Canadian Heritage’s quarterly financial report for the quarter ended June 30, 2017

1.1. Authority, mandate and program activities

Canadian Heritage promotes an environment in which all Canadians take full advantage of dynamic cultural experiences, celebrating our history and heritage, and built strong communities. The Department invests in the future by supporting the arts, our official and indigenous languages and our athletes and the sport system.

Further details on the Department of Canadian Heritage’s (PCH) authority, mandate and program activities can be found in the 2017-2018 Departmental Plan  and the 2017-2018 Main Estimates (PDF version, 1.52 MB).

1.2. Basis of presentation

This first quarterly financial 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 (A) for the 2017-2018 fiscal year.

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.

PCH 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.

1.3. Canadian Heritage financial structure

PCH has a financial structure composed of voted budgetary authorities that include Vote 1 – Operating expenditures and Vote 5 – Grants and Contributions, and Statutory authorities which are composed of contributions to employee benefits plans, Ministers’ Salary and motor car allowances and Statutory Payments for Lieutenant Governors.

2.1. Statement of authorities

PCH’s 2017-2018 authorities available for use at the end of the first quarter have increased by approximately $59.9 million when compared to the same quarter of 2016-2017. More specifically, the total available for use increased by $36.1 million in Vote 5 - Grants and contributions and $23.8 million in Vote 1 - Operating expenditures.

The overall increase of $59.9 million is mainly due to new funding that was secured last year for initiatives and sought in 2016-2017 Supplementary Estimates (B) and (C). These items are now reflected in PCH’s 2017-2018 Main Estimates:

• $17.6 million to support the provision of services in the Territories in French and Indigenous languages;
• $10.5 million for the Grants and Contributions Modernization Initiative including repairs to the roof of the Canadian Conservation Institute;
• $6.4 million to support the celebrations of Montreal’s 375th anniversary;
• $6.3 million for the celebrations of the 150th anniversary of Confederation;
• $5.6 million for the transfer of funds and responsibilities for the Multiculturalism Program;
• $5.2 million to support the promotion of Canadian artists and cultural industries on the world stage; and
• $5.0 million for the Harbourfront Centre Funding Program;
• $2.4 million to support the new Court Challenges Program; and
• ($0.9) million decrease for the Budget 2016 reductions in Professional Services, Advertising and Travel.

$6.9 million was also sought in 2017-2018 Supplementary Estimates (A) to support the Young Canada Works Program. Funding was secured later last year.

These increases are partially offset by a decrease of $5.0 million for the Aboriginal Languages Initiative to support Indigenous community efforts across Canada to preserve, revitalize and promote their Indigenous languages. Funding for 2017-2018 was announced in Budget 2017 and will be sought later in the year through supplementary estimates process.

The following table provides details on the changes in authorities observed from 2016-2017 to 2017-2018 at the end of the first quarter (Main Estimates and Supplementary Estimates (A)).

Changes in authorities observed from 2016-2017 to 2017-2018 at the end of the first quarter (in millions of dollars)

2.2. Departmental budgetary expenditures by standard object

Total expenditures for the first quarter of 2017-2018 have remained quite comparable to the same quarter of 2016-2017, though an increase of $3.1M (1.0%) occured: from $316,334K to $319,451K.

The Vote 5 – Grants and Contributions expenditures for the first quarter of 2017-2018 have remained relatively constant compared to the previous year’s first quarter—still, a decrease of $2.4M, from $269,434K to $266,985K, was observed. This 0.9% decrease is mainly due to the net effect of the following increases and decreases:

• $54.7M – Canada Celebration & Commemoration Program: the increase is triggered by Canada’s 150th anniversary of Confederation ($48.6M) and Montreal’s 375th anniversary ($6.1M);
• $7.5M – Canada Cultural Spaces Fund:  the source of the increase is due to the social infrastructure projects  which support the improvement, renovation and construction of arts and heritage facilities, the acquisition of specialized equipment, and the conducting of feasibility studies for cultural infrastructure projects;
• $7.0M – Canada Arts Presentation Fund: this upsurge is mainly attributable to the increase in the program’s grant maximum and authority at its last program renewal; thus, more funding is now being provided through grants agreements—which are generally paid out in full at the beginning of the fiscal year compared to contributions;
• ($68.4M) – Canada Periodical Fund: the significant decrease is caused by a delay in payments in 2017-2018 compared to 2016-2017. The difference will be resolved in the next quarter.

The Vote 1 – Operating expenditures for the first quarter of 2017-2018 have increased by $5.6M when compared to 2016-2017. This is mainly due to the $1.5M increase in Personnel, $1.4M in Professional and Special Services, and $0.7M in Utilities Materials and Supplies. The rise in Personnel payments is mainly due to the signing of newly ratified collective agreements and other pay related issues. Together, these occurrences triggered a higher amounts in retroactive payments, other allowances and benefits such as parental leave and severance, as well as an increase in seasonal and student pay compared to last year’s first quarter. The $1.4M augmentation in Professional and Special services compared to the same quarter in 2016-2017 is as a result of the Capital Experience Program involvement in Canada’s 150th anniversary of Confederation which incurred more expenses than in the same quarter of 2016-2017 such as for Canada Day celebrations and promotional materials for Canada 150th initiatives.

Statutory Expenditures are at a similar level to those observed in 2016-2017.

As noted in the table below, PCH has spent 22.0% ($319M) of its authorities in the first quarter of 2017-2018, which is relatively on par with last year’s 22.7% ($316M) for the same period of 2016-17.