Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended September 30, 2021

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

This quarterly 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. This quarterly report should be read in conjunction with the Main Estimates as well as Budget 2021.

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. Infrastructure Canada (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.

Further information on INFC's mandate, responsibilities, and programs can be found in INFC's 2021-22 Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes INFC's spending authorities granted by Parliament and those used by INFC consistent with the Main Estimates and Supplementary Estimates for the 2021-22 fiscal year (FY). 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 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.

INFC 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.

In the past, INFC has worked in collaboration with other federal departments and agencies to deliver some of its transfer payment programs (collectively known as federal delivery partners).

It should be noted that this quarterly report has not been subject to an external audit or review.

Highlights of Fiscal Quarter and Fiscal Year-to-Date Results

This section highlights the significant items that contributed to the change in resources available for use from 2020-21 to 2021-22 and in actual expenditures as of September 30, 2020 and September 30, 2021.

Authorities

As shown in the Statement of Authorities, INFC's total authorities available for 2021-22 are $9.9 billion as of the end of Quarter 2 (Q2) and represent a $1.9 billion increase compared to the same quarter in the prior year (PY).

Graph 1: Comparison of Authorities Available as of September 30, 2020 and September 30, 2021

Text description of Graph 1

Bar graph showing the comparison of authorities available for use as of September 30, 2020 and September 30, 2021.

• Operating authorities available as of Q2 2020-21 were $146.01 million, compared with $193.89 million as of Q2 2021-22.
• Capital authorities available as of Q2 2020-21 were $148.37 million, compared with $95.91 million as of Q2 2021-22.
• Contribution (Voted and Statutory) authorities available as of Q2 2020-21 were $7.68 billion, compared with $9.56 billion as of Q2 2021-22.      
• Contributions to the Employee Benefit Plan authorities available as of Q2 2020-21 were $7.76 million, compared with $15.05 million as of Q2 2021-22.
• The total of authorities available for use as of Q2 2020-21 were $7.98 billion, compared with $9.86 billion as of Q2 2021-22.

This increase is summarized in the table below:

Table 1: Year-to-date change in total authorities as of September 30, 2021

Authorities	Increase/(Decrease) vs. Prior Year-to-date (000's)	% Change vs. prior year
Operating Expenditures	47,875	32.8%
Capital Expenditures	(52,468)	(35.4%)
Contributions (Voted and Statutory)	1,878,663	24.5%
Contributions to Employee Benefit Plans (EBP)	7,297	94.1%

The sources of significant year-over-year changes are summarized as follows:

• Operating Expenditures – This increase is mainly due to funding received to sustain departmental operations from the Program Integrity Treasury Board submission – Strengthen Stewardship of Canadian Infrastructure: Long-Term Resourcing Strategy, as well as new Operating funding required to deliver on three new Programs: Funding to Improve Ventilation in Public Buildings, Green and Inclusive Community Buildings Program and Permanent Public Transit Fund.
• Capital Expenditures – As the Samuel De Champlain Bridge Corridor (SDCBC) project is now in the Operations, Maintenance and Rehabilitation phase, capital expenditures are decreasing year over year to align with the current obligations.
• Contributions (Voted and Statutory) – This increase is mainly due to the top up to the Canada Community-Building Fund (CCBF) previously named Gas Tax Fund.
• Contributions to Employee Benefit Plans – This increase is reflective of the growth in full time equivalents (FTEs) associated with the new Programs listed in the Operating Expenditures section.

Expenditure Analysis

Expenditures at the end of Q2 were $5.5 billion, compared to $2.7 billion reported in the same period of 2020-21, representing an increase of 105.3% between Q2 of the two years. The source of the relative increase is demonstrated in the tables, graphs and analysis below.

Graph 2: Comparison of Total Expenditures as of September 30, 2020 and September 30, 2021

Text description of Graph 2

Bar graph showing the comparison of total expenditures used year-to-date as of September 30, 2020 and September 30, 2021.

• Authorities used for Operating as of Q2 2020-21 were $63.23 million, compared with $88.7 million as of Q2 2021-22.

• Authorities used for Capital as of Q2 2020-21 were $47.69 million, compared with $6.65 million as of Q2 2021-22.
• Authorities used for Contributions (Voted and Statutory) as of Q2 2020-21 were $2.55 billion compared with $5.39 billion as of Q2 2021-22.
• Authorities used for Contributions to the Employee Benefit Plan as of Q2 2020-21 were $3.88 million, compared with $5.29 million as of Q2 2021-22.
• Total year-to-date budgetary expenditures as of Q2 2020-21 were $2.66 billion, compared to $5.47 billion as of Q2 2021-22.

Table 2: Change in year-to-date expenditures as of September 30, 2021

Year-to-date expenditures	Increase/(Decrease) vs. Prior Year-to-date (000's)	% Change vs. prior year
Operating Expenditures	25,477	40.3%
Capital Expenditures	(41,039)	(86.1%)
Contributions (Voted and Statutory)	2,819,627	110.6%
Contributions to Employee Benefit Plans	1,408	36.3%

The sources of significant year-over-year changes are summarized as follows:

• Operating and Capital Expenditures – Further details are provided later in this report, by standard object.
• Contributions (Voted and Statutory) – Further details by program are provided below.
• Contributions to Employee Benefit Plans – The increase in INFC's contribution to the Employee Benefit Plan is directly attributable to an increase in the number of FTEs currently employed at INFC.

Graph 3: Comparison of Authorities used for Contributions (Voted and Statutory) as of September 30, 2020 and September 30, 2021

Text description of Graph 3

Bar graph showing the comparison of authorities used for Contributions (Voted) and Contributions (Statutory) as of September 30, 2020 and September 30, 2021.

• Contributions (Voted and Statutory) expensed in the quarter were $237.6 million as of Q2 2020-21, compared to $2.84 billion as of Q2 2021-22.
• Contributions (Voted and Statutory) expensed year-to-date as of the end of Q2 2020-21 were $2.55 billion, compared to $5.37 billion as of Q2 2021-22.

Significant changes in year-to-date contribution expenditures between September 2020 and September 2021 were as follows:

Table 3: Change in year-to-date expenditures by contribution program as of September 30, 2021

Program Fund	Increase/(Decrease) vs. Prior Year-to-date (000's)	% Change vs. prior year
Canada Community-Building Fund (CCBF) - Statutory	2,319,767	107%
New Building Canada Fund-Provincial-Territorial Infrastructure Component-National and Regional Projects (NBCF-PTIC-NRP)	114,449	70%
Public Transit Infrastructure Fund (PTIF)	107,573	325%
Investing in Canada Infrastructure Program (ICIP): Public Transit Infrastructure Stream	83,823	101,807%
New Building Canada Fund-National Infrastructure Component (NBCF-NIC)	70,875	475%
Building Canada Fund-Major Infrastructure Component (BCF-MIC)	55,719	676%
Toronto Waterfront (TWRI)	25,885	105%
Investing in Canada Infrastructure Program (ICIP): COVID-19 Resilience Stream	20,017	N/A
Canada Healthy Communities Initiative (CHCI)	11,556	N/A
P3 Canada Fund (P3CF)	(13,375)	(100%)

The sources of significant year-over-year changes are summarized as follows:

• CCBF – Similar to 2020, the Canada Community-Building Fund (previously named as Gas Tax Fund) was accelerated this year and provided in a single payment in June to help Canadian communities recover from the COVID-19 pandemic as quickly as possible while respecting public health guidelines. As the allocation is indexed, the FY 2021-22 allocation was $2.27 billion, which is 5% higher than FY 2020-21. In addition, top-up payments were released in July for a total amount of $2.22 billion. 
• NBCF-PTIC-NRP – More claims were received and processed by the end of Q2 2021-22, compared to 2020-21.
• PTIF – In the next two years,  a significant  number of projects are expected to be completed. To date Québec, Ontario, British Columbia and Manitoba have submitted $140.4 million in claims.
• Public Transit Infrastructure Stream ICIP - More claims were received and processed for Alberta, British Columbia and Quebec under the PTIS stream by the end of Q2 2021-22, compared to 2020-21.
• NBCF-NIC – All the contribution agreements in this program have now been signed. Many of the projects are under implementation which is contributing to claims being higher than the previous year.
• BCF-MIC – An advance payment was sent to Transport Canada in the amount of $63.3 million for agreements managed on behalf of Infrastructure Canada.
• TWRI – More claims have been paid in Q2 of FY 2021-22 compared to FY 2020-21. This fiscal year most of the current forecast was paid by end of Q2.
• COVID-19-Resilience Stream ICIP – This stream is planning to spend $1 billion more this year compared to FY 2020-21. To date Québec submitted almost $20 million in claims. More claims are forecasted to be received in FY 2021-22.
• CHCI – The entire forecasted amount for this year was claimed in Q1. No other claims will be submitted in FY 2021-22.
• P3CF – The remaining four projects are expected to be completed and closed in this FY. Hamilton Biosolids Facility, the first of four projects under P3CF, was closed with a significant cost savings in August.  No claims have been paid this year for the other three projects.

Departmental Budgetary Expenditures by Standard Object

The planned Departmental Budgetary Expenditures by Standard Object are set out in the table at the end of this report. Aggregate year-to-date expenditures in 2021-22 increased by $2.805 billion, compared with the same quarter last year. The largest single factor was an increase in transfer payments as explained above.

A breakdown of variances in year-to-date spending by standard object is below:

Table 4: Change in year-to-date expenditures by standard object as of September 30, 2021

Changes to Expenditures by Standard Object	Increase/(Decrease) vs. Prior Year-to-date (000's)	% Change vs. prior year
Transfer payments	2,819,627	110.6%
Public Debt Charges	17,966	N/A
Personnel	11,000	31.6%
Repair and Maintenance	1,711	33.2%
Transportation and Communication	367	922.6%
Utilities, materials and supplies	(9)	(48.1%)
Information	(13)	(5.3%)
Rentals	(43)	(5%)
Acquisition of Machinery and Equipment	(216)	(62.6%)
Acquisition of Land, Buildings and Works	(8,760)	(76.1%)
Other Subsidies and Payments	(9,234)	(100%)
Professional and Special Services	(26,953)	(51.3%)

The sources of significant year-over-year changes are summarized as follows:

• Transfer payments – Details were previously discussed.
• Public debt charges – The increase is explained by an interest expense payment made for the Samuel De Champlain Bridge Corridor (SDCBC). These payments were previously coded under Other subsidies and payments.
• Personnel – Increase in the number of employees.
• Repair and maintenance – The increase is mainly related to SDCBC as the project is in the Operating and Maintenance phase.
• Transportation and communications – The increase is related to increased spending on mobile devices and monthly services fees compared to Q2 of FY 2020-21.
• Acquisition of machinery and equipment – This decrease is due to reduced spending on office equipment and furniture related to COVID-19.
• Acquisition of land, buildings and work – The decrease is related to the monthly capital payment made for the SDCBC project. The capital portion of the monthly payment was higher at the beginning of the year in 2020-21, but was later adjusted based on the Present Value calculation table – a new approach that was recommended by the Office of the Comptroller General.
• Other subsidies and payments – The interest expense payment made for the SDCBC project was reported under this standard object in 2020-21. As per Receiver General recommendation, interest payment for SDCBC are now coded under Public debt charges.
• Professional and special services – The decrease is due to reduced engineering consultation costs related to payments for the Réseau Express Métropolitain (REM) project, which are reimbursed based on an agreement between REM Inc. and INFC.

Overall, INFC has spent 55.5% of its current Total Authorities as of September 30, 2021, compared to 33.4% at the end of Q2 of the previous fiscal year.

Risks and Uncertainties

In most cases, INFC funds projects via a Contribution Agreement or Integrated Bilateral Agreement between Canada and a Provincial/Territorial (PT) government. PT governments then enter into their own agreements with municipalities, who are ultimately responsible for project management and construction of the infrastructure. 

Most of INFC's programs are structured in such a way that funding flows from the Department based on requests for reimbursements. It is important to note that federal spending is not an accurate measure of when the economic activity created by infrastructure spending occurs. When projects are approved, work begins and economic activity is generated by provinces, territories and municipalities, which are responsible for implementing projects and incurring costs. INFC makes the federal contribution only when requested by partners.

There are a variety of reasons that can affect the timing of requests for reimbursements, which can contribute to a variance between planned spending and actual spending. Some projects, once approved, move quickly into the construction phase while others have longer lead times for planning, and local approval processes (e.g. zoning and permitting). Regardless of how long planning takes or how soon ground can break, eligible costs can be submitted for reimbursement throughout the life of the project.

INFC encourages PTs to submit claims in a timely manner to ensure the flow of funding as planned. Parliamentary authority to spend typically expires at the end of the fiscal year; however, in response to the needs of its project partners, INFC reprofiles its authorities as needed so that the funding committed to specific projects continues to be available in future years when needed.

In addition, INFC has worked with provinces and territories to introduce improvements to the flow of funding processes to better align authorities of existing programs to expenditures and improve predictability of high materiality projects. It also used lessons learned from legacy programs to introduce additional flexibilities in the design of new programs such as flexibility in funding mechanism and basis of payments. These efforts should yield important impacts over the coming years.

INFC is committed to making infrastructure investments that support economic growth and job creation, help combat the effects of climate change, and build inclusive communities. While COVID-19 has not changed these priorities, the Department is focused on doing more with its existing resources and building back better. As current programs are adapted and a suite of new programming is launched, resource management practices and sound financial stewardship are key and center in ensuring successful delivery. Although recipients continue to experience constraints resulting from COVID-19 which affect the implementation of new projects, INFC is committed to provide funding to them in a timely fashion.

Therefore INFC is focusing efforts on attracting and retaining employees with the skill sets and experience necessary to fulfil the department's evolving mandate, and on implementing additional flexibilities to allow provinces and territories more time for the completion of projects under several programs. For example, the ICIP COVID-19 stream has been extended to allow projects by provinces to be completed by December 31st, 2023 and projects in the territories and in remote communities must be completed by December 31st, 2024.

Significant Changes in Relation to Operations, Personnel and Programs

Infrastructure Canada continues to grow and evolve. Since the last Quarterly Financial Report, the following significant changes have taken place within the department:

• INFC secured $1.38 billion over 12 years starting in 2021-22 for the Disaster Mitigation and Adaptation Fund, of which $670 million is to be dedicated to a new Small-Scale Projects Stream for projects between $1 million and $20 million in total eligible costs and approve the amended program terms and conditions, including enhancements to support Indigenous recipients and improve access to communities of all size.
• INFC secured $5.8 million over 2 years starting in 2021-22 to support the Minister of Infrastructure and Communities in negotiations and due diligence work towards the potential transfer of ownership of the Quebec Bridge to the Government of Canada.
• INFC increased its EXs baseline by one EX position to implement the new Permanent Transit Funding Program and lead the Centre for Rural Economic Development.

Approval by Senior Officials

Approved by:

Signed at Ottawa, Canada

Office of Infrastructure Canada
Quarterly Financial Report
For the quarter ended September 30, 2021

Departmental budgetary expenditures by Standard Objects (unaudited)
(in thousands of dollars)

Fiscal year 2021-22

N/A	Planned expenditures for the year ending March 31, 2022	Expended during the quarter ended September 30, 2021	Year-to-date used at quarter-end
Expenditures:
Personnel	103,182	24,709	45,781
Transportation and communications	1,907	375	407
Information	605	142	242
Professional and special services	51,522	2,578	25,631
Rentals	2,607	396	826
Repair and maintenance	41,616	4,336	6,873
Utilities, materials and supplies	340	5	10
Acquisition of land, buildings and works	70,346	1,650	2,744
Acquisition of machinery and equipment	2,344	84	129
Transfer payments	9,558,259	2,838,856	5,368,717
Public debt charges	30,379	10,795	17,996
Other subsidies and payments	-	(1)	(1)
Total net budgetary expenditures	9,863,107	2,883,925	5,469,356

Departmental budgetary expenditures by Standard Objects (unaudited)
(in thousands of dollars)

Fiscal year 2020-21

N/A	Planned expenditures for the year ending March 31, 2021	Expended during the quarter ended September  30, 2020	Year-to-date used at quarter-end
Expenditures:
Personnel	65,731	18,347	34,781
Transportation and communications	1,563	21	40
Information	659	237	256
Professional and special services	126,038	40,398	52,585
Rentals	1,494	492	869
Repair and maintenance	46,238	4,132	5,162
Utilities, materials and supplies	163	10	19
Acquisition of land, buildings and works	29,599	6,903	11,504
Acquisition of machinery and equipment	3,048	150	344
Transfer payments	7,679,596	237,600	2,549,090
Public debt charges	-	-	-
Other subsidies and payments	27,610	5,543	9,233
Total net budgetary expenditures	7,981,740	313,832	2,663,883

Office of Infrastructure Canada
Quarterly Financial Report
For the quarter ended September 30, 2021

Statement of Authorities (unaudited)
(in thousands of dollars)

Fiscal Year 2021-22

N/A	Total available for use for the year ending March 31, 2022	Used during the quarter ended September 30, 2021	Year-to-date used at quarter-end
Vote 1 – Operating expenditures	193,796	38,946	88,664
Vote 5 – Capital expenditures	95,908	3,462	6,648
Vote 10 – Contributions	5,068,176	617,740	878,634
Budgetary Statutory Authorities
(S) – Contributions to employee benefit plans	15,054	2,643	5,286
(S) – Canada Community-Building Fund	4,490,082	2,221,116	4,490,082
(S) – Municipal Asset Management Program	-	-	-
(S) – Minister salary and car allowance	91	18	41
Total Budgetary Authorities	9,863,107	2,883,925	5,469,356
Non-Budgetary Authorities	-	-	-
Total Authorities	9,863,107	2,883,925	5,469,356

Statement of Authorities (unaudited)
(in thousands of dollars)

Fiscal Year 2020-21

N/A	Total available for use for the year ending March 31, 2021	Used during the quarter ended September  30, 2020	Year-to-date used at quarter-end
Vote 1 – Operating expenditures	145,922	39,097	63,182
Vote 5 – Capital expenditures	148,376	34,513	47,687
Vote 10 – Contributions	5,509,280	237,600	378,774
Budgetary Statutory Authorities
(S) – Contributions to employee benefit plans	7,757	2,586	3,879
(S) – Canada Community-Building Fund	2,170,316	-	2,170,316
(S) – Municipal Asset Management Program	-	-	-
(S) – Minister salary and car allowance	89	37	45
Total Budgetary Authorities	7,981,740	313,832	2,663,883
Non-Budgetary Authorities	-	-	-
Total Authorities	7,981,740	313,832	2,663,883