EXPENDITURE BUDGET VOLUME V Message from the Chair of the Conseil du trésor and Additional Information

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1 EXPENDITURE BUDGET VOLUME V Message from the Chair of the Conseil du trésor and Additional Information

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3 EXPENDITURE BUDGET VOLUME V Message from the Chair of the Conseil du trésor and Additional Information

4 Expenditure Budget Volume V Message from the Chair of the Conseil du trésor and Additional Information Legal Deposit March 2012 ISSN (Print Version) ISSN (Online) ISBN (Print Version) ISBN (Online) Bibliothèque et Archives nationales du Québec Gouvernement du Québec 2012

5 FOREWORD The Public Administration Act (R.S.Q., c. A6.01) requires the Chair of the Conseil du trésor to table in the National Assembly the expenditure budget for all departments and agencies. This sets out the estimates of the appropriations required over the course of the coming fiscal year, as well as the annual expenditure management plans prepared by each of the ministers. In addition, the Act respecting mainly the implementation of certain provisions of the Budget Speech of 17 March 2011 and the enactment of the Act to establish the Northern Plan Fund (2011, c. 18) provides that a special funds budget is to be attached to the expenditure budget submitted to the National Assembly for approval of the expenditure and capital forecasts. In this regard, the Chair of the Conseil du trésor presents the Expenditure Budget information to the National Assembly in five volumes: Volume I, Estimates and Annual Expenditure Management Plans of the National Assembly and Persons Appointed by the National Assembly, contains information on the National Assembly and the Public Protector, the Auditor General, the Chief Electoral Officer, the Lobbyists Commissioner and the Ethics Commissioner who are appointed by the National Assembly; Volume II, Estimates of the Departments and Agencies, contains estimates of all government appropriations for the fiscal year. It distinguishes between the expenditure budget and the capital budget. Appropriations are broken down by portfolio and by program; Volume III, Special Funds Budget, which presents forecasts of revenue and of cumulative deficits or surpluses, amounts borrowed from the Financing Fund the advances from the general fund of the Consolidated Revenue Fund, and expenditure and capital forecasts for each of the special funds to be approved by the National Assembly; Volume IV, Annual Expenditure Management Plans of the Departments and Agencies, contains the yearly spending management plans prepared by each of the ministers; Volume V, Message from the Chair of the Conseil du trésor and Additional Information, begins with a message of the Chair and provides additional expenditure budget information, consolidated expenditures and public capital investments.

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7 TABLE OF CONTENTS MESSAGE FROM THE CHAIR OF THE CONSEIL DU TRÉSOR... III ADDITIONAL INFORMATION CHAPTER 1 CONSOLIDATED GOVERNMENT EXPENDITURES Consolidated Government Expenditures Changes in Consolidated Government Expenditures... 5 Appendix 1.1 Growth of Consolidated Expenditures, Excluding Debt Service, of the Provinces and the Federal Government... 6 Appendix 1.2 The Government s Reporting Entity... 7 CHAPTER EXPENDITURE BUDGET Expenditure Budget Evolution of the Program Spending Objective in Variation in Program Spending in Appendix 2.1 Variation Between the Expenditure Budget and the Probable Expenditure CHAPTER BUDGET EXPENDITURES AND THE PLAN TO RESTORE FISCAL BALANCE Evolution of the Budget Expenditures Forecast Variation in Government Budget Expenditures in Evolution of Authorized Appropriations in Plan to Restore Fiscal Balance by Departments and Agencies A. Reduction of Public Administration Costs B. Review of Program Parameters C. Budgetary Discipline Plan to Restore Fiscal Balance by Public Bodies... 30

8 CHAPTER 4 RESULTS OF CONSOLIDATED ENTITIES Evolution of the Forescast Results of Consolidated Entities in Government Results after the Impact of Consolidation in Results of Special Funds in Results of Extrabudgetary Agencies in Results of the Health and Social Services and Education Networks in Appendix 4.1 Changes in the List of Consolidated Entities and the Entities of the Health and Social Services and Education Networks Appendix 4.2 Results of Special Funds Appendix 4.3 Results of Extrabudgetary Agencies Appendix 4.4 Results of Definedpurpose Accounts Appendix 4.5 Entities of the Health and Social Services Network Appendix 4.6 Entities of the Education Networks Appendix 4.7 Government Corporations Accounted for at their Consolidation Value CHAPTER 5 PUBLIC INVESTMENTS IN FIXED ASSETS IN Public Investments in Fixed Assets Breakdown of Public Investments in Fixed Assets in Québec Infrastructures Plan: Priority Given to Maintening Assets in Good Condition Appendix 5.1 Public Investments in Fixed Assets: Sectors Concerned Appendix 5.2 Breakdown of Public Investments in Fixed Assets in Appendix 5.3 The Québec Infrastructures Plan Appendix 5.4 Report on the Achievement of Forecast Investments in for the Québec Infrastructures Plan Appendix 5.5 Review of the Processes Related to Asset Maintenance Management... 82

9 CHAPTER 6 PUBLIC SERVICE STAFF LEVEL Authorized Staff Level Envelope and Utilized Staff Level Evolution of Utilized Staff Level Variation in the Authorized Staff Level Envelope Appendix 6.1 Glossary Appendix 6.2 Public Service Utilized Staff Level Appendix 6.3 Evolution in the Staff Level of Departments and Agencies Appearing in the Expenditure Budget Appendix 6.4 Evolution in the Staff Level for Extrabudgetary Agencies and Agencies Performing Fiduciary Duties having Personnel subject to the Public Service Act Appendix 6.5 Variation in the Authorized Staff Level Envelope for Departments and Agencies Appearing in the Expenditure Budget Appendix 6.6 Variation in the Authorized Staff Level Envelope for Extrabudgetary Agencies and Agencies Performing Fiduciary Duties having Personnel subject to the Public Service Act CHAPTER EXPENDITURE BUDGET BREAKDOWN BY MAJOR CATEGORY AND BENEFICIARY Expenditure Breakdown Overview Remuneration Expenditures Operating Expenditures Capital Expenditures Interest Expenditures Support Expenditures Expenditures Related to Provisions for Doubtful Accounts and Other Allowances Appendix 7.1 Nature of the Expenditure Categories Considered in this Chapter Appendix Expenditures Budget Breakdown by Major Category Appendix Program Spending Breakdown by Beneficiary

10 CHAPTER 8 ENVIRONMENTAL LIABILITY Adoption of the Accounting Policy Establishing Environmental Liability Implementation of a Land Remediation Plan Appendix 8.1 Accounting Policy and Directives APPENDICES Appendix A Expenditure Budget by Mission Expenditure Budget by Mission Appendix B Economic and Budgetary Indicators B.1 Evolution of Program Spending, Debt Service and Budget Expenditures B.2 Evolution in Certain Specific Indicators for Québec B.3 Expenditures by Portfolio

11 MESSAGE FROM THE CHAIR OF THE CONSEIL DU TRÉSOR

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13 MESSAGE FROM THE CHAIR OF THE CONSEIL DU TRÉSOR INTRODUCTION The Government is determined to pursue its efforts to improve public administration operations and make the proper choices in order to limit expenditure growth, while at the same time preserving the level and quality of public services. The Expenditure Budget has therefore been drawn up with a view to giving additional impetus to the Plan to Restore Fiscal Balance. The measures implemented under this plan will enable the Government to submit a balanced budget in The results obtained to date are eloquent proof that these measures have made it possible to attain the goal of gradually reducing the growth of program spending and channelling investments into our priority areas: health, education and families. Significant efforts are made to strengthen governance and implement management practices in the areas of human and information resources, contract management, and investments in public infrastructures. Among the actions proposed, the Government will implement a major strategy for managing human resources. It will also introduce a plan to optimize the information resource infrastructure and a new approach to governance and management of information technology projects, and will continue to implement a new digital economy strategy for Québec. In addition, integrity requirements for companies and their directors have been added to the contract awarding process, and the Government is introducing a series of measures to strengthen the internal contract management capacity of public bodies Expenditure Budget III

14 Message from the Chair of the Conseil du trésor Lastly, practical steps are taken to reinforce management practices, promote continuous improvement in the performance of organizations and improve the monitoring and control of expenditures. The Government thus intends to boost productivity and reduce the costs of public administration. It is finding ways not only to achieve budget balance on deadline, but also to control expenditures in a sustainable way. Additional information IV

15 Message from the Chair of the Conseil du trésor A. LIMITED EXPENDITURE GROWTH, IN ACCORDANCE WITH THE PLAN TO RESTORE FISCAL BALANCE 1. EXPENDITURE GROWTH LIMITED TO 2.0% IN Program expenditures amount to $61,384 million in , an increase of 2.0% over the previous fiscal year. This confirms that the measures implemented under the Action Plan to Reduce and Control Expenditures are having the expected results. The annual growth of program spending, which averaged 5.6% from to , was lowered to 3.0% in and is 2.0% in Annual Growth of Program Spending from to (percentage) Before the Plan to Restore Fiscal Balance Average to : 5.6% Actual Data Expenditure Budget V

16 Message from the Chair of the Conseil du trésor 2. THE OBJECTIVE FOR EXPENDITURE GROWTH HAS BEEN MAINTAINED AT 2.0% IN The growth of program spending for is maintained at the same level as for , namely 2.0%. The program spending objective is therefore set at $62,642 million, an increase of $1,258 million. Health, education and families are still the core priorities In , the Government intends to continue investing in its priorities, which are health, education and families, while maintaining rigorous and responsible management of its expenditures. Program Spending in and (millions of dollars) Probable Expenditure Expenditure Budget Variation Santé et Services sociaux 29, , % 1 Éducation, Loisir et Sport 15, , % 2 Famille et Aînés 2, , % Other portfolios 14, ,095.1 (123.1) (0.9%) Total 61, , , % 1 Including the expenditures funded by FINESSS, the variation is 4.7%. 2 If a disbursement of $100 million for university clientele in were not taken into account, the variation would be 3.5%. Moreover, if one includes the amount of $100 million that could be used in by school boards from their cumulative surpluses, this variation amounts to 4.1%. Growth of 4.7% in health and social services budgets, including the FINESSS contribution In , the program spending budget allocated to the Ministère de la Santé et des Services sociaux is $30,121 million, to which is added a contribution from the Fund to Finance Health and Social Services Institutions (FINESSS) estimated at $1,005 million. This represents growth of $1,390 million, or 4.7%, compared to Additional information VI

17 Message from the Chair of the Conseil du trésor This level of growth will allow for funding of specific health system costs related to population aging, indexation of network expenditures, revision of the budget bases of institutions, as well as investments for young people in difficulty, and treatment of agerelated macular degeneration, cardiology, neonatology, ultrasound and oncology. It also funds access to services, including those related to the investment plan for seniors, the access plan for persons with intellectual and physical disabilities, the deployment of family medicine groups, and higher volumes of surgical services. It should be noted that the FINESSS contribution has so far enabled the funding of expenditures of $252 million in and $615 million in The contribution is estimated to be $1,005 million in If this contribution is included, the average annual growth rate of the health and social services budget for the period from to is close to 5.0%. For the period from to , the expenditure budget allocated to this sector increased by almost $12.3 billion, which reflects an average annual growth of 5.4% if the FINESSS contributions are not included. If they are included, the average annual growth increases to 5.7%. 2.2% growth in the budget for education, recreation and sports The budget for the Ministère de l Éducation, du Loisir et du Sport is up by $342 million, or 2.2%, in , for a total of $15,976 million. This budget will maintain and improve the quality of services and provide funding for the various growth factors of the education networks. It will also follow up on the Government s commitments, and provide funding for the Action Strategy on Student Retention and Student Success and for the actions announced in the Budget Speech to implement intensive English teaching in Grade 6, School 2.0: Connected Classrooms, La culture du sport à l école secondaire publique program, and the Placements Universités initiative Expenditure Budget VII

18 Message from the Chair of the Conseil du trésor The budgeted amount takes into account savings of $100 million that school boards will have to achieve by allowing them to use their cumulative surpluses. In addition, the 2.2% growth takes into account the disbursement, in , of $100 million for university clientele. Without this disbursement, the budget of the Ministère de l Éducation, du Loisir et du Sport would have grown by 3.5% in For the period from to , the expenditure budget allocated to this sector increased by $4,814 million, reflecting an average annual growth of 3.7%. 1.6% increase in the budget allocated to families and seniors The budget of the Ministère de la Famille et des Aînés increases by $40 million, or 1.6%, to reach $2,451 million. It will be used, in particular, to fund the creation of new reducedcontribution childcare places and to implement new measures for seniors related to the Aging at Home policy. For the period from to , the expenditure budget allocated to families and seniors increased by $1,168 million. This represents an average annual growth of 6.7%. Overall reduction of 0.9% in the budgets of the other portfolios Overall, the expenditure budgets of the other departments will decrease by $123 million, or 0.9%. This decrease is mainly due to application of the savings measures provided for in the Action Plan to Reduce and Control Expenditures. Additional information VIII

19 Message from the Chair of the Conseil du trésor B. RESTORING FISCAL BALANCE BY IS STILL AN IMPERATIVE After the financial crisis that destabilized public finances, the Government made its objective to restore fiscal balance by the cornerstone of its budget strategy. This imperative will continue to underlie its actions in the coming years. Reduction of expenditure growth by the departments and budgetfunded agencies As part of the Plan to Restore Fiscal Balance, the Government committed itself to reducing the growth of program spending by the departments and budgetfunded agencies by $5.2 billion. The departments and agencies have already identified and implemented several measures. The plan to reduce the growth of program spending is based on three axes: reduction of public administration costs, review of program parameters, and budgetary discipline. At the end of the second year of implementing the plan to reduce the growth of program spending, the results achieved match the objectives. The cumulative effort to reduce expenditure growth amounts to over $2.6 billion, or half of the $5.2 billion objective set for Reduction of expenditures of other public bodies The Government set $530 million as the contribution it expected from public bodies under the Plan to Restore Fiscal Balance. In particular, it asked them to reduce their administrative expenditures and increase productivity. In , the policies that public bodies have adopted to reduce expenditures and their efforts to boost productivity have achieved results worth $272 million. This means that the overall objectives for will be met Expenditure Budget IX

20 Message from the Chair of the Conseil du trésor C. CONTINUOUS IMPROVEMENT IN THE WAY THINGS ARE DONE AN IMPORTANT FEATURE OF THE BUDGET STRATEGY Restoring fiscal balance is only the first step toward sustainable control over government expenditures. That is why the Government is already putting significant efforts into continuous improvement in the way things are done. In this way, it hopes to build its capacity to make the best possible use of public funds and make the proper informed choices based on the priorities of Quebecers. 1. RENEWED MANAGEMENT OF HUMAN RESOURCES The ability of the departments and agencies to carry out their missions on behalf of the people of Québec is our core concern. Against the complex economic, social and technological backdrop that has had significant effects on the world of work in Québec, the public service will need to position itself in such a way that gains are preserved and the expertise required to maintain excellent public services is retained. That is why the Government will shortly announce the rollout of a significant human resources management strategy, and will introduce a series of measures to be implemented over five years. These measures will be designed to make the public service more competitive in the labour market, so that it will be able to attract and retain staff while still meeting its performance objectives. The three components of the strategy will be: Hiring in order to attract the best talent; Staff development in order to update and upgrade knowledge and skills; Governance in order to create a context that is innovative and motivating. The Government therefore intends to strengthen the governance of human resource management and adapt management practices so that they can better support the performance of departments and agencies. Additional information X

21 Message from the Chair of the Conseil du trésor The plan to reduce government size The application of measures under the plan to reduce government size and other streamlining measures has resulted in a staff reduction of 9,960 fulltime equivalents since These efforts have made it possible to reallocate 5,795 fulltime equivalents to meet new needs in some sectors. The net staff reduction for that period is therefore 4,165 fulltime equivalents, or 6.2%, whereas the Québec population increased by 6.6% over the same timeframe. As part of the Action Plan to Reduce and Control Expenditures, the Government reviewed its approach to controlling staff levels, concentrating on filling only some vacancies created by retirements and on freezing wages for departments and budgetfunded agencies at the level until This approach will be pursued in order to acquire the leeway needed to meet new needs deemed to be priorities, for example, to strengthen the internal capacity of the Ministère des Transports and to implement the Justice Action Plan. However, adjustments will continue to be made so that the public service maintains its capacity to carry out its mandates and evolve. 2. REINFORCED GOVERNANCE OF INFORMATION RESOURCES Much has been done in recent months to reinforce the governance of information resources, which are a significant expenditure item. These actions include the adoption, in June 2011, of the Act respecting the governance and management of the information resources of public bodies and government enterprises, which supplements the existing framework policy and directive. The purpose of this law is to institute integrated and concerted governance of information resources. It covers all departments and agencies of the Government, and the health and social services and education networks. Government corporations are also requested to adopt similar policies Expenditure Budget XI

22 Message from the Chair of the Conseil du trésor The Government is also implementing a plan to make the best use of information resource infrastructures, keeping pace with the worldwide tendency of large organizations to streamline infrastructures of this kind. The Government s objective is to put its money to good use, based on the current and future needs of its departments and agencies. It is trying to eliminate overlaps by combining information resources and making the best use of expertise and knowhow. This will result in substantial savings in the long run, and by , this initiative should result in savings of $200 million. The optimization plan meets the major objectives of the Politiquecadre sur la gouvernance et la gestion des ressources informationnelles des organismes publics. It aims to pool technology infrastructures, and to consolidate office automation environments and telecommunications services. Beginning in , the practical steps taken will include: combining data processing centres; finalizing the grouping of centralized computers, and implementing three separate emessaging solutions for the public service, the health and social services network and the education networks; a governmentwide videoconferencing service; a new cell phone service. In addition, the Government is continuing to implement a digital economy strategy for Québec, which will involve investments of $900 million by The first projects under this strategy will be revealed in the near future. 3. TIGHTENED CONTRACT MANAGEMENT Contracts made by all public bodies have a total value of between 15 and 20 billion dollars per year. The rules for awarding public contracts must be thorough and exemplary. Additional information XII

23 Message from the Chair of the Conseil du trésor The Government has therefore added, to the contract award process, requirements of integrity for companies and their directors, and in particular the obligation for companies to demonstrate that their income taxes are in order by producing a certificate issued by Revenu Québec. The Government will also set up, by June 1, 2012 at the latest, a register of companies that are not eligible for public contracts. On October 20, 2011, in addition to such existing measures as the creation of the permanent Anticorruption Unit and the adoption of the AntiCorruption Act, the Government announced 39 measures to strengthen the internal contract management capacity of public organizations. These measures are a followup to the report that the anticollusion unit has submitted to the Ministère des Transports. 4. TARGETS FOR PUBLIC INFRASTRUCTURE INVESTMENTS TO MEET GOVERNMENT PRIORITIES The Québec Infrastructures Plan (QIP), which was tabled today, is part of the Government s infrastructure policy, which is to maintain existing assets in good condition while acquiring modern infrastructures in all sectors. Major investments forecast for the road network, public transportation, and the health and social services and education sectors are essential for the development of a modern society. The QIP will entail investments of $44.2 billion, which will also help restart the economy. This is in line with the targets the Government announced in its Budget. It should be pointed out that the Government has set targets for the gradual reduction of infrastructure investments from to , in order to help reduce the public debt. It should also be pointed out that 66% of the forecast investments of the QIP will be earmarked for maintaining our infrastructures in good condition and for eliminating their maintenance deficit Expenditure Budget XIII

24 Message from the Chair of the Conseil du trésor 5. A MORE EFFICIENT PUBLIC ADMINISTRATION In various fields, projects are underway to strengthen the coordination of government actions, optimize procedures, improve accountability and simplify public access to services. In the long run, these projects will have significant structuring effects, and will thereby allow more effective and efficient use of public money, and improvement in the quality of services. The procedural requirements of the Public Service Act will be reconsidered in order to reaffirm the priority given to the quality of public services, strengthen and facilitate application of the resultsbased management approach, increase the transparency of departments and agencies, and improve the performance of government administration. Practical measures will be proposed for such things as: adapting the application of this Act to the way organizations really function in terms of strategic planning and accountability; simplifying the annual management reports of departments and agencies by refocusing them on performance measures and resource utilization; or refocusing internal audits on performance optimization based on the principal strategic risks that departments and agencies face. A program assessment tool will be deployed throughout the machinery of government by the end of 2012, in order to make standardized, relevant and credible information on program performance accessible to decision makers, and to encourage the use of this information in decision making at all levels of government. Projects to optimize procedures will be started in 2012 with some departments and agencies, led by "Lean" specialists, in order to boost productivity and reduce the costs of delivering services. These projects will be in supplement to ongoing efforts already under way in some organizations, for example health care institutions and the Régie de l assurance maladie du Québec. Additional information XIV

25 Message from the Chair of the Conseil du trésor Review of program parameters is continuing in various fields. Work is also under way, with an initial cohort of eleven departments, to make the best possible use of government spaces and to reconvey some premises wherever possible. Efforts are also continuing to strengthen the use of shared services and simplify access to government services by individuals and businesses. 6. IMPROVED AND EXTENDED CONTROL OVER EXPENDITURES Against the current budget backdrop, the Government is tightening its monitoring of some administrative expenditures in order to meet budget objectives. This will also lead to reduced risks and increased productivity. Significant measures will be introduced, including: A new initiative for governance and management of information technology projects is being set up. The Government is strengthening accountability in order to supervise these projects more closely and promptly straighten out those that are in trouble. A new unit assigned to the governance, monitoring and turnaround of information technology projects has also been created within the Secrétariat du Conseil du trésor. In addition, data on the health status of information technology projects is now being collected from public bodies three times a year. These data will be fed into the government scoreboard, which is used to determine the health status of projects being implemented. Budget envelopes related to the maintenance and development of information resources will be kept at their levels through , whereas the average annual growth recorded by the departments and budgetfunded agencies since has been approximately $19 million, or 5.2% Expenditure Budget XV

26 Message from the Chair of the Conseil du trésor A governance framework for public infrastructure projects of $5 million to $40 million will be drawn up in 2012, in order to extend best management practices to smaller projects. This extension will complement the Framework Policy for the Governance of Major Public Infrastructure Projects, which has ensured disciplined management of projects worth $40 million or more since An integrated offer of guidance in setting up project offices will be developed to support the managers of public bodies in making the cultural changes required to establish such offices of government infrastructures and information resources within their respective organizations. Starting in , the Government intends to start implementing a Land Remediation Plan for which it is responsible and thereby tighten the management of environmental liability. It should be noted that in 2007 the Government adopted an accounting convention concerning environmental liability. It was one of the first governments in Canada to acknowledge an obligation to decontaminate land that comes under its responsibility. Work is underway with the departments and agencies to update their management frameworks for asset maintenance. This exercise will, in particular, entail reviewing management procedures, evaluating results, being accountable for asset maintenance and retirement of the maintenance deficit, updating the inventory of the asset population, and updating its replacement value and the level of the accumulated maintenance deficit. Lastly, for the first time, the Government submits the forecast expenditures and investments of its special funds for approval by the National Assembly. These forecasts can be studied at the same time as the appropriations of the departments and budgetfunded agencies. This is a significant gesture, as the Auditor General of Québec has indeed pointed out, and it should contribute to improving parliamentary control. Additional information XVI

27 Message from the Chair of the Conseil du trésor CONCLUSION The Government is making serious efforts to limit the growth of its expenditures. The objective of restoring fiscal balance in the next budget is well on its way to being achieved. Therefore, program spending growth has been limited to 2.0% for and This is a historically low rate, thanks to contributions from all the departments and budgetfunded agencies. Added to this are the results of efforts requested from the other public bodies to help restore fiscal balance. Despite the difficult budget background, the Government has been able to invest significant amounts in its priority portfolios. In , those portfolios posted growth rates of 4.7% for health, including increased contributions from FINESSS, 2.2% for education and 1.6% for families. I am particularly proud of the results we have achieved to date. However, the budgetary discipline that the Government is showing must continue beyond the deadline of if Québec wants to enjoy the longterm benefits of highquality public services without exceeding its capacity to pay. The Government is therefore committed to making unceasing efforts to control expenditure growth, while at the same time taking practical steps to strengthen governance and improve the way things are done. It is finding ways to confront Québec s longterm budget challenges and thereby contribute to greater intergenerational equity. MICHELLE COURCHESNE Expenditure Budget XVII

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29 ADDITIONAL INFORMATION

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31 IN BRIEF CHAPTER 1 CONSOLIDATED GOVERNMENT EXPENDITURES For the fiscal year, the consolidated government expenditures should be $91,017.0 million, broken down as follows: $80,633.0 million for consolidated expenditures excluding debt service, of which $62,642.0 million is for program spending and $17,991.0 million for the expenditures of consolidated entities; $10,384.0 million for debt service expenditures, of which $8,237.0 million is for the general fund of the Consolidated Revenue Fund and $2,147.0 million for the consolidated entities. Overall, consolidated expenditures excluding debt service will rise 2.0% in , which is a marked slowdown compared to the average annual growth in previous fiscal years Expenditure Budget 3

32 Chapter 1: Consolidated Government Expenditures 1. CONSOLIDATED GOVERNMENT EXPENDITURES For the fiscal year, the consolidated government expenditures should be $91,017.0 million, broken down as follows: $80,633.0 million for consolidated expenditures excluding debt service, of which $62,642.0 million is for program spending and $17,991.0 million for the expenditures of consolidated entities; $10,384.0 million for debt service expenditures, of which $8,237.0 million is for the general fund of the Consolidated Revenue Fund and $2,147.0 million for the consolidated entities. The consolidated government expenditures for the fiscal year should be $2,508.0 million higher than those forecast for , a growth of 2.8%. Excluding debt service, consolidated government expenditures will rise 2.0% in , a marked slowdown compared to forecast growth of 3.5% in Consolidated Government Expenditures 1,2 (millions of dollars) Variation Program spending 62, , ,258.0 Expenditures of consolidated entities 3 17, , Consolidated expenditures excluding debt service 80, , , % General fund of the Consolidated Revenue Fund 8, , Consolidated entities 2, , Consolidated debt service 10, , Consolidated government expenditures 4 91, , , % The figures are presented in accordance with the structure. Expenditures after consolidation adjustments, which have the effect of eliminating interentity transactions and reclassifying some items. Includes expenditures of definedpurpose accounts and expenditures related to the tax regime. Excluding a provision for contingencies of $300.0 million in and in Additional information 4

33 Chapter 1: Consolidated Government Expenditures 2. CHANGES IN CONSOLIDATED GOVERNMENT EXPENDITURES Consolidated government expenditures, excluding debt service, have risen an average of 5.8% per year from to For the fiscal year, the growth of these expenditures will be limited to 2.0%. For the fiscal years from to the period covered by the Plan to Restore Fiscal Balance the average annual growth of consolidated expenditures, excluding debt service, should be 2.8%. Evolution in the Growth of Consolidated Expenditures, excluding Debt Service (percentage) Before the Plan 1 Average to : 5.8% Actual data With the Plan 1 Average to : 2.8% Plan to Restore Fiscal Balance. Source: Ministère des Finances du Québec Expenditure Budget 5

34 Chapter 1: Consolidated Government Expenditures APPENDIX 1.1 GROWTH OF CONSOLIDATED EXPENDITURES, EXCLUDING DEBT SERVICE, OF THE PROVINCES AND THE FEDERAL GOVERNMENT The average annual growth rate of 5.3% for Québec consolidated expenditures, excluding debt service, compares favourably with an annual average growth of 6.3% in Canada s other provinces. Québec and New Brunswick therefore rank second in Canada, behind British Columbia, which has a growth rate of 4.3%. Average Annual Growth of Consolidated Expenditures, excluding Debt Service, from to P (percentage) Weighted average of the provinces excluding Québec: 6.3% QC BC NB PE MB ON NS SK NL AB Federal P The figures are taken from the most recent official documents of the various governments as at March 13, 2012, and from their public accounts. Source: Provincial finance departments and Finance Canada. Additional information 6

35 Chapter 1: Consolidated Government Expenditures APPENDIX 1.2 THE GOVERNMENT S REPORTING ENTITY The criterion for inclusion in the government s reporting entity is based on how much control the government exerts. The government s reporting entity encompasses the departments and agencies under the responsibility of a Minister whose budgets are funded by appropriations voted by the National Assembly. It encompasses all the special funds, extrabudgetary agencies, definedpurpose accounts and corporations that are owned or controlled by the government. It also includes health and social services agencies, public health institutions, school boards, CEGEPs, and the Université du Québec and its constituents. Consolidated government expenditures include, in addition to program spending and debt service, expenditures incurred by special funds, extrabudgetary agencies and definedpurpose accounts. They also include the entities of the health and social services and education networks. Finally, starting on April 1, 2012, they include expenditures associated with the tax regime (refundable tax credits), following the coming into force of a new Canadian accounting standard. Expenditures of the consolidated entities are added to those of the government after eliminating interentity transactions and reclassifying some items, as needed. METHODS OF CONSOLIDATION The purpose of consolidation is to combine all financial transactions and resources for which the government is responsible. This provides a comprehensive picture of the government s finances. Two methods of consolidation are used, depending on the type of entity involved. The first method, known as the full consolidation method, consists of adding up, line by line, the accounts of departments, special funds, extrabudgetary agencies, definedpurpose accounts and entities of the health and social services and education networks. It thus incorporates their financial transactions, such as the expenditures and debts of agencies, into the government s financial statements. This method is used for the entities listed in Appendices 4.2, 4.3, 4.4, 4.5 and 4.6 of Chapter 4. The second method, known as the modified equity method, applies to government corporations. It consists of adding the net results of these corporations surpluses or deficits to the government s results. This method is used for the entities listed in Appendix 4.7 of Chapter Expenditure Budget 7

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37 IN BRIEF CHAPTER EXPENDITURE BUDGET Government budget expenditures amount to $70,879.0 million for the fiscal year. They break down as follows: $62,642.0 million for program spending, an increase of 2.0% or $1,258.0 million compared to the probable expenditure; $8,237.0 million for debt service, an increase of 10.5% or $785.0 million over The growth of program spending is allocated mainly to the following government priorities: $999.7 million to the "Santé et Services sociaux" portfolio, an increase of 3.4%; $341.9 million to the "Éducation, Loisir et Sport" portfolio, an increase of 2.2% Expenditure Budget 9

38 Chapter 2: Expenditure Budget EXPENDITURE BUDGET Government budget expenditures amount to $70,879.0 million for the fiscal year, a 3.0% increase over Budget expenditures break down as follows: $62,642.0 million for program spending, an increase of 2.0% or $1,258.0 million over ; $8,237.0 million for debt service, an increase of $785.0 million over The increase is mainly due to the increase in the debt and to the impact of the performance of the Caisse de dépôt et placement du Québec on the revenues of the Retirement Plan Sinking Fund (which are recorded as deductions of interest on liabilities with regard to retirement plans). Furthermore, since interest rates are not expected to continue to fall in , the Fonds d amortissement des emprunts will realize smaller gains on the disposal of securities than it did in Consequently, the revenues from this fund, which are recorded as a deduction from direct debt service, will be lower than in the previous year. Program spending accounts for 88.4% of the expenditure budget in , while debt service accounts for 11.6%. Evolution of Budget Expenditures (millions of dollars) Variation $ million % Program Spending 62, , , Debt Service 8, , Budget Expenditures 70, , , EVOLUTION OF THE PROGRAM SPENDING OBJECTIVE IN In the Budget Speech, the Government budgeted $62,113.0 million for program spending for the fiscal year. These expenditures have been revised and are now $62,642.0 million, an increase of $529.0 million. The revision is due to: $142.0 million related to application of the GDP clause in collective agreements; $236.0 million to take into account, in particular, the modification of clienteles in the "Éducation, Loisir et Sport" portfolio, and various growth factors in other portfolios, such as the impact of the Justice Action Plan, the production of forestry seedlings, and additional costs associated with the Commission of Inquiry into the Awarding and Management of Public Contracts in the Construction Industry; $151.0 million for budgetary measures announced in the Budget Speech. Additional information 10

39 Chapter 2: Expenditure Budget Evolution of the Program Spending Objective in (millions of dollars) Budget Speech 62,113.0 Principal variations Application of the GDP clause in collective agreements Modification of clienteles in the education networks and others Budgetary measures announced in the Budget Speech Program Spending 62, VARIATION IN PROGRAM SPENDING IN Program spending increases by $1,258.0 million in , which is 2.0% over the probable expenditure. This growth is allocated mainly to the following three portfolios: $999.7 million to the "Santé et Services sociaux" portfolio, a 3.4% increase over ; $341.9 million to the "Éducation, Loisir et Sport" portfolio, a 2.2% increase over ; $39.5 million to the "Famille et Aînés" portfolio, a 1.6% increase over Breakdown of Program Spending Growth (millions of dollars) Variation $ million % Santé et Services sociaux 30, , Éducation, Loisir et Sport 15, , Famille et Aînés 2, , Other portfolios 14, ,218.2 (123.1) (0.9) Total 62, , , Expenditure Budget 11

40 Chapter 2: Expenditure Budget SANTÉ ET SERVICES SOCIAUX Expenditure budget increases by $999.7 million in The growth allocated to the Ministère de la Santé et des Services sociaux is $999.7 million in , up 3.4% from This growth will be used in particular for: Covering the healthspecific system cost associated with population aging, indexation of nonsalary network expenditures, revision of budget bases of institutions, investments of close to $85.0 million for young people in difficulty, and treatment of agerelated macular degeneration, cardiology, neonatology, ultrasound and oncology; Funding forecast salary increases for network staff and health professionals and also the variation in employer contributions, which will be $870.7 million of the total growth in The growth of this portfolio also takes into account the anticipated savings to be realized by implementing the plan to optimize the services of the health and social services network, the Plan to Reduce and Control Expenditures. Added to the budget of the Ministère de la Santé et des Services sociaux are the expenditures funded by the Fund to Finance Health and Social Services Institutions (FINESSS), for which an amount of $1,005.0 million is forecast in Taking these expenditures into account, the budget allocated to health and social services has grown by 4.7% in FINESSS is used in particular to fund access to services, including those related to the investment plan for seniors, the access plan for persons with intellectual and physical disabilities, the deployment of family medicine groups, and higher volumes of surgical services. For the period from to , the expenditure budget allocated to the health and social services sector increased by $12,249.3 million, representing an average annual growth of 5.4%, excluding the expenditures funded by FINESSS. When FINESSS expenditures are taken into account, the average annual growth increases to 5.7%. Evolution in Health and Social Services Expenditures (millions of dollars) 32,000 28,000 24,000 20,000 17,872 19,025 20,581 21,163 22,452 24,054 25,621 27,466 28,514 29,121 30,121 $12,249.3 million 5.4% 1 on average 16,000 12, Including the expenditures funded by FINESSS, the growth rate is 5.7%. Additional information 12

41 Chapter 2: Expenditure Budget ÉDUCATION, LOISIR ET SPORT Expenditure budget increases by $341.9 million in Expenditures for education rise by $341.9 million in , which is 2.2% over This increase takes into account a disbursement, in , of $100.0 million relative to the clientele of universities. Without this disbursement, the growth of the budget of the Ministère de l Éducation, du Loisir et du Sport would have been 3.5% in Moreover, taking into account an amount of $100.0 million, which could be used in by school boards from their cumulative surplus, this variation comes to 4.1%. The growth of 2.2% will be used in particular to maintain and improve the quality of services and fund the different growth factors of the education networks, such as wage parameters, clientele effects and the subsidized debt, for a total amount of $240.3 million. In addition, a total of $101.6 million will be used to act on government commitments, mainly for: Implementing measures announced in the Action Strategy on Student Retention and Student Success, including reducing classroom sizes in Grades 5 and 6; Actions announced in the Budget Speech for implementing intensive English teaching in Grade 6, School 2.0: Connected Classrooms, La culture du sport à l'école secondaire publique program, and the Placements Universités initiative; Undertakings made in the most recent collective agreements, including reducing class sizes in the first cycle of secondary school and adding professional resources. For the period from to , the expenditure budget allocated to the education sector increased by $4,814.8 million, which represents an average annual growth of 3.7%. Evolution in Education Expenditures (millions of dollars) 17,000 15,000 13,000 11,000 11,161 11,568 11,874 12,280 12,638 13,399 14,321 14,653 15,195 15,634 15,976 $4,814.8 million 3.7% on average 9, Expenditure Budget 13

42 Chapter 2: Expenditure Budget FAMILLE ET AÎNÉS Expenditure budget increases by $39.5 million in The expenditures of the Ministère de la Famille et des Aînés increase by $39.5 million in , up 1.6% over These additional amounts will provide a $29.2million increase in the budget for Assistance Measures for Families program, which will be used mainly to fund the costs resulting from agreements negotiated with childcare providers, and to fund the new childcare places needed to make 223,000 places available by the end of The increase in the expenditure budget will also provide a $5.8million increase in the budget for the Condition of Senior program to implement the Aging at Home policy.. For the period from to , the expenditure budget allocated to the Ministère de la Famille et des Aînés increased by $1,167.6 million, which represents an average annual growth of 6.7%. Evolution in Family and Seniors Expenditures (millions of dollars) 3,000 2,263 2,411 2,451 2,000 1,458 1,516 1,605 1,719 1,837 1,961 2,067 $1,167.6 million 6.7% on average 1,283 1, Additional information 14

43 Chapter 2: Expenditure Budget OTHER PORTFOLIOS Overall reduction of 0.9% The main variations in other portfolios are: The budget of the Ministère des Affaires municipales, des Régions et de l Occupation du territoire decreases by $13.6 million or 0.8%, essentially due to program revisions made under the Action Plan to Reduce and Control Expenditures, and to lower debt servicerelated costs; The budget of the Ministère de l Agriculture, des Pêcheries et de l Alimentation increases by $13.4 million or 1.3%, mainly due to carrying over, from to a later year, forecast amounts for adapting agricultural businesses, and to a $7.0 million addition to the PrimeVert program; The budget of the National Assembly is up $1.4 million or 1.2%, mainly due to salary and operating expense indexation, and upgrades to security systems and the website; Excluding the $312.5 million forecast for the Contingency Fund, the budget of the Conseil du trésor et de l Administration gouvernementale increases by $2.2 million or 0.3%. This increase is attributable mainly to the establishment of the Commission of Inquiry into the Awarding and Management of Public Contracts in the Construction Industry. The increase is partially offset by continuing implementation of the Action Plan to Reduce and Control Expenditures, and by additional economy measures; The budget of the Ministère du Conseil exécutif is up $14.6 million. The increase is mainly due to indexation of development agreements made with Aboriginal nations; The budget of the Ministère de la Culture, des Communications et de la Condition féminine decreases by $22.6 million or 3.3%. The decrease is essentially due to nonrecurring expenditures in for the Maison symphonique de Montréal, and to a variation in the subsidized debt service; The budget of the Ministère du Développement durable, de l Environnement et des Parcs increases by $9.2 million or 4.5%. The increase is attributable to resources worth $4.6 million allocated for the Northern Plan, and to budgetary measures announced in the Budget Speech with regard to shale gas; The budget of the Ministère du Développement économique, de l Innovation et de l Exportation is up $26.0 million or 2.8%. The increase is mainly due to increased appropriations allocated to the Economic Development Fund for the ESSOR program and for carrying out mandates from the government to Investissement Québec; Expenditure Budget 15