Friday, September 17, 2010

Provincial Government Revenue and Expenditure

Question

A researcher here is looking at revenues and expenditures of individual provincial governments back to 1961. This used to be nicely covered by the old CANSIM I, with one matrix for each province (NFDL=6769, PEI=6770 .... BC=6778, and Yukon/NWT=6779) and covering the years 1961-1995. Similar data is available in CANSIM II, however, it is now split into three separate tables (384-0023, 384-0004, and 385-0001) , which do not seem to be compatible. The first and third table are terminated, but I don't think the second is terminated.

To complicate matters, it appears Statistics Canada is now adopting an IMF accounting standard. Would it be possible for someone to confirm our conclusions on this situation and to advise on any means to look at this subject area over time or alternate sources that might have continuous series? I have appended the main body of the researchers last communication with me.

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Well, as I now understand it, there are (at least) three series:
(1) 384-0023 from 1961 to 1980
(2) 384-0004 from 1981 to 2006
(3) 385-0001 from 1989 to 2009 (now terminated as well according to the website).

These series are not compatible, i.e. 1989 revenues for Manitoba for (2) are considerably less that 1989 MB revenues for (3) and it doesn't look like 1980 for (1) and 1981 for (2) are compatible either (the growth rate would be very high). So there must have been accounting changes such that earlier series are not compatible. For the 385-0001 series there is a statement: " 2007/2008 revised estimates and 2008/2009 estimates are the final reference years for which government revenues and expenditures statistics are available on a Financial Management System (FMS) basis. Statistics Canada will be adopting the International Monetary Fund accounting standard for government, called Government Finance Statistics, in 2012 starting with the reference year 2008/2009"

Can you confirm that this is correct, i.e. that there is no compatibility between the three series (and that there is no other series that is compatible over time). In particular, that the FMS series cannot be extended by before 1989? I looked through the documentation online at some length, but I can't find anything on this. I don't know who might know this at StatCan, but someone must. Thanks.

Answer

Our contacts in the divisions that produce these CANSIM tables have provided the following answer in response to your question:

"The 3 Cansim matrices that you mentioned cover two different things. Matrices 384-0004 and 384-0023 provide data based on the System of National Accounts while the matrix 385-0001 is on the Financial Management System basis, which used other accounting conventions. While both accounting systems used the provincial Public Accounts and other financial statements at the base for the statistics, conceptual differences exist between the two accounting systems of which:

- the SNA are on a calendar year basis while the FMS is on a fiscal year basis;

- in the SNA, Sales of Goods and Services are netted against expenses (ie, goods and services expenses are shown net) while in the FMS they are shown on a gross basis (they are included in the revenues); this explains in part why the revenues are less in the SNA than in the FMS;

- the SNA is on an accrual basis and shows "Current expenditure", ie, only depreciation expenses are shown in expenditure while capital expenditures are shown separately while the FMS is on a modified cash basis and shows total expenditures, ie, both current and capital are included in the expenditures.

Also, the matrix 385-0001 includes different levels of consolidation; For Manitoba, for example, series extracted under "Provincial and Territorial Governments" or "Local and Provincial and Territorial Governments" will yield to be very different results, as one include the Local level of government with the Provincial/Territorial while the other only shows the Provincial/Territorial level of government.

The matrix 384-0023 is the Provincial Economic Accounts as published in the SNA prior to the 1997 Historical Revision. 384-0004 is the PEA after that revision. While it is certainly true that there are series in the two tables that are congruent, e.g. personal income tax, in many other ways the two tables are fundamentally inconsistent. The most important reason for this incompatibility is universe changes. In the provincial government, for example, the post-1997 includes universities, colleges and health institutions, which were excluded before.

As for data back to 1961, we don't have this. With the historical revision in 1997, the PEA in the SNA went back to 1981 while we went back to only 1988/89 on a FMS basis."

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