Quarterly financial report for the quarter ended June 30, 2018

From: Employment and Social Development Canada

Official Title: Employment and Social Development Canada - Quarterly Financial Report - Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs - For the Quarter Ended June 30, 2018

On this page

1.0 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 for the current year.

1.1 Authority, mandate and programs

The mission of Employment and Social Development Canada (ESDC), including the Labour Program and Service Canada, is to build a stronger and more inclusive Canada, to support Canadians in helping them live productive and rewarding lives and improving Canadians’ quality of life.

The Minister of Families, Children and Social Development, the Minister of Employment, Workforce Development and Labour and the Minister of Sport and Persons with Disabilities are responsible for this organization.

ESDC delivers programs and services to each and every Canadian throughout their lives in a significant capacity. ESDC fulfills its mission by:

  • developing policies that ensure Canadians can use their talents, skills and resources to participate in learning, work and their community;
  • delivering programs that help Canadians move through life’s transitions, from school to work, from one job to another, from unemployment to employment, from the workforce to retirement;
  • providing income support to seniors, families with children and those unemployed due to job loss, illness or caregiving responsibilities;
  • helping Canadians with distinct needs, such as Indigenous people, persons with disabilities, homeless people, travelers and recent immigrants;
  • ensuring labour relations stability by providing mediation services;
  • promoting a fair and healthy workplace by enforcing minimum working conditions, promoting decent work and employment equity and fostering respect for international labour standards; and
  • delivering programs and services on behalf of other departments and agencies.

Further details on ESDC’s authority, mandate and programs may be found in Part II of the Main Estimates and in the Departmental Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities (Table 1) includes ESDC’s spending authorities granted by Parliament, consistent with the Main Estimates and the budgetary authorities used by the Department for the 2018–19 fiscal year. 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 moneys 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 authorities for specific purposes.

As part of the departmental performance reporting process, ESDC prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

The quarterly report has not been subject to an external audit or review.

1.3 ESDC’s financial structure

ESDC has a complex financial structure, with various funding mechanisms used to deliver its mandate. This includes budgetary authorities, comprised of voted and statutory authorities, as well as non-budgetary authorities. The voted budgetary authorities include Vote 1 (Operating Expenditures), vote-netted revenues, and Vote 5 (Grants and Contributions), while the statutory authorities are mainly comprised of the Old Age Security Program, the Canada Student Loans and Grants and Canada Apprentice Loans Program, the Canada Education Savings Program, the Canada Disability Savings Program, the Wage Earner Protection Program, Federal Workers’ Compensation and employee benefit plans (EBP). The non-budgetary authorities consist of loans disbursed under the Canada Student Financial Assistance Act and the Apprentice Loans Act.

The Department is financed by four main sources of funds:

  1. appropriated funds from the Consolidated Revenue Fund (CRF);
  2. the Employment Insurance (EI) Operating Account;
  3. the Canada Pension Plan (CPP); and
  4. Crown corporations and other government departments.

EI and CPP benefits and related administrative costs are charged against revenues earmarked in separate specified purpose accounts and not through appropriations from government. The EI Operating Account and the CPP are financed by employers and employees. Federal administrative costs incurred by departments in the delivery of programs related to EI and CPP are charged to the respective accounts and reported as revenues credited to the vote. Departmental costs related to the delivery of programs and services on behalf of other government departments, which are mainly for passport services and the administration of the Government Employee Compensation Act, are also reported as revenues netted against ESDC’s expenditures. The EI Operating Account and the CPP are excluded from ESDC’s Main and Supplementary Estimates. However, they are presented in the Departmental Plan. Accordingly, these accounts are not reflected in the Quarterly Financial Report.

2.0 Highlights of Fiscal Quarter and Fiscal Year-to-Date results

This section highlights the significant items that contributed to the net increase in resources available for the year and the net increase in actual expenditures for the quarter ending June 30, 2018.

ESDC’s total budgetary authority available in the first quarter ending June 30, 2018 was $60,930 million, which represents an overall increase of $2,916 million from the previous year. Much of this increase relates to an increase in statutory items. Statutory items are payments to be made under legislation previously approved by Parliament and are non-discretionary. Total Year-to-Date (YTD) budgetary authorities used as of the first quarter ending June 30, 2018 were $14,748 million. In comparison, total YTD budgetary authorities used as of the first quarter of the previous year were $14,103 million, representing a year-over-year increase of $645 million.

Figure 1: Quarter ended June 30, 2018 - 2018-19 (in millions of dollars)
Graphs comparing the proportions of Figure 1. Text version below.
Figure 1 – Text description
Details Total available Percentage Total available YTD used Percentage YTD Used
Voted 3,118  5% 651  4%
Statutory 57,812  95% 14,097  96%
Total 60,930  100% 14,748  100%
Figure 2: Quarter ended June 30, 2017 - 2017-18 (in millions of dollars)
Graphs comparing the proportions of figure 2. Text version below.
Figure 2 – Text description

Details

Total available Percentage Total available YTD used Percentage YTD Used

Voted

3,011 

5%

753 

5%

Statutory

55,003 

95%

13,350 

95%

Total

58,014 

100%

14,103 

100%

2.1 Significant changes to authorities

ESDC’s budgetary authorities available for use increased by $2,916 million compared to the first quarter of 2017–18 (Tables 1 and 2).

This increase is primarily associated with statutory items. In particular, forecasted OAS pension, Guaranteed Income Supplement (GIS) and Allowance payments represent an increase of $2,045 million, $414 million and $53 million respectively, owing to expected changes in the average monthly benefit payments and in the number of beneficiaries. Other factors contributing to the increase include:

  • An increase of $119 million in Canada Student Loans and Grants for Students and Canada Apprentice Loans Program mostly due to the implementation of Budget 2016 and Budget 2017 measures that increased the number of low-and middle-income students, including those with dependent children, eligible for the Canada Student Grants;
  • An increase of $97 million to Registered Disability Savings Grants and Bonds which is due to a steady increase in total registered Canada Disability Savings Plans and participation in the program;
  • An increase of $93 million in net operating expenditures (Vote 1), mainly related to the funding renewal in Budget 2017 for the Temporary Foreign Worker Program and new funding for the Old Age Security program workload to support the demographically driven increase;
  • An increase of $85 million to the Canada Education Savings Grant and the Canada Learning Bond, due to more Canadians saving for the post-secondary education of their children and to more children from low-income families receiving the education savings incentives for the first time in 2018–19; and
  • An increase of $10 million for other items.
Significant changes to authorities at the end of the first quarter of 2018–19
Detail

Amount (in millions of dollars)

Total budgetary authorities available for use — 2017–18

58,014

Changes to authorities available for use

Old Age Security Payments

2,045

Guaranteed Income Supplement Payments

414

Canada Student Loans and Grants and
Canada Apprentice Loans Program

119

Canada Disability Savings Program

97

Vote 1 — Operating Expenditures

93

Canada Education Savings Program

85

Allowance Payments

53

Other

10

Sub-Total - Changes to authorities available for use

2,916

Total budgetary authorities available for use — 2018–19

60,930

For non-budgetary loans, there is a net increase in authorities of $376 million from 2017–18 mainly as a result of introducing a fixed student contribution model to determine Canada Student Loans Program eligibility that allows students to gain valuable work experience without having to worry about a reduction in the amount of their financial assistance as announced in Budget 2016. In addition, the forecasted repayment amount has been decreased since more students are benefitting from the Repayment Assistance Plan, which allows Canada Student Loan borrowers in financial difficulty to make an affordable payment based on their family income.

As shown in Table 2, total authorities related to personnel expenditures have increased by $113 million, mainly due to compensation increases resulting from the signing of new collective agreements after the first quarter of 2017–18 and to the funding renewal in Budget 2017 of the Temporary Foreign Worker Program.

Variances to other operating expenditures (standard objects 02, 03, 04, 05, 06, 07 and 09) are the result of adjustments made to authorities available for use to bring them more in line with actual historical spending trends.

2.2 Significant changes to expenditures

Overall, the proportion of ESDC’s total budgetary expenditures as of June 30, 2018 is comparable to the usual spending presented at the first quarter, with approximately 24% of the authorities available for use expensed.

Compared to the previous year, total budgetary expenditures as of the quarter ending June 30, 2018 have increased by $645 million (4.6%), from $14,103 million to $14,748 million (refer to Tables 1 and 2).

This 4.6% increase is primarily explained by the rise in statutory expenditures from $13,350 million for the first quarter in 2017–18 to $14,097 million for the same period in 2018–19, representing a $747 million increase as of the end of the first quarter of 2018–19. The main reason for this rise is due to increases in statutory payments such as OAS pension and GIS payments, which have respectively increased by $500 million and $180 million. The main factor explaining these increases is the aging population, thus a greater number of seniors receiving OAS and GIS benefits in addition to higher average amounts paid to beneficiaries.

In addition, payments under the Canada Student Loans and Grants and Canada Apprentice Loans Program have increased by $38 million compared to the spending as at June 30, 2017, mostly due to increased grant amounts for low-income, middle-income and part-time students provided through the Canada Student Grants.

An increase of $12 million compared to the first quarter of 2017–18 for the Canada Disability Savings Program is due to a steady increase in the program’s participation.

Other smaller changes, equating $17 million, also contribute to the variance.

Offsetting these increases is a decrease of $54 million in Vote 5 – Grants and contributions and a decrease of $48 million in Vote 1 — Operating expenditures. The decrease in voted grants and contributions is mainly related to a decrease of Workforce Development Agreements payments to provinces and territories. In 2017–18, Canada Job Fund Agreements and Labour Market Agreements for Persons with Disabilities were consolidated into Workforce Development Agreements. New agreements were signed with most provinces and territories and these new agreements are baring new payment schedules. This decrease is partly offset by an increase in expenditures for the Early Learning and Child Care Agreements introduced after the first quarter of 2017–18. The decrease in operating expenditures, as compared to the same period last year is partly attributable to the timing of payment processing for the National Accommodation Plan paid to Public Services and Procurement Canada and for Labour Market Development Agreements administrative costs paid to provinces and territories.

Significant changes to expenditures at the end of the first quarter 2018–19
Detail Amount (in millions of dollars)
Total budgetary authorities used as of June 30, 2017 14,103
Changes in authorities used
Old Age Security Payments 500
Guaranteed Income Supplement Payments 180
Canada Student Loans and Grants and Canada Apprentice Loans Program 38
Canada Disability Savings Program 12
Vote 5 — Grants and contributions (54)
Vote 1 — Operating expenditures (48)
Other 17
Sub-Total - Changes in authorities used 645
Total budgetary authorities used as of June 30, 2018 14,748

In Table 1, the net amount of non-budgetary loans disbursed under the Canada Student Financial Assistance Act for the first quarter is negative, primarily due to timing differences between loan disbursements and repayments. Disbursements normally increase in early fall with the start of the academic year and continue until January, while repayments remain relatively stable throughout the year.

In Table 2, the increase in personnel expenditure is mostly related to compensation increases resulting from the signing of new collective agreements after the first quarter of 2017–18. Decreases in professional services and rentals (standard object 04 and 05) are mostly attributable to the timing of payments rather than changes in spending patterns.

3.0 Risks and uncertainties

ESDC faces a wide variety of risks due to its extensive mandate and responsibility for designing and delivering a broad span of programs and services to Canadians. ESDC maintains awareness of potential risks associated with the changing service delivery landscape, demographic changes within ESDC and Canadian society, protection of personal information, cyber-security, and the need to build and acquire relevant competencies in a rapidly changing work environment. ESDC is actively managing risks which could impact the Canadian public and continues to make progress on reducing risk levels for key corporate risks through an active enterprise risk management approach. This approach includes ongoing risk updates and discussions with senior management; continuous scanning of internal and external trends driving risks; aligning risk management with departmental goals; and basing risk assessments on evidence. Included in the supplementary information to the 2018–19 Departmental Plan, key risks and response strategies are reported. The key risks highlighted below might have a potential financial impact and a brief overview of progress to date to reduce them is provided.

3.1 Investment Planning and Project Management

There is a risk specific to individual projects that they may not deliver on time, within scope and on budget, or deliver their intended benefits and there is a risk that the level of ambition of the investment portfolio does not match with the Department’s capacity to execute.

Risk response strategies:

  • To improve project management capacity for major initiatives, the implementation of project management tools to provide real-time information on project status, timelines and expenditures is progressing on target.
  • A competency development model has been developed for project managers in order to improve their capacity.

3.2 Human Resource Management

There is a risk that the Department will not be able to sustain a sufficient workforce or attract skilled employees with the appropriate competencies to meet current and future organizational needs.

Risk response strategies:

  • The Staffing and Recruitment Strategy has been implemented to ensure the Department has the right people, in the right place at the right time.
  • The Professional Development Framework to manage talent has been completed.
  • To foster a productive workforce, the implementation of the Mental Health in the Workplace Integrated Framework and three-year Action Plan (2015–2018) has been completed. The Department is continuing to mitigate this risk through the development of a new three-year action plan for 2018–2021, which is currently being finalized.

4.0 Significant changes in operations, personnel and programs

To achieve the goals and commitments of the Government of Canada and ESDC Service Strategy that seeks to transform how services are delivered to clients, the Department has launched the Service Transformation Plan. This plan serves as the roadmap for the transformation and modernization of ESDC’s services and advances its vision for improved service delivery. An Integrated Service Management function has been established within the Department that will define the operational context and enabling environment for a successful implementation of the Service Transformation Plan. The agenda aims to establish a new departmental culture and way of operating to ensure service delivery is managed holistically. In 2018–19, ESDC will focus on implementing initiatives related to integrated resource planning, integrated workload management and an integrated view of all operations. More information on ESDC’s Service Strategy and Service Transformation Plan can be found in the 2018–19 Departmental Plan, under “Our vision for service excellence”.

5.0 Approval by senior officials

Original document was signed in Gatineau, Canada by:

  • Jason Won on behalf of Mark Perlman, Chief Financial Officer, on August 15, 2018
  • Louise Levonian, Deputy Minister, on August 15, 2018

Table 1: Statement of authorities (unaudited) (in thousands of dollars)

Vote Fiscal Year 2018–19 Fiscal Year 2017–18
Total available for use for the year ending March 31, 20191 Used during the quarter ended June 30, 2018 Year to date used at quarter-end Total available for use for the year ending March 31, 20181 Used during the quarter ended June 30, 2017 Year to date used at quarter-end
Budgetary
1 Operating expenditures 676,783 159,184 159,184 583,544 206,632 206,632
5 Grants and contributions 2,440,860 492,076 492,076 2,426,924 545,524 545,524
(S) Contributions to employee benefit plans 242,061 60,247 60,247 233,986 57,855 57,855
(S) Minister of Families, Children and Social Development—Salary and motor car allowance 86 21 21 84 21 21
(S) Minister of Employment, Workforce Development and Labour—Salary and motor car allowance 86 21 21 84 7 7
(S) Old Age Security Payments (Old Age Security Act) 40,854,760 10,311,371 10,311,371 38,810,000 9,810,832 9,810,832
(S) Guaranteed Income Supplement Payments (Old Age Security Act) 12,262,059 3,004,056 3,004,056 11,848,000 2,824,170 2,824,170
(S) Canada Student Grants to qualifying full and part-time students pursuant to the Canada Student Financial Assistance Act 1,190,685 116,954 116,954 1,135,016 85,669 85,669
(S) Canada Education Savings grant payments to Registered Education Savings Plan (RESP) trustees on behalf of RESP beneficiaries to encourage Canadians to save for post-secondary education for their children 912,000 211,915 211,915 843,000 206,655 206,655
(S) Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act 858,073 61,978 61,978 795,376 56,531 56,531
(S) Allowance Payments (Old Age Security Act) 550,221 136,669 136,669 497,000 131,754 131,754
(S) Canada Disability Savings Grant payments to Registered Disability Savings Plan (RDSP) issuers on behalf of RDSP beneficiaries to encourage long-term financial security of eligible individuals with disabilities 435,456 103,865 103,865 371,500 95,136 95,136
(S) Canada Disability Savings Bond payments to Registered Disability Savings Plan (RDSP) issuers on behalf of RDSP beneficiaries to encourage long-term financial security of eligible individuals with disabilities 233,243 20,242 20,242 200,600 17,202 17,202
(S) Canada Learning Bond payments to Registered Education Savings Plan (RESP) trustees on behalf of RESP beneficiaries to support access to post-secondary education for children from low-income families 159,000 28,754 28,754 143,000 28,019 28,019
(S) Wage Earner Protection Program payments to eligible applicants owed wages and vacation pay, severance pay and termination pay from employers who are either bankrupt or in receivership as well as payments to trustees and receivers who will provide the necessary information to determine eligibility 49,250 5,882 5,882 49,250 8,136 8,136
(S) Payments of compensation respecting government employees (Government Employees Compensation Act) and merchant seamen (Merchant Seamen Compensation Act) 44,000 29,080 29,080 44,000 25,109    25,109
(S) Universal Child Care Benefit (Universal Child Care Benefit Act) 12,000 3,150 3,150 24,000 1,217 1,217
(S) The provision of funds for interest and other payments to lending institutions and liabilities under the Canada Student Financial Assistance Act 4,449 2,078 2,078 7,359 1,391 1,391
(S) Payment related to direct financing arrangement under the Apprentice Loans Act 5,279 484 484 3,219 202 202
(S) Civil Service Insurance actuarial liability adjustments 145 0 0 145 0 0
(S) Supplementary Retirement Benefits—Annuities agents' pensions 35 0 0 35 0 0
(S) The provision of funds for interest payments to lending institutions under the Canada Student Loans Act 0 0 0 0 0 0
(S) The provision of funds for liabilities including liabilities in the form of guaranteed loans under the Canada Student Loans Act (2,889) (674) (674) (3,572) 16 16
(S) Spending of proceeds from the disposal of surplus Crown assets 91 0 0 216 0 0
(S) Refunds of amounts credited to revenues in previous years 44 44 44 12 12 12
(S) Spending pursuant to section 12(4) of the Canada Education Savings Act 1,972 657 657 1,652 764 764
Sub-total—Statutory items 57,812,106 14,096,794 14,096,794 55,003,962 13,350,698 13,350,698
Total budgetary 60,929,749 14,748,054 14,748,054 58,014,430 14,102,854 14,102,854
Non-Budgetary
(S) Loans disbursed under the Canada Student Financial Assistance Act 669,084 (290,518) (290,518) 280,883 (240,626) (240,626)
(S) Loans disbursed under the Apprentice Loans Act 65,890 8,052 8,052 77,880 10,472 10,472
Total Non-Budgetary 734,974 (282,466) (282,466) 358,763 (230,154) (230,154)
  • 1. Includes only authorities available for use and granted by Parliament at quarter-end.

Table 2: Departmental budgetary expenditures by standard object (unaudited) (in thousands of dollars)

Details Fiscal year 2018–19 Fiscal year 2017–18
Planned expenditures for the year ending March 31, 20191 Expended during the quarter ended June 30, 2018 Year to date used at quarter-end Planned expenditures for the year ending March 31, 20181 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end
Expenditures 
(01)  Personnel 1,963,803 516,622 516,622 1,850,345 465,217 465,217
(02)  Transportation and communications 57,471 10,289 10,289 53,905 10,049 10,049
(03)  Information 60,336 9,332 9,332 63,852 9,374 9,374
(04)  Professional and special services 622,898 106,768 106,768 618,127 134,339 134,339
(05)  Rentals 265,531 9,924 9,924 242,560 56,384 56,384
(06)  Repair and maintenance 6,239 430 430 5,243 151 151
(07)  Utilities, materials and supplies 7,123 912 912 8,403 906 906
(09)  Acquisition of machinery and equipment 29,635 2,407 2,407 34,511 1,163 1,163
(10)  Transfer payments 59,843,279 14,495,686 14,495,686 57,033,138 13,805,920 13,805,920
(12)  Other subsidies and payments 7,848 (191) (191) 3,512 3,250 3,250
Total gross budgetary expenditures 62,864,163 15,152,179 15,152,179 59,913,596 14,486,753 14,486,753
LESS: Revenues netted against expenditures
Recoverable expenditures on behalf of the Employment Insurance Operating Account (1,274,401) (308,690) (308,690) (1,267,509) (307,116) (307,116)
Recoverable expenditures on behalf of the Canada Pension Plan (336,425) (81,239) (81,239) (312,711) (75,833) (75,833)
Amounts recoverable from Crown agencies and other government departments regarding payments of injury compensation benefits (124,678) (756) (756) (124,671) (486) (486)
Other amounts recoverable from provincial and territorial governments, other departments or other programs within a department (198,910) (13,440) (13,440) (194,275) (464) (464)
Total revenues netted against expenditures (1,934,414) (404,125) (404,125) (1,899,166) (383,899) (383,899)
Total net budgetary expenditures 60,929,749 14,748,054 14,748,054 58,014,430 14,102,854 14,102,854
  • 1. Includes only authorities available for use and granted by Parliament at quarter-end.
Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: