Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended September 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).

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 priority for the Government of Canada.

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 September 30, 2014 to September 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 2 (Q2) and represent a $63.6 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 the New Building Canada Fund (NBCF).
  • Operating – a decrease of $1.6 million mostly due to decreased funding for the NBSLC project for 2015-16 compared to 2014-15.
  • Capital   a decrease of $15.5 million mostly related to the decreased funding required 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 deduction rate of 3.2% for 2015-16 compared to 2014-15.

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

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

Text description of Graph 1

Expenditure Analysis

Expenditures in Q2 were $1.455 billion, compared to $693 million in Q2 of 2014-15, bringing total budgetary expenditures for the year to date to $1.527 billionin 2015-16, compared to $1.403 billion in 2014-15. This represents an increase of 8.8% between the two years. The source of the relative increase is demonstrated in the graphs and analysis, by authority category, below.

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

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

Text description of Graph 2

Transfer Payments – Contributions

Year to date Contributions (Voted and Statutory) expenditures as of the end of Q2 have increased by approximately 7% or $97 million in comparison to last year due to more advances provided to Federal Delivery Partners who deliver projects on the Department’s behalf. The Department spent $1.469 billion so far this year compared to $1.372 billion in 2014-15.

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

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

Text description of Graph 3

Significant changes in year to date Contributions between September 2015 and September 2014 were as follows:

Program Fund Increase/(Decrease)
versus
Prior Year-to-date
(000's)
% Change
Border Infrastructure Fund 1,706 44
Building Canada Fund – Community Component (27,195) (54)
Building Canada Fund – Major Infrastructure Component 167,918 75
Canada Strategic Infrastructure Fund (16,621) (30)
Green Infrastructure Fund (4,475) (75)
Inuvik to Tuktoyaktuk Highway Fund 6,225 28
Municipal Rural Infrastructure Fund (10,000) (100)
National Recreational Trails Program (500) (100)
Provincial-Territorial Infrastructure Base Fund (12,500) (100)
  • Expenditures under the Border Infrastructure Fund for the first two quarters of 2015-16 have increased due to more advances to Federal Delivery Partners for anticipated expenditures.
  • Expenditures under the Building Canada Fund – Communities Component for the first two quarters of the current year have decreased due to less advances to Federal Delivery Partners for anticipated expenditures.
  • Expenditures under the Building Canada Fund – Major Infrastructure Component for the first two quarters of the current year have increased due to more advances to Federal Delivery Partners for anticipated expenditures.
  • The decrease under the Canada Strategic Infrastructure Fund spending reflects less advances to Federal Delivery Partners in 2015-16 due to a lower amount of anticipated expenditures than the previous year.
  • The decrease in expenditures under the Green Infrastructure Fund as of Q2 in 2015-16 is mainly related to less payments being processed compared to the same time in 2014-15.
  • Under the Inuvik to Tuktoyaktuk Highway Fund, the increase in expenditures in 2015-16 is due to more payments being processed in 2015-16.
  • The decrease in Municipal Rural Infrastructure Fund spending reflects that there have been no expenditures in 2015-16 since the program ended in 2014-2015.
  • Expenditures for the National Recreational Trails Program have decreased since Q2 last year due to the timing of payments processed in 2015-16.
  • The Provincial-Territorial Infrastructure Base Fund is close to the end of its lifecycle. As such, the transfer payments under this program are declining in 2015-16.

Operating Expenditures

Authorities used for Operating Expenditures as of September 30, 2015 have decreased 30% or $9.4 million compared to the same period in 2014-15. Further details are provided later in this report.

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

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

Text description for Graph 4

Contributions to Employee Benefit Plan

During the current fiscal year-to-date, INFC has made $2.6 million more in payments to Employee Benefit Plans because of an increased number of FTEs compared to 2014-15. This is the result of the transfer of employees from Transport Canada to Infrastructure Canada for the NBSLC project.

Capital

During the current fiscal year-to-date, INFC has incurred $33 million in capital expenditures compared to no capital expenditures during the same period in 2014-2015. This is mainly the result of acquisition of land, buildings and works related to the NBSLC project.

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 increased by $124 million, compared with the same period last year, primarily due to Transfer Payments as explained above, IT contracts for informatics equipment, acquisition of land, translation services and works related to the NBSLC project. 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 4,910 36
Transportation and Communications 57 32
Information 32 25
Professional and Special Services 2,118 14
Rentals 88 19
Repairs and Maintenance 382 2729
Acquisition of Land, Buildings and Works 20,047 100
Acquisition of Machinery and Equipment (104) (47)
Transfer Payment 97,023 7
Other Subsidies and Payments (919) (93)
  • Personnel expenditures were up approximately 36% or $4.9 million during the fiscal year-to-date in 2015-16 compared to 2014-15. This increase is primarily related to the transfer of employees from Transport Canada to Infrastructure Canada for the NBSLC project.
  • The variance in Transportation and Communications is largely related to the increase in travel to attend conferences and meet with stakeholders for the implementation of the NBCF.
  • The increase in Information expenses is mainly due to a significant cost increase for media monitoring, printing services and public relations services related to program delivery.
  • The significant variance in Professional and Special Services is a result of more specialized services being used in 2014-15 for the implementation of the NBCF and for the NBSLC project.
  • The variation in Rentals is due to increased expenditures related to leasing of land for the NBSLC project as well as increased expenditures for software license fees and application development.
  • The variation in Land, Buildings and Works relates to the purchase and capitalization of land related to NBSLC project.
  • The decrease in Acquisition of Machinery and Equipment can be explained by equipment purchased in 2014-15 for the NBSLC project such as furniture, storage cabinets and specialized printers.
  • The significant decrease in expenditures in the Other Subsidies and Payments category of 93% or $0.9 million is reflective of the one-time transition payment made last year, in 2014-15, for the implementation of salary payment in arrears by the Government of Canada.

Overall, Infrastructure Canada has spent 41.3% of its current Total Authorities as of September 30, 2015 compared to 38.6% 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 current programs, the 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 NBCF project proposals and is working diligently with its stakeholders on implementing the existing 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 appointed to be the new Deputy Minister of Transport, Infrastructure and Communities, effective July 20, 2015.

Approval by Senior Officials

Approved by:

Original signed by:

Jean-François Tremblay,
Deputy Head Officer

Date November 27

Darlene Boileau,
Chief Financial Officer

Date

Signed in Ottawa, Canada, November 27, 2015

Quarterly Financial Report
For the quarter ended September 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
September 30, 2015
Year to date used at
quarter-end
Vote 1 – Operating expenditures 73,530 11,552 21,907
Vote 5 – Capital expenditures 77,641 33,333 33,333
Vote 10 – Contributions 1,569,895 429,556 489,601
Budgetary Statutory Authorities      
(S) – Contributions to employee benefit plans 5,568 1,392 2,784
(S) – Gas Tax Fund 1,973,269 979,135 979,135
(S) – Minister salary and car allowance 82 0 0
Total Budgetary authorities 3,699,985 1,454,968 1,526,760
Non-budgetary authorities 0 0 0
Total authorities 3,699,985 1,454,968 1,526,760

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
September 30, 2014
Year-to-date used at
quarter-end
Vote 1 – Operating expenditures 75,260 19,573 31,270
Vote 5 – Capital expenditures 93,170 0 0
Vote 10 – Contributions 1,488,168 316,950 385,079
Budgetary Statutory Authorities      
(S) – Contributions to employee benefit plans 6,543 77 155
(S) – Gas Tax Fund 1,973,269 356,813 986,634
(S) – Minister salary and car allowance 0 0 0
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

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Quarterly Financial Report
For the quarter ended September 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
September 30, 2015
Year to date used at
quarter-end
Expenditures:
Personnel 38,791 9,410 18,666
Transportation and communications 737 137 235
Information 453 73 159
Professional and special services 42,689 15,737 17,756
Rentals 2,596 309 540
Repair and maintenance 1,975 396 396
Utilities, materials and supplies 477 17 34
Acquisition of land, buildings and works 68,589 20,045 20,047
Acquisition of machinery and equipment 469 104 119
Transfer payments 3,543,164 1,408,691 1,468,736
Public debt charges 0 0 0
Other subsidies and payments 45 49 72
Total gross budgetary expenditures 3,699,985 1,454,968 1,526,760
Total net budgetary expenditures 3,699,985 1,454,968 1,526,760

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
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
Public debt charges 0 0 0
Other subsidies and payments 174 48 991
Total gross budgetary expenditures 3,636,410 693,413 1,403,138
Total net budgetary expenditures 3,636,410 693,413 1,403,138

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