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- Statement outlining results, risks and significant changes in operations, personnel and programs
- Statement of Authorities (unaudited)
- Departmental budgetary expenditures by Standard Object (unaudited)
Statement outlining results, risks and significant changes in operations, personnel and programs
1. Introduction
This quarterly financial 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 Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Report.
The quarterly report should be read in conjunction with the Main Estimates and Supplementary Estimates (A).
This quarterly report has not been subject to an external audit or review.
1.1 Authority, Mandate and Program Activities
A summary description of Transport Canada's program activities is presented in Part II of the Main Estimates.
1.2 Basis of presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes Transport Canada's spending authorities granted by Parliament, and those used by Transport Canada consistent with a reduced supply of the Main Estimates and the 2020-21 Supplementary Estimates (A). Due to the Coronavirus pandemic (COVID-19) and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. Transport Canada is expected to receive full supply for the 2020-21 Main Estimates in December 2020. 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 money 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.
Transport Canada uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
2. Highlights of fiscal quarter and fiscal year-to-date (YTD) results
2.1. Statement of Authorities
Transport Canada's total authorities available for use decreased by approximately $366.4 million, from $1,964.9 million as of September 30, 2019 to $1,598.6 million as of September 30, 2020, as summarized below:
A substantial portion of this decrease is attributed to the government's decision to postpone a vote on Main Estimates until December 2020, resulting in Transport Canada receiving only 9/12ths of its Main Estimates authorities, rather than 12/12ths (also called Full Supply). This change from normal procedures was brought about as a result of the COVID-19 and impacts only voted authorities and not statutory authorities.
| AuthoritiesFootnote 3 | 2020–2021Footnote 1, Footnote 2 | 2019–2020Footnote 1, Footnote 2 | Variance |
|---|---|---|---|
| Vote 1 – Net operating expenditures | 581,380 | 748,617 | (167,237) |
| Vote 5 – Capital expenditures | 144,191 | 166,013 | (21,822) |
| Vote 10 – Grants and contributions – Efficient Transportation System | 462,973 | 605,098 | (142,125) |
| Vote 15 – Grants and contributions – Green and Innovative Transportation System | 148,201 | 192,407 | (44,206) |
| Vote 20 – Grants and contributions – Safe and Secure Transportation System | 30,148 | 33,798 | (3,650) |
| Budgetary statutory authoritiesFootnote 3 | 231,670 | 218,984 | 12,686 |
| Total Authorities | 1,598,563 | 1,964,917 | (366,354) |
The accompanying Statement of Authorities illustrates the total authorities available for use, the authorities used for the quarter, the year-to-date authorities used for the current fiscal year, as well as the comparative figures for the previous year. The major year-to-year changes for the quarters ended September 30, 2020 are explained below.
2.1.1. Vote 1 – Net operating expenditures (Decrease of $167.2 million)
Planned operating authorities decreased by $167.2 million from 2019-2020 to 2020-2021, mostly explained by the following factors:
- A decrease in authorities of:
- $181.5 million as a result of the delay in the approval of Main Estimates (Full Supply).
- Offset by an increase in funding of:
- $12.3 million for the operating budget carry forward.
2.1.2. Vote 5 – Capital expenditures (Decrease of $21.8 million)
Planned Capital authorities decreased by $21.8 million from 2019-2020 to 2020-2021, largely explained by the following factors:
- An increase in funding of:
- $16.4 million for Eastern Ferries Fleet Procurement;
- $10.3 million for the Oceans Protection Plan; and
- $2.0 million for the Capital Budget Carry Forward.
- Offset by a decrease in funding of:
- $37.7 million as a result of the delay in the approval of Main Estimates (Full Supply);
- $6.0 million for the Federal Infrastructure Initiatives; and
- $5.2 million for the World Class Tanker Safety System to prevent pollution from ships.
2.1.3. Vote 10 – Grants and contributions – Efficient Transportation System (Decrease of $142.1 million)
Grant and contribution authorities for Vote 10 decreased by $142.1 million from 2019-2020 to 2020-2021, largely explained by the following factors:
- An increase in funding of:
- $181.6 million for the National Trade Corridors Fund;
- $11.2 million for the Regional and Remote Passenger Rail Program; and
- $7.5 million for the Asia-Pacific Gateway and Corridor Transportation Infrastructure Fund.
- Offset by a decrease in funding of :
- $163.4 million as a result of the delay in the approval of Main Estimates (Full Supply);
- $149.8 million for the Port Asset Transfer Program; and
- $26.3 million for the Gateways and Border Crossings Fund.
2.1.4. Vote 15 – Grants and contributions – Green and Innovative Transportation System (Decrease of $44.2 million)
Grant and contribution authorities for Vote 15 decreased by $44.2 million from 2019-2020 to 2020-2021, largely explained by the following factors:
- An increase in funding of:
- $5.6 million for the Program to Protect Canada's Coastlines and Waterways;
- $1.5 million for the Program to Address Disturbances of Vessel Traffic; and
- $1.3 million for the Innovative Solutions Canada.
- Offset by a decrease in funding of:
- $33.5 million in budget reduced for interim supply as a result of the delay in the approval of Main Estimates (Full Supply); and
- $21.1 million for Encouraging Canadians to use the Zero – Emissions Vehicles Program.
2.1.5. Vote 20 – Grants and contributions – Safe and Secure Transportation System (Decrease of $3.7 million)
Grant and contribution authorities for Vote 20 decrease by $3.7 million from 2019-2020 to 2020-2021, largely explained by the following factors:
- An increase in funding of:
- $6.0 million for the Enhanced Road Safety Transfer Payment Program.
- Offset by a decrease in funding of:
- $9.7 million as a result of the delay in the approval of Main Estimates (Full Supply).
2.1.6. Budgetary statutory authorities (Increase of $12.7 million)
The planned expenditures for the budgetary statutory authorities increased by $12.7 million mainly as a result of an increase in funding of $1.4 million for the Northumberland Strait Crossing Subsidy Program and an increase in capital and operating requirements associated with the St. Lawrence Seaway Management Corporation (SLSMC) in the amount of $15.2 million. The SLSMC is responsible for managing and operating the Seaway, as well as the maintenance, repairs, acquisition and replacement of government-owned Navigation Seaway Assets. Transport Canada is responsible for funding any SLSMC financial requirements net of revenues. The increase in planned spending was offset by a decrease of $4.0 million in planned contributions to Employee Benefits Plans.
2.2. Statement of departmental budgetary expenditures by Standard Object
The accompanying Statement of Departmental Budgetary Expenditures by Standard Object illustrates annual planned expenditures, quarter and year-to-date expenditures for the current fiscal year, and comparative figures for the previous fiscal year. Overall, the year-to-date expenditures at the end of the second quarter of 2020-2021 represent 41% of the annual planned expenditures, which is higher than the second quarter (29%) of 2019-2020 due to the reduced supply of the Main Estimates.
Historically, most spending on high-dollar value, major infrastructure grant and contribution programs occurs in the fourth quarter. This is due to the fact that the majority of recipients submit their claims for reimbursement in the last quarter following the summer and fall construction periods. For some categories of operating expenditures, the year-to date actuals represent a small fraction of the planned expenditures, which is consistent with prior years and other federal government departments. This is mainly a result of a timing difference between the date the goods or services were obtained and the invoices received. In addition, there is also a ramp up of operational activities in the last quarter following the mid-year internal budget reallocations, and receipt of increased funding for new initiatives, for which the majority of expenditures will be incurred in the fourth quarter.
The major year-to-year variances as at September 30, 2020 are as follows:
Planned expenditures
- Personnel
The planned expenditures related to Personnel for the year 2020-2021 compared to 2019-2020 decrease by approximately $115.8 million primarily due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply) offset by an increase in Operating Budget Carry Forward.
- Transportation and Communications
The planned expenditures related to Transportation and Communications for the year 2020-2021 compared to 2019-2020 decreased by approximately $21.1 million mainly due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply).
- Professional and Special Services
The planned expenditures related to Professional and Special Services for the year 2020-2021 compared to 2019-2020 decreased by approximately $77.9 million due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply) and a decrease in the Capital Budget Carry Forward.
- Utilities, materials and supplies
The planned expenditures related to Utilities, materials and supplies for the year 2020-2021 compared to 2019-2020 decreased by approximately $9.5 million mainly due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply).
- Acquisition of machinery and equipment
The planned expenditures related to Acquisition of machinery and equipment for the year 2020-2021 compared to 2019-2020 decreased by $10.1 million mainly due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply).
- Transfer payments
The planned expenditures related to Transfer payments for the year 2020-2021 compared to 2019-2020 decrease by approximately $188.6 million. The causes of the variances are explained in sections 2.1.3 to 2.1.5.
- Other subsidies and payments
The planned expenditures related to Other subsidies and payments for the year 2020-2021 compared to 2019-2020 decreased by approximately $9.6 million mainly due to a decrease in authorities as a result of the delay in the approval of Main Estimates (Full Supply).
- Revenue
The planned revenue for the year 2020-2021 compared to 2019-2020 decreased by $76.6 million as a result of the application of interim supply instead of Main Estimates.
Year-to-Date Expenditures
- Personnel
The year-to-date expenditures related to Personnel at September 30, 2020 increased by approximately $24.6 million when compared to 2019-2020. The increase is mainly attributable to retroactive salaries and wages paid for earnings related to previous and current fiscal years following the ratification and signing of new collective agreements as well as an increase in the number of employees due to new departmental initiatives such as the creation of a Multimodal Business Transformation Team and an increase of personnel in the Aviation Safety Certification and the Protection of Oceans and Waterways programs.
- Transportation and communications
The year-to-date expenditures related to Transportation and communications at September 30, 2020 decreased by approximately $10.2 million when compared to 2019-2020. This decrease is largely explained by a reduction in travel related to meetings, workshops, conferences as well as for operations due to the travel restrictions following the COVID-19 pandemic.
- Professional and Special Services
The year-to-date expenditures related to Professional and Special Services at September 30, 2020 decreased by approximately $4.3 million when compared to 2019-2020. This decrease is largely explained by a reduction in services related to the remediation of contaminated sites.
- Acquisition of land, buildings and works
The year-to-date expenditures related to Acquisition of land, buildings and works at September 30, 2020 increased by approximately $5.1 million when compared to 2019-2020 mainly due to an increase of the St. Lawrence Seaway expenditures.
- Acquisition of machinery and equipment
The year-to-date expenditures related to Acquisition of machinery and equipment at September 30, 2020 increased by approximately $15.2 million when compared to 2019-2020. Most of the increase is related to the acquisition of a vessel under the MV Madeleine Interim Replacement project.
- Transfer payments
The year-to-date expenditures related to Transfer payments at September 30, 2020 increased by approximately $38.0 million when compared to 2019-2020. Major increases in this area include $21.8 million for the National Trade Corridors Fund and $17.0 million paid under the new Air Services for Remote Communities program.
- Other Subsidies and Payments
The year-to-date expenditures related to Other Subsidies and Payments at September 30, 2020 decreased by approximately $4.7 million when compared to 2019-2020 and is mainly a result of a reallocation of planned expenditures for the St. Lawrence Seaway to another standard object.
- Vote-netted revenues
The year-to-date revenues related to the Vote-netted revenues at September 30, 2020 decreased by approximately $11.4 million when compared to 2019-2020. This decrease is largely explained by a reduction in the Canadian Aviation Regulations and Marine Safety Regulation sectors due to the restrictions following the COVID-19 pandemic.
3. Risks and Uncertainties
The outbreak of COVID-19 has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel restrictions, self-imposed quarantine periods and physical distancing requirements, have caused material disruption to businesses globally resulting in an economic slowdown. The duration and impact of the COVID-19 outbreak is unknown at this time.
Transport Canada is closely monitoring the COVID-19 situation and has issued transportation-related measures and guidance. The economic impact to the transportation sector and the public at large will, in turn, impact departmental revenues and expenditures. The department remains committed to its top priority: the safety and security of Canadians and Canada's transportation system, as well as ensuring the continued flow of essential goods and services that Canadians need to remain healthy. Transport Canada is working with the Public Health Agency of Canada, provincial and territorial governments, transportation industry stakeholders, and Indigenous Peoples to reduce the risk of transmission.
Transport Canada maintains a Corporate Risk Profile which identifies and assesses high-level risks that could affect the achievement of departmental objectives and priorities. The identification of risks and the development of risk responses contribute to making decisions related to setting departmental priorities, planning, allocating resources, developing policies, managing programs and reporting on performance. Additional information regarding Transport Canada's key risk areas is presented in the 2020-2021 Departmental Plan.
Certain risks would have financial impacts should they materialize; for example many factors affecting the timing of transfer payments lie outside of Transport Canada's control and could require funds to be re-profiled to future years. To minimize these impacts, Transport Canada continuously monitors its program funding and expenditures, including a monthly senior management review of plans and forecasts.
Transport Canada implemented the Phoenix pay system on April 7, 2016 as part of the Government of Canada pay transformation initiative. Since its implementation, the new pay system has experienced issues, which Public Services and Procurement Canada is working to resolve as quickly as possible. To mitigate the impact on its employees, Transport Canada has issued emergency salary advances to employees not receiving their basic pay. The pay issues and the workload associated with the signing of new collective agreements have also resulted in a backlog of compensation transactions, most notably acting pay transactions. However, the number and the value of outstanding acting pay has been diminishing since 2018–2019. The pay system issues have also generated salary overpayments. Transport Canada works with the employees in question to recover the funds through a repayment plan to ensure that they do not experience any undue hardships. The impact of the pay system issues on the year-to-date expenditures reflected in the Quarterly Financial Report is not material. Transport Canada will deal with these matters on an expedited basis when the required updates to the Phoenix pay system are implemented.
Transport Canada is currently implementing major initiatives that have risks associated with inter-departmental coordination, cooperation and performance, as well as with the outcome of consultations with key transportation stakeholders and indigenous groups. Transport Canada's Transformation Plan is also designed to improve the department's financial sustainability and regulatory environment for the future. There are risks and uncertainties associated with implementing needed legislative changes, introducing new cost recovery initiatives and realizing planned savings from identified efficiency opportunities.
The loss of key personnel represents a risk for most organizations. Transport Canada mitigates that risk through its succession planning strategy, as well as promptly launching staffing processes and having experienced personnel acting in positions that are vacant.
4. Significant changes in relation to operations, personnel and programs
In response to COVID-19, over the weekend of March 14-15, 2020, Transport Canada transitioned to remote work to sustain critical services to Canadians. Since the first quarter of fiscal year 2020-2021 over 90% of Transport Canada employees were able to work remotely without invoking business continuity plans. This was possible as a result of digital capacity building within the department over the past two years and a focus on innovation through service design and digital tools to deliver improved and more cost-effective services in support of Canada's transportation system. Looking forward, Transport Canada is focusing on continuing to increase digital capacity, sustaining remote work, developing organizational capacity to effectively manage remote teams, and enabling a safe and gradual transition back to the worksite.
There have been no other significant changes in relation to operations, personnel and program over the last quarter, except as describe in section 2.1.
Approved by:
Original signed by
Michael Keenan
Deputy Minister
Ottawa, Canada
Ryan Pilgrim, CPA, CA
Chief Financial Officer
Ottawa, Canada
| (in thousands of dollars) | Fiscal year 2020-2021 | Fiscal year 2019-2020 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2021Footnote 4 | Used during the quarter ended September 30, 2020 | Year-to-date used at quarter-end | Total available for use for the year ending March 31, 2020Footnote 4 | Used during the quarter ended September 30, 2019Footnote 5 | Year-to-date used at quarter-endFootnote 5 | |
| Vote 1 – Operating expenditures | 581,380 | 166,031 | 354,702 | 825,267 | 191,029 | 358,559 |
| Vote 1 – Revenue credited to the vote | - | (17,561) | (24,410) | (76,650) | (25,171) | (35,791) |
| Vote 1 – Net operating expenditures | 581,380 | 148,470 | 330,292 | 748,617 | 165,858 | 322,768 |
| Vote 5 – Capital expenditures | 144,191 | 40,955 | 46,906 | 166,013 | 33,695 | 37,926 |
| Vote 10 – Grants and contributions – Efficient Transportation System | 462,973 | 55,405 | 84,682 | 605,098 | 25,772 | 52,583 |
| Vote 15 – Grants and contributions – Green and Innovative Transportation System | 148,201 | 39,314 | 50,893 | 192,407 | 41,961 | 47,065 |
| Vote 20 – Grants and contributions – Safe and Secure Transportation System | 30,148 | 214 | 400 | 33,798 | 879 | 922 |
| Budgetary statutory authorities | ||||||
| Contributions to employee benefit plans | 84,490 | 21,093 | 42,187 | 88,452 | 19,885 | 39,770 |
| Minister of Transport – Salary and motor car allowance | 89 | 23 | 45 | 88 | 22 | 44 |
| Railway Company – Victoria Bridge, Montreal | 3,300 | 868 | 1,030 | 3,300 | - | - |
| Northumberland Strait Crossing Subsidy Payment | 68,699 | - | 68,603 | 67,273 | - | 66,999 |
| Payments in respect of St. Lawrence Seaway Agreements | 75,092 | - | 25,600 | 59,871 | 799 | 11,399 |
| Court Awards – Crown Liability and Proceedings Act | - | 4 | 4 | - | - | - |
| Total Budgetary statutory authorities | 231,670 | 21,988 | 137,469 | 218,984 | 20,706 | 118,212 |
| Total budgetary authorities | 1,598,563 | 306,346 | 650,642 | 1,964,917 | 288,871 | 579,476 |
| (in thousands of dollars) | Fiscal year 2020-2021 | Fiscal year 2019-2020 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2021 | Expended during the quarter ended September 30, 2020 | Year-to-date used at quarter-end | Planned expenditures for the year ending March 31, 2020 | Expended during the quarter ended September 30, 2019 | Year-to-date used at quarter-end | |
| Expenditures: | - | - | - | - | - | - |
| Personnel | 534,551 | 146,825 | 330,040 | 650,390 | 153,959 | 305,452 |
| Transportation and communications | 17,318 | 1,858 | 2,862 | 38,461 | 6,637 | 13,070 |
| Information | 2,954 | 1,056 | 1,483 | 6,642 | 522 | 1,102 |
| Professional and special services | 107,229 | 33,297 | 54,639 | 185,141 | 37,689 | 58,906 |
| Rentals | 6,173 | 2,814 | 5,642 | 12,938 | 4,230 | 5,858 |
| Repair and maintenance | 6,802 | 2,288 | 3,542 | 13,550 | 3,391 | 4,551 |
| Utilities, materials and supplies | 8,861 | 3,313 | 5,453 | 18,329 | 4,389 | 8,587 |
| Acquisition of land, buildings and works | 143,387 | 12,823 | 34,018 | 136,661 | 19,138 | 28,909 |
| Acquisition of machinery and equipment | 49,992 | 19,810 | 25,794 | 60,043 | 7,178 | 10,628 |
| Transfer payments | 713,321 | 95,801 | 205,609 | 901,875 | 68,612 | 167,569 |
| Other subsidies and payments | 7,975 | 4,022 | 5,970 | 17,537 | 8,297 | 10,635 |
| Total gross budgetary expenditures | 1,598,563 | 323,907 | 675,052 | 2,041,567 | 314,042 | 615,267 |
| Less Revenues netted against expenditures: | - | - | - | - | - | - |
| Vote-netted revenues | - | (17,561) | (24,410) | (76,650) | (25,171) | (35,791) |
| Total Revenues netted against expenditures: | - | (17,561) | (24,410) | (76,650) | (25,171) | (35,791) |
| Total net budgetary expenditures | 1,598,563 | 306,346 | 650,642 | 1,964,917 | 288,871 | 579,476 |
