Quarterly Financial Report for the Quarter Ended December 31, 2022

This quarterly financial report has been prepared by Canada Economic Development for Quebec Regions (CED) as required under section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board.

This report should be read in conjunction with the 2022–23 Estimates and the 2022–2023 Departmental Plan.

This document has not been subject to external audit or review.

1.1 Authorities, mandate and programs

The mission of Canada Economic Development for Quebec Regions (CED) is to promote the long-term economic development of the regions of Quebec by giving special attention to those where slow economic growth is prevalent or opportunities for productive employment are inadequate.

CED is the key federal player in Quebec for the promotion of economic development in the regions and among small and medium-sized businesses (SMEs). To achieve its core responsibility, which consists of developing the Quebec economy, CED fosters business startups and performance. It helps businesses become more innovative and enhance their productivity and competitiveness. It also supports community engagement efforts in the various regions of Quebec and helps attract investment aimed at boosting economic prosperity in Quebec and Canada.

CED contributes to the economic vitality of all Quebec regions by leveraging their regional competitive advantages. It supports the transition and diversification of communities that remain dependent on a limited number of sectors, or that have been affected by an economic shock, such as the closure of the chrysotile mines.

CED achieves its results by supporting businesses—primarily SMEs—and non-profit organizations (NPOs) by means of strategic investments. Through its 12 business offices located in the various regions of Quebec, and the ties it has developed with the other economic development players, CED stays abreast of the needs of the regions and businesses and is able to provide financial support for the delivery of projects that support businesses and communities in their economic development efforts.

CED has three categories of programs that support its core responsibility:

• Regional Innovation
• Community Vitality
• Temporary or Targeted Support

Additional information about CED’s authority, mandate and programs can be found in the 2022–2023 Estimates and the 2022–2023 Departmental Plan.

1.2 Basis of presentation

This quarterly report was prepared by CED using an expenditure basis of accounting. The accompanying Statement of Authorities includes CED’s spending authorities granted by Parliament and used by CED, consistent with the 2022–2023 Main Estimates. This quarterly report was prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

Prior authority from Parliament is required before funds can be spent by the Government. Authorities available for use are given in the form of annually approved limits, through appropriation acts or through legislation in the form of statutory authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

CED uses the full accrual method of accounting to prepare and present its annual financial statements that make up part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis of accounting.

Financial structure of Canada Economic Development for Quebec Regions (CED)

CED manages its expenditures under two annual votes:

• Vote 1 – Net operating expenditures, which includes CED authorities related to personnel costs, and operating and maintenance expenditures
• Vote 5 – Grants and contributions, which includes all authorities related to transfer payments

Expenses under budgetary statutory authorities, for which payments are made under legislation previously approved by Parliament and which are not part of the annual appropriations bills, include items such as the employer’s share of the employee benefit plan, and transfer payments under the Public Health Events of National Concern Payments Act.

This section presents a variety of financial information as at December 31, 2022, including the authorities available for the year and expenditures incurred during the third quarter, as compared with the previous fiscal year.

The explanation of variances in the amounts is based on the premise that discrepancies of less than 5% have a minimal impact on the interpretation of results.

The details of this financial information are provided in sections 2.1 and 2.2, and in the tables in the Appendix.

2.1 Analysis of authorities

Authorities as at December 31, 2022, totalled $667.6M, compared with $493.4M as at December 31, 2021.

The $174.2M (35.3%) increase this year is due to the following changes:

• Vote 1 – Net operating expenditures : +$2.5M
• Vote 5 – Grants and contributions : +$171.7M

NB: In the report, totals may not add up due to rounding.

The chart below shows the annual budgetary appropriation authorities as at December 31, 2022, compared with the previous fiscal year.

Image 1 - Text version:

Analysis of annual budgetary appropriation authorities: subdivided into three sections, this graph provides an overview of net available budgetary authorities (Vote 1 – Net Operating Expenditures; Vote 5 – Grants and Contributions; and Budgetary Statutory Authorities) as at September 30 and as at December 31st, 2022, including a comparison as at September 30 and as at December 31st, 2021.

As at December 31st, 2022, annual authorities under Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities, totalled $48.2M ($45.7M in 2021–2022); $613.8M ($442.0M in 2021–2022); and $5.7M ($5.7M in 2021–2022), respectively.

As at September 30, 2022, annual authorities under Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities, totalled $47.2M ($43.4M in 2021–2022); $509.9M ($391.1M in 2021–2022); and $5.7M ($5.2M in 2021–2022), respectively.

Vote 1 authorities (Net operating expenditures)

As at December 31, 2022, authorities totalled $48.2M, compared with $45.7M as at December 31, 2021. This represents an increase of $2.65M (5.5%) this year.

This increase can be attributed to the numerous temporary economic recovery initiatives currently in place, for which CED receives operating funds to ensure their delivery, and specifically to hire resources.

The year-over-year variance stems from the following items, some of which varied upward, others downward:

• Increase in funding (+$4.5M)
  • Tourism Relief Fund: +$1.6M
  • Jobs and Growth Fund: +$1.2M
  • Signing of the collective agreement: $0.9M
  • Aerospace Regional Recovery Initiative: +$0.8M
• Decrease in funding (-$2.0M)
  • Regional Air Transportation Initiative: -$1.2M
  • Regional Relief and Recovery Fund (RRRF–REGI): -$0.8M

Vote 5 authorities (Grants and contributions)

As at December 31, 2022, authorities totalled $613.8M, compared with $442.0M as at December 31, 2021. This represents an increase of $171.7M (38.9%) this year.

This variance stems from a number of items, some of which varied upward, others downward, for a net increase of $171.7M:

• Increase in funding (+$298.1M)
  • Tourism Relief Fund: +$89.1M
  • Jobs and Growth Fund: +$69.3M
  • Major Festivals and Events Support Initiative: +$50.0M
  • Aerospace Regional Recovery Initiative: +$44.4M
  • Moving up of 2023–2024 repayable contributions: +$15M
  • Canada Community Revitalization Fund: +$12.8M
  • Launch of a national quantum strategy: +$6M
  • Initiative for the development of regional economic infrastructure in Quebec: +$4.8M
  • Various items: +$4.0M
  • International Sustainability Standards Board: +$2.7M
• Decrease in funding (-$126.4M)
  • Regional Relief and Recovery Fund (REGI and CFP): -$70.7M
  • Reinvestment of repayable contributions: * -$46.7M
  • Regional Air Transportation Initiative: -$8.8M
  • Various items: -$0.2M

*In 2020–2021, as a COVID-19 mitigation measure, CED granted its clients a nine-month moratorium on the reimbursement of repayable contributions. Two years later, in 2022–2023, since these repayments are being reinvested in regular programs, CED is reporting a shortfall. These funds will be recovered over a longer period of time than originally anticipated. A total of $15M in funds from 2023 2024 was moved forward to this year to partially offset this shortfall.

Budgetary statutory authorities

As at December 31, 2022, authorities totalled $5.7M, they also stood at $5.7M as at December 31, 2021. The variance between the two years is therefore insignificant.

2.2 Analysis of expenditures

CED expenditures recorded during the third quarter of 2022–2023 totalled $130.1M, compared with $84.5M for the same period last year. This represents a net increase of $45.6M (53.9%) compared with the previous fiscal year.

This variance can be broken down as follows:

• Vote 1 – Net operating expenditures: -$1.4M
• Vote 5 – Grants and contributions: +$47.4M
• Budgetary statutory authorities: -$0.4M

On a cumulative basis as at December 31, 2022, expenditures amounted to $236.6M, compared with $223.8M, for the same period last year. This represents an increase of $12.8M (5.7%) this year.

This variance can be broken down as follows:

• Vote 1 – Net operating expenditures: +$1.1M
• Vote 5 – Grants and contributions: +$11.7M
• Budgetary statutory authorities: -$0.0M

The chart below shows expenditures in the third quarter of 2022–2023 by budgetary appropriation, compared with the previous fiscal year.

Image 2 - Text version:

Analysis of third quarter expenditures and presentation of year-to-date expenditures by budgetary appropriation as at December 31st, fiscal year 2022–2023, compared with 2021 2022: subdivided into three sections, namely Vote 1 – Net Operating Expenditures, Vote 5 – Grants and Contributions, and Budgetary Statutory Authorities. This graph shows expenditures incurred during the third quarter of 2022–2023, as well as year-to-date expenditures as at September 30, 2022, and includes a comparison with fiscal year 2021–2022.

In the third quarter of 2022–2023, expenditures under Vote 1 (Net Operating Expenditures), Vote 5 (Grants and Contributions), and Budgetary Statutory Authorities, amounted to $10.0M ($11.4M in 2021–2022); $119.6M ($72.3M in 2021–2022); and $0.5M ($0.8M in 2021–2022), respectively.

Year-to-date expenditures as at December 31st, 2022, under Vote 1 (Net Operating Expenditures), Vote 5 (Grants and Contributions), and Budgetary Statutory Authorities, totalled $33.4M ($32.3M in 2021–2022); $199.9M ($188.1M in 2021–2022); and $3.3M ($3.3M in 2021–2022), respectively.

Vote 1 expenditures (Net operating expenditures)

CED’s net operating expenditures for the third quarter of 2022–2023 totalled $10.0M, compared with $11.3M in 2021–2022. This represents a decrease of $1.3M (-12.0%) this year. The rise in computer licensing expenditures for, which the pace of payments increased compared with the same quarter a year ago, slowed down, as anticipated.

Cumulative expenditures totalled $33.4M as at December 31, 2022, compared with $32.3M as at December 31, 2021, representing an increase of $1.1M (3.4%) this year. The increase is largely attributable to a rise in salary expenditures, since additional staff had to be hired to deliver new temporary initiatives and specific COVID-19 initiatives. The renewal of certain collective agreements this year also resulted in an increase in salary expenditures.

(For further details on these expenditures, see the table entitled “Departmental budgetary expenditures by standard object” in Appendix 6.2.)

Vote 5 expenditures (Grants and contributions)

Grant and contribution expenditures for the third quarter of 2022–2023 totaled $119.6M, compared with $72.3M in 2021–2022, representing a net increase of $47.3M (65.5%) this year.

The variance can primarily be attributed to recovery initiatives that did not involve expenditures in the third quarter of 2021–2022. The Tourism Relief Fund (+$25.8M) and the Jobs and Growth Fund ($17.6M) are the increase in spending in the third quarter of 2022–2023. The remaining variances are caused by the many ups and downs of various initiatives, including the Canada Community Revitalization Fund (+$9.4M) and the Regional Relief and Recovery Fund (RRRF–REGI) (-$6.9M).

On a cumulative basis as at December 31, 2022, expenditures totalled $199.9M, compared with $188.1M as at December 31, 2021. This represents an increase in spending this year of $11.8M (6.3%).

This increase can be attributed to increased spending on economic recovery initiatives this quarter, compared with the same period last year, as well as by a slight increase in regular programming.

Expenditures under budgetary statutory authorities

Spending on statutory authorities in the third quarter of 2022–2023 totalled $0.4M, compared with $0.8M as at December 31, 2021. This represents a decrease of $0.4M compared with the third quarter of 2021–2022.

This variance can be attributed to cut-offs. Payments under the employee benefit plan were made in January.

Cumulative expenditures as at December 31, 2022, stood at $3.3M and consist solely of payments under the employee benefit plan. As at December 31, 2021, expenditures totalled $3.3M.

(For further details on these expenditures, see the table entitled “Departmental budgetary expenditures by standard object” in Appendix 6.2.)
 

3. Risks and uncertainties

4. Significant changes to operations, personnel and programs

5. Approval by senior officials

6. APPENDICES