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Quarterly Financial Report, quarter ended December 31, 2023

From: Environment and Climate Change Canada

Statement outlining results, risks and significant changes in operations, personnel and programs

Departmental quarterly financial report - Q3/2023-24 [PDF - 450 KB]

Introduction

This third 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 (TB). This quarterly report should be read in conjunction with the 2023-24 Main Estimates.

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

Authority, mandate and program activities

Environment and Climate Change Canada (ECCC) leads and supports a wide range of environmental issues, including taking action on clean growth and climate change, pollution, conserving nature, and predicting weather and environmental conditions. The Department addresses these issues through various actions and initiatives including leading Canada’s efforts to transition to a net-zero economy and strengthening resilience to climate change, protecting more of our lands and waters, strengthening protection and recovery for species at risk and their habitats, and providing environmental and weather information to Canadians. To achieve its mandate, the Department works with provinces, territories, Indigenous peoples, civil society, industry, and international partners, and undertakes monitoring, science-based research, policy and regulatory development, and enforcement of environmental laws and regulations.

The Department’s program focus reflects the interdependence between environmental sustainability and economic well-being.

Under the Department of the Environment Act, the powers, duties and functions of the Minister of Environment and Climate Change extend to matters such as:

A summary description of the ECCC Raison d’être and core responsibilities can be found in Part II of the Main Estimates and the Departmental Plan.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the ECCC’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for the 2023‑24 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 money 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.

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 an appropriation for the fiscal year in which it is issued.

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

Highlights of the fiscal quarter and fiscal year-to-date results

Authority analysis

The Statement of Authorities presented in this quarterly financial report (see Table 1) reflects the authorities that were approved as of December 31, 2023. The funding available for use includes the 2023-24 Main Estimates, Supplementary Estimates “B” and allocations from TB Central Votes including the Operating and Capital budget carry forwards, compensation allocations related to various collective agreements and Government-wide Initiatives.

ECCC’s total available authorities for use for the year ending March 31, 2024 are higher by approximately $624.2M ($2,864.1M - $2,239.9M)Footnote 1  when compared to the same quarter of the previous year. This difference is explained by an increase in Vote 1 – Net Operating of $104.1M ($1,196.9M - $1,092.8M), in Vote 10 – Grants and Contributions of $404.5M ($1,248.7M - $844.2M), in Budgetary Statutory authorities of $130.0M ($285.8M - $155.8M) and by a decrease in Vote 5 – Capital of $14.4M ($132.7M - $147.1M).

Vote 1 – Net Operating authorities

The $104.1M increase compared to the same quarter of the previous year in the net Operating Authorities is mainly due to the following increases:

Offset by the following decreases:

Operating Authorities are net of respendable revenues. Revenues at ECCC come from sales of goods and information products and services of a non-regulatory nature. Major revenue items include, for example: Oil Sands monitoring activities, Ocean disposal permit applications, Hydrometric services, Ocean disposal monitoring fees, and Weather and environmental services.

Vote 5 – Capital authorities

The $14.4M decrease compared to the same quarter of the previous year in the Capital Authorities is mainly due to the following decreases:

Offset by the following increases:

Vote 10 – Grants and contributions authorities

The $404.5M increase compared to the same quarter of the previous year in the Grants and Contributions Authorities is mainly due to the following increases:

Offset by the following decrease:

Statutory authorities

The $130.0M increase compared to the same quarter of the previous year in the Budgetary Statutory Authorities is mainly due to the following:

Expenditures analysis by vote

Details of expenditures by vote are presented in Tables 1 and 2.

In the third quarter of 2023-24, total budgetary expenditures were $445.2M compared to $383.6M reported for the same period in 2022-23, resulting in an increase of $61.6M. Year-to-date expenditures as of December 31, 2023, were $1,107.3M, which represents an increase of $111.5M ($1,107.3M - $995.8M) compared to the same period in 2022-23.

Vote 1 – Net Operating Authorities used during the third quarter of 2023-24 totalled $299.4M, which represents an increase of $35.0M ($299.3M - $264.3M) compared to the same period last year. Year-to-date expenditures as of December 31, 2023, were $780.2M, which represents an increase of $63.7M ($780.2M - $716.5M) compared to the same period last year. Both variances are mainly due to an increase in personnel expenditures, offset by an increase in revenues and by a decrease in professional and special services expenditures.

Vote 5 – Capital Authorities used during the third quarter of 2023-24 totalled $21.6M, which represents a decrease of $2.6M ($21.6M - $24.2M) compared to the same period last year. Year-to-date expenditures as of December 31, 2023, are $49.2M, which represents a decrease of $2.7M ($49.2M - $51.9M) compared to the same period last year. Both variances are mainly due to a decrease in engineering consulting fees related to initiatives associated with the revitalization of meteorological services offset by the acquisition of lands.

Vote 10 – Grants and Contributions Authorities used during the third quarter of 2023-24 totalled $91.4M, which represents an increase of $24.8M ($91.4M - $66.6M) compared to the same period last year. Year-to-date expenditures as of December 31, 2023, are $185.9M, which represents an increase of $41.5M ($185.9M - $144.4M) compared to the same period last year. Both variances are mainly due to an increase in contribution payments to strengthen protection and recovery of species at risk and their habitats, for Canada’s international climate finance and to restore and enhance wetlands, peatlands, and grasslands to store and capture carbon. The quarterly variance is also due to an increase in contribution payments for the Trans Mountain expansion pipeline.

Budgetary Statutory Authorities – Budgetary Statutory Authorities used during the third quarter of 2023-24 totalled $32.9M, which represents an increase of $4.4M ($32.9M - $28.5M) compared to the same period last year. Year-to-date expenditures as of December 31, 2023, are $92.0M, which represents an increase of $9.0M ($92.0M - $83.0M) compared to the same period last year. Both variances are mainly due to an increase in contribution to employee benefit plans and in distribution of carbon pollution pricing proceeds. The year-to-date variance is also due to an increase in refunds of overpayments from previous years.

Expenditures analysis by Standard Object

Details of expenditures by Standard Object are presented in Tables 3 and 4.

Quarterly and year-to-date personnel expenditures increased by $51.8M ($269.8M - $218.0M) and $85.8M ($734.1M - $648.3M) compared to the same period last year. Both variances are mainly due to an increase in salary wages due to renewed collective agreements. The quarterly variance is also due to disbursements of signing bonuses following the ratification and signing of some collective agreements.

Quarterly and year-to-date information expenditures increased by $0.2M ($2.5M - $2.3M) and decreased by $1.9M ($4.7M - $6.6M) compared to the same period last year. The year-to-date variance is mainly due to the timing of payment of advertising expenses.

Quarterly and year-to-date professional and special services expenditures decreased by $13.3M ($61.8M - $75.1M) and $13.0M ($127.7M - $140.7M) compared to the same period last year. Both variances are mainly due to the non-recurring expenditures related to hosting the 15th United Nations Biodiversity Conference (COP15) in December 2022 and a decrease in engineering consulting fees related to initiatives associated with the revitalization of meteorological services.

Quarterly and year-to-date repair and maintenance expenditures increase by $0.9M ($5.2M - $4.3M) and by $2.4M ($11.5M - $9.1M) compared to the same period last year. The quarterly variance is mainly due to expenditures for repair and maintenance expenditures for the Eureka Weather Station.

Quarterly and year-to-date acquisition of land, building and works expenditures increased by $0.7M ($0.8M - $0.1M) and $3.2M ($3.4M - $0.2M) compared to the same period last year. Both variances are mainly due to the acquisition of a land in British Colombia and Nova Scotia to expand the National Wildlife Area and protect more lands.

Quarterly and year-to-date transfer payments expenditures increased by $28.1M ($96.1M - $68.0M) and $45.8M ($192.0M - $146.2M) compared to the same quarter last year. Both variances are mainly due to an increase in contribution payments to strengthen protection and recovery of species at risk and their habitats, for Canada’s international climate finance and to restore and enhance wetlands, peatlands, and grasslands to store and capture carbon. The quarterly variance is also due to an increase in contribution payments to the Trans Mountain expansion pipeline as well as to distribute carbon pollution pricing proceeds.

Quarterly and year-to-date revenue collections increased by $7.2M ($21.9M - $14.7M) and $11.4M ($46.6M - $35.2M) compared to the same period last year. Both variances are mainly due to the timing of collections related to hydrometric data and information services as well as for ocean disposal monitoring fees. The quarterly variance is also due to the timing of collections related to the Oil Sands monitoring program. The year-to-date variance is also offset by refunds of overpayments from previous years related to excess emissions charges.

Risks and uncertainties

A wide range of internal and external factors have the potential to affect ECCC’s ability to deliver optimal and timely results for Canadians. The Department considers and addresses four key strategic risks to its financial plan: strategic partnerships; human resources; capital and technological infrastructure and information for decision-making.

To pursue the delivery of results for Canadians, the Department needs to work in close collaboration with a wide array of strategic partners, including federal, provincial, territorial, Indigenous, and international partners, as well as with the private and non-profit sectors, and civil society. This reliance can give rise to risks associated with the Department’s ability to deliver on its mandate if efforts are not well aligned and coordinated in the face of competing priorities, changing political landscapes, resource constraints, and an expanding departmental mandate that includes many high-profile priorities and commitments. To ensure the Department’s priorities are well coordinated with those of its partners and stakeholders, ECCC continued to develop and build important relationships, including by working diligently to harmonize its engagement activities, especially when dealing with the same partners on multiple issues. ECCC also works with external partners through existing and new governance bodies and continues to explore technological solutions that foster collaboration among them. In addition, the Department promotes sound stewardship of departmental resources through the terms and conditions associated with its grants and contributions programs to leverage partner support, ensure efficient delivery of external funding, and reduce potential lapses.

To fulfill its mandate, ECCC requires diverse, highly qualified, and specialized personnel with various expertise in areas such as scientific and regulatory areas, data management, policy development and transfer payment programs. Uncertainties endure in attracting, developing, and retaining these employees due in part to a highly competitive and transforming labour market and to process challenges related to classification, succession planning and staffing. This is compounded by ECCC’s increasingly ambitious policy and program agendas that add to the Department’s workload without necessarily adding new resources. To attract and retain a qualified workforce, ECCC continues to maintain flexibility in providing internal human resources services, to perform sound human resources planning, including by realigning resources to priority files, and to implement talent management initiatives and recruitment strategies targeting key areas.

The Department also relies on its capital and technological infrastructure to achieve its mandate. This infrastructure requires maintenance and ongoing investment to prevent rust-out, stay abreast of technological advancements and ensure functionality in the face of changing and increasingly complex needs. ECCC undertakes capital and technological investment planning to proactively identify deficits and determine priorities and funding needs in these areas.

The Department’s ability to fulfill its mandate is also closely linked to its ability to efficiently access, manage, analyze, and share increasingly large and complex amounts of data. To address uncertainties in this area, ECCC continues to invest in information management systems, infrastructure, tools, and personnel to support the appropriate management of information and seamless data mining, interoperability, and sharing. At the same time, ECCC continues to invest in expanding partnerships and external collaboration to leverage existing sources of scientific data for the collective advancement of critical environmental efforts.

ECCC will continue to closely monitor its operating environment to allocate resources to key priorities and ensure that resources are being managed effectively to deliver optimal and timely results through improved programs, policies, and services.

Significant changes in relation to operations, personnel and programs

There are no significant changes in relation to operations, personnel and programs to report during the third quarter.

Approved by:

(the original version was signed by)

Jean-François Tremblay
Deputy Minister
Gatineau, Canada
Date: February 29, 2024

(the original version was signed by)

Linda Drainville
Chief Financial Officer
Gatineau, Canada
Date: February 18, 2024

Statement of Authorities (unaudited) – Table 1

Fiscal year 2023-24 (in thousands of dollars)
- Total available for use for the year ending March 31, 2024* Used during the quarter ended December 31, 2023 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 1,196,890 299,350 780,171
Vote 5 – Capital Expenditures 132,688 21,570 49,160
Vote 10 – Grants and Contributions 1,248,697 91,426 185,887
Budgetary Statutory – Employee Benefit Plans 130,366 27,977 83,931
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 95 24 71
Budgetary Statutory – Distribution of Fuel and Excess Emission Charges 155,392 4,638 6,095
Budgetary Statutory – Refund of previous years revenue - 217 1,562
Budgetary Statutory – Spending of proceeds from the disposal of surplus Crown assets - 13 385
Total Budgetary authorities 2,864,128 445,215 1,107,262
Non-Budgetary authorities - - -
Total authorities 2,864,128 445,215 1,107,262

* The funding available for use includes the 2023-24 Main Estimates, Supplementary Estimates “B” and allocations from TB Central Votes including the Operating and Capital budget carry forwards, compensation allocations related to various collective agreements and government-wide initiatives.

Totals may not add up due to rounding.

Statement of Authorities (unaudited) – Table 2

Fiscal year 2022-23 (in thousands of dollars)
- Total available for use for the year ending March 31, 2023* Used during the quarter ended December 31, 2022 Year-to-date used at quarter end
Vote 1 – Net Operating expenditures 1,092,799 264,321 716,547
Vote 5 – Capital expenditures 147,052 24,224 51,913
Vote 10 – Grants and contributions 844,212 66,591 144,384
Budgetary Statutory – Employee Benefit Plans 114,673 27,025 81,076
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 92 23 69
Budgetary Statutory – Distribution of Fuel and Excess 41,066 1,385 1,849
Total Budgetary authorities 2,239,894 383,569 995,838
Non-Budgetary authorities - - -
Total authorities 2,239,894 383,569 995,838

* The funding available for use includes the 2022-23 Main Estimates, Supplementary Estimates “B” and allocations from TB Central Votes including the Operating and Capital budget carry forwards, the compensation allocations related to the Executive economic increases and government-wide initiatives.

Totals may not add up due to rounding.

Departmental budgetary expenditures by Standard Object (unaudited) – Table 3

Fiscal year 2023-24 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2024* Expended during the quarter ended December 31, 2023 Year-to-date used at quarter end
Personnel 993,155 269,772 734,088
Transportation and communications 29,349 9,921 24,962
Information 18,360 2,487 4,739
Professional and special services 307,835 61,809 127,737
Rentals 53,343 4,936 15,121
Repair and maintenance 22,196 5,245 11,528
Utilities, materials and supplies 48,841 7,821 21,076
Acquisition of land, buildings and works 2,521 837 3,386
Acquisition of machinery and equipment 51,468 8,341 16,632
Transfer payments 1,404,090 96,064 191,981
Public debt charges 498 - -
Other subsidies and payments 7,486 (104) 2,581
Total gross budgetary expenditures 2,939,142 467,129 1,153,831
Less Revenues netted against expenditures:
Revenues 75,014 21,914 46,569
Total Revenues netted against expenditures: 75,014 21,914 46,569
Total net budgetary expenditures 2,864,128 445,215 1,107,262

* The planned expenditures include the 2023-24 Main Estimates, Supplementary Estimates “B” and allocations from TB Central Votes including the Operating and Capital budget carry forwards, compensation allocations related to various collective agreements and government-wide initiatives.

Totals may not add up due to rounding.

Departmental budgetary expenditures by Standard Object (unaudited) – Table 4

Fiscal year 2022-23 (in thousands of dollars)
Expenditures Planned expenditures for the year ending March 31, 2023* Expended during the quarter ended December 31, 2022 Year-to-date used at quarter end
Personnel 869,420 217,962 648,316
Transportation and communications 21,172 9,366 22,976
Information 10,526 2,309 6,626
Professional and special services 292,823 75,106 140,654
Rentals 85,202 4,599 14,651
Repair and maintenance 28,949 4,258 9,139
Utilities, materials and supplies 48,474 8,862 21,941
Acquisition of land, buildings and works 1,952 116 191
Acquisition of machinery and equipment 62,130 7,648 17,410
Transfer payments 885,277 67,976 146,233
Public debt charges 577 - -
Other subsidies and payments 7,606 52 2,896
Total gross budgetary expenditures 2,314,108 398,254 1,031,033
Less Revenues netted against expenditures:
Revenues 74,214 14,685 35,195
Total Revenues netted against expenditures: 74,214 14,685 35,195
Total net budgetary expenditures 2,239,894 383,569 995,838

* The funding available for use includes the 2022-23 Main Estimates, Supplementary Estimates “B” and allocations from TB Central Votes including the Operating and Capital budget carry forwards, the compensation allocations related to the Executive economic increases and government-wide initiatives.

Totals may not add up due to rounding.

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