Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended December 31, 2014 (revised)

Statement outlining results, risks and significant changes in operations, personnel and program

Erratum

Date: April 28, 2015
Location: Departmental budgetary expenditures by Standard Objects (unaudited), Expended during the quarter ended December 31, 2014, Transfer Payments.
Revision: “Transfer Payments $1,201,597 thousands” replaces “Transfer Payments  $1,201,497 thousands”.
Rationale for the revision: Original amount reported was not correct.

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) and (B), 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) and (B) funding received, which included voted operating and capital funding for the New Bridge for the St. Lawrence Corridor (NBSLC) 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 (NBCF), and the Operating Budget Carry Forward, an aggregate increase of $363 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 December 31, 2013 to December 31, 2014.

Authorities

Infrastructure Canada's total authorities available for 2014-15 of $3.7 billion as of the end of Quarter 3 (Q3) represents a $468 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 $593 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 (NBCP) 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 $29 million mostly for the new funding related to the NBSLC.
  • Capital – an increase of $94 million in new funding mostly related to the NBSLC.
  • Statutory Contributions to Employee Benefit Plan – an increase of $1.6 million, due to the addition of the Federal Montreal Bridges (FMB) branch, which will be managing the NBSLC project.

Graph 1: Comparison of Authorities Available for Use as of December 31, 2014 and December 31, 2013

Graph 1 - Bar graph of comparison of authorities available for use as of December 31, 2014 and December 31, 2013

Text description of Graph 1

Expenditure Analysis

Expenditures in Q3 were $1.2 billion, bringing total budgetary expenditures for the year to date to $2.6 billion, compared to $2.9 billion reported in the same period of 2013-14, indicating a decrease of 10% 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 December 31, 2014 and December 31, 2013

Graph 2 - Bar graph of comparison of authorities available for use as of December 31, 2014 and December 31, 2013

Text description of Graph 2

Transfer Payments – Contributions

Year to date Contributions (Voted and Statutory) expenditures as of the end of Q3 have decreased by approximately 11% or $329 million in comparison to last year. The Department spent $2.6 billion so far this year compared to $2.9 billion in 2013-14.

Graph 3: Comparison of Authorities Used for Contributions (Voted and Statutory), as of December 31, 2014 and December 31, 2013

Graph 3 - Bar graph of comparison of authorities used for contributions (Voted and Statutory) as of December 31, 2014 and December 31, 2013

Text description of Graph 3

Significant changes in year to date Contributions (Voted and Statutory) between December 2014 and December 2013 were as follows:

Program Fund Increase/(Decrease)
versus
Prior Year-to-date
(000's)
% Change
Gas Tax Fund 167,384 9.7
Municipal Rural Infrastructure Fund (23,714) (70)
Provincial-Territorial Infrastructure Base Fund (33,222) (73)
Canada Strategic Infrastructure Fund (147,462) (58)
Building Canada Fund – Communities Component (34,232) (35)
Building Canada Fund – Major Infrastructure Component (216,974) (34)
  • The increase under the Gas Tax Fund reflects that 2013-14 payments to some provinces/territories had not been processed by Q3.
  • The decrease under the Municipal Rural Infrastructure Fund reflects the winding down of the program, with limited payments occurring during the three quarters 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 third quarter of the current year have decreased as a result of a decrease in amounts advanced to Federal Delivery Partners for anticipated expenditures. Compared to the prior year, this resulted in an overall decrease of $217 million in expenses under this program.

Operating Expenditures

Authorities used for Operating Expenditures as of December 31, 2014 have more than doubled. In 2014-15, authorities used was $56 million compared to $27 million at the same period in 2013-14. The increase is mostly due to outlays related to the NBSLC project. Further details are provided later in this report.

Graph 4: Comparison of Authorities Used for Operating Vote as of December 31, 2014 and December 31, 2013

Graph 4 - Bar graph of comparison of authorities used for operating vote as of December 31, 2014 and December 31, 2013

Text description for Graph 4

Contributions to Employee Benefit Plan

During the current fiscal year-to-date, the department has made $3.5 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 branch.

Capital

No expenditures have been recorded during this fiscal year. Capital spending will be reflected during Q4.

Departmental Budgetary Expenditures by Standard Object

The planned Departmental Budgetary Expenditures by Standard Object are set out in the table at the end of this report. Aggregate year-to-date expenditures in 2014–15 decreased by $303 million, compared with the same quarter last year, primarily due to Transfer Payments as explained above. Although minor in proportion to the overall authorities and spending, there were also several notable variances in spending by standard object within the Operating vote.

Notable Changes to Expenditures by Standard Object Increase/(Decrease) versus Prior Year-to-date
(000's)
% Change
Transfer Payments (328,883) (11)
Personnel (1,289) (5)
Transportation and Communications 355 427
Professional and Special Services 25,082 506
Acquisition of Machinery & Equipment 557 1,547
Other subsidies and payments 1,088 5,181
  • Personnel expenditures were down 5% or $1.3 million during the first three quarters compared to 2013-14. This decrease is primarily related to a new schedule for payments for Employee Benefit Plans: there will be a large adjustment to these expenditures taking place at year-end.
  • The variance in Transportation and Communications is largely related to the increase in travel due to the FMB branch who manage the NBSLC project. However, there is also an increase related to travel required to meet with the NBCF stakeholders and relocation costs for a new Assistant Deputy Minister.
  • The significant variance in Professional and Special Services is due to the implementation of the NBCF and the arrival of the FMB branch which increased the need for the use of specialized expertise. Consequently, year-to-date spending has reached over $30 million, which is an increase of 506% over last fiscal year.
  • The variation in Acquisition of Machinery and Equipment can be explained by the increase in furniture and informatics equipment to accommodate the arrival of the FMB personnel. There was also an increase in purchases of ergonomic furniture compared to last fiscal year.
  • 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 category, which is 5,180%, or $1.1 million higher than last year.

Overall, Infrastructure Canada has spent 71.4% of its current Total Authorities as of December 31, 2014 compared to 70.6% 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 NBCF 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. Infrastructure Canada continues to review and approve NBCF project proposals and is working diligently with its stakeholders on the negotiation of contribution agreements for the NBCF.

The integrity of the Champlain Bridge could be compromised earlier than expected, leading to its complete or partial closing before the planned new bridge is in service. This could result in significant overtime, pressure on capacity, securing approvals to move money to earlier years in the fiscal framework and re-shifting some priorities. To address these risks, the Department is relying on the Jacques Cartier and Champlain Bridges Incorporated’s extensive project plan that covers the repair, maintenance and operation of its structures. Further, there are working groups and interdepartmental teams who will be regularly monitoring the project timeliness.

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 Q3.

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

Darlene Boileau,
Chief Financial Officer

Date

Signed in Ottawa, Ontario, February 27, 2015

Quarterly Financial Report
For the quarter ended December 31, 2014
Statement of Authorities (unaudited)
Fiscal year 2014-2015

(in thousands of dollars)
  Total available for use for the year ending
March 31, 2015
Used during the quarter ended
December 31, 2014
Year-to-date used
at quarter-end
Vote 1 – Operating expenditures* note 1 75,065 24,823 56,093
Vote 3 – Capital expenditures 94,037 0 0
Vote 5 – Contributions 1,535,992 284,750 669,830
Budgetary Statutory Authorities
(S) – Contributions to employee benefit plans 6,543 77 232
(S) – Gas Tax Fund 1,973,269 916,847 1,903,481
(S) – Minister salary and car allowance 80 0 0
Total Budgetary authorities 3,684,986 1,226,497 2,629,636
Non-budgetary authorities 0 0 0
Total authorities 3,684,986 1,226,497 2,629,636

Statement of Authorities (unaudited) (continued)
Fiscal year 2013-2014

(in thousands of dollars)
  Total available for use for the year ending
March 31, 2014
Used during the quarter ended
December 31, 2013
Year-to-date used
at quarter-end
Vote 1 – Operating expenditures* note 1 45,848 9,510 26,667
Vote 3 – Capital expenditures 0 0 0
Vote 5 – Contributions 4,102,031 1,415,700 2,902,193
Budgetary Statutory Authorities
(S) – Contributions to employee benefit plans 4,986 1,247 3,740
(S) – Gas Tax Fund 0 0 0
(S) – Minister salary and car allowance 0 0 0
Total Budgetary authorities 4,152,865 1,426,457 2,932,600
Non-budgetary authorities 0 0 0
Total authorities 4,152,865 1,426,457 2,932,600

*An amount of $63,411 has been added to Operating expenditures in 2014-15. This amount was originally charged to Transport Canada for salaries of employees related to the New Bridge over the St Lawrence Corridor Project. Although the employee files have not yet been transferred to Infrastructure Canada, the $63,411 has been added to better reflect actual expenditures.

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Quarterly Financial Report
For the quarter ended December 31, 2014
Departmental budgetary expenditures by Standard Objects (unaudited)
Fiscal year 2014-2015

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2015
Expended during the quarter ended
December 31, 2014
Year-to-date used
at quarter-end
Expenditures:
Personnel* note 1 39,727 9,176 22,932
Transportation and communications 990 260 438
Information 425 55 182
Professional and special services 62,459 14,403 30,041
Rentals 9,593 498 950
Repair and maintenance 61 3 17
Utilities, materials and supplies 174 17 63
Acquisition of land, buildings and works 61,600 0 0
Acquisition of machinery and equipment 511 370 593
Transfer payments** 3,509,263 1,201,597 2,573,311
Other subsidies and payments 183 118 1,109
Total gross budgetary expenditures 3,684,986 1,226,497 2,629,636
Total net budgetary expenditures 3,684,986 1,226,497 2,629,636

*An amount of $63,411 has been added to 'Personnel' in 2014-15. This amount was originally charged to Transport Canada for salaries of employees related to the New Bridge over the St Lawrence Corridor Project. Although the employee files have not yet been transferred to Infrastructure Canada, the $63,411 has been added to better reflect actual expenditures.

** The amount Expended during the quarter ended December 31, 2014 on Transfer payments has been corrected to reflect a dollar amount of $1,201,597 thousand.

Departmental budgetary expenditures by Standard Objects (unaudited) (continued)
Fiscal year 2013-2014

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2014
Expended during the quarter ended
December 31, 2013
Year-to-date used
at quarter-end
Expenditures:
Personnel 34,774 8,084 24,221
Transportation and communications 640 26 83
Information 225 47 158
Professional and special services 10,545 1,862 4,959
Rentals 2,530 698 888
Repair and maintenance 12 7 9
Utilities, materials and supplies 99 12 32
Acquisition of land, buildings and works 0 0 0
Acquisition of machinery and equipment 276 17 36
Transfer payments 4,102,030 1,415,700 2,902,193
Other subsidies and payments 1,734 4 21
Total gross budgetary expenditures 4,152,865 1,426,457 2,932,600
Total net budgetary expenditures 4,152,865 1,426,457 2,932,600

 

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