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

Management Statement for the Quarter Ending September 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 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 (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 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.

Note that this report differs from the 2014-15 Main Estimates with respect to total departmental funding, reflecting the following adjustments since these were tabled: current year Supplementary Estimates A funding received, which included voted operating and capital funding for the New Bridge for the St. Lawrence (NBSL) Corridor project being undertaken in Montreal and managed through Infrastructure Canada, voted operating funds for the department to implement new and existing infrastructure programs, voted contributions funding for new programs under the New Building Canada Fund, and the Operating Budget Carry Forward, an aggregate increase of $315 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 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 two quarters ended September 30, 2013 and the two quarters ended September 30, 2014.

Authorities

Infrastructure Canada's total authorities available for 2014-15 of $3.6 billion as of the end of Quarter 2 (Q2) represents a $288 million decrease, compared with the authorities available for use as of 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 and existing Building Canada Plan programs which 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 $33 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 – an 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 September 30, 2014 and September 30, 2013

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

Text description of Graph 1

Expenditure Analysis

Expenditures in Q2 were $693 million, bringing total budgetary expenditures for the year to date to $1,403 million, compared to $1,506 million reported in the same period of 2013-14, indicating a decrease of 7% 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 September 30, 2014 and September 30, 2013

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

Text description of Graph 2

Transfer Payments – Contributions

Year to date Contributions (Voted and Statutory) expenditures as of the end of Q2 have decreased by approximately 8% or $115 million in comparison to last year. The Department spent $1,371 million so far this year compared to $1,486 million in 2013-14.

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

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

Text description of Graph 3

Significant changes in year to date contributions between September 2014 and September 2013 were as follows:

Program Fund Increase/(Decrease)
versus
Prior Year-to-date
(000's)
% Change
Gas Tax Fund (28,738) (3)
Municipal Rural Infrastructure Fund (23,717) (70)
Provincial-Territorial Infrastructure Base Fund (33,222) (73)
Canada Strategic Infrastructure Fund (25,326) (31)
Building Canada Fund – Communities Component (38,670) (43)
Building Canada Fund – Major Infrastructure Component 24,503 12
  • The decrease under the Gas Tax Fund reflects that 2013-14 included some catch up expenditures from prior years, which is not the case in the current year. 2014-15 is the first year of the renewed Gas Tax Fund. New contribution agreements have been put in place for this permanent statutory program.
  • The decrease under the Municipal Rural Infrastructure Fund reflects the winding down of the program, with limited payments occurring during the first half of this year.
  • The 73% decrease in payments under the Provincial-Territorial Infrastructure Base Fund is reflective of the lower level of authorities under the program in 2014-15, which has decreased by 79% year over year.
  • The Canada Strategic Infrastructure Fund year-over-year decrease is reflective of the reduced authorities for 2014-15, as expenditures are expected to be $36 million lower in the current year, based on the cash flow requirements of the recipients.
  • The Building Canada Fund–Communities Component year-over-year decrease is also reflective of the reduced authorities in 2014-15, as expenditures are expected to be $48 million lower in the current year, based on the cash flow requirements of the recipients.
  • Expenditures under the Building Canada Fund–Major Infrastructure Component for the period April to September have increased by $25 million, as a result of an increase in amounts advanced for anticipated expenditures, as compared to the prior year. By the end of the year, it is projected that expenditures will be $234 million lower than 2013-14.

Operating Expenditures

Authorities used for Operating Expenditures as of September 30, 2014 have increased 60% or $11.8 million compared to the same period in 2013-14, at $31.4 million. The increase is mostly due to $12.1 million in outlays related to the NBSL project.

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

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

Text description for Graph 4

Contributions to Employee Benefit Plan

During the current fiscal year-to-date, the department has made $2.3 million less in payments to Employee Benefit Plans as a result of an adjustment to the timing of these expenditures. Annual spending is expected to be greater overall than last year, because of the addition of the FMB team.

Capital

No expenditures have been incurred during the first half of this fiscal year. Capital spending is planned to 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, details initial expenditure plans. These plans are subject to change during the year.

Aggregate expenditures in the first two quarters of 2014–15 decreased by $103 million, compared with the same period 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 (114,780) (36)
Professional and special services 12,542 405
Rentals 262 138
Personnel (2,382) (15)
Other subsidies and payments 874 5,729

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 during the first half of the year increased by 405%, reaching $12.5 million.
  • Spending on Rentals was up 138%, to $0.3 million, over the comparable period last year, due mainly to lower coverage of rental space by Public Works and Government Services Canada, and also to payments for office space needed for the transition of the Federal Montreal Bridges division into Infrastructure Canada.
  • Personnel expenditures were down 15% or $2.4 million during the first two quarters compared to 2013-14. This decrease is primarily related to a new schedule for payments for Employee Benefit Plans. Approximately $2.3 million in the Employee Benefit Plan costs related to salaries earned in the first two quarters will be paid towards year end. Another factor keeping personnel costs low in the first half of 2014-15 is the timing of the interdepartmental billing for salary costs related to the FMB group — the bill for an estimated $1.1 million in salary costs will be received in the third quarter.
  • The one-time transition payment for the implementation of salary payment in arrears by the Government of Canada of $1.0 million was the main reason for the increase in expenditures in the Other subsidies and payments is category, which is 5,729%, or $0.9 million higher than last year.

Overall, Infrastructure Canada has spent 38.6% of its current Total Authorities as of September 30, 2014 compared to 38.3% at the same point in the prior year.

Risks and Uncertainties

There are challenges from several sources impacting the ability of the Department to deliver on New Building Canada Fund and future programs. The newly approved ten-year operational funding stream is capped in the first three years and then declines. New programs are contingent on the execution by provincial, territorial and municipal partners for timely delivery, cost sharing and joint project management. These factors could lead to delays in submissions, approvals and provision of timely infrastructure funding, creating the possibility that the pattern of funding approved may not reflect the actual pattern of work.

Large system integration projects affecting Infrastructure Canada resources such as the transitioning of the 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, Infrastructure Canada is taking 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

There have been no significant changes in relation to operations, personnel and programs at Infrastructure Canada during Q2.

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

David Cluff,
Chief Financial Officer

Date

Signed in Ottawa, Ontario, November 28, 2014

Quarterly Financial Report
For the quarter ended September 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
September 30, 2014
Year to date used at
quarter-end
Vote 1 – Operating expenditures 75,260 19,573 31,270
Vote 3 – Capital expenditures 93,170 0 0
Vote 5 – Contributions 1,488,168 316,950 385,079
(S) – Contributions to employee benefit plans 6,543 77 155
(S) – Gas Tax Fund** note 2 1,973,269 356,813 986,634
Total Budgetary authorities 3,636,410 693,413 1,403,138
Non-budgetary authorities 0 0 0
Total authorities 3,636,410 693,413 1,403,138

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
September 30, 2013
Year-to-date used at
quarter-end
Vote 40 – Operating expenditures*** note 3 42,151 9,165 17,156
Vote 45 – Contributions*** note 3 3,877,559 388,556 1,486,493
(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.

**Note that Gas Tax Fund authorities became Statutory 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 September 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
September 30, 2014
Year to date used at
quarter-end
Expenditures:
Personnel 39,587 6,486 13,756
Transportation and communications 1,313 154 178
Information 411 40 127
Professional and special services 60,674 12,422 15,638
Rentals 10,078 284 452
Repair and maintenance 65 9 14
Utilities, materials and supplies 355 31 46
Acquisition of land, buildings and works 61,600 0 0
Acquisition of machinery and equipment 716 176 223
Transfer payments 3,461,437 673,763 1,371,713
Other subsidies and payments 174 48 991
Total net budgetary expenditures 3,636,410 693,413 1,403,138

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
September 30, 2013
Year-to-date used at
quarter-end
Expenditures:
Personnel 33,642 7,953 16,138
Transportation and communications 528 37 56
Information 189 37 111
Professional and special services 8,867 2,304 3,096
Rentals 2,127 94 190
Repair and maintenance 11 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 3,877,559 388,556 1,486,493
Other subsidies and payments 1,458 (39) 17
Total net budgetary expenditures 3,924,696 398,968 1,506,142

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