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

Management Statement for the Quarter Ending September 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 2012-13, 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 2013-14, the changes to departmental authorities were reflected in the 2013-14 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 2012-13 to 2013-14 and in actual expenditures from the quarter ended September 30, 2012 and the quarter ended September 30, 2013.

In 2013-14, Infrastructure Canada is continuing to implement 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 September 30th, 2013

Figure 1 - Bar graph of Expenditures Compared to Annual Authorities (as at September 30th)

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 2 (Q2), compared to $5.1B at Q2 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 45 2012-13 / Vote 5 2013-14) which is in line with recipients' cash flow requirements. 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.

Operating authorities also decreased by 27% or $15.9M, 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,
  • $5M in cost savings and operational efficiencies, and
  • Infrastructure Canada will be receiving paylist expenditures and operating budget carry forward later this year.

Year to date Contribution expenditures have decreased by approximately 1% or $11.4M in comparison to last year, as follows. Significant changes are as follows:

Program Fund Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Green Infrastructure Fund 8,831 620%
Municipal Rural Infrastructure Fund 22,803 209%
Border Infrastructure Fund 6,386 114%
Provincial-Territorial Infrastructure Base Fund 16,223 55%
Building Canada Fund — Major Infrastructure (56,259) -22%
  • The increase under the Green Infrastructure Fund was due to an increase in the number of payments made in Q2 in comparison to last year.
  • Under both the Municipal Rural Infrastructure Fund and the Border Infrastructure Fund more funds were advanced to two Federal Delivery Partners for a province for projects during the first half of 2013-14 as compared to the same time period of 2012-13.
  • An increase in payments under the Provincial-Territorial Infrastructure Base Fund was due primarily to a large payment to a province ($32.5M) in Q1 of 2013-14.
  • A large payment of $54M was made in 2012-13 under the Building Canada Fund – Major Infrastructure Component. As a result, there is a significant decrease in expenditures reflected in 2013-14. In addition, the outcome of improved forecasting cash flow requirements resulted in lower advances to Federal Delivery Partners paid in 2013-14 in comparison to 2012-13.

In addition, operating expenditures as of September 30 have decreased 15% or $3.0M compared to the same period during 2012-13.

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 a requirement to transfer the responsibility for the provision of accommodation to Public Works and Government Services Canada and the deferred billing of residual costs above the 13% standard threshold until fiscal year end. Other subsidies and payments decreased by 81% compared to 2012-13 when a payment for a claim against the Crown was issued. Transportation and communication expenditures are down 79% largely as a result of reduced travel as Infrastructure Canada focuses on planning for the implementation of new programs under Economic Action Plan 2013. Professional and special services were adjusted to reflect proper coding and as a result are now in line with the same quarter of last year. Employee turnover has resulted in a decrease in Personnel costs of 7% year to date over the same time period in 2012-13.

Notable Changes in Expenditures by Standard Object Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Personnel (1,166) −7%
Transportation and communications (208) −79%
Other subsidies and payments (74) −81%
Rentals (1,737) −90%
Professional and special services 211 7%

Overall, Infrastructure Canada has spent 38% of its current Total Authorities as of September 30, 2013 compared to 30% at the same point in the prior FY.

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, Infrastructure Canada will need to secure the necessary funding to deliver existing programs and implement the new programs announced in Canada's Economic Action Plan 2013. Infrastructure Canada is working closely with Central Agencies to establish a sustainable level of funding for operating expenditures.

Infrastructure Canada 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.) that influence the cash flow requirements for major projects and are beyond the control of Infrastructure Canada and its partners, the risk of lapsed funding remains. To mitigate this risk, Infrastructure Canada 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

Effective July 15, 2013, Order in Council 2013-0869 transfers Infrastructure Canada to the President of the Queen's Privy Council for Canada from Transport Canada. As a result, both Infrastructure Canada's operating and contribution vote numbers have changed. Of note, there have been no changes to the Minister or Deputy Minister responsible for Infrastructure Canada.

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.

Effort will be required by Infrastructure Canada to implement the new Public Works Government Services Canada's 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 businesses 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, November 29, 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
September 30, 2013
Year to date used at
quarter-end
Vote 1 - Net Operating expenditures 42,151 9,165 17,156
Vote 5 - Contributions 3,877,559 388,557 1,486,493
Statutory      
(S) - Contributions to employee benefit plans 4,986 1,247 2,493
(S) - Green Infrastructure Fund 0 0 0
Total Budgetary authorities 3,924,696 398,968 1,506,142
Non-budgetary authorities 0 0 0
Total authorities 3,924,696 398,968 1,506,142

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

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

(in thousands of dollars)
  Total available for use for the year ending** note 2, *** note 3
March 31, 2013
Used during the quarter ended
September 30, 2012
Year to date used at
quarter-end
Vote 40 - Net Operating expenditures 58,092 10,518 20,171
Vote 45 - Contributions 5,045,585 364,121 1,497,872
Statutory      
(S) - Contributions to employee benefit plans 4,973 1,244 2,487
(S) - Green Infrastructure Fund 0 812 812
Total Budgetary authorities 5,108,650 376,694 1,521,341
Non-budgetary authorities 0 0 0
Total authorities 5,108,650 376,694 1,521,341

[**]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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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
September 30, 2013
Year to date used at
quarter-end
Expenditures:
Personnel 33,642 7,952 16,138
Transportation and communications 528 37 56
Information 189 37 111
Professional and special services 8,867 2,304 3,097
Rentals 2,127 94 190
Repair and maintenance 10 1 2
Utilities, materials and supplies 83 12 20
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 232 13 19
Transfer payments 3,877,559 388,557 1,486,493
Public debt charges 0 0 0
Other subsidies and payments 1,458 (39) 17
Total net budgetary expenditures 3,924,696 398,968 1,506,142

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
September 30, 2012
Year to date used at
quarter-end
Expenditures:
Personnel 33,893 8,662 17,303
Transportation and communications 900 182 264
Information 687 84 148
Professional and special services 13,923 1,792 2,886
Rentals 3,746 929 1,927
Repair and maintenance 254 2 2
Utilities, materials and supplies 145 16 28
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 873 7 9
Transfer payments 5,045,585 364,932 1,498,683
Public debt charges 0 0 0
Other subsidies and payments 8,644 88 91
Total net budgetary expenditures 5,108,650 376,694 1,521,341

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