Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended June 30, 2016

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 Budget 2016.

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 2016-17 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 2016-17 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 2016-17 Main Estimates with respect to total departmental funding, reflecting the following adjustments since the Main Estimates were tabled: current year Supplementary Estimates (A) funding received, which included Operating and Contribution funding linked to new and existing programs as outlined in Budget 2016.

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 2015-16 to 2016-17 and in actual expenditures from June 30, 2015 to June 30, 2016.

Authorities

As shown in the Statement of Authorities, INFC's total authorities available for 2016-17 are $5.3 billion as of the end of Quarter 1 (Q1) and represent a $1.6 billion 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 $1.5 billion, due to an increase in authority levels linked to new and existing programs as outlined in Budget 2016.
• Operating – an increase in $54.9 million due to increased authorities related to the New Bridge for the St. Lawrence project for 2016-17 compared to 2015-16, as well as an increase related to new and existing programs as outlined in Budget 2016.
• Capital – an overall increase of $9.7 million, related to authority levels for the New Bridge for the St. Lawrence and the Gordie Howe International Bridge projects.
• Statutory Contributions to Employee Benefit Plan (EBP) – an increase of $1.2 million, related to an increase in the number of employees.

Graph 1: Comparison of Authorities Available as of June 30, 2016 and June 30, 2015

Text description of Graph 1

Expenditure Analysis

Expenditures in Q1 were $171 million, compared to $72 million reported in the same period of 2015-16, representing an increase of 138% between the two years. The source of the relative increase is demonstrated in the graphs and analysis below.

Graph 2: Comparison of Total Expenditures as of June 30, 2016 and June 30, 2015

Text description of Graph 2

Transfer Payments – Contributions

Year-to-date Contributions (Voted and Statutory) expenditures as of the end of Q1 have increased by approximately 162% or $97.6 million dollars in comparison to last year. The increase is primarily due to advances provided to Federal Delivery Partners who deliver projects on the Department's behalf.

Graph 3: Comparison of Authorities Used for Contributions as of June 30, 2016 and June 30, 2015

Text description of Graph 3

Other significant changes in year-to-date contribution expenditures between June 2016 and June 2015 were as follows:

Program Fund	Increase/(Decrease) versus Prior Year-to-date (000's)	% Change
Building Canada Fund - Major Infrastructure Component	77,618	427
Inuvik to Tuktoyaktuk Highway Fund	10,850	38
New Building Canada Fund Provincial-Territorial Infrastructure Component National and Regional Projects	5,991	-
Green Infrastructure Fund	3,841	-
New Building Canada Fund Provincial-Territorial Infrastructure Component Small Communities Fund	499	-
Canada Strategic Infrastructure Fund	71	323
Building Canada Fund - Communities Component	(1,308)	(10)

• Expenditures under the Building Canada Fund – Major Infrastructure Component for the first quarter of the current year have increased due to advances to Federal Delivery Partners for anticipated expenditures in 2016-17.
• The increase under the Inuvik to Tuktoyaktuk Highway Fund was due to larger claims compared to the same period in 2015-16.
• There were no payments processed under the New Building Canada Fund Provincial-Territorial Infrastructure Component, National and Regional Projects in Q1 of 2015-16.
• There were no payments processed under the Green Infrastructure Fund in Q1 of 2015-16.
• There were no payments processed under the New Building Canada Fund Provincial-Territorial Infrastructure Component, Small Communities Fund in Q1 of 2015-16.
• The increase in Canada Strategic Infrastructure Fund is due mostly to a project moving into the construction phase, resulting in larger claims.  
• There were fewer claims submitted under the Building Canada Fund – Communities Component in Q1 of 2016-17, compared to Q1 of 2015-16.

Operating Expenditures

Authorities used for Operating Expenditures as of June 30, 2016 have increased 6% or $663 thousand compared to the same quarter of 2015-16. Further details are provided later in this report.

Graph 4: Comparison of Authorities Used for Operating Expenditures as of June 30, 2016 and June 30, 2015

Text description for Graph 4

Contributions to Employee Benefit Plan

During Q1 INFC paid $77 thousand more to Employee Benefit Plans due to an increase in the number of employees.

Capital

During Q1 2016-17 INFC paid $973 thousand more for Capital Expenditures when compared to Q1 2015-16. There were no capital expenditures recorded during Q1 of 2015 16, whereas in Q1 of 2016-17, INFC made payments related to the New Bridge for the St. Lawrence 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 2016-17 increased by $99.3 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
Professional and Special Services	933	46
Repair and Maintenance	270	100
Rentals	159	69
Acquisition of Machinery and Equipment	158	1,053
Other Subsidies and Payments	(27)	(117)

• Professional and Special Services expenditures increased largely due to an increase in legal service fees related to the New Bridge for the St. Lawrence and the Gordie Howe International Bridge projects.
• Repair and Maintenance expenditures increased due to rehabilitation costs related to the New Bridge for the St. Lawrence project.
• Rental expenditures increased for software and accommodations costs for the current year.
• Acquisition of Machinery and Equipment expenditures increased due to the acquisition of network and communication equipment.
• Expenditures for Other Subsidies and Payments decreased due to fewer payments in the current quarter compared to last year.

Overall, Infrastructure Canada has spent 3% of its current Total Authorities as of June 30, 2016, which closely resembles the 2% expenditure for Q1 of the previous fiscal year.

Risks and Uncertainties

There are challenges from several sources impacting the ability of the Department to deliver on current programs, accelerate delivery of the new Building Canada Fund, implement Phase 1 of the 10-year Plan, and prepare for Phase 2. 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 project proposals and is working diligently with its stakeholders on the negotiation of contribution agreements. 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 data centre consolidation, new pay system, 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

Order in Council P.C. 2015-1237, transferred the Windsor-Detroit Bridge Authority (WDBA) from the Minister of Transport to the Minister of Infrastructure and Communicites, as of November 4, 2015. Between November 4, 2015 and March 31, 2016, Transport Canada continued to assume stewardship of the WDBA under a memorandum of understanding. As of April 1, 2016, that responsibility was assumed by INFC.

On March 14, 2016, Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges left Infrastructure Canada. Following her departure, there was a re-organization which moved the New Bridge for the St. Lawrence project including oversight of the Jacques Cartier and Champlain Bridges Inc., and the Gordie Howe International Bridge project, including oversight of the WDBA, into a new directorate (Major Bridges) under Marc Fortin, Assistant Deputy Minister, Program Operations.

Approval by Senior Officials

Approved by:

Signed in Ottawa, Canada, August 19, 2016

Quarterly Financial Report
For the quarter ended June 30, 2016
Statement of Authorities (unaudited)
Fiscal year 2016-2017

(in thousands of dollars)

	Total available for use for the year ending March 31, 2017	Used during the quarter ended June 30, 2016	Year to date used at quarter-end
Vote 1 – Operating expenditures	124,731	11,011	11,011
Vote 5 – Capital expenditures	68,691	973	973
Vote 10 – Contributions	2,996,452	157,608	157,608
Budgetary Statutory Authorities
(S) – Contributions to employee benefit plans	6,781	1,469	1,469
(S) – Gas Tax Fund	2,071,933	-	-
(S) – Minister salary and car allowance	84	7	7
Total Budgetary authorities	5,268,672	171,068	171,068
Non-budgetary authorities	-	-	-
Total authorities	5,268,672	171,068	171,068

Statement of Authorities (unaudited) (continued)
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	-	-
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	-	-
(S) – Minister salary and car allowance	82	-	-
Total Budgetary authorities	3,677,618	71,792	71,792
Non-budgetary authorities	-	-	-
Total authorities	3,677,618	71,792	71,792

Quarterly Financial Report
For the quarter ended June 30, 2016
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2016-2017

(in thousands of dollars)

	Planned expenditures for the year ending March 31, 2017	Expended during the quarter ended June 30, 2016	Year to date used at quarter-end
Expenditures:
Personnel	45,553	9,423	9,423
Transportation and communications	851	105	105
Information	433	87	87
Professional and special services	106,839	2,952	2,952
Rentals	2,701	390	390
Repair and maintenance	115	270	270
Utilities, materials and supplies	252	22	22
Acquisition of land, buildings and works	42,178	42	42
Acquisition of machinery and equipment	1,161	173	173
Transfer payments	5,068,385	157,608	157,608
Public debt charges	-	-	-
Other subsidies and payments	204	(4)	(4)
Total net budgetary expenditures	5,268,672	171,068	171,068

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
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	-	-
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
Public debt charges	-	-	-
Other subsidies and payments	40	23	23
Total net budgetary expenditures	3,677,618	71,792	71,792