Table of contents
- Statement outlining results, risks and significant changes in operations, personnel and program
- Statement of Authorities (unaudited)
- Departmental budgetary expenditures by Standard Object (unaudited)
Statement outlining results, risks and significant changes in operations, personnel and program
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.
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 the department consistent with the Main Estimates for the 2018-2019 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
The authorities increased by $52.9 million since the first quarter of 2018-19 as a result of the operating and capital budget carry forwards that were transferred to the department in the second quarter of 2018-19.
Transport Canada's total authorities available for use increased by approximately $206.9 million, from $1,403.5 million as of September 30, 2017 to $1,610.4 million as of September 30, 2018, as summarized below:
Table 1: Significant changes in Authorities (in thousands of dollars):
| Authorities Footnote 1 | 2018-2019 Footnote 2 | 2017-2018 Footnote 2 | Variance |
|---|---|---|---|
| Vote 1 – Net operating expenditures |
739,021 |
661,843 |
77,178 |
| Vote 5 – Capital expenditures |
163,329 |
160,353 |
2,976 |
| Vote 10 – Grants and contributions – Gateways and corridors |
- |
113,975 |
(113,975) |
|
Vote 15 – Grants and contributions – Transportation infrastructure |
- |
185,062 |
(185,062) |
| Vote 20 – Grants and contributions – Other |
- |
47,124 |
(47,124) |
| Vote 10 – Grants and contributions – An Efficient Transportation System |
413,110 |
- |
413,110 |
| Vote 15 – Grants and contributions – A Green and Innovative Transportation System |
41,602 |
- |
41,602 |
| Vote 20 – Grants and contributions – A Safe and Secure Transportation System |
27,773
|
-
|
27,773 |
| Budgetary statutory authorities |
225,557 |
235,164 |
(9,607) |
| Total Authorities |
1,610,392 |
1,403,521 |
206,871 |
The Statement of Authorities attached at the end illustrates the total authorities available for use, the authorities used for the quarter and 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 quarter ended September 30, 2018 are explained below.
2.1.1 Vote 1 – Operating expenditures (increase of $77M)
Planned operating authorities increased by $77 million from 2017-2018 to 2018-2019 mostly explained by the following factors:
- An increase in funding of:
- $19.0 million for Climate Change Adaptation and Mitigation;
- $18.4 million for the Oceans Protection Plan to improve marine safety and protect Canada's marine environment;
- $17.2 million for the implementation of the Trade and Transportation Corridors Initiative to implement strategies and make direct investments in transportation infrastructure;
- $16.8 million for salary increases negotiated in newly signed Collective Agreements;
- $15.0 million for Transport Canada's Modernization Plan;
- $8.8 million for Protecting Marine Life including the protection and recovery of endangered whale populations;
- $5.1 million for Federal Contaminated Sites Action Plan III which is a continuation of government efforts to clean up contaminated sites; and
- $2.5 million for the renewal of the Tanker Safety Inspection Program.
- Offset by a decrease in funding of:
- $17.9 million for sunsetting of the Clean Air Renewal, which has been replaced by Clean Air Mitigation and Adaptation; and
- $8.5 million for the sunsetting of the Federal Infrastructure Initiative - Budget 2016, Federal Contaminated Sites Action Plan.
2.1.2 Vote 5 –Capital expenditures (increase of $3.0M)
Capital expenditures authorities increased by $3.0 million from 2017-2018 to 2018-2019, largely explained by the following factors:
- An increase in funding of:
- $13.9 million for Protecting Marine Life including the protection and recovery of endangered whale populations;
- $10.3 million for the Capital Budget Carry Forward for Core Activities;
- $5.3 million for the upkeep of assets related to ferry services in Eastern Canada under the Ferry Services Program;
- $2.3 million for the Ocean Protection Plan (OPP);
- $2.1 million for the Trade and Transportation Corridor Initiative; and
- $0.9 million for the Port Asset Transfer Program.
- Offset by a decrease in funding of:
- $32.1 million due to Budget 2014 and Budget 2016 Federal Infrastructure Initiatives which are sunsetting.
2.1.3 Votes 10, 15 and 20 – Grants and contributions (increase of $136M)
Grants and contributions authorities as a whole increased by $136 million from 2017-2018 to 2018-2019. The variance by Vote cannot be compared between 2018-2019 and 2017-2018 as a result of significant differences between the previous Program Alignment Architecture presented in 2017-2018 and the new Departmental Results Framework used for 2018-2019, which impacts the distribution of the G&C programs across the three votes. The variance across all three grants and contributions Votes can be explained by the following:
- An increase in funding of:
- $99.3 million for the Trade and Transportation Corridor Initiative;
- $27.1 million for the Oceans Protection Plan;
- $25.2 million for the Ferry Services Contribution Program; and
- $17.2 million for the Port Asset Transfer Program.
- Offset by a decrease in funding of:
- $16.6 million for the Asia Pacific Gateway and Corridor Initiative Program which is approaching maturity dates;
- $7.5 million for the Outaouais Road Development Agreement Program cash flow changes;
- $5.4 million for the Support for Clean Transportation Initiatives which is approaching maturity dates; and
- $4.1 million for the Gateways and Border Crossings Fund which is approaching maturity dates.
2.1.4 Budgetary statutory authorities (decrease of $9.6M)
The planned expenditures for the budgetary statutory authorities decreased by $9.6 million mainly as a result of a decrease 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 is explained by the reduced funding provided by Transport Canada for the SLSMC's Modernization Project as it nears completion.
The year-to-date expenditures for the budgetary statutory authorities decreased by $6.4 million mainly explained by the reduction of payments to the SLSMC due to a lower cash flow requirements.
2.2 Statement of Departmental budgetary expenditures by Standard Object
The statement of Departmental Budgetary Expenditures by Standard Object attached at the end illustrates the annual planned expenditures, the expenditures for the quarter and the year-to-date expenditures for the current fiscal year as well as the comparative figures for the previous year. Overall, the year-to-date expenditures at the end of the second quarter of 2018-2019 represent 30% of the annual planned expenditures, compared to 33% in 2017-2018.
Historically, most spending on high-dollar value, major infrastructure grants 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 period. 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 due to a timing difference between the date when the goods or services were obtained and when the invoices were received.In addition, there is also a ramp up of operational activities in the last quarter following the mid-year internal budget reallocations as well as receipt of increased funding for new initiatives, for which the expenditures will be mostly incurred in the fourth quarter.
The major year-to-year variances as at September 30, 2018 are as follows:
Planned Expenditures
- The 2018-2019 increases in planned expenditures for the Standard Objects listed below are mainly as a result of the increases in funding for the Oceans Protection Plan, the Trade and Transportation Corridors Initiative, Protecting Marine Life and the Operating Budget Carry Forward:
- Information: $0.6 million
- Professional and special services: $39.2 million
- Acquisitions of machinery and equipment: $4.0 million
- The 2018-2019 decrease in planned expenditures for the Standard Objects listed below are mainly as a result of decreases in the reallocation of planned spending by standard object.The reallocation exercise took into account previous years` trends in actual spending by standard object:
- Rentals: $0.8 million
- Utilities, materials and supplies: $1.2 million
- Transportation and communication: $4.8 million
- Repair and Maintenance: $2.3 million
- Acquisition of Land, Buildings and Works: $11.1 million
- Personnel
The planned expenditures related to Personnel for 2018-2019 increased by approximately $47.4 million mostly as a result of increases in funding for the Oceans Protection Plan, Collective Agreements, Trade and Transportation Corridors Initiative and Climate Change Mitigation.
- Transfer payments
The planned expenditures related to Transfer payments for 2018-2019 increased by approximately $138 million when compared to the planned expenditures for 2017-2018. The causes of the variances are explained in section 2.1.3 and by an increase in funding of $1.7 million for the Northumberland Strait Crossing Subsidy Agreement.
Year-to-Date Expenditures
- Personnel
The year-to-date expenditures related to Personnel at September 30, 2018 increased by approximately $10 million compared to 2017-2018. The increase is mainly driven by the rise in the number of employees because of new departmental initiatives such as the Ocean Protection Plan. Although there was an increase in the number of employees, the second quarter's expenditures decreased compared to the previous year as a result of the payment of retroactive salaries and wages to employees that were made in 2017 following the ratification and signing of new collective agreements.
- Transportation and communications
The year-to-date expenditures related to Transportation and communications at September 30, 2018 increased by approximately $3.1 million when compared to 2017-2018. The increase is mainly due to the additional stakeholder engagement to promote the department's new initiatives and programs.
- Professional and special services
The year-to-date expenditures related to Professional and special services at September 30, 2018 increased by approximately $5.8 million when compared to 2017-2018. The increase is mainly due to higher management consulting services, translation, scientific services and training as a result of the new departmental initiatives and programs.
- Acquisitions of machinery and equipment
The year-to-date expenditures related to Acquisitions of machinery and equipment at September 30, 2018 increased by approximately $5.6 million when compared to 2017-2018. This increase is mainly due to acquisition of parts and accessories for aircraft.
- OtherSubsidies and Payments
The year-to-date expenditures related to Other Subsidies and Payments at September 30, 2018 decreased by approximately $18 million when compared to 2017-2018. This decrease is mainly due to a lower cash flow requirement to the St. Lawrence Seaway Management Corporation as their Modernization Project nears completion and to a timing difference in the settlement of the suspense account for expenditures incurred by the Department related to intergovernmental transactions for which the relevant financial coding has not been obtained.
3. Risks and Uncertainties
Transport Canada maintains a Corporate Risk Profile which identifies and assesses high-level risks that could affect the achievement of the Department's 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 the Department's key risk areas is presented in the 2018-19 Departmental Plan .
Certain risks would have financial impacts should they materialize, for example many factors affecting the timing of transfer payments lie outside the control of the Department and could require funds to be re-profiled to future years. To minimize these impacts, the Department 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 (PSPC) 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.The pay system issues have also generated salary overpayments. The department 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. The Department'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. As highlighted in section 4 below, there have been a number of changes in senior personnel within the last quarter. Transport Canada mitigates that risk through its succession planning strategy, as well as promptly launching staffing processes and having experienced personnel acting in those roles during their vacancy.
4. Significant changes in relation to operations, personnel and programs
As a result of the new Policy on Results that was approved by the Treasury Board in June 2016, a new Departmental Results Framework has been implemented for the Department in fiscal year 2018-19. The new policy directly supports the government's commitment to deliver and demonstrate progress toward clear results for Canadians. The new approach aims to improve how the government articulates its results, measures performance, allocates and aligns resources to core responsibilities and priorities, and reports on outcomes that matter most to Canadians. By implementing the new approach, both Canadians and parliamentarians will receive clear, transparent, useful information on the results that the Department has achieved and the resources used to do so.
The following changes in senior personnel occurred during the second quarter:
- On July 27, 2018, following the retirement of Pierre-Marc Mongeau, the Deputy Minister and Associate Deputy Minister announced the appointment of Marie-Claude Petit, Director General, Transportation Infrastructure Programs as the Acting Assistant Deputy Minister(ADM), Programs until October 14, 2018;
- On August 21, 2018, the Deputy Minister and Associate Deputy Minister announced the appointment of Aaron McCrorie, Director General, Civil Aviation as Associate ADM, Safety and Security, effective Sept 4, 2018;
- On August 24, 2018, following Lori MacDonald's new appointment by the Prime Minister as Associate Deputy Minister of Immigration Refugee Citizenship Canada (IRCC), the Deputy Minister and Associate Deputy Minister announced the appointment of Aaron McCrorie, Associate ADM Safety and Security as Acting ADM, Safety and Security, and the appointment of Nicole Girard, Director General, Civil Aviation as Acting Associate ADM, Safety and Security, effective August 29, 2018;
- On August 31, 2018, the Prime Minister announced the appointment of Terry Beech as Transport Canada's Parliamentary Secretary ; and
- On September 27, 2018, the Deputy Minister and Associate Deputy Minister announced the appointment of Anuradha Marisetti as ADM, Programs, starting October 15, 2018.
Approved by:
Original signed by
Michael Keenan,
Deputy Minister
Ottawa, Canada
November 29, 2018
André Lapointe,
Chief Financial Officer
Ottawa, Canada
November 23, 2018
Statement of Authorities Footnote1 (unaudited)
| (in thousands of dollars) | Fiscal year 2018-2019 | Fiscal year 2017-2018 | ||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending
March 31, 2019 Footnote2 |
Used during the quarter ended September 30, 2018 | Year-to-date used at quarter-end | Total available for use for the year ending March 31, 2018 Footnote2 | Used during the quarter ended September 30, 2017 Footnote3 | Year-to-date used at quarter-end Footnote3 | |
| Vote 1 – Operating expenditures |
808,594 |
166,321 |
326,675 |
730,825 |
172,033 |
308,948 |
| Vote 1 – Revenue credited to the vote |
(69,573) |
(22,363) |
(33,178) |
(68,982) |
(20,158) |
(30,670) |
| Vote 1 – Net operating expenditures |
739,021 |
143,958 |
293,497 |
661,843 |
151,875 |
278,278 |
| Vote 5 – Capital expenditures |
163,329 |
14,583 |
19,834 |
160,353 |
18,073 |
21,981 |
| Vote 10 – Grants and contributions – Gateways and corridors |
- |
- |
- |
113,975 |
9,616 |
11,692 |
| Vote 15 – Grants and contributions – Transportation infrastructure |
- |
- |
- |
185,062 |
15,833 |
25,067 |
| Vote 20 – Grants and contributions – Other |
- |
- |
- |
47,124 |
1,700 |
1,555 |
| Vote 10 – Grants and contributions – An Efficient Transportation System |
413,110 |
27,026 |
40,499 |
- |
- |
- |
| Vote 15 – Grants and contributions – A Green and Innovative Transportations System |
41,602 |
918 |
968 |
- |
- |
- |
| Vote 20 – Grants and contributions – A Safe and Secure Transportation System |
27,773 |
513 |
514 |
- |
- |
- |
| Budgetary statutory authorities |
|
|
|
|
|
|
| Contributions to employee benefit
plans |
77,000 |
18,817 |
37,634 |
73,114 |
17,195 |
34,405 |
| Minister of Transport – Salary and
motor car allowance |
86 |
22 |
43 |
84 |
21 |
42 |
| Railway Company – Victoria
Bridge, Montreal |
3,300 |
639 |
1,230 |
3,300 |
639 |
1,579 |
| Northumberland Strait Crossing
Subsidy Payment |
67,544 |
- |
66,046 |
65,845 |
- |
64,942 |
| Payments in respect of St. Lawrence
Seaway Agreements |
77,627 |
608 |
18,208 |
92,821 |
3,577 |
28,577 |
| Total Budgetary statutory authorities |
225,557 |
20,086 |
123,161 |
235,164 |
21,432 |
129,545 |
|
|
|
|
|
|
|
|
| Total budgetary authorities |
1,610,392 |
207,084 |
478,473 |
1,403,521 |
218,529 |
468,118 |
Departmental budgetary expenditures by Standard Object (unaudited)
| (in thousands of dollars) | Fiscal year 2018-2019 | Fiscal year 2017-2018 | ||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2019 | Expended during the quarter ended September 30, 2018 | Year-to-date used at quarter-end | Planned expenditures for the year ending
March 31, 2018 Footnote 4 |
Expended during the quarter ended September 30, 2017 Footnote 4 | Year-to-date used at quarter-end Footnote 4 | |
| Expenditures: | ||||||
| Personnel |
580,929 |
143,989 |
290,756 |
533,570 |
154,462 |
280,485 |
| Transportation and communications |
36,310 |
7,399 |
14,093 |
41,139 |
6,183 |
10,946 |
| Information |
4,503 |
555 |
993 |
3,902 |
611 |
792 |
| Professional and special services |
211,915 |
22,365 |
38,598 |
172,687 |
18,155 |
32,754 |
| Rentals |
12,270 |
3,892 |
4,593 |
13,108 |
3,335 |
4,275 |
| Repair and maintenance |
13,389 |
2,357 |
3,901 |
15,733 |
1,490 |
2,271 |
| Utilities, materials and supplies |
19,474 |
4,185 |
8,590 |
20,664 |
3,944 |
7,018 |
| Acquisition of land, buildings and works |
89,044 |
8,492 |
9,636 |
100,129 |
11,544 |
11,576 |
| Acquisition of machinery and equipment |
56,776 |
6,013 |
11,507 |
52,788 |
4,046 |
5,953 |
| Transfer payments |
553,329 |
29,096 |
109,257 |
415,306 |
27,788 |
104,835 |
| Other subsidies and payments |
102,026 |
1,104 |
19,727 |
103,477 |
7,129 |
37,883 |
|
|
|
|
|
|
|
|
| Total gross budgetary expenditures |
1,679,965 |
229,447 |
511,651 |
1,472,503 |
238,687 |
498,788 |
| Less Revenues netted against expenditures: |
|
|
|
|
|
|
| Vote-netted revenues |
(69,573) |
(22,363) |
(33,178) |
(68,982) |
(20,158) |
(30,670) |
|
|
|
|
|
|
|
|
| Total Revenues netted against expenditures: |
(69,573) |
(22,363) |
(33,178) |
(68,982) |
(20,158) |
(30,670) |
|
|
|
|
|
|
|
|
| Total net budgetary expenditures |
1,610,392 |
207,084 |
478,473 |
1,403,521 |
218,529 |
468,118 |
