Estimation of Government
Current Expenditure on
Goods and Services in the
Canadian SNA
Arthur Berger
GDP by Final Expenditure, Shenzhen, China, 25-29 April 2011
Outline
1. Government sub-sectors in the Canadian SNA
2. Accounts that include Government Current
Expenditure (GCE) in the Canadian SNA
3. Revision cycle
4. GCE estimation in nominal terms
5. Deflation of GCE
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Government sub-sectors in the
Canadian SNA




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Federal government
Provincial and territorial government
Local government
Canada Pension Plan (CPP) & Quebec Pension
Plan (QPP)
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Accounts that include GCE in the
Canadian SNA
Supply Use Accounts
Income & Expenditure Accounts
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Revision cycle
Annual revisions
 Once a year, quarterly IEA are revised going back 3
years to align with the most recent supply-use
tables
Sub-annual revisions
 Between annual revisions, quarterly IEA is revised
within the most recent reference year only
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Revision cycle: GDP by final expenditure
Quarterly IEA
annual supply-use
Jan-11
Feb-11
Q1/2010 - Q4/2010
Mar-11
Apr-11
2008 GDP C$
May-11 Q1/2008 - Q1/2011
Jun-11
Jul-11
Aug-11 Q1/2011 - Q2/2011 2008 GDP K$
Sep-11
Oct-11
2008 detail
Nov-11 Q1/2011 - Q3/2011
Dec-11
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Revision cycle: GDP by final expenditure
2010
2009
2008
Feb-2011 1st annual estimate
May-2011 2nd annual estimate 3rd annual estimate
final annual estimate
May-2012 3rd annual estimate final annual estimate
May-2013 final annual estimate
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GCE estimation in nominal terms
“Current”
quarterly
estimation
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Preliminary
annual
estimation
Final annual
estimation
Federal
government



Provincial and
territorial
governments



Local
governments



CPP & QPP



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GCE nominal: Federal government
Final annual estimation
 Divided into budgetary and extra budgetary
components
 Budgetary – accounting system data
 Extra budgetary- annual and sub- annual
financial reports and statements of the extrabudgetary entities (about 100 entities)
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GCE nominal: Federal government
Final annual estimation
Total budgetary expenditures
Less
Spending not on goods and services
Transfer payments, Interest on public debt,
Intergovernmental transfers, Transfers to extrabudgetary entities
= Current and capital budgetary expenditures
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GCE nominal: Federal government
Final annual estimation
 Extra-budgetary part
 Transactions in the source documents are
analyzed and those that are purchases of goods
and services are identified and aggregated
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GCE nominal: Federal government
Final annual estimation
 Current and capital expenditures – Capital
spending + Capital consumption allowances +
consumption of FISIM = Gross current
expenditure on goods and services
 Gross current expenditure on goods and
services - Sales of goods and services = Net
current expenditure on goods and services
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GCE nominal: Federal government
Preliminary annual estimation
 Budgetary part
 Similar to final annual estimation except that
since the Public Accounts of Canada is not
usually available for the most recent year,
monthly reports are used.
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GCE nominal: Federal government
Preliminary annual estimation
 Extra-budgetary part
 Similar to final annual estimation
 The main difference is source-data availability;
for some extra-budgetary entities, financial
statements are not available for the reference
year and previous year annual estimates must
be projected.
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GCE nominal: Federal government
Quarterly estimation
 Budgetary part: same information source as
preliminary annual estimates
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GCE nominal: Federal government
Quarterly estimation
 Extra budgetary part: similar to annual
estimation, but not as much data available for
some entities.
 In these cases, the most recent data are
projected forward using an average growth rate.
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GCE nominal: Provincial government
Final annual estimation
 Source documents: public accounts of each
province and territory for budgetary components
and audited financial statements and annual
reports of extra-budgetary entities.
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GCE nominal: Provincial government
Final annual estimation
 Current and capital expenditures – Capital
spending + Capital consumption allowances +
consumption of FISIM = Gross current
expenditure on goods and services
 Gross current expenditure on goods and
services - Sales of goods and services = Net
current expenditure on goods and services
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GCE nominal: Provincial Health
Final annual estimation
 Public health and social services: includes
hospitals, residential care facilities and other
health and social service entities
 Data sources include Canadian Institute for
Health Information (CIHI), Statistics Canada
surveys and provincial health ministry records
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GCE nominal: Provincial Health
Final annual estimation
 Public health and social services:
 GCE is obtained by summing their operating
expenditures. These surveys and records also
provide the information to estimate sales of
goods and services.
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GCE nominal: Provincial post-secondary
Final annual estimation
 Public universities and colleges: expenditures on
goods and services as well as sales of goods
and services are obtained by Statistics Canada
surveys
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GCE nominal: Provincial government
Preliminary annual estimation
 Source information: budget estimates, quarterly
and monthly financial reports obtained directly
from governments and their subordinate entities
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GCE nominal: Provincial health
Preliminary annual estimation
For public health, social and universities, and postsecondary education, estimates for the more
current years are projected using indicators such
as provincial and territorial funding transfers and
labour income time series.
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GCE nominal: Provincial government
Quarterly estimation
 Information sources vary widely across
jurisdictions:
• accounting-system information
• official budget estimates
 public health, social services, and postsecondary education GCE growth rate is based
on labour income
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GCE nominal: Local government
Final annual estimation
 Information source: Financial reporting system
information from municipalities is available from
the Internet
 Primary and secondary public education: data
comes from census of provincial and territorial
departments of education
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GCE nominal: Local government
Preliminary annual estimation
 Sample surveys of information developed for
budget estimate some financial statements is
used
 Primary and secondary public education: data
comes from survey of provincial departments of
education
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GCE nominal: Local government
Quarterly estimation
GCE growth rate is based on labour income
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GCE nominal: CPP & QPP
Annual estimation
 Administrative expenditures of the Canada
Pension Plan and Quebec Pension Plan are
obtained from the accounting statements of the
plans for both the preliminary and final
estimates.
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GCE nominal: CPP & QPP
Quarterly estimation
 Quarterly accounting statements of the plans
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Deflation of GCE
 For deflation purposes, GCE is broken down into
components.
 The deflation is carried out in three broad
segments: compensation of employees; capital
consumption allowances; and, all other current
expenditures.
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Deflation of GCE - Compensation of
employees
 Represents about 60% of GCE
 Hours worked is used as a measure of volume
of labour input.
 Hours worked is estimated using employment
data multiplied by average hours worked per
employee
 Quality change in labour input
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Deflation of GCE
Capital consumption allowance
• Current and constant linear depreciation
are calculated by asset type from a
perpetual inventory of capital stock
model.
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Deflation of GCE
Other nonwage current expenditures
 Other non-wage GCE is broken down into four
parts:
•
•
•
•
defence
medicare
hospitals
a remainder for all other outlays
 Combined, they represent about 30% of net
government expenditure on goods and services.
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Deflation of GCE
Other nonwage current expenditures
 Defense: a combination of various material and
average hourly earnings indexes
 Medicare expenditures are deflated using a feebenefits index for physicians
 Hospital expenditures are deflated with a fixedweighted index of commodities used in
hospitals.
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Deflation of GCE
Other nonwage current expenditures
 The remaining portion of GCE is deflated using
a base-weighted composite price index covering
major operating expenditure categories
 Prices come mostly form CPI, some from IPPI
 The weights come from the latest Input-Output
Tables.
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