Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended June 30, 2014

Management Statement for the Quarter Ending June 30, 2014

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 and Supplementary Estimates A, as well as Canada's Economic Action Plan 2012, 2013 and 2014 (Budget 2012, 2013 and 2014).

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 2014-15 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 2014-15 fiscal year. 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 monies 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.

This report differs from the 2014-15 Main Estimates with respect to total departmental funding, since it reflects current year Supplementary Estimates A funding received, which includes voted operating and capital funding for the New Bridge for the St. Lawrence (NBSL) Corridor project being undertaken in Montréal and managed through the Federal Montréal Bridges (FMB) branch of Infrastructure Canada, voted operating funds for the department to implement new and existing infrastructure programs, and voted contributions funding for new programs under the New Building Canada Fund, an aggregate increase of $313 million since the Main Estimates were approved. 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 (YTD) results

This section highlights the significant items that contributed to the change in resources available for use from 2013-14 to 2014-15 and in actual expenditures from the quarter ended June 30, 2013 and the quarter ended June 30, 2014.

Authorities

Infrastructure Canada's total authorities available for use in 2014-15 of $3.6 billion represents a $290 million decrease, compared with the authorities available for use in the same quarter in the prior year as shown in the Statement of Authorities. This decrease is primarily related to the following:

  • Contributions (both Voted and Statutory) – a decrease of $416 million, reflective of a decrease in spending levels under sunsetting programs as existing Building Canada Plan programs are winding down, while the new programs under the New Building Canada Plan are just being launched. Beginning in 2014-15, the Gas Tax Fund has become a statutory vote, establishing it as permanent, predictable and flexible funding to address local infrastructure priorities.
  • Operating – an increase of $31 million mostly for the new funding related to the NBSL.
  • Capital – an increase of $93 million in new funding related to the NBSL.
  • Statutory Contributions to Employee Benefit Plan increase of $2 million, due to the addition of the Federal Montreal Bridges (FMB) branch.

Graph 1: Comparison of Authorities Available for Use as of June 30, 2014 and June 30, 2013

Graph 1 - Bar graph of comparison of authorities available for use as of June 30, 2014 and June 30, 2013

Expenditure Analysis

In the first quarter of 2014-15, total budgetary expenditures were $710 million, compared to $1,107 million reported in the same period of 2013-14, indicating a decrease of 36% between the two years. The source of the relative decline is demonstrated in the graphs and analysis, by authority category, below.

Graph 2: Comparison of Authorities Used as of June 30, 2014 and June 30, 2013

Graph 2 - Bar graph of comparison of authorities available for use as of June 30, 2014 and June 30, 2013

Transfer Payments – Contributions

Year to date Contributions (Voted and Statutory) expenditures have decreased by approximately 36% or $400 million in comparison to last year.

Graph 3: Comparison of Authorities Used for Contributions (Voted and Statutory) as of June 30, 2014 and June 30, 2013

Graph 3 - Bar graph of comparison of authorities used for contributions (Voted and Statutory) as of June 30, 2014 and June 30, 2013

Significant expenditure changes are as follows:

Program Fund Increase/(Decrease)
versus
Prior Year-to-date
(000's)
% Change
Gas Tax Fund (385,550) (38)
Provincial-Territorial Infrastructure Base Fund (45,722) (100)
Building Canada Fund – Major Infrastructure Component 41,399 348
  • Gas Tax Fund payments declined by $386 million year-over-year due to the change in the program for 2014-15. New Gas Tax Fund agreements were required this year and not all were fully executed prior to the end of the first quarter, which meant that some payments were delayed to the next period. Again, note that, beginning in 2014-15, the Gas Tax Fund has become a statutory vote.
  • No payments under the Provincial-Territorial Infrastructure Base Fund were made during the quarter, which reflects the timing variability of claims submissions by recipients under the program.
  • Growth in the Building Canada Fund – Major Infrastructure Component expenditures is the result of advances to Federal Delivery Partners that were sent earlier than the previous year in anticipation of expenses being incurred.
Operating Expenditures

Authorities used for Operating Expenditures as of June 30, 2014 have increased 46% or $3.7 million compared to the same quarter of 2013-14. These expenditures increased by $2.4 million this quarter compared to last year at the same time because of the transfer of the Federal Montréal Bridges team to Infrastructure Canada. Another significant factor was an increase in expenditures of $0.9 million due to a one-time transition payment for the implementation of salary payment in arrears by the Government of Canada.

Graph 4: Comparison of Authorities Used for Operating Vote as of June 30, 2014 and June 30, 2013

Graph 4 - Bar graph of comparison of authorities used for operating vote as of June 30, 2014 and June 30, 2013

Contributions to Employee Benefit Plan

The timing of the Royal Assent of Supplementary Estimates A resulted in approximately $1.4 million in the Employee Benefit Costs for the period being paid in the next quarter.

Capital

No expenditures have been incurred during the first quarter this fiscal year. Capital spending will take place later in the year.

Departmental Budgetary Expenditures by Standard Object

The planned Departmental Budgetary Expenditures by Standard Object, as set out in the table at the end of this report, show initial expenditure plans. These plans are subject to change during the year. Expenditures in the first quarter of 2014–15 decreased by $397 million, compared with the same quarter last year, primarily due to Transfer Payments as explained above.

Notable Changes to Expenditures by Standard Object Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Transfer Payments (399,986) (36)
Professional and special services 2,423 306
Rentals 72 75
Personnel (915) (11)
Other subsidies and payments 887 1,583

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 significant variance in Professional and Special Services is due to the implementation of the New Building Canada Plan and the arrival of the Federal Montreal Bridges group which has increased the need for the use of specialized expertise. Consequently, spending for the quarter in this regard grew by 306%, reaching $3.2 million.
  • Spending on Rentals was up 75%, to $0.2 million, over the comparable period last year, due mainly to lower coverage of rental space by Public Works, and also to payments for office space needed for the transition of the Federal Montréal Bridges division into Infrastructure Canada.
  • Personnel expenditures were down 11% or $0.9 million for the first quarter compared to 2013-14. This decrease is primarily related to the timing of the Royal Assent of Supplementary Estimates A, which meant that approximately $1.4 million in the Employee Benefit Costs for the period will be paid in the next quarter. There were also differences between the first quarter of 2014-15 and 2013-14 with respect to allowances and severance pay, which were lower in 2014-15 by $0.3 million as severance pay outs were higher last year due to voluntary cash-outs of severance prior to retirement, made possible by the signing of new collective agreements.
  • The one-time transition payment for the implementation of salary payment in arrears by the Government of Canada for $0.9 million, as discussed above, was the main driver for the increase in expenditures in the Other subsidies and payments is category, which is a 1,583%, or $0.9 million increase over last year.

Overall, Infrastructure Canada has spent 19.5% of its current Total Authorities as of June 30, 2014 compared to 28.2% at the same point in the prior year.

Risks and Uncertainties

Infrastructure Canada is working on the timely flow of funds to projects as part of the New Building Canada Plan. Several uncertainties have been identified in this area including the impact of new program requirements such as P3 screening and the possible need for provinces and territories, as key funding partners, to revise processes to identify and recommend project proposals under the New Building Canada Fund (NBCF). INFC is taking steps to ensure it has in place adequate strategies, plans and resources to deliver funds on a timely basis.

Large system integration projects affecting INFC resources like Email Transformation Initiative and transitioning SIMSI application hosting to Shared Services Canada (SSC) may impact the Department's ability to react quickly and nimbly to internal business pressures/new requirements. To address these challenges, INFC will take measures to augment internal capacity to perform application development and provide operational support as well as act as an integrator between SSC and applications services providers.

Significant Changes in Relation to Operations, Personnel and Programs

On May 3, 2014, Su Dazé, Chief Financial Officer, retired from Infrastructure Canada.

On May 6, 2014, David Cluff was appointed Chief Financial Officer.

In early 2014, Infrastructure Canada solidified its funding for administration and operating costs for a 10-year period, fiscal years 2014-15 to 2023-24. Until 2014-15, operating requirements were confirmed by Treasury Board on an annual basis.

During the first quarter, Infrastructure Canada integrated the operations of the FMB branch into the department, requiring adaptations to certain practices.

On April 7, 2014, Infrastructure Canada went live with the new Shared Travel System, and has been dealing with certain challenges in implementing this new system.

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 achieve efficient and effective program execution for Canadians.

Approval by Senior Officials

Approved by:

Original signed by:

Louis Lévesque,
Deputy Head

Date

David Cluff,
Chief Financial Officer

Date

Signed in Ottawa, Ontario, August 28, 2014

Quarterly Financial Report
For the quarter ended June 30, 2014
Statement of Authorities (unaudited)
Fiscal year 2014-2015

(in thousands of dollars)
  Total available for use for the year ending* note 1
March 31, 2015
Used during the quarter ended
June 30, 2014
Year to date used at
quarter-end
Vote 1 – Operating expenditures 73,152 11,697 11,697
Vote 3 – Capital expenditures 93,170 0 0
Vote 5 – Contributions 1,488,168 68,129 68,129
(S) – Contributions to employee benefit plans 6,543 77 77
(S) – Gas Tax Fund** note 2 1,973,269 629,821 629,821
Total Budgetary authorities 3,634,302 709,724 709,724
Non-budgetary authorities 0 0 0
Total authorities 3,634,302 709,724 709,724

Statement of Authorities (unaudited) (continued)
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*** note 3 42,161 7,991 7,991
Vote 40 – Contributions*** note 3 3,877,559 1,097,936 1,097,936
(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

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

**Note that Gas Tax Fund authorities were moved to Statutory, from Vote 5 in 2014-15.

***Note that Vote numbers were adjusted in Q2 2013-14 to the current Vote 1 – Operating Expenses, Vote 3 – Capital Expenditures and Vote 5 – Contributions.

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Quarterly Financial Report
For the quarter ended June 30, 2014
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2014-2015

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2015
Expended during the quarter ended
June 30, 2014
Year to date used at
quarter-end
Expenditures:
Personnel 39,587 7,270 7,270
Transportation and communications 1,268 24 24
Information 395 87 87
Professional and special services 59,725 3,216 3,216
Rentals 9,248 168 168
Repair and maintenance 59 5 5
Utilities, materials and supplies 346 14 14
Acquisition of land, buildings and works 61,600 0 0
Acquisition of machinery and equipment 473 47 47
Transfer payments 3,461,437 697,950 697,950
Other subsidies and payments 164 943 943
Total net budgetary expenditures 3,634,302 709,724 709,724

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
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
Other subsidies and payments 1,458 56 56
Total net budgetary expenditures 3,924,706 1,107,174 1,107,174

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