Quarterly Financial Report of Transport Canada (unaudited) for the quarter ended June 30, 2021

From: Transport Canada

Table of contents

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 the Main Estimates for the 2021-2022 fiscal year. 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 increased by approximately $893.2 million, from $1,535.1 million as of June 30, 2020 to $2,428.3 million as of June 30, 2021, as summarized below:

Table 1: Significant changes in Authorities (in thousands of dollars):
Authoritiestable 1 note 3 2021–2022table 1 note 1 2020–2021table 1 note 1 Variance
Vote 1 – Net operating expenditures 744,562 549,188 195,374
Vote 5 – Capital expenditures 122,783 112,954 9,829
Vote 10 – Grants and contributions 1,333,548 - 1,333,548
Vote 10 – Grants and contributions – Efficient Transportation Systemtable 1 note 2 - 462,973 (462,973)
Vote 15 – Grants and contributions – Green and Innovative Transportation Systemtable 1 note 2 - 148,201 (148,201)
Vote 20 – Grants and contributions – Safe and Secure Transportation Systemtable 1 note 2 - 30,148 (30,148)
Total Votes 10, 15 and 20 – Grants and contributions 1,333,548 641,322 692,226
Budgetary statutory authoritiestable 1 note 3 227,476 231,669 (4,193)
Total Authorities 2,428,369 1,535,133 893,236
 

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 June 30, 2021 are explained below.

2.1.1 Vote 1 – Net operating expenditures (Increase of $195.4 million)

Planned operating authorities increased by $195.4 million from 2020-2021 to 2021-2022, mostly explained by the following factors:

  • An increase in authorities of:
    • $181.5 million as a result of the withholding of full supply of the Main Estimates in 2020-2021 until the third quarter; and
    • $26.0 million as a result of an increase in collective bargaining.
  • Offset by a decrease of:
    • $11.0 million in funding for the Oceans Protection Plan.
2.1.2 Vote 5 – Capital expenditures (Increase of $9.8 million)

Planned Capital authorities increased by $9.8 million from 2020-2021 to 2021-2022, largely explained by the following factors:

  • An increase in funding of:
    • $37.7 million as a result of the withholding of full supply of the Main Estimates in 2020-2021 until the third quarter; and
    • $8.8 million to Support Essential Air Access to Remote Communities.
  • Offset by a decrease of $35.5 million in funding of:
    • $13.1 million for the Ferry Services Contribution Program;
    • $5.9 million for the Airports Capital Assistance Program;
    • $5.8 million in the National Aerial Surveillance Program;
    • $5.1 million for the Remotely Piloted Aircraft System;
    • $4.5 million for the Airport Critical Infrastructure Program; and
    • $1.1 million for the World Class Tanker Safety System.
2.1.3 Vote 10 – Grants and contributions (Increase of $692.2 million)

Grant and contribution authorities for Vote 10 increased by $692.2 million from 2020-2021 to 2021-2022, largely explained by the following factors:

  • An increase in funding of:
    • $202.7 million for the Airport Critical Infrastructure Program;
    • $197.8 million as a result of the withholding of full supply of the Main Estimates in 2020-2021 until the third quarter;
    • $123.0 million for the Incentives for Zero-Emission Vehicles Program;
    • $92.0 million for the Airports Capital Assistance Program;
    • $64.9 million for the Airport Relief Fund; 
    • $57.7 million to Support Essential Air Access to Remote Communities;
    • $7.6 million in contributions for the Port Asset Transfer Program; and
    • $4.9 million for major rehabilitation work on the roadway portion of the Victoria Bridge.
  • Offset by a decrease in funding of:
    • $46.9 million for the National Trade Corridors Fund; and
    • $13.8 million for the Gateways and Border Crossings Fund.
2.1.4 Budgetary statutory authorities (Decrease of $4.2 million)

The planned expenditures for the budgetary statutory authorities decreased by $4.2 million mainly as a result of a decrease in funding of $8.3 million in capital and operating requirements associated with the St. Lawrence Seaway Management Corporation (SLSMC). 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 decrease in planned spending was offset by an increase of $2.8 million in planned contributions to Employee Benefits Plans and by an increase of $1.3 million for the Northumberland Strait Crossing Subsidy Program.

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 first quarter of 2021-2022 represent 18.7 % of the annual planned expenditures, which is consistent with the first quarter of 2020-2021.

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 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 June 30, 2021 are as follows:

Planned expenditures
  • Personnel

The planned expenditures related to Personnel for the year 2021-2022 compared to 2020-2021 increased by approximately $163.4 million primarily due to an increase in the authorities as a result of the withholding of the full supply of the Main Estimates in 2020-2021 until the third quarter as well as an increase in funding for collective agreements and offset by a decrease for the Oceans Protection Plan.

  • Transportation and Communications

The planned expenditures related to Transportation and Communications for the year 2021-2022 compared to 2020-2021 increased by approximately $14.3 million due to an increase in the authorities as a result of the withholding of the full supply of the Main Estimates in 2020-2021 until the third quarter.

  • Professional and Special Services

The planned expenditures related to Professional and Special Services for the year 2021-2022 compared to 2020-2021 increased by approximately $62.2 million due to an increase in the authorities as a result of the withholding of the full supply of the Main Estimates in 2020-2021 until the third quarter.

  • Acquisition of land, building and works

The planned expenditures related to Acquisition of land, building and works for the year 2021-2022 compared to 2020-2021 decreased by $8.8 million mainly due to a reduced funding for ferries and federal infrastructure initiatives.

  • Acquisition of machinery and equipment

The planned expenditures related to Acquisition of machinery and equipment for the year 2021-2022 compared to 2020-2021 increased by $23.0 million mainly due to an increase in the authorities as a result of the withholding of the full supply of the Main Estimates in 2020-2021 until the third quarter.

  • Transfer payments

The planned expenditures related to Transfer payments for the year 2021-2022 compared to 2020-2021 increased by approximately $693.5 million. The causes of the variances are explained in section 2.1.3.

  • Vote-netted revenues

The planned expenditures related to Vote-netted revenues for the year 2021-2022 compared to 2020-2021 increased by approximately $83.1 million mainly due to an increase in the authorities as a result of the withholding of the full supply of the Main Estimates in 2020-2021 until the third quarter. 

Year-to-Date Expenditures
  • Personnel

The year-to-date expenditures related to Personnel at June 30, 2021 increased by approximately $2.5 million when compared to 2020-2021 mainly driven by a general economic increase in the renewal of the collective agreements.

  • Professional and special services

The year-to-date expenditures related to Professional and special services at June 30, 2021 increased by approximately $2.4 million when compared to 2020-2021. This increase is mainly explained by expenses for the licensing of Government of Canada's document management solution (GCDOCS) and by increased costs for the delivery of the pleasure craft licensing program.

  • Acquisition of machinery and equipment

The year-to-date expenditures related to Acquisition of machinery and equipment at June 30, 2021 increased by approximately $2.9 million when compared to 2020-2021 mainly due to an increase of the St. Lawrence Seaway expenditures in the first quarter when compared to the previous year.

  • Transfer payments

The year-to-date expenditures related to Transfer payments at June 30, 2021 increased by approximately $96.2 million when compared to 2020-2021. Major increases in this area include $50.2 million in payments under the Incentives for Zero-Emission Vehicles Program and an increase of 38 million for the Support Essential Air Access to Remote Communities.

  • Other subsidies and payments

The year-to-date revenues related to the Other subsidies and payments at June 30, 2021 increased by approximately $5.9 million when compared to 2020-2021 due to an increase of $3 million in the payment to the St. Lawrence Seaway Management Corporation in respect of Seaway Agreements under the Canada Maritime Act. The increase is also explained by $2.9 million in reimbursements made in the first quarter of 2021-2022 for 2020 ground lease rent payments received from National Airport System airports which were overestimated as a result of the slowdown of the aerospace's sector due to the pandemic. Other reimbursements are planned for the upcoming quarter.

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.

Transport Canada is closely monitoring the COVID-19 situation and has issued transportation-related measures and guidance. 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.

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 this 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.

The following changes in senior personnel occurred during the first quarter:

  • On February 9, 2021, the Deputy Minister and Associate Deputy Minister announced the appointment of Raj Thuppal as Chief Digital Officer, effective April 1, 2021;
  • On April 20, 2021, the Deputy Minister and Associate Deputy Minister announced the appointment of Duwayne Williams as Regional Director General for the Ontario Region, effective May 17, 2021;
  • On April 22, 2021, following Lawrence Hanson's new appointment as Associate Deputy Minister of Department of Fisheries and Oceans, the Deputy Minister and Associate Deputy Minister announced the appointment of Serge Bijimine as Assistant Deputy Minister, Policy, effective May 6, 2021; and
  • Following Anuradha Marisetti's appointment as Assistant Secretary, Economic Sector of Treasury Board Secretariat, the Deputy Minister and Associate Deputy Minister announced on June 21st, 2021 the appointment of Stephanie Hébert as Assistant Deputy Minister, Programs, effective July 5, 2021.


Approved by:

Original signed by

Michael Keenan
Deputy Minister
Ottawa, Canada

September 1, 2021



Ryan Pilgrim, CPA, CA
Chief Financial Officer
Ottawa, Canada

August 18, 2021

Table 2 - Statement of Authorities (unaudited)

(in thousands of dollars) Fiscal year 2021-2022 Fiscal year 2020-2021
Total available for use for the year ending March 31, 2022table 2 note 1 Used during the quarter ended June 30, 2021 Year-to-date used at quarter-end Total available for use for the year ending March 31, 2021table 2 note 1 Used during the quarter ended June 30, 2020 Year-to-date used at quarter-end
Vote 1 – Operating expenditures 827,696 189,184 189,184 549,188 188,672 188,672
Vote 1 – Revenue credited to the vote (83,134) (8,144) (8,144) - (6,849) (6,849)
Vote 1 – Net operating expenditures 744,562 181,040 181,040 549,188 181,823 181,823
Vote 5 – Capital expenditures 122,783 6,008 6,008 112,954 5,952 5,952
Vote 10 – Grants and contributions 1,333,548 134,497 134,497 - - -
Vote 10 – Grants and contributions – Efficient Transportation Systemtable 2 note 2 - - - 462,973 29,277 29,277
Vote 15 – Grants and contributions – Green and Innovative Transportation Systemtable 2 note 2 - - - 148,201 11,579 11,579
Vote 20 – Grants and contributions – Safe and Secure Transportation Systemtable 2 note 2 - - - 30,148 186 186
Total Votes 10, 15 and 20 – Grants and contributions 1,333,548 134,497 134,497 641,322 41,042 41,042
Budgetary statutory authorities
Contributions to employee benefit plans 87,335 29,610 29,610 84,489 21,093 21,093
Minister of Transport – Salary and motor car allowance 91 23 23 89 22 22
Railway Company – Victoria Bridge, Montreal 3,300 2,159 2,159 3,300 162 162
Northumberland Strait Crossing Subsidy Payment 70,000 69,306 69,306 68,699 68,603 68,603
Payments in respect of St. Lawrence Seaway Agreements 66,750 28,600 28,600 75,092 25,600 25,600
Refunds of amounts credited to revenues in previous years - 2,882 2,882 - - -
Total Budgetary statutory authorities 227,476 132,580 132,580 231,669 115,480 115,480
Total budgetary authorities 2,428,369 454,125 454,125 1,535,133 344,297 344,297

Table 3 - Departmental budgetary expenditures by Standard Object (unaudited)

(in thousands of dollars) Fiscal year 2021-2022 Fiscal year 2020-2021
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended June 30, 2021 Year-to-date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended June 30, 2020 Year-to-date used at quarter-end
Expenditures:
Personnel 675,947 185,706 185,706 512,577 183,159 183,159
Transportation and communications 30,324 1,449 1,449 16,068 1,005 1,005
Information 5,998 661 661 2,736 427 427
Professional and special services 162,725 23,747 23,747 100,488 21,341 21,341
Rentals 9,914 2,666 2,666 5,729 2,829 2,829
Repair and maintenance 11,850 2,199 2,199 6,320 1,254 1,254
Utilities, materials and supplies 15,502 3,120 3,120 8,217 2,184 2,184
Acquisition of land, buildings and works 115,017 19,980 19,980 123,824 21,195 21,195
Acquisition of machinery and equipment 61,363 8,901 8,901 38,317 5,996 5,996
Transfer payments 1,406,848 205,962 205,962 713,321 109,807 109,807
Other subsidies and payments 16,015 7,878 7,878 7,536 1,949 1,949
Total gross budgetary expenditures 2,511,503 462,269 462,269 1,535,133 351,146 351,146
Less Revenues netted against expenditures:
Vote-netted revenues (83,134) (8,144) (8,144) - (6,849) (6,849)
Total Revenues netted against expenditures: (83,134) (8,144) (8,144) - (6,849) (6,849)
Total net budgetary expenditures 2,428,369 454,125 454,125 1,535,133 344,297 344,297

 

Quarterly Financial Report of Transport Canada (unaudited) for the quarter ended June 30, 2021
(PDF, 859 KB)

 

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