Part B: The Federal Government’s Budget The Federal Government’s Budget The government’s fiscal year runs from April 1 to March 31. The upcoming budget will project revenues and expenditures for the next fiscal period (April 1, 2013 to March 31, 2014). It will likely be released in March 2013. What are the government’s expenditures? The federal government is responsible for matters of national concern, such as Defence, International Trade, and Canadian Heritage and Official Languages. To deliver on these responsibilities the federal government must spend money and this spending is known as expenditures. This year, the federal government has expenditures of approximately $276 billion dollars. What are the government’s revenues? In order for the federal government to pay for its expenditures, the government collects money from individuals and businesses through taxes and other forms of income or profits. The money collected or earned is called revenue. Last year, the federal government’s total revenue was $248.8 billion. Do we have a surplus or deficit? With any budget, even a personal one, you can have a surplus or a deficit. A surplus occurs when you have more revenue than expenditures. A deficit happens when you have more expenditures than revenue, or when you are spending more than you are earning. Last year, the federal government’s deficit was $26.2 billion. Why have a deficit? While no one wants to have a deficit, it is sometimes necessary in order to ensure citizens receive the services they rely on. At other times, like during the recent Global Recession, deficits are caused by governments spending money to boost the economy. The federal government plans to eliminate the deficit by 2015/2016 fiscal year. How much is our federal debt? When you have a deficit, you need to borrow money to cover the shortfall or gap. The money you borrow becomes your debt. The federal government’s current debt is approximately $602 billion. How much interest do we pay? Just like individuals and businesses, the government has to pay interest on its debt. Interest is the amount charged by lenders to carry the debt. Currently, 78% of this debt is owed to Canadians, including citizens and domestic institutions holding federal bonds, Treasury bills and other forms of the debt. Last year, the federal government’s interest charges totaled $31 billion and formed 11% of all expenditures. Discussion Are you surprised with the amount of Canada’s debt? What do you think of the government’s plan to return to balanced budgets by 2015/2016?