Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended June 30, 2015

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

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, 2014 and 2015).

Infrastructure Canada's (INFC) 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 INFC's mandate, responsibilities, and programs can be found in  INFC's 2015-16 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 INFC's spending authorities granted by Parliament and those used by INFC consistent with the Main Estimates and Supplementary Estimates for the 2015-16 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

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 2015-16 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 operating and capital funding for the New Bridge for the St. Lawrence Corridor (NBSLC) project.  

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 2014-15 to 2015-16 and in actual expenditures from June 30, 2014 to June 30, 2015.

Authorities

As shown in the Statement of Authorities, INFC's total authorities for 2015-16 are $3.7 billion as of the end of Quarter 1 (Q1) and represent a $43 million increase, compared to the same quarter in the prior year. This increase is primarily related to the following:

  • Contributions (both Voted and Statutory) – an increase of $81.7 million, reflective of an increase in spending levels under New Building Canada Fund (NBCF).
  • Operating – a decrease of $3.4 million mostly due to decreased funding for the NBSLC project for 2015-16 compared to 2014-15.
  • Capital – a decrease of $34.2 million mostly related to the decreased funding for the NBSLC project for 2015-16 compared to 2014-15.
  • Statutory Contributions to Employee Benefit Plan (EBP) – a decrease of $1.0 million reflects the EBP rate deduction of 3.2% for 2015-16 compared to 2014-15.

Graph 1: Comparison of Authorities Available as of June 30, 2015 and June 30, 2014

Graph 1 - Bar graph of comparison of authorities available for use as of June 30, 2015 and June 30, 2014

Text description of Graph 1

Expenditure Analysis

Expenditures in Q1 were $72 million, compared to $710 million reported in the same period of 2014-15, indicating a decrease of 90% between the two years. The source of the relative decline is demonstrated in the graphs and analysis below.

Graph 2: Comparison of Authorities Used as of June 30, 2015 and June 30, 2014

Graph 2 - Bar graph of comparison of authorities available for use as of June 30, 2015 and June 30, 2014

Text description of Graph 2

Transfer Payments – Contributions

Year to date Contributions (Voted and Statutory) expenditures as of the end of Q1 have decreased by approximately 91% or $638 million in comparison to last year.  The $630 million decrease is due almost entirely to the timing of the first Gas Tax Fund payments (statutory) for 2015-16 to the provinces/territories which had not been processed in Q1 (they were processed in early July 2015, and will be reflected in the Q2 report).

Graph 3: Comparison of Authorities Used for Contributions (Voted and Statutory) as of June 30, 2015 and June 30, 2014

Graph 3 - Bar graph of comparison of authorities used for contributions (Voted and Statutory) as of June 30, 2015 and June 30, 2014

Text description of Graph 3

Other significant changes in year-to-date Contributions between June 2015 and June 2014 were as follows:

Program Fund Increase/(Decrease)
versus
Prior Year-to-date
(000's)
% Change
Green Infrastructure Fund (701)

(100)

Inuvik to Tuktoyaktuk Highway Fund 28,500 100
Canada Strategic Infrastructure Fund (2,601) (99)
Building Canada Fund – Major Infrastructure Component (35,127) (66)
  • There were no payments processed under the Green Infrastructure Fund in Q1 of 2015-16.
  • There were no payments processed under the Inuvik to Tuktoyaktuk Highway Fund in Q1 of 2014-15.
  • The decrease in Canada Strategic Infrastructure Fund spending reflects the reduced authorities for 2015-16; expenditures are expected to be 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 first quarter of the current year have decreased due to less advances to Federal Delivery Partners for anticipated expenditures.

Operating Expenditures

Authorities used for Operating Expenditures as of June 30, 2015 have decreased 11% or $1.3 million compared to the same quarter of 2014-15. Further details are provided later in this report.

Graph 4: Comparison of Authorities Used for Operating Vote as of June 30, 2015 and June 30, 2014

Graph 4 - Bar graph of comparison of authorities used for operating vote as of June 30, 2015 and June 30, 2014

Text description for Graph 4

Contributions to Employee Benefit Plan

During Q1 INFC paid $1.3 million more to Employee Benefit Plans because of an increased number of FTEs at the end of Q1 of 2015-16 compared to Q1 of 2014-15. This is the result of the transfer of employees from Transport Canada to Infrastructure Canada for the NBSLC project.

Capital

No expenditures have been recorded during Q1 of 2015-16. Capital spending will take place later in the fiscal year.

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 2015-16 decreased by $638 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
Personnel 1,986 27
Transportation and Communications 74 308
Professional and Special Services (1,197) (37)
Rentals 63 38
Acquisition of Machinery and Equipment (32) (68)
Other subsidies and payments (920) (98)
  • Personnel expenditures were up 27% or $2 million during the first quarter compared to 2014-15. This increase is primarily related to the increase in payments for Employee Benefit Plans as explained in the section above.
  • The variance in Transportation and Communications is largely related to the increase in travel by the Federal Montreal Bridges team which manages the NBSLC project.
  • The significant variance in Professional and Special Services is due to more specialized services being used in 2014-15 for the implementation of the New Building Canada Fund and for the NBSLC project.
  • The variation in Rentals is due to the timing of payments related to software licensing and maintenance fees paid for the department and the land rental fees paid for the NBSLC project in Q1 of 2015-16.
  • The variation in Acquisition of Machinery and Equipment can be explained by the purchase of equipment to support departmental communications in 2014-15.
  • The significant decrease in expenditures in the Other Subsidies and Payments category of 98% or $0.9 million is reflective of the one-time transition payment made in 2014-15 for the implementation of salary payment in arrears by the Government of Canada.

Overall, Infrastructure Canada has spent 2% of its current Total Authorities as of June 30, 2015 compared to 20% 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 current programs, the New Building Canada Fund (NBCF) and future programs. The ten-year operating funding stream is highest in the first three years and then declines. Infrastructure 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.  INFC 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 Department is also ensuring that it has in place strategies, plans and resources to deliver effectively new and current programs.

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 (JCCBI) extensive project plan that covers the repair, maintenance and operation of its structures. JCCBI was allocated funding for 2014-2019 through Budget 2014 and other sources to support its comprehensive project plan that covers the repairs, maintenance and operation of all structures under its responsibility, including the Champlain Bridge.  Further, there are working groups and interdepartmental teams who will be regularly monitoring the project timeliness.

The number of current and future large scale whole-of-government initiatives (i.e. projects like Email Transformation Initiative, transition to MyGCHR, data centre consolidation, new pay system, direct deposit initiative, financial management transformation, the new shared travel system, migration of web sites to Canada.ca, and preparation for moving to GCDocs document management) may impact the Department's ability to react quickly and nimbly to other internal business pressures that require timely support services and solutions, and ongoing service availability.  The focus of the risk responses is to ensure departmental readiness for current and new infrastructure programs and the continued delivery of timely IMIT, HR, Finance and other enabling services.

Significant Changes in Relation to Operations, Personnel and Programs

On June 26, 2015, it was announced that Jean-François Tremblay was to be the new Deputy Minister of Transport, Infrastructure and Communities, effective July 20, 2015.

Approval by Senior Officials

Approved by:

Original signed by:

Yazmine Laroche,
Acting Deputy Head

Date

Darlene Boileau,
Chief Financial Officer

Date

Signed in Ottawa, Canada, August 25, 2015

Quarterly Financial Report
For the quarter ended June 30, 2015
Statement of Authorities (unaudited)
Fiscal year 2015-2016

(in thousands of dollars)
  Total available for use for the year ending
March 31, 2016
Used during the quarter ended
June 30, 2015
Year to date used at
quarter-end
Vote 1 – Operating expenditures 69,797 10,355 10,355
Vote 5 – Capital expenditures 59,007 0 0
Vote 10 – Contributions 1,569,895 60,045 60,045
Budgetary Statutory Authorities      
(S) – Contributions to employee benefit plans 5,568 1,392 1,392
(S) – Gas Tax Fund 1,973,269 0 0
(S) – Minister salary and car allowance 82 0 0
Total Budgetary authorities 3,677,618 71,792 71,792
Non-budgetary authorities 0 0 0
Total authorities 3,677,618 71,792 71,792

Statement of Authorities (unaudited) (continued)
Fiscal year 2014-2015

(in thousands of dollars)
  Total available for use for the year ending
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 5 – Capital expenditures 93,170 0 0
Vote 10 – Contributions 1,488,168 68,129 68,129
Budgetary Statutory Authorities      
(S) – Contributions to employee benefit plans 6,543 77 77
(S) – Gas Tax Fund 1,973,269 629,821 629,821
(S) – Minister salary and car allowance 0 0 0
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

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Quarterly Financial Report
For the quarter ended June 30, 2015
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2015-2016

(in thousands of dollars)
  Planned expenditures for the year ending
March 31, 2016
Expended during the quarter ended
June 30, 2015
Year to date used at
quarter-end
Expenditures:
Personnel 38,791 9,256 9,256
Transportation and communications 705 98 98
Information 407 87 87
Professional and special services 40,763 2,019 2,019
Rentals 1,182 231 231
Repair and maintenance 1,741 0 0
Utilities, materials and supplies 463 17 17
Acquisition of land, buildings and works 49,955 1 1
Acquisition of machinery and equipment 407 15 15
Transfer payments 3,543,164 60,045 60,045
Other subsidies and payments 40 23 23
Total gross budgetary expenditures 3,677,618 71,792 71,792
Total net budgetary expenditures 3,677,618 71,792 71,792

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
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 gross budgetary expenditures 3,634,302 709,724 709,724
Total net budgetary expenditures 3,634,302 709,724 709,724

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