insurance fund. This fund is financed by contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of combined employer-employee contributions. The government's contribution to the fund for 1955-56 is estimated at $34 million and administration costs are expected to total $27 million; the corresponding figures for 1954-55 were $32 million and $28 million. Government contribution with respect to superannuation account The Government's contribution to the superannuation account is an amount equal to the estimated payments by individuals in the previous fiscal year for both current and prior service, and transfers from the retirement fund. For 1955-56 the contribution will be $31 million compared with $37 million in 1954-55. Provision for reserve for losses on realization of assets No charge to expenditures for an addition to the general reserve for losses on the realization of assets has been included in the Government's accounts for 1955-56. The balance of the reserve which was $496 million at March 31, 1955 remains unchanged. Agriculture Expenditures of the Department of Agriculture are estimated at $88 million for 1955-56 compared with $82 million spent in 1954-55. The net increase of $6 million is due chiefly to the deficit of $8 million in the prairie farm emergency fund (for which there was no corresponding charge in 1954-55) and to increases of $3 million in the operating losses of the agricultural prices support board, $1 million in the costs of experimental farm services and The Budget-Appendix $1 million in payment of premiums on hog carcasses, offset by decreases of S3 million in freight assistance on western feed grains and S2 million in outlay for marketing services. The estimated expenditure of $8 million to cover the deficit in the prairie farm emergency fund is the first charged to budgetary expenditures for this purpose since the fiscal year 1950-51 when $4 million was required. The decrease in expenditures for marketing services is due mainly to a reduction in the payments under the Agricultural Products Co-operative Marketing Act, c. 5, R.S. 1952, the purpose of which is to assist and encourage the co-operative marketing of agricultural products by primary producers. A comparative summary of estimated expenditures for 1955-56 and actual expenditures for 1954-55 is presented in the following table:


TABLE XIV


(In millions of dollars) Agriculture Fiscal Year Ended March 31 Increase1956 (Estimated) 1955 Decrease (-)Experimental farms service 10-9 9-6 1-3Freight assistance on western feed grains 15-5 19-0 -3-5Marketing service 6-9 9-3 -2-4Operating losses of the agricultural prices support board 5-8 31 2-7Premium on hog carcasses including administrative costs... 5-8 5* 1 0-7Prairie farm emergency fund-deficit 8-0 80Production service 10-4 10-0 0-4Rehabilitation and reclamation projects 12-5 12-7 -0-29-3 9-3 Administration and general 30 3-7 -0-788-1 81-8 63 Atomic energy Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited are estimated at 820 million for 1955-56 compared with $15 million in 1954-55, an increase of $5 million. Administration expenses of the Atomic Energy Control Board and grants for research and investigations with respect to atomic energy are estimated at $0-3 million, the same as the 1954-55 expenditure. Payments to Atomic Energy of Canada Limited, for its research programme, are estimated at $19 million compared with $15 million in 1954-55. Of the total $11 million is for current operations and maintenance and $8 million for the construction and acquisition of buildings, land, works and equipment. In addition advances to Atomic Energy of Canada Limited to be covered by obligations or shares of the company are estimated at $12 million, of which $2 million is for working capital and $10 million for the construction or acquisition of buildings and equipment at Chalk River and Deep River and for the commercial products division at Ottawa. This brings the total of loans to the company to $44 million. Canadian Broadcasting Corporation Payments by the Government of Canada to the Canadian Broadcasting Corporation are estimated at $31 million for 1955-56 compared with $29 million in 1954-55. Payments to the corporation of an amount equivalent to the collections of the 15 per cent special tax imposed on radio and television sets and tubes are expected to amount to $23 million in 1955-56 compared with $21 million 2412 HOUSE OF COMMONS The Budget-Appendix in 1954-55. For the current year it is estimated that $18 million is in respect of television and $5 million in respect of radio. In 1954-55 payments were $17 million for television and $4 million for radio. A comparative summary of the estimated payments for 1955-56 and actual payments for 1954-55 is shown in the following table.


TABLE XV


(In millions of dollars) Payments to Canadian Broadcasting Corporation Fiscal Year Ended March 31 Increase1956 (Estimated) 1955 or Decrease (-)6-3 6-3 19 21 -0-2Payments to the corporation of amounts equal to tax collected under the Excise Tax Act in respect of radio and tele- 230 20-8 2-2 31-2 29'2 20 In addition to these expenditures, loans of $9 million will have been made in 1955-56 to cover the cost of television installations and to support the development of the service. This will bring the total loans to the corporation to $28 million at March 31, 1956. Interest at various rates is being paid semi-annually and is included in non-tax revenues under "Return on investments". Citizenship and Immigration Expenditures of the Department of Citizenship and Immigration are estimated at $33 million for 1955-56 compared with $28 million in 1954-55. The increase of $5 million is due mainly to an increase in the expenditures of the Indian Affairs branch of the department reflecting for the most part increased outlay for education. The following table presents a comparative summary of estimated expenditures for 1955-56 with actual expenditures for 1954-55.


TABLE XVI

March 20, 1956