Data quality, concepts and methodology

Government services

1. Concepts

Government services covers international transactions arising largely from official representation and military activities, as well as commercial activities of governments not covered in other accounts. They include expenses of staff at embassies and missions and of individuals stationed on military bases. Receipts chiefly comprise expenditures in Canada by foreign governments and their staff recruited abroad. Receipts also include overheads to administer official assistance. Payments cover expenditures abroad of both the Canadian federal and provincial governments and their staff recruited in Canada. Beginning with the reference year 1996, separate information is available on construction, existing building and land transactions for both embassy and other use by the Government of Canada abroad. Construction is now included in construction services while purchases of existing buildings will continue to be treated as government services. In conformity with international standards, land transactions are classified as non-produced non-financial assets in the capital account.

Again in conformity with international standards, outlays by the federal government for contributions to the operations of international organizations and programs are excluded and shown in current transfers. For provincial governments, the data exclude receipts and payments by provinces for the promotion of tourism, which are included in commercial services.

To the extent that official government records used as the source data are on a cash basis, they have been incorporated as such in the balance of payments accounts, rather than on an accrual basis, as called for by international standards. With the move to accrual accounting at April 1, 2001 by the Canadian government, it is anticipated that progressively more services in this category will be stated in accrual terms.

2. Data sources

Almost all the data are collected from administrative sources, except for ad hoc surveys conducted to obtain estimates of spending by foreign embassies in Canada (the last such survey was conducted to collect 1995 data). Federal government administrative sources include the following:

• Public Accounts of Canada;
• National Defence;
• Canadian International Development Agency;
• Department of Foreign Affairs and International Trade;
• International Development Research Centre;
• From 1997, data on a range of immigration services paid by non-residents has been added to this account. They draw on administrative records of revenues and entry of persons maintained by Citizenship and Immigration Canada.

Data for provincial and territorial governments come from the provincial Public Accounts while data for crown corporations are taken from federal and provincial Public Accounts and supplementary data obtained directly from selected corporations.

Most of the data on spending in Canada by U.S. government authorities are provided by the U.S. Bureau of Economic Analysis. Data on spending by countries other than the U.S. are obtained from Canadian administrative records.

3. Methods

3.1 General methodology

The Balance of Payments Division compiles the data. For Canadian expenditures by personnel posted abroad, two-thirds of their salary is assumed to be available for personal spending in the local economy. Payments for Canadian military personnel are calculated and provided by the Income and Expenditure Accounts Division.

A number of changes were made following a review of government transactions with the Input-Output Division. Beginning with 1993 data, military expenditures abroad were scaled back to be more in line with declining outlays on personnel. From the same year, improved data sources were used for receipts for the use of Canadian facilities by visiting non-U.S. military forces. Additions and changes were also made to more accurately reflect outlays for trade development by provincial governments. A number of in-Canada outlays of a commercial nature-deemed paid to Canada by recipients of official aid flows- were reduced and were recognized instead under services to business. Spending by foreign embassies, High Commissions and consulates was re-estimated through a voluntary survey for 1995. This survey produced a small but helpful cross-section of responses. Results were generally higher than previous estimates.

3.2 Extended geographical breakouts

In terms of geographical detail for government services, some larger segments of data are initially recorded by individual country, such as Canadian representation abroad or certain expenditures on defence. In Canada, overheads to administer official assistance are recorded as receipts. These are distributed geographically according to the administrative records of assistance provided. These records are country-specific. More difficult is an allocation for foreign government expenditures in Canada. Here, the 1995 benchmark survey forms the basis for a benchmark indicator composed of wages and salaries paid annually to local employees of embassies and consulates in Canada and aggregated from taxation records.

For immigration services, detailed records by mission are available for persons paying abroad. Certain payments made in Canada prior to granting landed immigrant status are allocated by flows of landed immigrants. Revenues from the granting or renewal of work or study permits are also available directly by country from Citizenship and Immigration records. The share of payments made by residents on behalf of persons seeking entry into Canada was estimated for exclusion in consultation with C&I officials.

4. Products

4.1 Data accuracy

Overall, the data are reliable. For each series, the accuracy varies. This reflects the variable accuracy of the data sources, which range from sound administrative records to estimates-particularly of foreign activity in Canada-that are based overall on very limited information. The data, however, benefit from the extensive detailed reconciliation conducted annually with the U.S. Bureau of Economic Analysis on current account transactions. ¹

4.2 Data accessibility

The quarterly and annual series on government services are published as total receipts, payments and balances for total and for the United States in the quarterly publication Canada's Balance of International Payments (available in print and in electronic format on the Internet) and in CANSIM.

The annual series on government services are published in the present annual publication, Canada's International Transactions in Services, in total and for the six geographical groupings: United States, United Kingdom, Other European Union, Japan, Other OECD and Other Countries. Annual breakouts of individual are also released, aggregated with transportation services from 1990 onward in the same publication.

Specific unpublished breakouts are available on request.