Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended December 31, 2017

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) and (B), as well as Budget 2017.

The key to building Canada for the 21st century is a strategic and collaborative long-term infrastructure plan that builds economically vibrant, strategically planned, sustainable and inclusive communities. Infrastructure Canada (INFC) works closely with all orders of government and other partners to enable investments in social, green, public transit and other core public infrastructure, as well as trade and transportation infrastructure.

Further information on INFC's mandate, responsibilities, and programs can be found in INFC's 2017-18 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 2017-18 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.

INFC 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.

In the past, INFC has worked in collaboration with other federal departments and agencies to deliver some of its transfer payment programs (collectively known as federal delivery partners).

During the third quarter of 2017-18, the only federal delivery partner for certain sunsetting programs was Transport Canada.

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 2016-17 to 2017-18 and in actual expenditures as at December 31, 2016 and as at December 31, 2017.

Authorities

Graph 1: Comparison of Authorities Available as of December 31, 2017 and December 31, 2016.

Graph 1: Comparison of Authorities Available as of December 31, 2017 and December 31, 2016.

Text description of Graph 1

As shown in the Statement of Authorities, INFC's total authorities available for 2017-18 are $7.155 billion as of the end of Quarter 3 (Q3) and represent a $1.803 billion increase compared to the same quarter in the prior year. This increase is summarized in the table below:

Table 1: Year-to-date change in total authorities as of December 31, 2017

Total authorities as of December 31, 2017

Increase/(Decrease) versus
Prior Year-to-date (000's)

% Change versus prior year

Contributions (Voted and Statutory)

1,265,542

25%

Capital Expenditures

450,926

360%

Operating Expenditures

86,831

67%

Contributions to Employee Benefit Plan

(453)

(7%)

The sources of significant year-over-year changes are as follows:

  • Contributions (both Voted and Statutory) – The increase is due to an increase in authority levels for existing programs, mainly the Phase 1 Investing in Canada Plan.
  • Capital Expenditures – The increase is primarily related to authority levels for the New Champlain Bridge Corridor project, specifically for the milestone payment anticipated during 2017-18.
  • Operating Expenditures – The increase is primarily related to authority levels for the New Champlain Bridge Corridor project.

Expenditure Analysis

Expenditures at the end of Q3 were $2.371 billion, compared to $2.356 billion reported in the same period of 2016-17, representing an increase of 1% between the two years. The source of the relative increase is demonstrated in the tables, graphs and analysis below.

Graph 2: Comparison of Total Expenditure as of December 31, 2017 and December 31, 2016.

Graph 2: Comparison of Total Expenditure as of December 31, 2017 and December 31, 2016.

Text description of Graph 2

Table 2: Change in year-to-date expenditures as of December 31, 2017

Year-to-date expenditures

Increase/(Decrease) Versus Prior Year-to-date (000's)

% Change versus prior year

Operating Expenditures

11,994

30%

Contributions (Voted and Statutory)

1,887

0%

Capital Expenditures

689

6%

Contributions to Employee Benefit Plan

174

4%

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 2017-18 increased by $14.7 million, compared with the same quarter last year.

A breakdown of variances in year-to-date spending by standard object is below:

Table 3: Change in year-to-date expenditures by standard object as of December 31, 2017

Changes to Expenditures by Standard Object

Increase/(Decrease) versus Prior Year-to-date
(000's)

% Change versus prior year

Professional and special services

8,424

43%

Personnel

5,964

21%

Transfer payments

1,887

0%

Transportation and communications

238

62%

Acquisition of machinery and equipment

134

22%

Repair and maintenance

21

2%

Utilities, materials and supplies

4

6%

Information

0

0%

Rentals

(49)

(4%)

Other subsidies and payments

(195)

(63%)

Acquisition of land, buildings and works

(1,684)

(86%)

The source of significant year-over-year changes is summarized as follows:

  • Professional and special services – Mostly due to an increase in costs related to a Memorandum of Understanding with the National Research Council of Canada for the update and development of Canada's Building Codes, standards and tools with the goal of achieving resilient and sustainable buildings and infrastructure.
  • Personnel – Increase is related primarily to Phase 2 of the Investing in Canada Plan.
  • Transportation and communications – Increase is due to an increase in travel related to new departmental programs.
  • Acquisition of land, buildings and works – Decrease is related to land acquisition for the New Champlain Bridge Corridor and the Gordie Howe International Bridge projects that occurred last year.

Overall, Infrastructure Canada has spent 33.1% of its current Total Authorities as of December 31, 2017, compared with 44.0% at the end of Q3 of the previous fiscal year.

Risks and Uncertainties

In most cases, INFC funds projects via a Contribution Agreement or Integrated Bilateral Agreement between Canada and a Provincial/Territorial (PT) government. Those PT governments enter into their own agreements with municipalities, who are ultimately responsible for project management and construction of the infrastructure.

Most of INFC's programs are designed to flow federal funds to PTs after they have submitted their claims for actual costs incurred by a project. Only once INFC receives a claim can the funding flow to the PT in order to pay the federal share. It should be noted that the pace of the claims submitted to INFC does not match the economic activity on a project as spending can happen long before claims are received. For this reason, INFC relies on PTs and other partners to submit claims in a timely manner.

There are a variety of reasons that can explain the timing of claims being submitted, which in turn contribute to a variance between planned spending and actual spending profile. There is often a time lag between when the project was approved or announced to the actual start date of construction as infrastructure projects typically require a significant amount of upfront planning, design and procurement. Even after construction has started, sometimes project delays due to factors beyond the control of funding recipients such as, inclement weather or weather events, may delay the submission of claims. In other cases, partners may not have an immediate need or urgency to submit claims due to the financial planning within their own jurisdictions. In general, INFC encourages PTs to submit claims in a timely manner to ensure the flow of funding as planned. Parliamentary authority to spend typically expires at the end of the fiscal year. When claims are not submitted as expected in a given fiscal year as planned, INFC seeks to reprofile the authorities so that the funding committed to specific projects continues to be available in future years.

Over the last two years the department has been in a state of transformation. The introduction of new programs and responsibilities has resulted in structural changes to better support the delivery of new business lines, as well as required the department to move to more specialized skills and experience necessary for key positions. INFC is working to ensure it attracts and retains employees with the skill sets and experience necessary to fulfil the department's evolving mandate.

Significant Changes in Relation to Operations, Personnel and Programs

Since the summer of 2017, INFC has been actively working with central agencies to ensure contribution program authorities better align to historical spending trends. Following the end of the third quarter, $2.8 billion of contribution authorities have been moved to a frozen allotment and will remain available for INFC's programs in future years.

Approval by Senior Officials

Approved by:

Original signed by:

Kelly Gillis,
Deputy Head

Date

Darlene Boileau,
Chief Financial Officer

Date

Signed at Ottawa, Canada.

Quarterly Financial Report
For the quarter ended December 31, 2017
Statement of Authorities (unaudited)
Fiscal year 2017-2018

(in thousands of dollars)
 
Total available for use for the year ending March 31, 2018
Used during the quarter ended December 31, 2017
Year to date used at quarter-end

Vote 1 – Operating expenditures

217,124
17,416
51,504

Vote 5 – Capital expenditures

576,352
5,924
11,623

Vote 10 – Contributions

4,282,963
293,616
544,852

Budgetary Statutory Authorities

(S) – Contributions to employee benefit plans

6,328
1,526
4,580

(S) – Gas Tax Fund

2,071,933
722,156
1,758,122

(S) – Minister salary and car allowance

84
21
63

Total Budgetary authorities

7,154,784
1,040,659
2,370,744

Non-budgetary authorities

-
-
-

Total authorities

7,154,784
1,040,659
2,370,744

Statement of Authorities (unaudited) (continued)
Fiscal year 2016-2017

(in thousands of dollars)
 
Total available for use for the year ending March 31, 2017
Used during the quarter ended December 31, 2016
Year to date used at quarter-end

Vote 1 – Operating expenditures

130,126
16,653
39,524

Vote 5 – Capital expenditures

125,426
4,630
10,934

Vote 10 – Contributions

3,017,422
161,249
535,090

Budgetary Statutory Authorities

(S) – Contributions to employee benefit plans

6,781
1,469
4,406

(S) – Gas Tax Fund

2,071,933
730,030
1,765,997

(S) – Minister salary and car allowance

84
28
49

Total Budgetary authorities

5,351,772
914,059
2,356,000

Non-budgetary authorities

-
-
-

Total authorities

5,351,772
914,059
2,356,000

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Quarterly Financial Report
For the quarter ended December 31, 2017
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2017-2018

(in thousands of dollars)
 
Planned expenditures for the year ending March 31, 2018
Expended during the quarter ended December 31, 2017
Year to date used at quarter-end

Expenditures:

Personnel

55,117
12,762
34,990

Transportation and communications

3,325
264
619

Information

1,672
78
276

Professional and special services

678,761
10,067
28,180

Rentals

8,747
394
1,192

Repair and maintenance

9,061
485
1,321

Utilities, materials and supplies

799
24
66

Acquisition of land, buildings and works

-
87
278

Acquisition of machinery and equipment

4,386
713
735

Transfer payments

6,382,146
1,015,772
2,302,974

Public debt charges

-
-
-

Other subsidies and payments

10,770
13
113

Total net budgetary expenditures

7,154,784
1,040,659
2,370,744

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
Fiscal year 2016-2017

(in thousands of dollars)
 
Planned expenditures for the year ending March 31, 2017
Expended during the quarter ended December 31, 2016
Year to date used at quarter-end

Expenditures:

Personnel

45,553
9,883
29,026

Transportation and communications

911
144
381

Information

470
44
276

Professional and special services

161,893
10,298
19,756

Rentals

2,944
614
1,241

Repair and maintenance

1,057
473
1,300

Utilities, materials and supplies

267
12
62

Acquisition of land, buildings and works

47,824
940
1,962

Acquisition of machinery and equipment

1,274
370
601

Transfer payments

5,089,355
891,279
2,301,087

Public debt charges

-
-
-

Other subsidies and payments

224
2
308

Total net budgetary expenditures

5,351,772
914,059
2,356,000

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Help on accessing alternative formats, such as PDF, PPT and ZIP files, can be obtained in the alternate format help section.

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