Quarterly financial report for the quarter ended June 30, 2021

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, 2021

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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 help Canadians live productive and rewarding lives and to 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, 2022. 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:

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

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 2020, 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 addressing the pressing needs of vulnerable populations, including Canadians experiencing homelessness. Payments for most of these initiatives ended December 31, 2020. Three new temporary recovery benefits to ensure Canadians continue to receive the support they need when their employment is affected by COVID-19 were introduced as part of Canada's COVID-19 Economic Response Plan and effective September 27, 2020: the Canada Recovery Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit. While most COVID-19 recovery initiatives were temporary for the fiscal year ending March 31, 2021, these 3 recovery benefits continue to be available in the fiscal year ending March 31, 2022.

Within the environment described above, 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, 2021.

ESDC's total budgetary authority available in the first quarter ending June 30, 2021 was $94,643 million, which represents an overall decrease of $43,689 million from the previous year. Much of this decrease relates to COVID-19 statutory measures provided under the Public Health Events of National Concern Payments Act in the first quarter of the fiscal year ending March 31, 2021. 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, 2021 were $25,485 million. In comparison, total YTD budgetary authorities used as of the first quarter of the previous year were $17,228 million, representing a year-over-year increase of $8,257 million.

Figure 1: Quarter ended June 30, 2021
Figure 1: Quarter ended June 30, 2021 Figure 2: Quarter ended June 30, 2020 Figure 2: Quarter ended June 30, 2020

2.1 Significant changes to authorities

ESDC's budgetary authorities available for use decreased by $43,689 million compared to the first quarter of the fiscal year ending March 31, 2021 (Tables 3 and 4).

Approximately $69,919 million of the decrease in the authorities available for use is due to benefits that were 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 $60 billion for the Canada Emergency Response Benefit (CERB). Other measures included the Canada Emergency Student Benefit (CESB), Additional support for Canadian seniors, Support for students and youth impacted by COVID-19, the Emergency Community Support Fund, Reaching Home, and the New Horizons for Seniors Program expansion.

Additionally, a decrease of $190 million for the Canada Disability Savings Program is mostly due to an adjustment in the forecasting model to better reflect trends in actual expenditures.

Offsetting these decreases are increases totalling $26,420 million, mainly related to statutory items.

Table 1: Significant changes to authorities at the end of the first quarter of the fiscal year ending March 31, 2022.
Detail (in millions of dollars)
Total budgetary authorities available for use for the fiscal year ending March 31, 2021 138,332
Changes to authorities available for use n/a
Payments related to Public Health Events of National Concern and income support (69,919)
Canada Disability Savings Program (190)
Canada Recovery Benefits (including Sickness and Caregiving Benefits) 14,207
Old Age Security benefits 2,946
Vote 5 — Grants and contributions 2,681
Payments to provinces and territories for early learning and child care 2,648
Transfer payments in connection with the Budget Implementation Act — Supplementary payments to seniors and Payment to the Government of Quebec for the parental insurance plan 1,803
Canada Student Financial Assistance Program and Canada Apprentice Loans 1,405
Vote 1 — Operating expenditures 617
Contributions to employee benefit plans 92
Other 21
Sub-Total - Changes to authorities available for use (43,689)
Total budgetary authorities available for use for the fiscal year ending March 31, 2022 94,643

With respect to non-budgetary loans, there is a net decrease in authorities of $60 million from the fiscal year ending March 31, 2021. Despite a forecasted increase to loans related to COVID-19 measures which temporarily increased the loan limit and waived the student and spousal contribution, the growing repayment portfolio has resulted in a net decrease in the fiscal year ending March 31, 2022.

As shown in Table 4, total authorities related to transfer payments have decreased by $44,681 million compared to the first quarter of the fiscal year ending March 31, 2021 mainly due to COVID-19 measures undertaken to provide relief under the Public Health Events of National Concern Payments Act.

In contrast, there is an increase of $745 million to personnel authorities due to measures to address workload, including increases related to COVID-19 measures, to transformation and modernization initiatives and to employee compensation increases.

An increase of $779 million related to professional and special services is mainly due to additional resources for the administration and the integrity of the Canada Emergency Response Benefit, the Canada Emergency Student Benefit and the Employment Insurance Emergency Response Benefit and for transformation and modernization initiatives.

Variances to other operating expenditures (standard objects 02, 03, 05, 06, 07, 09, 12) 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 June 30, 2021 is higher than last quarter, with approximately 27% of the authorities available for use expensed. This percentage follows historic trends, with the exception of last year, which saw a significant increase to total available authorities as of June 30, 2020 due to COVID-19 emergency measures.

Compared to the previous year, total budgetary expenditures as of the quarter ending June 30, 2021 have increased by $8,257 million (48%) from $17,228 million to $25,485 million (refer to Tables 3 and 4).

This 48% increase is primarily explained by the rise in statutory expenditures from $16,069 million for the first quarter in the fiscal year ending March 31, 2021 to $24,133 million for the same period in the fiscal year ending March 31, 2022, representing a $8,064 million increase as of the end of the first quarter of the fiscal year ending March 31, 2021.

This increase is primarily related to payments under the Canada Recovery Benefits Act, which include the Canada Recovery Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit, which have increased by $7,636 million as of the first quarter of the year ending March 31, 2022.

Offsetting these increases was a decrease of $439 million to Payments related to Public Health Events of National Concern and income support. This emergency funding was available during the first quarter of the fiscal year ending March 31, 2021 as a response to the COVID -19 pandemic. Continued pandemic relief support is mainly provided under the Canada Recovery Benefits Act for the first quarter of the fiscal year ending March 31, 2022.

Table 2: Significant changes to expenditures at the end of the first quarter for the fiscal year ending March 31, 2022
Details (in millions of dollars)
Total budgetary authorities used as of June 30, 2020 17,228
Changes in authorities used n/a
Canada Recovery Benefits (including Sickness and Caregiving Benefits) 7,636
Old Age Security benefits 529
Canada Student Financial Assistance Program and Canada Apprentice Loans 219
Vote 1 — Operating expenditures 125
Canada Disability Savings Grants and Bonds 69
Vote 5 — Grants and contributions 68
Other 50
Payments related to Public Health Events of National Concern and income support (439)
Sub-Total - Changes in authorities used 8,257
Total budgetary authorities used as of June 30, 2021 25,485

In Table 3, 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 addition, the decrease of $304 million is mainly due to a significant increase in repayments in the first quarter of the year ending March 31, 2022. The temporary COVID-19 measure providing a 6-month moratorium on Canada Student Loans repayments put on hold repayments between March 30, 2020 and September 30, 2020 and all repayment during that period were voluntary repayments from borrowers.

In Table 4, the increase in personnel expenditures is mostly related to an increase in the workforce to address and implement COVID-19 measures and to compensation increases resulting from the implementation of new collective agreements after the first quarter of the year ending March 31, 2021. Increases in rentals (standard object 05) are mostly attributable to the timing of payments rather than changes in spending patterns for the National Accommodation Plan paid to Public Services and Procurement Canada. Reasons for the increase in transfer payments (standard object 10) are in line with explanations provided in previous paragraphs regarding the changes in statutory items and voted grants and contributions (Vote 5) expenditures.

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 Overall risks and mitigation sub-section of ESDC's Departmental Plan for the fiscal year ending March 31, 2022.

In response to COVID-19, the department launched several new income support programs in fiscal year 2020 to 2021 while still delivering established ones. It successfully managed several risks in order to meet Canadians' expectations.

As a result, ESDC business decisions will likely continue to have much broader and significant financial impacts going forward. As the Department deals with new operational pressures that were not forecasted 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's operating environment has changed significantly due to COVID-19. It is uncertain whether some of the changes are temporary or will become new ways of doing business. The department will continue to face uncertainty during fiscal year 2021 to 2022, including when and how many employees return to the workplace.

Economic and social impacts from the COVID-19 pandemic will continue to shape the department's operations and its strategies. The pandemic has had a large impact on Canada and the world since March 2020. This is expected to continue into fiscal year 2021 to 2022. Impacts on the economy could increase if Canadians' activities are limited because of more infections and the need for restrictive public health measures. Canadians will need continued support if they lose their jobs or have reduced work hours due to the pandemic.

The department will continue to invest in service delivery and to advance its ambitious service agenda and remains committed to improving services to Canadians. In doing so, it will continue to ensure that Canadians receive high quality, timely and accessible services. The department is working hard to adjust its programming to meet the needs of Canadians as the impacts of the pandemic evolve. It is taking measures to enhance supports to Canadians, and to deliver services as quickly as possible.

5. Approval by senior officials

Original document was signed in Gatineau, Canada by:

Table 3: Statement of authorities (unaudited)
Vote (in thousands of dollars) Fiscal Year 2021 to 2022: Total available for use for the year ending March 31, 20221 Fiscal Year 2021 to 2022: Used during the quarter ended June 30, 2021 Fiscal Year 2021 to 2022: Year to date used at quarter-end 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 June 30, 2020 Fiscal Year 2020 to 2021: Year to date used at quarter-end
1 Operating expenditures 1,251,054 314,156 314,156 633,443 189,006 189,006
5 Grants and contributions 5,626,694 1,037,419 1,037,419 2,946,167 970,040 970,040
(S) Contributions to employee benefit plans 351,216 70,192 70,192 258,501 109,997 109,997
(S) Minister of Employment, Workforce Development and Disability Inclusion, Salary and motor car allowance 90 23 23 89 22 22
(S) Minister of Families, Children and Social Development, Salary and motor car allowance 90 23 23 89 22 22
(S) Minister of Labour – Salary and motor car allowance 90 23 23 89 15 15
(S) Minister of State (Seniors) – Motor car allowance 2 1 1 2 1 1
(S) Payments related to Public Health Events of National Concern and income support n/a n/a n/a 69,918,800 438,878 438,878
(S) Old Age Security Payments (Old Age Security Act) 47,189,124 11,843,006 11,843,006 44,966,057 12,562,827 12,562,827
(S) Guaranteed Income Supplement Payments (Old Age Security Act) 14,613,979 3,476,537 3,476,537 13,921,587 2,285,240 2,285,240
(S) Payments related to the Canada Recovery Benefits Act 14,207,000 7,636,426 7,636,426 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 2,997,188 351,639 351,639 1,677,841 160,687 160,687
(S) Payments to provinces and territories for early learning and child care pursuant to the Budget Implementation Act, 2021, No. 1 2,648,082 n/a n/a n/a n/a N/A
(S) Transfer payments in connection with the Budget Implementation Act, 2021, No. 1 1,803,251 n/a n/a n/a n/a N/A
(S) Payments related to the direct financing arrangement under the Canada Student Financial Assistance Act 1,067,777 35,216 35,216 980,566 7,321 7,321
(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 980,000 258,458 258,458 980,000 214,707 214,707
(S) Allowance Payments (Old Age Security Act) 670,775 148,602 148,602 640,024 91,577 91,577
(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 472,004 141,214 141,214 478,032 94,828 94,828
(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 216,737 40,024 40,024 401,529 17,389 17,389
(S) Spending of revenues pursuant to subsection 5.2(2) of the Department of Employment and Social Development Act 223,509 37,276 37,276 233,375 19,842 19,842
(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 180,000 20,361 20,361 194,000 18,886 18,886
(S) One-time payment to persons with disabilities pursuant to An Act respecting further COVID-19 measures 56,109 25,941 25,941 n/a n/a N/A
(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 7,065 7,065 49,250 13,846 13,846
(S) Payments of compensation respecting government employees (Government Employees Compensation Act) and merchant seamen (Merchant Seamen Compensation Act) 31,445 38,500 38,500 44,000 30,606 30,606
(S) The provision of funds for interest and other payments to lending institutions and liabilities under the Canada Student Financial Assistance Act 5,107 981 981 6,087 636 636
(S) Payments related to direct financing arrangement under the Apprentice Loans Act 2,564 296 296 2,995 133 133
(S) Spending pursuant to section 12(4) of the Canada Education Savings Act 880 n/a n/a 923 n/a N/A
(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 138 1 1 109 n/a N/A
(S) The provision of funds for interest payments to lending institutions under the Canada Student Loans Act 46 4 4 n/a 28 28
(S) Universal Child Care Benefit (Universal Child Care Benefit Act) 40 1,115 1,115 100 965 965
(S) Refunds of amounts credited to revenues in previous years 22 22 22 8 8 8
(S) The provision of funds for liabilities including liabilities in the form of guaranteed loans under the Canada Student Loans Act (1,613) 19 19 (1,968) 16 16
(S) Payment pursuant to section 24(1) of the Financial Administration Act for the Temporary Foreign Worker Program under the Public Health Events of National Concern Payments Act n/a (10) (10) n/a n/a N/A
N/A Sub-total—Statutory items 87,765,047 24,132,955 24,132,955 134,752,230 16,068,477 16,068,477
N/A Total budgetary 94,642,795 25,484,530 25,484,530 138,331,840 17,227,523 17,227,523
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 937,194 (198,623) (198,623) 993,135 105,457 105,457
(S) Loans disburded under the Apprentice Loans Act 19,997 16 16 24,358 261 261
N/A Total Non-Budgetary 957,191 (198,607) (198,607) 1,017,493 105,718 105,718

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 2021 to 2022: Planned expenditures for the year ending March 31, 20221 Fiscal year 2021 to 2022: Expended during the quarter ended June 30, 2021 Fiscal year 2021 to 2022: Year to date used at quarter-end Fiscal year 2020 to 2021: Planned expenditures for the year ending March 31, 20211 Fiscal year 2020 to 2021: Expended during the quarter ended June 30, 2020 Fiscal year 2020 to 2021: Year to date used at quarter-end
(01) Personnel 2,865,887 722,601 722,601 2,121,394 623,742 623,742
(02) Transportation and communications 97,768 4,389 4,389 67,267 5,898 5,898
(03) Information 98,433 5,508 5,508 69,901 4,576 4,576
(04) Professional and special services 1,393,977 157,545 157,545 614,921 167,576 167,576
(05) Rentals 290,232 58,851 58,851 247,111 5,455 5,455
(06) Repair and maintenance 12,277 274 274 5,386 361 361
(07) Utilities, materials and supplies 10,119 373 373 6,738 888 888
(09) Acquisition of machinery and equipment 140,960 7,777 7,777 52,453 8,937 8,937
(10) Transfer payments 92,393,652 25,020,759 25,020,759 137,074,603 16,874,855 16,874,855
(12) Other subsidies and payments (122,305) 4,116 4,116 (118,294) 11,945 11,945
Total gross budgetary expenditures 97,181,000 25,982,193 25,982,193 140,141,480 17,704,233 17,704,233
LESS: Revenues netted against expenditures
Recoverable expenditures on behalf of the Employment Insurance Operating Account (2,029,836) (387,755) (387,755) (1,412,965) (384,431) (384,431)
Recoverable expenditures on behalf of the Canada Pension Plan (507,469) (109,908) (109,908) (395,775) (92,279) (92,279)
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 (2,538,205) (497,663) (497,663) (1,809,640) (476,710) (476,710)
Total net budgetary expenditures 94,642,795 25,484,530 25,484,530 138,331,840 17,227,523 17,227,523

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

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