By Catherine Harris

(February 28 – 17:00 ET) The $116 billion in program the federal budget 2000 is expecting to spend in the fiscal year ending Mar. 31, 2001. That includes $36 billion in transfers to individuals, $22.6 billion in transfers to other levels of governments, $19.6 billion in subsidies and other transfers, $4.1 billion for crown corporations, $9.4 billion for defence and $24.3 billion for other departmental spending.

Transfers to individuals consist of $24.2 billion in elderly benefits and $11.8 billion in Employment Insurance benefits. Elderly benefits will continue to rise with the aging of the population. EI benefits are tied to economic performance.

The $22.6 billion in transfers to governments excludes $2 billion in spending which is expected to occur in 2001 but which was booked through two special Canada Health & Social Transfer (CHST) grants booked in fiscal 1999 and 2000. Budgetary analysis is complicated by items such as these. Basically what happens is that Ottawa finds itself with extra money and books it for the current year even though it won’t be spent until sometime later.

This means that the provinces will be getting $24.6 billion from Ottawa in 2001, down from a peak of $26.9 billion in 1994 – despite population growth and continued increases in the costs of providing social services.

Subsidies and other transfers peaked at $22.5 billion in 1998, about $3 billion higher than the projected $19.6 billion for 2001. This basket includes agriculture ($1.3 billion), international assistance ($2.1 billion), health ($1.2 billion), human resources development ($2.8 billion), Indian affairs and northern development ($4.3 billion), industry and regional
agencies ($2.3 billion), veterans affairs ($1.4 billion) and “other” (4.3 billion).Crown corporation costs peaked at $6.2 billion in 1993, fell to $2.5 billion in 1998 and is now back up around $4 billion.

Defence spending rose to $9.9 billion in 2000 from $8.8 billion the year before, partly because of the war in Kosovo and partly because of the need for extra spending to maintain our military capacity. Further investments aimed at the latter will keep spending in this area at around $9.5 billion.

The government kept the lid on “other departmental spending” through most of the 1990s but it’s now on the rise, expected to reach $26 billion in 2002 vs $20.2 billion in 1999. This category includes the $3.7 billion in pay equity adjustments Ottawa is required to make. Most of this had been booked in previous years.