Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended June 30, 2013

Management Statement for the Quarter Ending June 30, 2013

Introduction

This quarterly report has been prepared by management as required by Section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates as well as Canada's Economic Action Plan 2012 (Budget 2012).

Infrastructure Canada's raison d'être is to lead the Government of Canada's efforts in addressing Canada's public infrastructure challenges. Strong, modern, world-class public infrastructure is a key factor in achieving the Government of Canada's priorities of a stronger economy, a cleaner environment and more prosperous, safer communities. Further information on Infrastructure Canada's mandate, responsibilities, and programs can be found in the Infrastructure Canada 2013-14 Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Infrastructure Canada spending authorities granted by Parliament and those used by Infrastructure Canada consistent with the Main Estimates for the 2013-14 fiscal year (FY). This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the government. Approvals are given in the form of annually approved limits through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

Infrastructure Canada uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-2014, the changes to departmental authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.

It should be noted that this quarterly report has not been subject to an external audit or review.

Highlights of Fiscal Quarter and Fiscal Year to Date Results

This section highlights the significant items that contributed to the change in resources available for use from FY 2012-13 to FY 2013-14 and in actual expenditures between the first quarter ended June 30, 2012 and the first quarter ended June 30, 2013.

In 2013-14, Infrastructure Canada is continuing to wrap-up programs under the existing Building Canada plan and conduct advance planning including the development of parameters for the New Building Canada Plan announced as part of Economic Action Plan 2013. The New Building Canada Plan provides approximately $53 billion over 10 years in new and existing funding to build roads, bridges, subways, commuter rail and other public infrastructure in cooperation with provinces, territories and municipalities including an indexed permanent Gas Tax Fund, $10 billion for a Provincial-Territorial Infrastructure Component that will support projects of national, regional and local significance in communities across the country, and $4 billion for a National Infrastructure Component that will support investments in projects of national significance.

Figure 1: Expenditures Compared to Annual Authorities as at June 30th, 2013

Figure 1 - Bar graph of Expenditures Compared to Annual Authorities (as at Q1)

As can be seen in Figure 1, in the current year, Infrastructure Canada has $3.9B in Total Authorities as of the end of Quarter 1 (Q1), compared to $5.1B at Q1 in the prior year, representing a total decrease of approximately 23% or $1.2B. This decrease can be explained almost entirely by a net decrease of $1.17B in Contribution authorities (Vote 40/45) due to the winding down of current programs. Following consultations with partners, authorities are sought to match the cash requirements of infrastructure projects. As infrastructure projects are being completed, the total authorities sought to match the cash requirements are lower in 2013-14 than they were in 2012-13.

On a quarterly basis Contribution expenditures were down a total of 3% broken down as follows:

Program Fund Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Provincial-Territorial Infrastructure Base Fund 29,437 181%
Gas Tax Fund (19,220) −2%
Building Canada Fund — Communities Component (26) −62%
Building Canada Fund — Major Infrastructure Component (13,765) −54%
Canada Strategic Infrastructure Fund (4,238) −39%
Municipal Rural Infrastructure Fund (1,790) −41%
Total (35,815) −3%
  • The significant increase in payments under the Provincial-Territorial Infrastructure Base Fund was entirely due to a large payment to Ontario ($32.5M).
  • All other fund payments/advances were down with the most significant decreases in Building Canada Fund (54%-62%) payments as a result of the improved method for forecasting cash flow requirements. Since advances were previously issued, less money is now required for the final payment of related claims.

Operating authorities also decreased by 23% or $12.8M, as a result of

  • a $4.3M transfer of funding authority to Shared Services Canada,
  • the removal of $3.5M from Infrastructure Canada's authorities to be held centrally for the provision for accommodation, and
  • $5M in cost savings and operational efficiencies.

In contrast, actual expenditures as of June 30 have only decreased 12% or $1.1M compared to the same quarter of FY 2012-13.

Infrastructure Canada has used 28% of its current Total Authorities as of June 30, 2013, compared to 22% at the same point in the prior FY. This change is largely due to the reduced authority levels compared to the same period last year.

Although minor in proportion to the overall authorities and spending there were several notable variances in spending by standard object within the Operating vote. The most significant of these is a 90% decrease in Rental expenditures. This is entirely due to an agreement with Public Works and Government Services Canada to assume building lease costs under their responsibility for the provision of accommodation and the deferred billing of residual costs above the 13% standard threshold until fiscal year end. Transportation and Communication expenditures are down 77% largely as a result of reduced travel as the department winds down its programs and focuses on planning for the implementation of new programs under the Economic Action Plan 2013. Professional and Special Services were also down 28% largely as the result of reduced spending on information technology consultants as part of cost savings measures. Personnel costs were down 5% for the first quarter compared to 2012-13.

Notable Changes to Expenditures by Standard Object Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Personnel (456) −5%
Transportation and communications (63) −77%
Professional and special services (301) −28%
Rentals (902) −90%

Risks and Uncertainties

Infrastructure Canada has no ongoing base level of funding for administration and operating costs. Until 2013-14, its operating requirements have always been funded entirely from infrastructure programs and related administrative costs are confirmed by Treasury Board on an annual basis. In 2013-14, Infrastructure Canada's operating budget has been sourced from the fiscal framework. Without predictable ongoing operating funding, the department will need to secure the necessary funding to deliver existing programs and implement new programs announced in Canada's Economic Action Plan 2013. The Department is working closely with Central Agencies to establish a sustainable level of funding for operating expenditures.

Canada's Economic Action Plan 2013 announcement of whole-of-government initiatives designed to modernize government administration to improve services and achieve efficiencies will be a source of continued pressures for reducing departmental spending. In particular, the appropriation of significant funding to Shared Services Canada for email, data centres and telecommunications, in addition to overall budget reductions, reduces departmental capacity to respond to central IM/IT priorities

The department has adopted a revised forecasting method to better assess and estimate the cash flow requirements of its partners to reduce the risk that actual transfer payment expenses will be less than budget and minimize the need to seek authority to re-profile lapsed funds. Nonetheless, because of the varied factors, (weather, labour shortages, etc.) beyond the control of the department and its partners, that influence the cash flow requirements for major projects, the risk of lapsed funding remains. To mitigate this risk, the Department maintains constant contact with partners to keep current on cash flow changes and shares best practices to expedite claims processing.

Significant Changes in Relation to Operations, Personnel and Programs

Infrastructure Canada's main priority for 2013-14 is working with partners to ensure commitments made in Budget 2013, specifically the $53 billion, 10-year New Building Canada Plan, are operationalized.

Revisions to the Treasury Board Directive on Travel, Hospitality, Conferences and Events have and will continue to require additional work to integrate changes into established practice and procedures.

The awarding of a new contract for management of Government Travel Services will require the re-orientation of limited current resources to implement a new Travel Management System being developed by the new travel management company.

Budget 2012 Implementation

Infrastructure Canada continues ongoing efforts to implement measures announced in Budget 2012 to refocus government and programs; make it easier for Canadians and business to deal with their government; modernize and reduce the back office; and carefully and thoughtfully exercise budgetary restraint.

Approval by Senior Officials

Approved by:

Original signed by:

Louis Lévesque,
Deputy Head

Date

Su Dazé,
Chief Financial Officer

Date

Signed in Ottawa, Ontario, August 29, 2013

Quarterly Financial Report
For the quarter ended June 30, 2013
Statement of Authorities (unaudited)
Fiscal year 2013-2014

(in thousands of dollars)
  Total available for use for the year ending* note 1
March 31, 2014
Used during the quarter ended
June 30, 2013
Year-to-date used at
quarter-end
Vote 35 - Operating expenditures 42,161 7,991 7,991
Vote 40- Contributions 3,877,559 1,097,936 1,097,936
Statutory      
(S) - Contributions to employee benefit plans 4,986 1,247 1,247
(S) - Green Infrastructure Fund 0 0 0
Total Budgetary authorities 3,924,706 1,107,174 1,107,174
Non-budgetary authorities 0 0 0
Total authorities 3,924,706 1,107,174 1,107,174

Statement of Authorities (unaudited) (continued)
Fiscal year 2012-2013

(in thousands of dollars)
  Total available for use for the year ending* note 1, ** note 2
March 31, 2013
Used during the quarter ended
June 30, 2012
Year to date used at
quarter-end
Vote 40 - Net Operating expenditures 55,006 9,653 9,653
Vote 45- Contributions 5,045,585 1,133,751 1,133,751
Statutory      
(S) - Contributions to employee benefit plans 4,973 1,243 1,243
(S) - Green Infrastructure Fund 0 0 0
Total Budgetary authorities 5,105,564 1,144,647 1,144,647
Non-budgetary authorities 0 0 0
Total authorities 5,105,564 1,144,647 1,144,647

*Includes only Authorities available for use and granted by Parliament at quarter-end.

**Total available for use does not reflect measures annonced in Budget 2012.

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Quarterly Financial Report
For the quarter ended June 30, 2013
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2013-2014

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2014
Expended during the quarter ended
June 30, 2013
Year-to-date used at
quarter-end
Expenditures:
Personnel 33,642 8,185 8,185
Transportation and communications 538 19 19
Information 189 73 73
Professional and special services 8,867 793 793
Rentals 2,127 96 96
Repair and maintenance 11 1 1
Utilities, materials and supplies 83 8 8
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 232 7 7
Transfer payments 3,877,559 1,097,936 1,097,936
Public debt charges 0 0 0
Other subsidies and payments 1,458 56 56
Total net budgetary expenditures 3,924,706 1,107,174 1,107,174

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
Fiscal year 2012-2013

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2013
Expended during the quarter ended
June 30, 2012
Year to date used at
quarter-end
Expenditures:
Personnel 33,229 8,641 8,641
Transportation and communications 837 82 82
Information 657 64 64
Professional and special services 12,075 1,094 1,094
Rentals 3,388 998 998
Repair and maintenance 180 0 0
Utilities, materials and supplies 135 12 12
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 835 2 2
Transfer payments 5,045,585 1,133,751 1,133,751
Public debt charges 0 0 0
Other subsidies and payments 8,642 3 3
Total net budgetary expenditures 5,105,563 1,144,647 1,144,647

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