Chapter 1
Introduction

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In Canada, as in other modern societies, governments perform an important role in economic affairs. They undertake a wide variety of activities through many different types of agents. Governments are involved in the provision of goods and services whose characteristics are such that it is often difficult or impossible to offer them through private sector channels. This includes activities such as national defence, justice, civil order and the regulation of economic and social actions.

Governments are also involved in the provision of services such as education and health, where public intervention is in the general interest of society, even though such services could be, and often are, also provided by the private sector. As well, governments often engage in commercial activities that are similar to and in competition with the private sector. Electric utilities and public transportation services are examples of this involvement.

To study the impact of public bodies on the economy, it is essential to have a precise definition of the entities that comprise the public sector universe. The Guide to the Public Sector of Canada presents the criteria utilized to determine the entities that are in the public sector. It also delineates the structures used to categorize these data for statistical purposes. This universe provides the framework to observe the extent of governments' involvement in the production of goods and services in the Canadian economy.

The criteria used to define the public sector are based on principles embodied by the Canadian System of National Accounts (CSNA) at Statistics Canada. The CSNA is an accounting framework which classifies entities by economic sector. The Canadian System of National Accounts (CSNA) generally harmonizes their concepts with the International Standard System of National Accounts, (also referred to as SNA 2008, a joint publication of the Commission of the European Communities (CEC), International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), United Nations (UN) and World Bank).

In order to measure the public sector, an up-to-date profile of the public sector universe is required. The public sector includes all government controlled entities such as ministries, departments, funds, organizations, and business enterprises which political authorities at all levels use to implement their social and economic policies. Statistics Canada's Public Institutions Division profiles and classifies public sector entities.

Within Statistics Canada, various classification systems are applied to the statistical units that comprise the public sector universe. For example, in Public Institutions Division, the revenue and expenditures of government units are classified according to the Financial Management System (FMS). In the Canadian System of National Accounts (CSNA), financial data are classified by institutional sector and economic activity to measure the Gross Domestic Product (GDP). The public sector statistical universe is also used to delineate public versus private sector involvement in a number of important areas of study. A few examples are Statistics Canada's monthly, "Labour Force Survey" and the annual "Private and Public Investment Intentions" program. Public sector statistics that are produced from the application of the various Statistics Canada classification systems are disseminated nationally and are reported to the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD) for incorporation into their statistical programs.