Archived - Department of Finance Canada Quarterly Financial Report for the quarter ended September 30, 2022 (unaudited)
Table of contents
2. Highlights of Fiscal Quarter Results
4. Significant Changes in Relation to Operations, Personnel and Programs
5. Approval by Senior Officials
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 Reports. This Quarterly Financial Report should be read in conjunction with the 2022-23 Main Estimates and Supplementary Estimates of the Department of Finance Canada.
This Quarterly Financial Report has not been subject to an external audit or review.
1.1 Authority, Mandate and Program Activities
The Department of Finance Canada (the Department) helps the Government of Canada (the government) develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs. It plays an important central agency role, working with other departments to ensure that the government's agenda is carried out and that ministers are supported with high-quality analysis and advice.
The Department's responsibilities include the following:
- Preparing the federal budget and the fall economic and fiscal update;
- Preparing the Annual Financial Report of the Government of Canada and the Public Accounts of Canada, in cooperation with the Treasury Board of Canada Secretariat and the Receiver General for Canada;
- Developing tax and tariff policy and legislation;
- Managing federal borrowing on financial markets;
- Designing and administering major transfers of federal funds to the provinces and territories;
- Developing financial sector policy and legislation; and
- Representing Canada in various international financial institutions and groups.
The description of the program activities for the Department can be found in Part II of the Main Estimates and the Departmental Plan.
1.2 Basis of Presentation
This Quarterly Financial Report has been prepared by management using an expenditure basis of accounting, and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. 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 (2021-22 and 2022-23) as well as transfers from Treasury Board central votes that are approved by the end of the quarter.
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 uses the 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.
1.3 Department of Finance Canada – Financial Structure
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 grant 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 it is within the normal course of business that statutory expenditures may in some cases exceed planned spending estimates.
- Non-budgetary authorities: Included in this category are disbursements made by the Department that 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 Program.
2. Highlights of Fiscal Quarter Results
The following section highlights the financial results and provides explanations for the fiscal quarter ended September 30, 2022 as compared to the same period last year.
| 2022-23 Authorities as at September 30, 2022 | 2021-22 Authorities as at September 30, 2021 | Variance in Authorities | Expenditures during the quarter ended September 30, 2022 | Expenditures during the quarter ended September 30, 2021 | Variance in Expenditures | |
|---|---|---|---|---|---|---|
| Budgetary Authorities | ||||||
| Vote 1 - Program Expenditures | 325,651 | 118,896 | 206,755 | 218,995 | 28,548 | 190,447 |
| Statutory Authorities | ||||||
| Major transfers to other levels of government | 81,435,883 | 83,153,228 | (1,717,345) | 23,259,794 | 24,692,877 | (1,433,083) |
| Interest on Unmatured Debt and Interest on Other Liabilities | 24,750,000 | 21,306,000 | 3,444,000 | 7,863,576 | 5,851,023 | 2,012,553 |
| Direct program expenses | 5,595,023 | 4,541,478 | 1,053,545 | 303,479 | 33,684 | 269,795 |
| Total Statutory Authorities | 111,780,906 | 109,000,706 | 2,780,200 | 31,426,849 | 30,577,584 | 849,265 |
| Total Budgetary Authorities | 112,106,557 | 109,119,602 | 2,986,955 | 31,645,844 | 30,606,132 | 1,039,712 |
| Non-Budgetary Authorities | 361,709 | 273,400 | 88,309 | 14,140,065 | 13,459,537 | 680,528 |
| Total Authorities | 112,468,266 | 109,393,002 | 3,075,264 | 45,785,909 | 44,065,669 | 1,720,240 |
2.1 Statement of Authorities
As per Table 1 – Statement of Authorities (unaudited), the total authorities available for use increased by $3,075.3 million, as compared to the same quarter in 2021-22, from $109,393 million to $112,468.3 million.
The following table provides a detailed explanation of the significant changes in the authorities available for use:
| Budgetary Authorities | Change (thousands of dollars) |
|---|---|
| Vote 1 - Program Expenditures | |
Funding in 2022-23 for the following programs:
|
205,026 |
| Funding in 2022-23 for other various programs | 1,729 |
| Sub-total Vote 1 - Program Expenditures | 206,755 |
| Statutory Authorities | |
| Decreases in major transfers to other levels of government largely due to one-time payments in 2021-22 to the provinces and territories in respect of Canada's COVID-19 Immunization Plan ($1 billion), payments related to the Canada Health Transfer to help provinces and territories address immediate health care system pressures caused by the pandemic ($4 billion) and increased recoveries related to the Alternative Payments for Standing Programs and the Youth Allowance Recovery. This decrease is partially offset by legislated increases for major transfer payments ($3.9 billion) | (1,717,345) |
| Increase in direct program expenses mostly due to an increase in authorities related to planned payments to the Canada Infrastructure Bank and International Development Association | 1,053,545 |
| Increase in interest on unmatured debt partially offset by a decrease in interest on other liabilities primarily due to higher interest rate expectations of Government of Canada bonds anticipated by private sector economists | 3,444,000 |
| Sub-total Statutory Authorities | 2,780,200 |
| Total Budgetary Authorities | 2,986,955 |
| Non-Budgetary Authorities | |
| Increase in non-budgetary authorities mostly due to an increase in authorities for financial assistance to the International Development Association, offset by a decrease in authorities for the purchase of initial shares in the Asian Infrastructure Investment Bank and payment to the International Finance Corporation for purchase of shares | 88,309 |
| Total Non-Budgetary Authorities | 88,309 |
| Total Authorities | 3,075,264 |
2.2 Statement of Departmental Budgetary Expenditures by Standard Object
As per Table 2 – Departmental budgetary expenditures by Standard Object (unaudited), the total net budgetary expenditures in the second quarter of 2022-23 increased by $1,039.7 million, as compared to the same quarter in 2021-22 largely due to the following:
- Expenditures related to Public debt charges increased by $2 billion, primarily due to an increase in interest rates, Consumer Price Index adjustments on Real Return Bonds and an increase in the stock of debt of approximately $70 billion;
- Expenditures related to Other subsidies and payments increased by $455 million, primarily due to an increase of $228.9 million in payments to the Canada Infrastructure Bank (CIB) to carry out approved activities as outlined in the CIB's corporate plan, a payment of $191.6 million to Newfoundland and Labrador, which represents the 2021 net revenues of the Hibernia Net Profits Interest and Incidental Net Profits Interest agreements, and an increase of $34 million in foreign exchange losses; and
- Expenditures related to Transfer payments decreased by $1.4 billion, primarily due to pandemic-related payments made in the previous year to provinces and territories for the COVID-19 Immunization Plan ($1 billion) and the Canada Health Transfer ($4 billion). This decrease is partially offset by legislated increases for major transfer payments as well as one-time payments to provinces and territories to address pandemic-related issues (e.g. school ventilation, surgery backlogs, municipal transit and housing).
2.3 Non-Budgetary Expenditures
Total net non-budgetary expenditures in the second quarter of 2022-23 increased by $680.5 million, as compared to the same quarter in 2021-22. This is largely due to an increase of $1,000.5 million in the value of loans disbursed to Crown corporations, resulting from an increase in their business requirements, and $450 million in loan resources provided to the Government of Ukraine to help meet its urgent balance of payment needs and support its macroeconomic stability. These were offset by $770 million in share purchases in 2021-22 in the Canada Enterprise Emergency Funding Corporation to provide a source of funds for the Large Employer Emergency Financing Facility as a result of the COVID-19 pandemic.
3. Risks and Uncertainties
The Department's Corporate Risk Profile provides a snapshot of the Department's key corporate risks. The Department's financial management framework supports strategic planning and allows for decisions on allocating resources to achieve the Department's objectives, mitigate risks and invest in people and tools in a fiscally prudent manner.
The Department monitors its operating environment to identify areas of most significant corporate risk and to reflect on progress made in implementing mitigation strategies. This allows the Department to continue to carry out its core responsibility for economic and fiscal policy, while managing corporate risks as they evolve in the current economic environment.
4. Significant Changes in Relation to Operations, Personnel and Programs
Patrick Halley was appointed Assistant Deputy Minister, International Trade and Finance, effective July 18, 2022.
5. Approval by Senior Officials
Approved by:
Michael Sabia, Deputy Minister
Ottawa, Canada
November 24, 2022
Chris Veilleux CPA, CMA, PMP
Chief Financial Officer
Ottawa, Canada
November 24, 2022
| Fiscal year 2022-2023 | Fiscal year 2021-2022 | |||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2023* |
Used during the quarter ended September 30, 2022 |
Year to date used at quarter-end |
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 |
|
| Budgetary Authorities | ||||||
| Voted authorities | ||||||
Program expenditures |
325,651 | 218,995 | 248,075 | 118,896 | 28,548 | 56,336 |
| Total voted authorities | 325,651 | 218,995 | 248,075 | 118,896 | 28,548 | 56,336 |
| Statutory authorities | ||||||
| Major transfers to other levels of government | ||||||
Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) |
45,207,608 | 11,301,902 | 22,603,804 | 43,125,784 | 10,781,446 | 21,562,892 |
Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act) |
15,938,157 | 3,984,539 | 7,969,078 | 15,473,939 | 3,868,485 | 7,736,970 |
Payments to the provinces and territories in respect of Canada's COVID-19 immunization plan (Subsection 198(2) - Budget Implementation Act, 2021, No. 1) |
- | - | - | 1,000,000 | 1,000,000 | 1,000,000 |
Payments related to Canada Health Transfer (Section 24.72 - Federal-Provincial Fiscal Arrangements Act) |
- | 2,000,000 | 2,000,000 | 4,000,000 | 4,000,000 | 4,000,000 |
Fiscal arrangements |
||||||
Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act) |
21,920,222 | 5,480,056 | 10,960,111 | 20,910,789 | 5,227,698 | 10,455,395 |
Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangements Act) |
4,552,785 | 928,768 | 2,695,249 | 4,379,879 | 893,495 | 2,592,888 |
Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities) |
42,639 | 20,082 | 21,320 | 42,639 | 20,082 | 21,319 |
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964) |
(1,151,088) | - | - | (1,043,982) | - | (521,991) |
Other major transfers |
||||||
Additional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act) |
47,772 | - | - | - | 85,626 | 85,626 |
Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act) |
(5,222,212) | (1,305,553) | (2,611,106) | (4,735,820) | (1,183,955) | (2,367,910) |
Payments for school ventilation improvement pursuant to the Economic and Fiscal Update Implementation Act, 2021 |
100,000 | 100,000 | 100,000 | - | - | - |
Payments in relation to transit and housing (Budget Implementation Act, 2022, No. 1) |
- | 750,000 | 750,000 | |||
| Total major transfers to other levels of government | 81,435,883 | 23,259,794 | 44,488,456 | 83,153,228 | 24,692,877 | 44,565,189 |
| Interest on Unmatured Debt and Interest on Other Liabilities | ||||||
Interest on Unmatured Debt and Other Public Debt Costs |
19,638,000 | 6,570,554 | 12,909,303 | 16,173,000 | 4,571,874 | 9,077,424 |
Interest on Other Liabilities |
5,112,000 | 1,293,022 | 2,592,880 | 5,133,000 | 1,279,149 | 2,577,396 |
| Total Interest on Unmatured Debt and Interest on Other Liabilities | 24,750,000 | 7,863,576 | 15,502,183 | 21,306,000 | 5,851,023 | 11,654,820 |
| Direct program expenses | ||||||
Operating expenses |
||||||
Purchase of Domestic Coinage |
82,000 | 26,633 | 46,356 | 84,000 | 20,956 | 39,244 |
Contributions to Employee Benefit Plans |
14,951 | 3,737 | 7,476 | 13,037 | 3,236 | 6,471 |
Deputy Prime Minister and Minister of Finance – Salary and motor car allowance |
93 | 23 | 46 | 91 | 30 | 45 |
Minister of Tourism and Associate Minister of Finance – Motor car allowance |
2 | - | - | 2 | - | 1 |
Transfer payments |
||||||
Payment to the International Development Association (Bretton Woods and Related Agreements Act) |
911,436 | - | - | 423,240 | - | - |
Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act |
53,424 | - | - | 53,132 | - | - |
Payments of any amount that is required for the purpose of providing financial assistance, pursuant to section 8.3 of the Bretton Woods and Related Agreements Act |
- | 52 | 52 | - | - | - |
Other |
||||||
Losses on Foreign Exchange |
- | (14,325) | 13,446 | - | (46,928) | 1,839 |
Refunds of Previous Years Revenue |
- | (1,370) | - | - | - | |
Payment of Liabilities Previously Recorded as Revenue |
- | 6,109 | 6,109 | - | 2,701 | 4,427 |
Payment to the Canada Infrastructure Bank (Canada Infrastructure Bank Act) |
4,533,117 | 282,620 | 373,450 | 3,967,976 | 53,689 | 114,427 |
Payment under subsection 12(2) of the Canadian Commercial Corporation Act to the Canadian Commercial Corporation |
- | - | - | - | - | 13,000 |
| Total direct program expenses | 5,595,023 | 303,479 | 446,935 | 4,541,478 | 33,684 | 179,454 |
| Total statutory authorities | 111,780,906 | 31,426,849 | 60,437,574 | 109,000,706 | 30,577,584 | 56,399,463 |
| Total budgetary authorities | 112,106,557 | 31,645,844 | 60,685,649 | 109,119,602 | 30,606,132 | 56,455,799 |
| Non-budgetary authorities | ||||||
Purchase of initial shares pursuant to the Asian Infrastructure Investment Bank Agreement Act |
- | - | - | 49,000 | - | - |
Advances to Crown corporations (Gross) |
- | 13,677,065 | 28,954,199 | - | 12,683,537 | 29,895,263 |
Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross) |
- | 13,000 | 19,000 | - | 6,000 | 12,000 |
Payments under Bretton Woods and Related Agreements Act - National Governments (Gross) |
- | 450,000 | 1,950,000 | - | - | - |
Payment to the Canada Enterprise Emergency Funding Corporation to purchase shares pursuant to paragraph 60.2(2)(a) of the Financial Administration Act to support the Large Employer Emergency Financing Facility |
- | - | - | - | 770,000 | 2,670,000 |
Payment to the International Finance Corporation for purchase of shares (Bretton Woods and Related Agreements Act, Subsection 8(2)) |
- | - | - | 224,400 | - | - |
Financial assistance to the International Development Association (Bretton Woods and Related Agreements Act, Section 8) |
361,709 | - | - | - | - | - |
| Total non-budgetary authorities | 361,709 | 14,140,065 | 30,923,199 | 273,400 | 13,459,537 | 32,577,263 |
| Total authorities | 112,468,266 | 45,785,909 | 91,608,848 | 109,393,002 | 44,065,669 | 89,033,062 |
|
* Includes only Authorities available for use and granted by Parliament at quarter-end |
||||||
| Fiscal year 2022-2023 | Fiscal year 2021-2022 | |||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2023 |
Expended during the quarter ended September 30, 2022 |
Year to date used at quarter-end |
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 |
113,918 | 27,413 | 54,658 | 101,776 | 28,169 | 54,459 |
Transportation and communications |
3,095 | 404 | 752 | 2,689 | 166 | 220 |
Information |
4,671 | 1,056 | 2,142 | 6,694 | 1,151 | 1,865 |
Professional and special services |
19,184 | 1,753 | 4,672 | 15,129 | 1,443 | 4,439 |
Rentals |
2,679 | 164 | 884 | 3,081 | 173 | 837 |
Repair and maintenance |
187 | 110 | 111 | 562 | 50 | 73 |
Utilities, materials and supplies |
82,370 | 26,669 | 46,412 | 84,327 | 20,995 | 39,304 |
Acquisition of land, buildings and works |
- | - | - | - | 49 | 49 |
Acquisition of machinery and equipment |
5,109 | 233 | 492 | 1,864 | 235 | 313 |
Transfer payments |
82,400,779 | 23,259,846 | 44,488,508 | 83,629,635 | 24,693,031 | 44,565,472 |
Public debt charges |
24,750,000 | 7,863,576 | 15,502,183 | 21,306,000 | 5,851,023 | 11,654,820 |
Other subsidies and payments |
4,724,715 | 464,620 | 584,835 | 3,967,995 | 9,647 | 133,948 |
| Total gross budgetary expenditures | 112,106,707 | 31,645,844 | 60,685,649 | 109,119,752 | 30,606,132 | 56,455,799 |
| Less Revenues netted against expenditures | 150 | - | - | 150 | - | - |
| Total net budgetary expenditures | 112,106,557 | 31,645,844 | 60,685,649 | 109,119,602 | 30,606,132 | 56,455,799 |
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