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Section II – Analysis of Program Activities by Strategic Outcome

The following section describes the Department of Finance Canada's program activities and identifies their expected results, performance indicators and targets. It also provides the performance status of each expected result and presents a performance summary. The section also identifies the financial and non-financial resources the Department planned to use and the actual resources used during the fiscal year. All program activities of the Department of Finance Canada are linked to its single strategic outcome.

Program Activity 1.1: Economic and Fiscal Policy Framework

This program activity reflects the main function of the Department, which is to develop policies and provide advice and recommendations to the Minister of Finance. Advice and policy development in the areas of economic, fiscal and social policy, corporate finance, federal-provincial-territorial relations, financial affairs, taxation, and international trade and finance help the federal government deliver its annual budget and contribute to building a strong and sustainable economy. The work conducted in this program area involves extensive research, analysis, and consultation and collaboration with partners in both the public and private sectors.

Program Activity: Economic and Fiscal Policy Framework

2009-10 Financial Resources ($ millions)			2009-10 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
65.1	99.7	90.8	447	517	40

Expected Results	Performance Indicators	Targets	Performance Status	Performance Summary
Effective management of the government's fiscal framework	Budgetary balance	Respect Budget 2009 projections for return to budgetary surplus	Successfully met	Budget 2010 set out a three-point plan to return to balance over the medium term, when the economy has recovered. The government remains on track to meet this objective.
	Debt-to-GDP ratio	Keep program spending growth in line with Budget 2009 initiatives	Successfully met	A key element of Budget 2010's plan to return to balance is ensuring that temporary stimulus measures end as scheduled in Budget 2009.
Canada has a sound, efficient, and competitive financial sector	Soundness, efficiency, and competitiveness of Canada's financial sector	Healthy, stable financial sector that serves the needs of Canadians	Successfully met	The Canadian financial system was resilient during the financial crisis and continued to be seen internationally as a model of sound, prudent management. This was demonstrated by the World Economic Forum's ranking of Canada's banking system as the soundest in the world for two consecutive years. As well, the International Monetary Fund (IMF) commented in 2009 that Canada's financial sector showed "remarkable stability amid the global turbulence, thanks in good part to strong supervision and regulation." To support the financial system during the crisis, the Government of Canada took unprecedented action to improve the availability of financing to households and businesses in Canada. Further, under Canada's leadership at the G7 and G20 and active participation in other international forums such as the Financial Stability Board, continued progress on key elements of the international financial reform agenda was made.
Canada has a competitive, efficient, and fair tax system	Competitiveness, efficiency, and fairness of Canada's tax system	Tax system that raises the required revenue in a manner that compares favourably to other G7 countries	Successfully met	In 2010, as a result of federal and provincial tax changes, Canada's overall tax rate (i.e., marginal effective tax rate) on new business investment will be the lowest in the G7 and below the average of the OECD. In addition, Budget 2010 introduced a number of tax measures aimed at reducing red tape for businesses, improving Canada's international tax system to attract new investment, and making the tax system fairer by closing tax loopholes. These measures support Budget 2010's objectives of contributing to the global recovery and sustaining Canada's economic advantage. They also support the objectives set out in Advantage Canada, the Government of Canada's long-term economic plan.

Performance Analysis

A key priority over the 2009–10 fiscal year was the effective and timely implementation of Canada's Economic Action Plan, including accountability measures and reporting on progress. The Economic Action Plan, announced in Budget 2009, is a two-year, $62-billion plan to protect and create jobs in response to the deepest global recession since the Second World War. The Economic Action Plan provides substantial, targeted stimulus measures, including strengthened benefits and increased skills development opportunities for workers and significant investments to stimulate the housing sector, aimed at addressing the short-term impacts of the global economic downturn and ensuring that Canada emerges from the downturn in a stronger position.

The Department of Finance Canada coordinated with other central agencies and departments to ensure the speedy and efficient delivery of resources allocated under the Economic Action Plan. In 2009–10, the first year of the Plan, $28 billion was provided to support the economy and Canadians, augmented by a further $8 billion from provinces, territories, municipalities, and other partners. An economic recovery in Canada began in mid-2009, in large part supported by the stimulus in the Economic Action Plan.

With Budget 2010, the Department put forth a plan to secure Canada's economic recovery and the return to budgetary balance as the economy improves. Measures announced in Budget 2010 include the following:

• commitment of $19 billion in new federal stimulus under Year Two of Canada's Economic Action Plan to create and maintain jobs, complemented by $6 billion from provinces, territories, municipalities, and other partners;
• investment in a limited number of new, targeted initiatives to create jobs and build growth for the economy of tomorrow, strengthen Canadian innovation, and make Canada a destination of choice for new business investment;
• one-time total transfer protection to provide provinces with as much support through the major transfers in 2010–11 as in 2009–10, in recognition of the short-term challenges provinces face as Canada emerges from the global recession; and
• a plan to bring Canada's finances back to balance over the medium term and well before any other G7 country.

The following chart shows the projected deficits for 2009–10 and the next five fiscal years. The deficit is projected to be cut by almost half, from $53.8 billion in 2009–10 to $27.6 billion in 2011–12. This significant drop in the deficit, for the most part, reflects the Government of Canada's commitment to ensure that Action Plan stimulus measures expire as scheduled on March 31, 2011. The deficit is projected to be cut by two-thirds, from $53.8 billion in 2009–10 to $17.5 billion in 2012–13, and to decline to just $1.8 billion by 2014–15.

Projected Federal Budgetary Deficit

Text Version

An important measure of fiscal sustainability is the debt burden as measured by the debt-to-GDP ratio. Reductions in the debt burden in recent years have provided Canada with the flexibility to put in place significant measures to support the economy.

The following chart shows that the federal debt, measured in relation to the size of the economy, was projected to increase from 29 per cent of GDP in 2008 to a peak of 35.4 per cent in 2010–11.

Federal Debt-to-GDP Ratio

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The total government net debt-to-GDP ratio in Canada is the lowest of all G7 countries and will continue to be so over the medium term. In fact, by 2014, Canada's debt-to-GDP ratio is expected to be proportionately much lower in relation to other G7 countries than it is now, as shown in the following chart.

Total Government Net Debt-to-GDP Ratio

Text Version

In 2009–10, the Department also worked to strengthen the regulatory framework of financial institutions. Canada's financial system is stable, well-capitalized, and underpinned by one of the most effective regulatory frameworks in the world. Nevertheless, the Department developed prudent legislative measures to enhance the government's ability to safeguard financial stability and to ensure that it is equipped with a broad range of flexible tools to address problems as they arise.

The Department implemented new authorities through Budget 2009 that allow the government to inject capital into federally regulated financial institutions if needed and the Minister of Finance to enter into transactions that promote financial stability and maintain efficient and well-functioning markets. The Department also implemented measures to provide the Canada Deposit Insurance Corporation with greater flexibility to bolster its ability to safeguard financial stability in Canada.

The Department successfully put in place measures to provide up to $200 billion through the Extraordinary Financing Framework (EFF) to mitigate the impact of the global credit crunch on Canadian financial institutions, consumers, and businesses. Major EFF measures included:

• the Insured Mortgage Purchase Program, which provided some $69 billion in term financing to banks;
• assurance facilities for banks and insurance companies;
• the Canadian Secured Credit Facility;
• support for the Bank of Canada's emergency liquidity measures; and
• increased flexibilities and capacities for financial Crown corporations, including the Business Credit Availability Program (BCAP).

The Department also supported the Advisory Committee on Financing, a new committee that is part of the comprehensive package of measures the government put in place in Canada's Economic Action Plan to ensure the availability of financing to Canadian businesses and consumers, to support the economy, and to encourage growth.

Credit conditions during the year improved significantly, as the extraordinary support measures achieved their goal. Most measures, with the exception of BCAP, ended by March 31, 2010.

In the international context, Canada became the chair of the G7 and took on a leadership role within the G20, for which financial sector reform is a key pursuit. Canada hosted a meeting of G7 Finance Ministers and Central Bank Governors in Iqaluit in February 2010, the G8 Leaders Summit in Muskoka in June 2010, and the G20 Leaders Summit in Toronto in June 2010. The Department contributed to G20 agreements on IMF governance reforms as well as provided ongoing analysis of IMF/World Bank operations. On an ongoing basis, the Department, along with other federal agencies such as the Office of the Superintendent of Financial Institutions and the Bank of Canada, actively participated in the work of the Financial Stability Board.

The Department continued to support open markets through the negotiation of trade and investment agreements, including implementation of trade agreements with Colombia, Panama, and Jordan, while also supporting the conclusion of multilateral trade negotiations. With respect to trade finance, the Department contributed to and advised on the emergency $250 billion in trade financing made available by G20 countries during the economic crisis^[1] and also participated in the Global Trade Liquidity Program. The Department continued its work with other departments to implement the Aid Effectiveness Agenda, which, as announced in 2009–10, focuses 80 per cent of Canada's aid on 20 priority countries and 5 thematic priorities. The Department has also led the development of innovative financing tools for international assistance, worked to strengthen the capacity of multilateral development banks, and assumed a leadership role in the World Bank's Debt Management Facility.

In setting up the Canadian Securities Transition Office (CSTO) and the Advisory Committee of Participating Provinces and Territories, the Department continued to support the Government of Canada's long-standing priority of establishing a single Canadian securities regulator. The Department supported the CSTO in developing a proposed Canadian Securities Act. The new Canadian securities regulator will offer significant benefits to all Canadians, such as providing better and more consistent protection for investors across Canada.

In 2009–10, consumers of financial products were supported by the establishment of an independent task force to make recommendations to the Minister of Finance on a national strategy on financial literacy. In addition, the Minister of Finance developed new credit card rules to limit business practices that are not beneficial to consumers and provide clear and timely information to Canadians about credit cards.

Significant action was also taken by the Minister of Finance in 2009–10 to strengthen the payments system. On November 19, 2009, in response to issues raised by stakeholders in the debit and credit card markets, the Government of Canada released a proposed Code of Conduct for the Credit and Debit Card Industry in Canada. The Code aims to promote fair business practices and ensure that merchants and consumers clearly understand the costs and benefits associated with credit and debit cards.

In support of sound social policy, the Department has been engaged in a serious discussion with Canadians on pensions and pension security over the past year. Moreover, concrete action has been taken to strengthen Canada's retirement income system. As there is a need to work with provincial and territorial partners to examine the larger retirement income concerns facing Canadians, the issue was raised at the annual meeting of Finance ministers in late 2008 and, in May 2009, ministers set up a federal-provincial-territorial research working group to conduct an in-depth examination of retirement income adequacy. The Research Working Group's summary report, which confirms the relative strength of Canada's retirement income system, was presented to Finance ministers at their December 2009 meeting. While acknowledging the strength of Canada's retirement income system, ministers tasked senior officials to work collaboratively to analyze the wide range of ideas that have been put forward to ensure the ongoing strength of the retirement income system for future generations of Canadians. Broad public consultations were launched through an online consultation paper in March 2010.

The Department also continued to deliver on its lead responsibilities for Canada's anti–money laundering and anti–terrorist financing regime, actively contributing to the work of the Financial Action Task Force (FATF) in strengthening its standards and their global implementation in support of the efforts of G20 Leaders to protect the integrity of the global financial system.

To promote the competitiveness and productivity of Canadian companies, the Department developed, consulted on, and implemented the Budget 2010 initiative to make Canada a tariff-free zone for industrial manufacturers. This initiative eliminated all remaining tariffs on manufacturing inputs and machinery and equipment (see chart), which will increase investment, create jobs, improve innovation and productivity, lower prices for consumers, and increase overall prosperity for Canadians. The elimination of these tariffs is expected to result in the creation of up to 12,000 jobs over time.

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Improving tax competitiveness, efficiency, and fairness

Budget 2010 introduced measures that are helping to improve the competitiveness, fairness, and efficiency of the tax system, raise standards of living, fuel job creation, and increase investment in Canada. A continued federal commitment to reduce corporate income tax rates and complementary efforts by provinces and territories are delivering real progress toward the government's goal of a 25-per-cent combined federal-provincial corporate income tax rate, which is helping to improve Canada's competitiveness.

Budget 2010 also proposed a narrowed definition of taxable Canadian property, which applies to certain types of Canadian property held by non-residents. This change will eliminate the need for tax reporting under section 116 of the Income Tax Act, thereby improving the ability of Canadian businesses to attract foreign venture capital.

The Government of Canada also introduced a number of initiatives in Budget 2010 intended to protect the integrity of the Canadian tax system. By closing loopholes in the tax system, these initiatives will help ensure that all taxpayers pay their fair share of tax on income earned in Canada and abroad. Another initiative in the budget will strengthen the capacity of the Canada Revenue Agency to address aggressive tax planning and compliance risks, which have the potential to erode the tax base, and to fight against tax evasion. Taken together, these initiatives help protect the government's revenue base and are consistent with its ongoing commitment to tax fairness.

Finally, Budget 2010 took actions to improve the fairness and efficiency of the personal income tax system. In particular, a number of measures were introduced to address tax planning concerns, including measures to strengthen the tax treatment of employee stock option benefits. Other Budget 2010 measures included:

• improvements to the Registered Disability Savings Plan to help parents and family members provide long-term financial security for a severely disabled child; and
• significant reforms to the disbursement quota to reduce administrative complexity and better enable charities to focus their time and resources on charitable activities.

In 2009–10, as a result of decisions by Ontario and British Columbia to enter into the harmonized value-added tax framework, the Department worked with both provinces to conclude two new Comprehensive Integrated Tax Coordination Agreements (CITCAs) that would see the HST take effect in these provinces on July 1, 2010.

Lessons Learned

In 2008 and 2009, the global economic situation deteriorated markedly, and the impact of the global recession has been broadly felt in the Canadian economy. The current economic situation highlights the importance of putting in place sound structural policies that can help mitigate the negative risks to the economy and, in particular, the importance of having sound fiscal fundamentals.

Recent economic indicators show that Canada's Economic Action Plan, through its targeted and temporary stimulus measures, played an important role in boosting confidence and economic growth and protecting Canadian jobs and incomes. The Economic Action Plan's mixture of infrastructure investments, labour market support measures, permanent tax cuts, and support for the most affected industries and communities was successful in stimulating domestic demand for products and services and was an appropriate fiscal response to the economic crisis in Canada. Canada would not have been able to undertake such a plan without its strong fiscal position. The global economic crisis emphasizes the importance of maintaining and bolstering Canada's solid fiscal fundamentals and the necessity to restore fiscal balance over the medium term.

The global financial crisis continues to impart important lessons to governments around the world about the composition, behaviour, and regulation of the financial sector. Canada needs to remain an integral part of coordinated international initiatives to re-establish a well-functioning global financial system and to help prevent future crises. The global reform agenda is expected to require significant departmental resource commitments over the next few years to monitor and address systemic risks in the economy.

Response to recommendations made in the 2009 Fall Report of the Auditor General of Canada concerning technical income tax amendments

In Chapter 3 of the Auditor General's fall 2009 report, entitled "Income Tax Legislation," a number of recommendations were made to the Department of Finance Canada regarding processes for recording, tracking, and prioritizing technical income tax amendments and for addressing a backlog of technical amendments that have been proposed but not enacted.

The Department has responded by consolidating its inventory of outstanding technical changes and updating its existing database to reflect this. It has begun a project to implement a more user‑friendly and comprehensive database and anticipates that by March 31, 2011, all existing data will be transferred to the new database and it will be consistently used and updated by all officers.

As the Government of Canada indicated in the action plan that was developed in response to the Auditor General's report, the Department will continue to work toward ensuring that necessary technical amendments are put forward for consideration on a regular and timely basis. As such, the Department will consider recommending the release of smaller packages of draft technical income tax amendments on a regular basis in order to make the process more manageable and efficient. Moreover, the Department will consider the possibility of recommending the release of such packages before Parliament has passed previously tabled technical amendments.

Response to recommendations made in the 2009 Spring Report of the Auditor General of Canada concerning tax overpayments by corporations

In Chapter 4 of her spring 2009 report, entitled "Interest on Advance Deposits from Corporate Taxpayers," the Auditor General raised concerns about interest paid on tax overpayments by corporations. In response, the Department proposed in Budget 2010 to reduce by two percentage points the interest rate payable by the Minister of National Revenue to corporations. Effective July 1, 2010, the interest rate will be set at the average yield of three-month Government of Canada Treasury Bills sold in the first month of the preceding quarter, rounded up to the nearest percentage point.

Benefits for Canadians

The Department's work in the Economic and Fiscal Policy Framework program area ensures that Canada's economic performance and future prosperity are based on coherent policies and measures that are developed through strategic research and analysis of issues of interest to Canadian taxpayers and businesses. Canadians benefit from the development of strategies that are tailored to the country's situation and capacity. Such strategies enable Canada to better respond to various economic shocks so the costs of government spending are not passed on to future generations. Canadians also benefit from a sound and stable financial sector that supports the savings and investment needs of individuals and businesses as well as the economy as a whole.

Program Activity 1.2: Transfer and Taxation Payment Programs

The Department of Finance Canada's mandate includes the administration of transfer and taxation payments to provinces and territories and taxation payments to Aboriginal governments. In accordance with legislation and negotiated agreements, the Department provides fiscal equalization and support for health and social programs and other shared national priorities. Also included in this program area are the Department's commitments to and agreements with international financial institutions aimed at aiding the economic advancement of developing countries. This program activity also includes payments to Canadian organizations for the development of social and cultural infrastructure in Toronto's waterfront area.

Program Activity: Transfer and Taxation Payment Programs

2009-10 Financial Resources ($ millions)			2009-10 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
50,743.5	51,437.2	51,223.2	12	8	-4

Expected Results	Performance Indicators	Targets	Performance Status	Performance Summary
Payments to support Canadian provinces in providing their residents with public services; payments to international organizations to promote the economic advancement of developing countries	Payments are made on time and according to levels and formulas set out in legislation	100 per cent	Successfully met	The transfer and taxation payments to Canadian provinces, territories, and Aboriginal governments were all made on time and according to levels and formulas set out in legislation or tax agreements.

Performance Analysis

Transfer programs

The Department's work in 2009–10 to ensure the continued delivery of timely and accurate transfer payments totalling over $51 billion to the provinces and territories—including Equalization, Territorial Formula Financing, the Canada Health Transfer, and the Canada Social Transfer—helped to support the delivery of public services, universally accessible health care services, post-secondary education, and social programs, among other targeted areas. To meet this commitment, the Department worked closely with Statistics Canada to ensure that the best available data were used in the determination of transfer payments. In addition, measures of fiscal capacity were updated where required to account for evolving provincial and territorial taxation practices.

Over the 2009–10 fiscal year, the Department also focused on implementing the new transfer arrangements flowing from Budget 2009 and Budget 2010 through the preparation and adoption of the required regulatory and legislative amendments.

Tax collection agreements and negotiations with Aboriginal governments

To meet the Government of Canada's commitment to ensuring that agreements with the provinces and territories meet policy and administrative objectives, corporate tax payments under the agreements were advanced in 2009–10. As well, the Department continued negotiations and initiated several new negotiations with Aboriginal governments on the First Nations goods and services tax (FNGST).

Payments of GST/HST revenues

The Department estimated and allocated each of Newfoundland and Labrador, Nova Scotia, and New Brunswick's share of the GST/HST revenues under the terms of the Comprehensive Integrated Tax Coordination Agreements (CITCAs). Work was also undertaken to integrate Ontario and British Columbia into the revenue allocation framework, following signature of two new CITCAs in 2009. The Department also worked closely with the Canada Revenue Agency and Statistics Canada to refine the underlying data and methodologies.

Canada's participation in Debt Relief Initiatives

In compliance with the Treasury Board Policy on Evaluation's requirement that all grants and contributions programs be evaluated once every five years, the Department's Internal Audit and Evaluation conducted an evaluation of Canada's participation in Debt Relief Initiatives. The evaluation found that the mandate and strategic objectives of Canada's participation in the Debt Relief Initiatives continue to be relevant. In addition, the administration of the program and the use of the transfer payment system for International Debt Relief were found to be efficient, having little duplication and resulting in fairly low costs. The project was found to be functioning well overall, and no major changes to the design or delivery were required.

Toronto Waterfront Renewal

The Department continued to administer the two separate but linked contribution programs related to the Toronto waterfront: the Toronto Waterfront Revitalization Initiative (TWRI) and the Harbourfront Centre Funding Program (HCFP). At the end of the 2009–10 fiscal year, most federally funded projects under the TWRI had been completed and had provided increased public accessibility to and usage of the waterfront area, revitalized urban infrastructure, and improved environmental management of the waterfront area. The HCFP provided funding to Harbourfront Centre to help cover the organization's administrative and operational costs as a means of facilitating its ability to leverage funding from other governments and pursue other revenue-generating strategies.

Lessons Learned

The Department will continue to strive to attain the program activity's target of 100-per-cent accurate and timely transfer of funds to the provinces and territories. Improvements to models will continue to allow the Department to respond in a timely, more transparent manner to information requests about the computation of transfer payments.

While the Government of Canada has taken steps to improve provincial-territorial engagement, transparency in transfer payment programs has continued to be a challenge. In the past, the need to take quick action to ensure the ongoing fairness, sustainability, and predictability of federal transfers, coupled with the complexity of the transfer system, has often precluded meeting the expectations of provinces, territories, and other interested parties for more extensive advance consultations. Given that the legislation governing all major transfers will expire at the end of 2013–14, efforts to enhance transparency and improve provincial-territorial engagement will become even more important and will help ensure that the federal-provincial-territorial environment is amenable to productive, technical discussions when renewing fiscal arrangements. The Department will continue to build capacity on transfer renewal and enhance efforts to work with provincial and territorial counterparts on technical issues aimed at improving the efficiency, equity, accuracy, and transparency of major transfers.

Benefits for Canadians

The Department's work in 2009–10 to ensure the continued delivery of timely transfer payments to the provinces and territories—such as Equalization, Territorial Formula Financing, the Canada Health Transfer, and the Canada Social Transfer—helped to support the delivery of public services, universally accessible health care services, post-secondary education, and social programs, among other targeted areas.

During 2009–10, the Department effectively administered tax collection agreements with the provinces and territories and tax administration agreements with Aboriginal governments, making accurate and timely payments. Tax collection agreements with the provinces and territories allow the federal government to streamline service and reduce administrative costs by having a single tax form and a single tax collector. To support Aboriginal self-government, tax administration agreements with Aboriginal governments allow the federal government to vacate a negotiated portion of its GST and personal income tax room, to share it with Aboriginal governments, and to administer Aboriginal tax regimes.

Program Activity 1.3: Treasury and Financial Affairs

This program area provides direction for Canada's debt and reserves management activities, including the payment of debt service costs and investments in financial assets needed to maintain a prudent liquidity position. This program supports the ongoing refinancing of government debt coming to maturity, the execution of the budget plan, and other financial operations of the government, including governance of the borrowing activities of major government-backed entities such as Crown corporations. This program activity also includes oversight of the system for circulating Canadian currency (bank notes and coins) to meet the needs of the economy.

Program Activity: Treasury and Financial Affairs

2009-10 Financial Resources ($ millions)			2009-10 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
32,389.7	147,021.9	147,021.9	30	24	-6

Expected Results	Performance Indicators	Targets	Performance Status	Performance Summary
Prudent and cost-effective management of government's treasury activities and financial affairs	Consultations with market participants	Timely and useful input obtained for the debt management strategy	Successfully met	A series of consultations were undertaken. Views expressed by market participants were taken into consideration in the development of the debt management strategy.
	Required authorities obtained and risk limits respected	Governor in Council (GIC) approval of aggregate borrowing limit; exposure limits respected; action taken where warranted	Successfully met	All required authorities were obtained and borrowings were within GIC-approved borrowing limits.
	Debt Management Strategy, Debt Management Report, and annual Report on the Management of Canada’s Official International Reserves, which support transparency and accountability	Timely and useful information for Parliament and the public; reports tabled within the deadlines established under the Financial Administration Act and Currency Act	Successfully met	The Debt Management Strategy, Debt Management Report, and annual Report on the Management of Canada’s Official International Reserves were tabled within the deadlines established under the Financial Administration Act.
	Successful operations	Effective operations ensuring sufficient funds are available to support government and Crown operations	Successfully met	All bill and bond operations were fully covered and raised their allocated amount of funding.

Performance Analysis

The 2009–10 federal debt strategy, prepared by the Department in conjunction with the Bank of Canada and published with Budget 2009, addressed a significant increase in financial requirements. These included fiscal stimulus measures and Extraordinary Financing Framework (EFF) measures under Canada's Economic Action Plan, most notably the provision of some $69 billion in term funding through the Insured Mortgage Purchase Program.

To implement the EFF, the Department worked closely with major financial Crown corporations, including the Canada Mortgage and Housing Corporation, Export Development Canada, and the Business Development Bank of Canada. The Department also provided support and direction to other federal entities that engage in borrowing and lending activities backed by the full faith and credit of the government, in particular through publication of the revised Minister of Finance Financial Risk Management Guidelines for Crown Corporations.

In terms of currency and coinage, the Government of Canada announced in Budget 2010 that it was taking steps to modernize Canada's currency and protect it against counterfeiting. The introduction of a new series of bank notes by the Bank of Canada will begin in 2011. These bank notes will have increased security features and will be printed on a polymer material, which lasts significantly longer than the current cotton-based paper, thereby reducing production costs and the impact on the environment. The Government of Canada also announced that it was planning to change the composition of the $1 and $2 coins using the Royal Canadian Mint's less expensive, patented multi-ply plated steel technology.

Lessons Learned

The Government of Canada has successfully undertaken substantial new borrowing to finance its plan to stimulate the economy and improve access to credit. Debt securities issued to fund these measures have found a ready and diversified investor base thanks to Canada's strong fiscal position, combined with a long-standing policy of maintaining a liquid, well-functioning securities market.

Benefits for Canadians

Managing public debt effectively helps keep public debt costs low and financial markets functioning well. Fiscal savings from debt management better position Canada to weather economic storms and improve intergenerational equity by ensuring that future generations do not have to pay for the benefits received by their predecessors.

Program Activity 1.4: Internal Services

This program area enables the Department to deliver its management agenda and covers a variety of activities: departmental governance; legal services; public affairs and communications; internal audits and evaluations; and corporate services, which include human resources, financial management, facilities and asset management, information management, and information technology services.

Program Activity: Internal Services

2009-10 Financial Resources ($ millions)			2009-10 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
42.6	52.7	48.6	246	255	9

Performance Analysis

In 2009–10, the Department continued to implement its 2008–11 Integrated Human Resources Plan and 2009–10 Human Resources Action Plan, focusing its attention on three priority areas: recruitment, employee development, and employee retention.

The Department implemented several strategies to mitigate the risk of having a shortage of employees who possess the required qualifications to fulfill the Department's mandate. These strategies are as follows:

• the development and implementation of branch-level staffing plans to identify and fill key positions and forecast upcoming staffing requirements;
• the Department's University Recruitment Program to attract economists; and
• the 2009–10 Human Resources Action Plan, which identified 47 specific activities to support 4 areas of strategic importance: planning, recruitment, development and retention, and enabling infrastructure.

The Department recognized the need to continue its strong support for employee learning, development, and retention. In addition to supporting formal training for employees, key initiatives successfully developed and/or implemented include the following:

• the University Recruitment Transitioning Program, which matches Department of Finance Canada employees to new recruits prior to their employment;
• an Administrative Services Committee, which supports the developmental aspirations of administrative professionals;
• training for all executives on EX staffing and values-based appointments; and
• employment equity and diversity training sessions.

Following the successful implementation of dedicated departmental corporate administrative services in the Department in February 2009, the Department of Finance Canada and the Treasury Board of Canada Secretariat jointly undertook a review of selected corporate services provided by the Secretariat to Finance in a shared services environment to determine whether any adjustments would be required. As a result of this review, it was decided that the Department of Finance Canada would establish, effective April 1, 2010, its own internal capacity for compensation and benefits services within the Corporate Service Branch. Changes were also made to asset and environmental management services and to the security functions related to special events such as federal budgets, G8 and G20 summits, and federal/provincial Finance ministers' meetings.

With the introduction of Canada's Economic Action Plan, the Internal Audit and Evaluation Division updated its risk-based audit plan to include an internal audit of the Economic Action Plan in July 2009. The Division also conducted an audit of the security of information, an audit of risk management, and a follow-up audit to Human Resources and Skills Development Canada's 2005 audit of the Toronto Waterfront Revitalization Initiative. The Department's Audit and Evaluation Committee provides the Deputy Minister with independent advice regarding the sufficiency, quality, and results of assurance on the functioning of the department's risk management, control, and governance frameworks and processes, including all departmental activities related to internal audit and evaluation.

The Department also conducted two evaluations of grants and contributions programs in
2009–10: an evaluation of the Research and Policy Initiatives Assistance Program and an evaluation of Canada's participation in International Debt Relief Initiatives.

In February 2009, the Department of Finance Canada implemented a departmental Conflict of Interest Code. The recently established Office of Values and Ethics will develop, implement, monitor, and ensure the continuous improvement of frameworks, plans, and processes to meet the obligations of new legislation and policies, including the Conflict of Interest Code. All confidential reports received from employees underwent thorough review and analysis, and corrective action was taken where necessary to ensure compliance with the Code.

Lessons Learned

As part of the 2009–10 integrated business planning process, the Department developed a number of innovations to enhance its human resources planning processes. Improved tools and documents provided branch management teams with better information and analysis on which to base workforce planning decisions. Improved templates also facilitated the reporting of human resources planning information. The development of the 2010–11 Human Resources Action Plan drew once again on a wide range of internal and external sources, including results of the 2008 Public Service Employee Survey and results of the Department's assessment under the Management Accountability Framework.

Benefits for Canadians

The Department of Finance Canada plays an important role in promoting a strong and sustainable Canadian economy. Success in this respect depends on the quality and timeliness of the Department's economic analysis and policy advice, which in turn are supported by the Department's internal services. Efficient and effective departmental management is also necessary to ensure that the financial and material resources Parliament provides to the Department are used appropriately and that competent personnel are in place to carry out the Department's mandate. Canadians benefit from the fact that the Department of Finance Canada's communications, legal services, human resources, information technology, and other internal services all contribute to these objectives.

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