Archived - Department of Finance Canada
Quarterly Financial Report for the Quarter Ended June 30, 2011 (unaudited)
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1.1 Basis of Presentation
2. Highlights of fiscal quarter and fiscal year to date (YTD) results
2.1 Authorities Analysis
2.2 Expenditure Analysis
3. Risks and Uncertainties
4. Significant changes in relation to operations, personnel and programs
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 Treasury Board Accounting Standard 1.3. This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates. The quarterly financial report has not been subject to an external audit or review.
The description of the program activities for the Department of Finance Canada (the ‘Department’) can be found in Part II of the Main Estimates.
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department’s spending authorities granted by Parliament and those used by the department, consistent with the Main Estimates and Supplementary Estimates for both fiscal years. This quarterly financial 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.
The Department of Finance 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.
The Department has three major categories of expenditure authority.
These categories are:
- Voted budgetary authorities: included in this category are the operational expenditures of the Department itself as well as authorized expenditures under grants and contribution programs. These expenditures must be specifically approved by Parliament through an appropriation act.
- Statutory budgetary authorities: included in this category are expenditure authorities that are granted through an existing Act of Parliament. Further parliamentary approval is not required for expenditures related to statutory amounts and that it is within the normal course of business that statutory expenditures may in some cases exceed planned spending estimates. Departmental statutory payments include those made under the Federal-Provincial Fiscal Arrangements Act as well as Interest and Other Costs incurred in connection with the Public Debt of Canada.
- Non-budgetary authorities: included in this category are disbursements made by the Department which do not have a direct budgetary impact to the Government. This includes the value of loans initially disbursed to Crown Corporations participating in the Crown Borrowing Framework.
Total 2011-12 budgetary authorities available for use as at June 30, 2011 decreased by $1.435 billion compared to the same fiscal quarter of 2010-11. This decrease was in voted operating and grants and contributions authorities ($159.6 million) and statutory authorities ($1.276 billion). This was offset by an increase in non-budgetary authorities ($20.6 million).
The 2011-12 Estimates do not yet reflect Budget 2011 statutory projections.
Voted budgetary authorities
Total available authorities for operating expenditures decreased by $21.9 million compared to the same period in the prior year. This decrease is attributable to time-limited funding of various initiatives including Government advertising programs ($6 million); 2010 G8 Summit in Muskoka ($4.2 million); implementation of the HST in Ontario and British Columbia ($2.6 million); the Task Force on Financial Literacy ($2.6 million); improving access to financing and strengthening Canada’s financial system ($2.6 million); litigation related to the application of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act ($1.1 million); Budget 2010 cost containment measures ($1 million); and the Payments Task Force ($0.7 million).
Available authorities for voted grants and contributions decreased by $137.8 million compared to the same period in the prior year. Of this amount, $78.5 million is related to changes in planned bilateral debt relief payments, and $59.3 million for scheduled payments to Toronto Waterfront Revitalization Initiative and the Harbourfront Centre in 2011-12.
Statutory budgetary authorities
There was an increase of $119.9 million in authorities for the Federal-Provincial Fiscal Arrangements Act compared to the same period in the prior year. This increase is largely attributable to the legislative framework increases in Fiscal Equalization, the Canada Health Transfer, the Canada Social Transfer and Territorial Formula Financing ($2.36 billion); a decrease in the schedule of payments to Ontario and BC for transitional assistance related to the harmonized value-added tax framework ($1.889 billion); a decrease in Alternative Payments for Standing Programs ($163 million) which are forecast based on projected personal income tax data, and a decrease for the incentive for provinces to eliminate taxes on capital ($188 million) which reflects the temporary nature and timing of payments of this measure.
Interest and Other Costs related to Public Debt authorities decreased by $1.09 billion compared to the same period in the prior year. These costs vary depending on changes to debt levels and interest rates. The decrease is largely due to a reduction in payments to consolidated specified purpose accounts as a result of the Jobs and Economic Growth Act which received Royal Assent in July 2010.
The remaining statutory authorities decreased by $306 million compared to the same period in the prior year largely due to a decrease in the payment to Ontario related to the Canada Health Transfer which was approved under the Budget Implementation Act, 2009. No such payments are legislated for fiscal years after 2010-11. The Transitional Payment to Newfoundland and Labrador was made pursuant to the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act. In the first quarter of 2011-12, nearly $125 million was paid to Newfoundland and Labrador – the total for 2011-12 will be $536.1 million.
Non-budgetary authorities related to the value of loans disbursed to Crown Corporations participating in the Crown Borrowing Framework are not reflected in the Estimates. The gross borrowing requirements for Crown corporations are driven by the need to match the term and structure of the borrowing requirements of corporations’ clients. These activities are influenced by current, and expectations of future, economic conditions and can vary greatly over a short period of time. For example, if clients of the Crown corporation are seeking short-term, floating rate loans, the Crown corporation will seek to match that with short-term borrowings from the government. This will result in the loan being refinanced several times through the year, with higher gross borrowings associated with a smaller net borrowing amount. This can change very quickly should the market conditions suggest interest rates are going to rise and their clients seek to lock in their borrowing costs through longer term borrowings. As such, there can be very large and significant variances both inter-year and intra-year. Given the risk of significant forecast errors and that the gross advances to Crown corporations are a non-budgetary item and do not impact on the net-debt of the government, the Department only reports on actual borrowings by the Crown corporations.
Total 2011-12 planned budgetary expenditures have decreased by $1.435 billion compared to 2010-11. The majority of the decrease relates to planned public debt charges ($1.09 billion) and planned transfer payments ($313.8 million).
The decrease of $313.8 million in planned transfer payments relates to voted grants and contributions ($137.8 million) and statutory transfer payments ($176 million) compared to the same period in the prior year.
Expenditure patterns in the first quarter of 2011-12 are consistent with those of 2010-11. Operating expenditures are comparable to those of the same quarter of 2010-11 with approximately 24% of authorities available for use expended during the quarter. Other Grants and Contributions, and statutory payments are consistent with payment schedules.
The Canadian Securities Regulation Regime Transition Office Act authorizes the Minister of Finance to make direct payments to the Canadian Securities Transition Office for its use in fulfilling its mandate in an amount not to exceed $33 million for a three-year period commencing on July 13, 2009. Three equal $11 million tranches were planned over the course of its mandate. Actual funding transferred to the Transition Office reflected its shorter initial year of operation for fiscal year 2009-10 ($5.4 million) as well as its anticipated work for fiscal year 2010-11 ($13.2 million) and the remaining period ending July 2012 ($14.3 million). The revised funding profile was not available when the 2010-11 Estimates were finalized.
Non-budgetary expenditures related to the value of loans disbursed to Crown Corporations participating in the Crown Borrowing Framework decreased by $7.049 billion compared to the same period in the prior year. Gross borrowings by Crown Corporations are based on demand and the business requirements of the participating entities, and also depend on the terms of the Crown Corporation borrowings. As such, amounts can vary significantly from year-to-year.
The Canadian economy, which continues to recover from the worst global recession since the 1930s, has fared much better than other major advanced economies over the past several years, reflecting the significant policy stimulus provided in the recession and Canada's solid economic fundamentals. Going forward, private sector economists expect that economic growth in Canada will continue to be moderate. Nevertheless, the uncertainty surrounding the global economic outlook remains elevated, posing risk to the Canadian outlook.
The Department of Finance Canada must manage these risks. To do so, it must have in place the infrastructure, resources and authorities needed to respond to an evolving economic and financial sector environment. It must manage the increased requirement for coordinated international decision making to deal with uncertain world economic conditions. It must also ensure that responsible agencies take effective coordinated action to support the soundness, integrity and reputation of the Canadian financial system.
This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates (and Supplementary Estimates A as applicable) for which full supply was released on June 27, 2011.
Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. The impact on departmental activities has been managed through personnel turnover, by identifying efficiencies in areas such as travel, and by using other control mechanisms, such as those related to executive staffing.
There have been no significant changes to operations, personnel and programs over the last year.
Originally signed by:
Michael Horgan, Deputy Minister,
Originally signed by:
Sherry Harrison, Chief Financial Officer
Date: August 22, 2011
Department of Finance Canada Quarterly Financial Report
For the quarter ended June 30, 2011
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|(in thousands of dollars)||Total available for use for the
March 31, 2012*
|Used during the
June 30, 2011
|Year to date used at
|Total available for use for the
March 31, 2011*
|Used during the
June 30, 2010
|Year to date used at
|Grants and contributions||181,416||10,052||10,052||319,195||2,005||2,005|
|Total voted authorities||282,299||34,106||34,106||441,940||28,162||28,162|
|Federal-Provincial Fiscal Arrangements Act payments|
|Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act)||14,658,570||3,664,642||3,664,642||14,372,000||3,593,000||3,593,000|
|Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act)||26,951,863||6,737,966||6,737,966||25,426,286||6,356,572||6,356,572|
|Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act)||11,514,064||2,878,516||2,878,516||11,178,703||2,794,676||2,794,676|
|Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangement Act)||2,876,083||1,115,920||1,115,920||2,663,567||1,033,463||1,033,463|
|Wait Times Reduction Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act)||250,000||62,500||62,500||250,000||62,500||62,500|
|Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act)||(3,112,956)||(870,646)||(870,646)||(2,949,851)||(651,369)||(651,369)|
|Transitional assistance to provinces entering into the harmonized value-added tax framework (Part III.1 Federal-Provincial Fiscal Arrangements Act)||1,880,000||-||-||3,769,000||-||-|
|Incentive for Provinces to Eliminate Taxes on Capital (Part IV - Federal-Provincial Fiscal Arrangements Act)||-||-||-||188,000||-||-|
|Total Federal-Provincial Fiscal Arrangements Act payments||55,017,624||13,588,898||13,588,898||54,897,705||13,188,842||13,188,842|
|Public Debt - Interest and Other Costs||30,251,000||7,509,042||7,509,042||31,341,000||6,908,510||6,908,510|
|Transitional Payment to Newfoundland and Labrador (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act)||-||124,590||124,590||-||-||-|
|Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964)||(685,644)||(346,799)||(346,799)||(649,810)||(324,905)||(324,905)|
|Payments to International Development Association||384,280||384,280||384,280||384,280||384,280||384,280|
|Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act||51,200||-||-||76,200||-||-|
|Establishment of a Canadian Securities Regulation Regime and Canadian Regulatory Authority (Budget Implementation Act, 2009)||150,000||-||-||150,000||-||-|
|Canadian Securities Regulation Regime Transition Office (Canadian Securities Regulation Regime Transition Office Act)||11,000||14,345||14,345||11,000||13,255||13,255|
|Purchase of Domestic Coinage||130,000||27,798||27,798||140,000||25,632||25,632|
|Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities)||32,149||1,238||1,238||32,000||1,238||1,238|
|Contributions to Employee Benefit Plans||12,790||3,197||3,197||12,836||3,209||3,209|
|Minister of Finance - Salary and motor car allowance||78||20||20||79||19||19|
|Payment to Ontario related to the Canada Health Transfer (Budget Implementation Act, 2009)||-||-||-||195,300||53,450||53,450|
|Subsidy Resources to the International Monetary Fund's Poverty Reduction and Growth Trust (Section 8 - Bretton Woods and Related Agreements Act)||-||-||-||40,000||-||-|
|Losses on Foreign Exchange||-||65,624||65,624||-||101,183||101,183|
|Court awards - Crown Liability and Proceedings Act||-||-||-||-||2,587||2,587|
|Payment of Liabilities Previously Recorded as Revenue||-||12,275||12,275||-||365||365|
|Refunds of Previous Years Revenue||-||-||-||-||19||19|
|Payments for Pensions Grants or Allowances in respect to the Halifax Relief Pension Continuation Act||-||-||-||-||1||1|
|Total statutory authorities||85,354,477||21,384,508||21,384,508||86,630,590||20,357,685||20,357,685|
|Total Budgetary Authorities||85,636,776||21,418,614||21,418,614||87,072,530||20,385,847||20,385,847|
|Pursuant to section 8(c) of the Bretton Woods and Related Agreements Act, the amount of financial assistance provided by the Minister of Finance for the purchase on behalf of Her Majesty in right of Canada of shares of the International Bank for Reconstruction and Development shall not exceed an amount of $98,141,398 in United States dollars over the period 2011-12 to 2015-16, and in respect of the period commencing on April 1, 2011 and ending on March 31, 2012, an amount of $20,082,471 in United States dollars, notwithstanding that the amount may exceed the equivalent in Canadian dollars estimated at $20,610,640 on September 24, 2010||20,611||-||-||-||-||-|
|Advances to Crown corporations (Gross)||-||16,335,495||16,335,495||-||23,384,721||23,384,721|
|Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross)||-||2,000||2,000||-||2,000||2,000|
|In accordance with the Bretton Woods and Related Agreements Act, the issuance and payment of non-interest bearing, non-negotiable demand notes in an amount not to exceed $384,280,000 to the International Development Association||-||-||-||-||-||-|
|Total Non-budgetary authorities||20,611||16,337,495||16,337,495||-||23,386,721||23,386,721|
|* Includes only Authorities available for use and granted by Parliament at quarter-end|
|Fiscal year 2011-2012||Fiscal year 2010-2011|
|(in thousands of dollars)||Planned expenditures for the year ending March 31, 2012||Expended during the quarter ended June 30, 2011||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2011||Expended during the quarter ended June 30, 2010||Year to date used at quarter-end|
|Transportation and communications||5,600||745||745||18,091||911||911|
|Professional and special services||14,000||1,356||1,356||19,392||2,365||2,365|
|Repair and maintenance||600||27||27||644||37||37|
|Utilities, materials and supplies||131,200||27,917||27,917||142,008||25,767||25,767|
|Acquisition of machinery and equipment||2,529||659||659||4,566||363||363|
|Public debt charges||30,251,000||7,509,042||7,509,042||31,341,000||6,907,760||6,907,760|
|Other subsidies and payments||11,000||92,245||92,245||11,000||117,923||117,923|
|Total gross budgetary expenditures||85,637,176||21,418,614||21,418,614||87,072,930||20,385,847||20,385,847|
|Less Revenues netted against expenditures||400||-||-||400||-||-|
|Total net budgetary expenditures||85,636,776||21,418,614||21,418,614||87,072,530||20,385,847||20,385,847|