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Quarterly financial report for the quarter ended December 31, 2020

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 December 31, 2020.

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1. 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 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 improve Canadians’ quality of life.

The Ministers responsible for Employment and Social Development Canada are:

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

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

1.1 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities (Table 3) includes ESDC’s spending authorities granted by Parliament, consistent with the Main Estimates and the budgetary authorities used by the Department for the fiscal year ending March 31, 2021. 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.

1.2 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:

The statutory authorities are mainly comprised of:

The non-budgetary authorities consist of loans disbursed under the Canada Student Financial Assistance Act and the Apprentice Loans Act.

The Department is generally financed by 4 main sources of funds:

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. While presented in the Departmental Plan, the EI Operating Account and the CPP are excluded from ESDC’s Main and Supplementary Estimates. Accordingly, these accounts are not reflected in the Quarterly Financial Report.

2. Highlights of Fiscal Quarter and Fiscal Year-to-Date results

As Canada’s economy closed in mid-March, the Government of Canada focused its efforts on ensuring Canadians had timely and efficient support when they needed it most for reasons related to COVID-19. At the onset of COVID-19, ESDC had to continue supporting Canadians, while undertaking the monumental task of developing and delivering new benefits and services to reach all Canadians in need during these unprecedented times. The priority was to establish, implement, and quickly distribute the Canada Emergency Response Benefit (CERB), working with the Canada Revenue Agency.The department also focused on helping seniors and people with disabilities, supporting students and recent graduates, and also, helping Youth with Canada Summer Jobs program, and addressing the pressing needs of vulnerable populations, including Canadians experiencing homelessness.

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 December 31,2020.

ESDC’s total budgetary authority available in the third quarter ending December 31, 2020 was $170,193 million, which represents an overall increase of $105,158 million from the previous year. Much of this increase relates to COVID-19 benefits to be provided to the public as a result of the pandemic. These benefits are part of the 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 third quarter ending December 31, 2020 were $108,515 million. In comparison, total YTD budgetary authorities used as of the third quarter of the previous year were $48,715 million, representing a year-over-year increase of $59,800 million.

Figure 1: Quarter ended December 31, 2020
Figure 1
Text description
Authorities Total available % Total available YTD used % YTD Used
Voted 4,084 2% 3,160 3%
Statutory 166,109 98% 105,355 97%
Total 170,193 100% 108,515 100%
Figure 2: Quarter ended December 31, 2019
Figure 2
Text description
Authorities Total available % Total available YTD used % YTD Used
Voted 3,933 6% 2,787 6%
Statutory 61,102 94% 45,928 94%
Total 65,035 100% 48,715 100%

2.1 Significant changes to authorities

ESDC’s budgetary authorities available for use increased by $105,158 million compared to the third quarter of the fiscal year ending March 31, 2020 (Tables 3 and 4).

Approximately $99,053 million of the increase in the authorities available for use is due to benefits to be provided as part of the department’s response to COVID-19 under the Public Health Events of National Concern Payments Act. The most significant measure being $88B for the Canada Emergency Response Benefit (CERB). Other measures include the Canada Emergency Student Benefit (CESB), Additional support for Canadian Seniors, Support for provincial and territorial job training efforts (LMTA), Support for Students and Youth impacted by COVID-19, the Emergency Community Support Fund (ECSF), Safe Restart for Indigenous Communities (IELCC), Reaching Home, New Horizons for Seniors, Temporary Foreign Workers on farms, Support for persons with disabilities (National Workforce Accessibility), and Personal Support Worker Training and Measures to Address Labour Shortages in Long-Term and Home Care.

The remainder of the increase ($6,105 million) is mainly associated with statutory items.

Table 1: Significant changes to authorities at the end of the third quarter of the fiscal year ending March 31, 2021.
Detail (in millions of dollars)
Total budgetary authorities available for use for the fiscal year ending March 31, 2020 65,035
Changes to authorities available for use N/A
Payments related to Public Health Events of National Concern and income support 99,053
Old Age Security benefits 3,324
Canada Student Loans Program and Canada Apprentice Loans 1,623
One-time payment to persons with disabilities pursuant to An Act respecting further COVID-19 measures 849
Vote 5: Grants and contributions 153
Canada Disability Savings Program 112
Spending of Revenues pursuant to subsection 5.2(2) of the Department of Employment and Social Development Act 38
Canada Education Savings Program 34
Contributions to employee benefit plans (26)
Other (2)
Sub-Total: Changes to authorities available for use 105,158
Total budgetary authorities available for use for the fiscal year ending March 31, 2021 170,193

Related to non-budgetary loans, there is a net increase in authorities of $1,171.4 million from the fiscal year ending March 31, 2020, mainly attributed to new COVID-19 measures on the 6 month moratorium on CSLP payments.

As shown in Table4, total authorities related to transfer payments have increased by $104,831 million compared to the third quarter of the fiscal year ending March 31, 2020 mainly due to COVID-19 measures undertaken to provide relief to the public. There is also an increase of $536 million to professional and special services in part due to the delivery of measures such as CERB and CESB by the Canada Revenue Agency.

The variance in total authorities for Other subsidies and payments (standard object 12) and for Amounts recoverable from Crown agencies and other government departments regarding payments of injury compensation benefits are related. The reason for these variances is mainly attributable to the revenues of the Working Conditions and Workplace Relations program as a result of a change in presentation. Going forward, these revenues, which are related to Government Employees’ Compensation act, are being presented under Other subsidies and payments and no longer under Amounts recoverable from Crown agencies and other government departments regarding payments of injury compensation benefits.

Variances to other operating expenditures (standard objects 01, 02, 03, 05, 06, 07 and 09) are the result of adjustments made to authorities available for use to align them with actual historical spending trends.

2.2 Significant changes to expenditures

Overall, the proportion of ESDC’s total budgetary expenditures as of December 31, 2020 is approximately 64% of the authorities available for use expensed. The decreased percentage compared to the usual 75% spending at this period of the fiscal year is mainly due to the significant authorities available to meet the potential demand for CERB and other COVID-19 measures.

Compared to the previous year, total budgetary expenditures as of the quarter ending December 31, 2020 have increased by $59,800 million, from $48,715 million to $108,515 million (refer to Tables 3 and 4).

This large increase is almost all explained by the rise in statutory expenditures from $45,928 million for the third quarter in the fiscal year ending March 31, 2020 to $105,355 million for the same period in the fiscal year ending March 31, 2021, representing a $59,427 million increase as of the end of the third quarter of the fiscal year ending March 31, 2021. The main reason for this rise is due to the COVID-19 related statutory benefit payments under the Public Health Events of National Concern Payments Act. which are responsible for 48,868 million of the increase. In addition, the Canada Recovery Benefits account for an amount of $7,264 million and One-time Payment to Persons with Disabilities for an amount of $770 million. Increases to other statutory payments such as OAS benefits, have also contributed to $2,092 million of this increase as at December 31, 2020. The main factor explaining these increases is the aging population, thus a greater number of seniors receiving benefits in addition to higher average amounts paid to beneficiaries.

Payments under the Canada Student Loans Program and Canada Apprentice Loans have increased by $484 million compared to the spending as of December 31, 2019. The variance is due to an increase in grants caused by the new temporary COVID-19 measure on the doubling of Canada student grants for loan year 2020 to 2021. This increase is offset by a reduction in the Repayment Assistance Plan expenditures due to the Six Month Moratorium on CSLP payments between March 30, 2020 and September 30, 2020.

In addition, expenditures under Vote 5: Grants and contributions have increased by $307 million compared to the spending at the end of the same quarter in the fiscal year ending March 31, 2020. The increase is mainly attributable to the Workforce Development Agreements spending due to the timing of payments being processed.

An increase of $67 million in Vote 1 operating expenditures is mainly due to timing with regard to Revenues netted against expenditures.

An increase of $21 million to contributions to employee benefit plans, which is mostly related to additional personnel resources approved.

An increase of $14 million under the CESG is due to more people saving for the post-secondary education of their children.

Federal Worker`s compensation payments decreased by $39 million compared to the spending at the end of the same quarter in the fiscal year ending March 31, 2020. This variance is attributed to the timing of the recoveries. While the expenditures are similar than last fiscal year, some recoveries were delayed in 2019 to 2020 as the Federal Workers Compensation Service was operating with limited resources. As a result, the recoveries were higher at this third quarter of 2020 to 2021 compared to the same quarter in 2019 to 2020.

The CLB decreased by $47 million compared to the spending at the end of the same quarter in the fiscal year ending March 31, 2020. This significant decrease in CLB payments is, in part, owed to the diminishing impact of the maturing policy change that allows common law spouses to apply for the CLB. (The implementation of the spousal functionality in June 2019 significantly increased CLB payments between June 2019 and December 2019. This effect has been decreasing over time). The COVID-19 pandemic is the other factor that contributed to this decrease.

In addition, other smaller changes, equating $1 million, also contribute to the variance.

Table 2: Significant changes to expenditures at the end of the third quarter for the fiscal year ending March 31, 2021
Detail (in millions of dollars)
Total budgetary authorities used as of December 31, 2019 48,715
Changes in authorities used N/A
Payments related to Public Health Events of National Concern and income support 48,868
Canada Recovery Benefit 7,264
Old Age Security benefits 2,092
Canada Student Loans Program and Canada Apprentice Loans 484
Vote 5: Grants and contributions 307
Vote 1: Operating expenditures 67
Employee Benefit Plans 21
Canada Education Saving Grants 14
Federal Worker’s Compensation Payments (39)
Canada Learning Bond (47)
Other (1)
Sub-Total - Changes in authorities used 59,800
Total budgetary authorities used as of December 31, 2020 108,515

In Table3, there is a net increase in net loans disbursed primarily due to the implementation of new COVID-19 measure of the Six Month Moratorium on CSLP payments. The Six Month Moratorium on payments generates less revenue for the Canada Student Loans Program.

3. Risks and uncertainties

As the Department strives to ensure that Canadians receive high quality and efficient services, it must remain mindful of the changing environment in which it operates as well as the risks that may delay or prevent it from achieving its mission. Across the portfolio, the Department uses standard risk management practices, oversight committees, consultation, and training to anticipate and mitigate the probability and impact of negative events. The Department’s top corporate risks and the efforts being taken to mitigate them are described in the Risks and Mitigation sub-section of the ESDC Departmental Plan for the fiscal year ending March 31, 2021. Risks which have a potential financial impact are explained below and a brief overview of progress to date to reduce them is provided.

In a department the size of ESDC, with its vast and varied programs and benefits, there is a risk that current funding is insufficient to meet the Department's transformation agenda intended to meet rising expectations for service delivery. The Department has also identified project management capabilities within its workforce as an area requiring improvement, without which could result in scheduling delays, cost overruns and ultimately reduce the likelihood of delivering on project benefits.

The Department is committed to strengthen project management and investment planning to direct resources to emerging priorities and deliver results.

Mitigation strategies implemented by the department for the fiscal year ending March 31, 2021:

Due to COVID-19, ESDC has taken on new priorities and work during this fiscal year, which has resulted in reprioritizing the Department’s core work, and reallocating staff to the most critical and emerging business functions. As a result, ESDC business decisions will likely have much broader and significant financial impacts going forward, that are uncertain at this time. As the Department deals with new operational pressures that were not forecast at the beginning of the year, it may have additional financial risks to manage as the fiscal year progresses. However, strong financial management practices are in place to monitor and mitigate the impacts of these potential risks.

4. Significant changes in operations, personnel and program

The Department will continue to transform the delivery of its services to ensure they meet the evolving expectations of Canadians by:

5. Approval by senior officials

Original document was signed in Gatineau, Canada by:

Table 3: Statement of authorities (in thousands of dollars, unaudited)
Vote Item Fiscal Year 2020 to 2021: Total available for use for the year ending March 31, 20211 Fiscal Year 2020 to 2021: Used during the quarter ended December 31, 2020 Fiscal Year 2020 to 2021: Year to date used at quarter-end Fiscal Year 2019 to 2020: Total available for use for the year ending March 31, 20201 Fiscal Year 2019 to 2020: Used during the quarter ended December 31, 2019 Fiscal Year 2019 to 2020: Year to date used at quarter-end
1 Operating expenditures 882,964 201,017 647,931 885,396 223,919 582,626
5 Grants and contributions 3,201,184 1,185,271 2,511,988 3,047,781 1,112,010 2,204,544
(S) Contributions to employee benefit plans 282,763 60,788 182,365 308,491 53,682 161,048
(S) Minister of Employment, Workforce Development and Labour, Salary and motor car allowance N/A N/A N/A 88 14 58
(S) Minister of Families, Children and Social Development, Salary and motor car allowance 89 22 67 88 14 58
(S) Minister of Labour, Salary and motor car allowance 89 22 67 N/A N/A N/A
(S) Minister of Employment, Workforce Development and Disability Inclusion, Salary and motor car allowance 89 22 67 N/A N/A N/A
(S) Minister of State (Seniors), Motor car allowance 2 N/A 2 88 22 66
(S) Payments related to Public Health Events of National Concern and income support 99,053,115 2,558,466 48,868,264 N/A N/A N/A
(S) Old Age Security Payments (Old Age Security Act) 44,966,057 11,532,521 34,707,892 42,754,294 11,292,866 33,191,709
(S) Guaranteed Income Supplement Payments (Old Age Security Act) 13,921,587 3,535,018 10,212,782 12,894,967 3,309,677 9,648,104
(S) Payments related to the Canada Recovery Benefits Act N/A 7,264,248 7,264,248 N/A N/A N/A
(S) Canada Student Grants to qualifying full and part-time students pursuant to the Canada Student Financial Assistance Act 3,228,446 329,464 1,580,427 1,454,300 128,739 904,041
(S) One-time payment to persons with disabilities pursuant to An Act respecting further COVID-19 measures 848,600 768,000 769,686 N/A N/A N/A
(S) Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act 773,268 65,586 90,136 931,034 98,173 279,170
(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 980,000 220,917 637,323 955,000 206,393 622,790
(S) Allowance Payments (Old Age Security Act) 640,023 143,201 421,545 555,082 140,812 410,824
(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 478,032 82,746 250,562 430,700 71,079 241,855
(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 401,529 13,422 41,542 336,600 14,446 44,545
(S) Spending of Revenues pursuant to subsection 5.2(2) of the Department of Employment and Social Development Act 233,375 42,494 95,900 194,537 39,593 107,736
(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 194,000 22,144 134,138 185,000 42,973 180,837
(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 21,743 50,241 49,250 5,687 47,298
(S) Payments of compensation respecting government employees (Government Employees Compensation Act) and merchant seamen (Merchant Seamen Compensation Act) 44,000 (2,658) 36,018 44,000 7,129 75,216
(S) The provision of funds for interest and other payments to lending institutions and liabilities under the Canada Student Financial Assistance Act 11,256 671 1,875 4,028 594 3,692
(S) Payment related to direct financing arrangement under the Apprentice Loan Act 2,002 463 1,177 3,144 249 1,835
(S) Spending pursuant to section 12(4) of the Canada Education Savings Act 1,228 N/A N/A 1,954 N/A 1,032
(S) Civil Service Insurance actuarial liability adjustments 145 N/A N/A 145 N/A N/A
(S) Spending of proceeds from the disposal of surplus Crown assets 191 N/A N/A 102 2 2
(S) Universal Child Care Benefit (Universal Child Care Benefit Act) 100 2,418 5,214 300 1,571 5,918
(S) Refunds of amounts credited to revenues in previous years 1,378 N/A 1,378 874 22 874
(S) The provision of funds for liabilities including liabilities in the form of guaranteed loans under the Canada Student Loans Act (1,765) (462) (597) (2,402) (1,446) (1,370)
(S) The provision of funds for interest payments to lending institutions under the Canada Student Loans Act 65 15 63 N/A N/A N/A
(S) Payment pursuant to section 24(1) of the Financial Administration Act N/A 321 2,759 N/A N/A N/A
N/A Sub-total—Statutory items 166,108,914 26,661,592 105,355,141 61,101,664 15,412,291 45,927,338
N/A Total budgetary 170,193,062 28,047,880 108,515,060 65,034,841 16,748,220 48,714,508
N/A Non-Budgetary N/A N/A N/A N/A N/A N/A
(S) Loans disbursed under the Canada Student Financial Assistance Act 2,222,758 (195,806) 1,375,331 1,031,822 (131,439) 892,152
(S) Loans disbursed under the Apprentice Loans Act 22,343 1,883 4,208 41,887 7,707 18,162
N/A Total Non-Budgetary 2,245,101 (193,923) 1,379,539 1,073,709 (123,732) 910,314

1: Includes only authorities available for use and granted by Parliament at quarter-end.

Table 4: Departmental budgetary expenditures by standard object (unaudited)
Expenditures (in thousands of dollars) Fiscal year 2020 to 2021: Planned expenditures for the year ending March 31, 20211 Fiscal year 2020 to 2021: Expended during the quarter ended December 31, 2020 Fiscal year 2020 to 2021: Year to date used at quarter-end Fiscal year 2019 to 2020: Planned expenditures for the year ending March 31, 20201 Fiscal year 2019 to 2020: Expended during the quarter ended December 31, 2019 Fiscal year 2019 to 2020: Year to date used at quarter-end
(01) Personnel 2,545,176 668,381 1,857,789 2,386,749 587,514 1,651,043
(02) Transportation and communications 80,315 8,268 24,065 68,330 16,876 42,606
(03) Information 85,989 22,042 30,612 73,533 14,745 39,265
(04) Professional and special services 1,192,023 240,565 528,684 655,703 184,981 413,495
(05) Rentals 294,106 55,653 163,009 290,155 43,347 148,378
(06) Repair and maintenance 10,054 1,837 3,433 8,568 1,983 3,767
(07) Utilities, materials and supplies 8,424 3,034 5,518 10,026 1,561 3,616
(09) Acquisition of machinery and equipment 62,617 10,066 30,958 60,641 7,220 13,799
(10) Transfer payments 168,352,366 27,661,257 107,304,788 63,520,921 16,418,294 47,767,261
(12) Other subsidies and payments (115,443) 7,707 102,650 9,269 2,768 10,758
Total gross budgetary expenditures 172,515,627 28,678,810 110,051,506 67,083,895 17,279,289 50,093,988
LESS: Revenues netted against expenditures N/A N/A N/A N/A N/A N/A
Recoverable expenditures on behalf of the Employment Insurance Operating Account (1,801,855) (480,550) (1,195,235) (1,509,694) (375,894) (1,044,156)
Recoverable expenditures on behalf of the Canada Pension Plan (519,810) (150,380) (341,211) (413,775) (109,637) (282,742)
Amounts recoverable from Crown agencies and other government departments regarding payments of injury compensation benefits N/A N/A N/A (124,685) (45,538) (52,582)
Other amounts recoverable from provincial and territorial governments, other departments or other programs within a department (900) N/A N/A (900) N/A N/A
Total revenues netted against expenditures (2,322,565) (630,930) (1,536,446) (2,049,054) (531,069) (1,379,480)
Total net budgetary expenditures 170,193,062 28,047,880 108,515,060 65,034,841 16,748,220 48,714,508

1. Includes only authorities available for use and granted by Parliament at quarter-end.

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