Future-Oriented Statement of Operations (Unaudited) - For the year ended March 31, 2019

Infrastructure Canada Future-Oriented Statement of Operations (unaudited)
for the year ending March 31
(in thousands of dollars)

N/A	Forecast results 2017-18	Planned results 2018-19
Expenses
Public Infrastructure for a More Prosperous Canada	3,906,758	6,016,486
Internal Services	46,503	64,538
Total expenses	3,953,261	6,081,024
Revenues
Miscellaneous revenues	114	114
Revenues earned on behalf of government	(114)	(114)
Total revenues	0	0
Net cost of operations before government funding and transfers	3,953,261	6,081,024

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

1. Authority and Objectives

The Office of Infrastructure of Canada (INFC) was created in 2002 as a separate organization under Schedule I.1 of the Financial Administration Act, by Order in Council P.C. 2002-1323. The applied name for this organization is Infrastructure Canada.

The key to building Canada for the 21^st century is a strategic and collaborative long-term infrastructure plan that builds economically vibrant, strategically planned, sustainable and inclusive communities. INFC works closely with all orders of government and other partners to enable investments in social, green, public transit and other core public infrastructure, as well as trade and transportation infrastructure.

INFC is funded through annual and statutory appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act. INFC reports to the Minister of Infrastructure and Communities.

Order in Council P.C. 2004-325 authorizes the Minister of INFC to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada.

Order in Council P.C. 2014-144 transferred ministerial responsibility for the New Champlain Bridge Corridor Project and oversight of the Jacques Cartier and Champlain Bridges Incorporated (JCCBI) from the Minister of Transport to the Minister of INFC (effective February 13, 2014). The enabling legislation for this project, the New Bridge for the St. Lawrence Act, was enacted on June 19, 2014.

Orders in Council P.C. 2015-1237 and P.C. 2015-1238 transferred responsibility for the Gordie Howe International Bridge Project, including oversight of the Windsor-Detroit Bridge Authority (WDBA), from the Minister of Transport to the Minister of INFC (effective November 4, 2015). The WDBA is responsible for the procurement process for the design, construction, operation and maintenance for the new publicly-owned Gordie Howe International Bridge between Windsor, Ontario and Detroit, Michigan through a public-private partnership. The enabling legislation for this project, the Bridge to Strengthen Trade Act, was enacted on December 14, 2012.

Order in Council P.C. 2015-1240 designated the Minister of INFC as the Minister responsible for federal matters relating to the Toronto Waterfront Revitalization Initiative.

Order in Council P.C. 2016-0679, designated the Minister of INFC, as the appropriate Minister for PPP Canada Inc. Of note, Order in Council P.C. 2017-1329, indicated the government's intention to dissolve PPP Canada Inc.

Since 2014-15, INFC has delivered its mandate under one strategic outcome, as well as internal services, in support of its activities as described below. It should be noted that INFC will be adopting a new Departmental Results Framework in 2018-19. More details of this change can be found in the 2018-19 Departmental Plan.

Public Infrastructure for a More Prosperous Canada: INFC's key business lines and initiatives are grouped into six programs which fall under this strategic outcome.

• Funding for Provincial-Territorial Priorities - providing predictable funding to each province and territory to enhance Canada's public infrastructure system. (Provincial-Territorial Infrastructure Base Fund).
• Permanent and Flexible Infrastructure Funding - providing long-term and predictable funding for municipalities for their infrastructure priorities (Gas Tax Fund).
• Investments in National Infrastructure Priorities - provides funding to infrastructure projects that advance the national priorities (New Building Canada Fund-National Infrastructure Component, Green Infrastructure Fund, Border Infrastructure Fund, Inuvik to Tuktoyaktuk Highway Fund, Public Transit Infrastructure Fund, Clean Water and Wastewater Fund, Asset Management Fund, and Capital Building for Climate Change Challenges Fund).
• Large-Scale Infrastructure Investments - providing funding for infrastructure projects of national, regional and/or local significance (New Building Canada Fund-Provincial Territorial Infrastructure Component-National and Regional Projects, Building Canada Fund-Major Infrastructure Component, Canada Strategic Infrastructure Fund, and Gordie Howe International Bridge project).
• Infrastructure Investments in Small Communities and Rural Areas - providing funding for infrastructure projects in small communities and rural areas to support local or and/or regional priorities and economies (New Building Canada Fund-Provincial-Territorial Infrastructure Component-Small Communities Fund, and Building Canada Fund-Communities Component).
• New Bridge for the St. Lawrence Corridor Project - In support of the Government of Canada's economic and safety priorities, this program ensures the overall delivery of the New Bridge for the St. Lawrence Corridor project in Montreal, Quebec.

Internal Services: Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of INFC. Internal Services include only those activities and resources that apply across INFC, not those provided specifically for a program.

2. Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Department Plan.

The information in the forecast results for fiscal year 2017-18 is based on actual results as at December 31, 2017, and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2018-19.

The main assumptions underlying the forecasts are as follows:

• Contribution funding of $2.676 billion in 2017-18 is reprofiled to future years to better align with anticipated cash flows.
• Forecast results for 2017-18 will be $488 million less than available authorities, based primarily on anticipated cash flow requirements of contribution program recipients.
• Payments for the New Champlain Bridge Corridor project will be paid as anticipated ($500 million during 2017-18, and $700 million during 2018-19).
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue.

These assumptions are adopted as at January 15, 2018.

3. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, INFC has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

• the timing and the amount of acquisitions and disposals of property, plant and equipment which may affect gains, losses and amortization expense;
• the implementation of new collective agreements;
• the timing at which recipients submit claims for reimbursement under INFC's various transfer payment programs;
• potential changes to how transfer payment programs are accounted for;
• further changes to contributions (and operating budgets) through approval of additional new infrastructure initiatives or technical adjustments later in the year;
• any change to the progress of the New Champlain Bridge Corridor project; and
• ongoing changes to the budgetary cycle and estimates process.

After the Departmental Plan is tabled in Parliament, INFC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Result Report.

4. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for fiscal year the 2017-18, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

1. Expenses

The department records expenses on an accrual basis.

Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered including expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

2. Revenues

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Department's liabilities. Although the deputy head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of INFC's gross revenues.

5. Parliamentary Authorities

INFC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to INFC differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, INFC has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)

N/A	Forecast results 2017-18	Planned results 2018-19
Net cost of operations before government funding and transfers	3,953,261	6,081,024
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(1,500)	(3,130)
Services provided without charge by other government departments	(7,708)	(7,844)
Increase in vacation pay and compensatory leave	(439)	0
Increase in employee future benefits	(1,069)	(153)
Bad debt expense	(85)	0
Refunds of previous years' expenditures	330	560
Total items affecting net cost of operations but not affecting authorities	(10,471)	(10,567)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets (Note 6)	41,861	80,362
Total items not affecting net cost of operations but affecting authorities	41,861	80,362
Requested authorities forecast to be used	3,984,651	6,150,819

b) Authorities requested
(in thousands of dollars)

N/A	Forecast Results 2017-18	Planned Results 2018-19
Authorities requested:
Vote 1: Operating expenditures	217,124	99,902
Vote 5: Capital expenditures	576,352	760,949
Vote 10: Contributions	4,282,963	3,111,504
Statutory amounts
Employee Benefit Plan	7,326	7,782
Gas Tax Fund	2,071,933	2,170,596
Minister's Salary and Car Allowance	84	86
Total authorities requested	7,155,782	6,150,819
Less:
Amounts for reprofile (contributions)	(2,675,933)	0
Estimated unused authorities	(495,198)	0
Requested authorities forecast to be used	3,984,651	6,150,819

6. Tangible Capital Assets

INFC has the New Champlain Bridge Corridor (NCBC) project, which is a Public-Private Partnership arrangement for a new bridge crossing the St. Lawrence, as well as a new l'Île-des-Soeurs Bridge, and reconstruction and widening of the federal portion of Autoroute 15 in Montreal, Quebec.

The NCBC project involves the acquisition of tangible capital assets that are not reflected in the Statement of Operations. The value of construction in progress is recognized as a construction in progress asset, as well as a corresponding construction in progress liability. These amounts are reflected on INFC's annual Statement of Financial Position, and Statement of Change in Departmental Net Debt.

In 2017-18, there is an anticipated milestone payment of $500 million for the New Champlain Bridge Corridor project. A second milestone payment of $700 million is anticipated for 2018-19. These payments, which are recognized on the Statement of Operations, will reduce the outstanding construction in progress liability.