Quarterly Financial Report, quarter ended June 30, 2020: Environment and Climate Change Canada

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

Introduction

This first 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 2020-21 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) is the lead federal department for a wide range of environmental issues, including taking action on clean growth and climate change. The Department is also engaged in activities aimed at preventing and managing pollution, conserving nature, and predicting weather and environmental conditions. The Department addresses these issues through various actions including the implementation of the Pan-Canadian Framework on clean growth and climate change, engaging with our strategic partners including provinces, territories and Indigenous peoples, monitoring, science-based research, policy and regulatory development, and through the enforcement of environmental laws.

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 department's spending authorities granted by Parliament, and those used by the department consistent with the Main Estimates for the 2020‑21 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 the fiscal year-to-date (YTD) results

Authority analysis

The Statement of Authorities presented in this quarterly financial report (see Table 1) reflects the authorities that were approved as of June 30, 2020.

ECCC’s total available authorities for use for the year ending March 31, 2021 is lower by approximately $289.2M ($1,538.5M - $1,827.7M)Footnote 1 when compared to the same quarter of the previous year. This decrease is mainly due to the reduced supply of the Main Estimates. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. The funding available for ECCC use reflects 9/12ths of the 2020-21 Main Estimates. ECCC is expected to receive full supply for the 2020-21 Main Estimates in December 2020.

The decrease of $289.2M includes a decrease in Vote 1 – Net Operating of $199.0M ($643.7M - $842.7M), in Vote 5 – Capital of $34.6M ($67.4M - $102.0M), in Vote 10 – Grants and Contributions of $165.3M ($622.4 - $787.7M) and an increase in Budgetary Statutory authorities of $109.7M ($205.0M - $95.3M).

Vote 1 – Net Operating authorities

The $199.0M decrease compared to last fiscal year in the net Operating authorities is mainly due to a decrease of $214.6M related to the reduced supply of 9/12 for the 2020-21 Main Estimates, whereas Full supply was provided last year. The remaining variance is attributable to fluctuations in the funding profile for various initiatives such as the Federal Contaminated Sites Action Plan, National Zero Waste Plastic Strategy, Adapting Canada's Weather and Water Services to Climate Change, Trans Mountain Expansion Project, Low Carbon Economy Fund, Implementing a Federal Carbon Offset System, as well as compensation allocations from Treasury Board Secretariat related to new collective agreements.

Vote 5 – Capital authorities

The $34.6M decrease compared to last fiscal year in the Capital authorities is mainly due to a decrease of $22.4M related to the reduced supply of 9/12 for the 2020-21 Main Estimates, whereas Full supply was provided last year. The remaining variance is attributable to fluctuations in the funding profile for various initiatives such as Strong Artic and Northern Communities, Revitalization of Canada's Weather Services and Adapting Canada's Weather and Water Services to Climate Change.

Vote 10 – Grants and contributions authorities

The $165.3M decrease compared to last fiscal year in the Grants and Contributions authorities is mainly due to a decrease of $207.5M related to the reduced supply of 9/12 for the 2020-21 Main Estimates, whereas Full supply was provided last year. The remaining variance is attributable to fluctuations in the funding profile for various initiatives such as Low Carbon Economy Fund, National Zero Waste Plastic Strategy, Protecting Canada's Nature, Parks and Wild Spaces, Clean Growth and Climate Change, Trans Mountain Expansion Project and Species at Risk Act (SARA).

Statutory authorities

The $109.7M increase compared to last fiscal 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 first quarter of 2020-21, total budgetary expenditures were $259.6M compared to $233.6M reported for the same period in 2019-20, resulting in an increase of $26.0M.

Vote 1 – Net Operating authorities used during the first quarter of 2020-21 totalled $194.1M, which represents an increase of $1.7M ($194.1M - $192.4M) compared to the same quarter in 2019‑20. This variance is mainly due to an increase in salary wages due to renewed collective agreements, a reduction in travel expenditures and a decrease in revenue due to the timing of collection.

Vote 5 – Capital authorities used during the first quarter of 2020-21 totalled $5.1M, which represents an increase of $0.8M ($5.1M – $4.3M) compared to the same quarter in 2019-20. Variance is mainly due to an increase in engineering consulting fees for various construction activities.

Vote 10 – Grants and Contributions authorities used during the first quarter of 2020-21 totalled $36.5M, which represents an increase of $23.2M ($36.5M - $13.3M) compared to the same quarter in 2019-20. The increase is mainly due to the timing of payments submitted for initiatives such as Protecting Canada’s Nature, Parks & Wild Spaces, Clean Growth and Climate Change and Youth Employment and Skills Strategy.

Statutory authorities used during the first quarter of 2020-21 totalled $24.0M, which represents an increase of $0.3M ($24.0M - $23.7M) compared to the same quarter in 2019-20.

Expenditures analysis by Standard Object

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

Personnel expenditures have increased by $11.0M ($190.7M - $179.7M) compared to the same quarter last year. The variance is mainly due to an increase in salary wages due to renewed collective agreements.

Transportation and communications expenditures have decreased by $7.4M ($0.9M - $8.3M) compared to the same quarter last year. The variance is mainly explained by a reduction in travel expenditures due to travel restrictions put in place to stem the spread of COVID-19.

Professional and special services expenditures have decreased by $2.3M ($17.5M - $19.8M) compared to the same quarter last year. The variance is mainly due to a decrease in translation services as well as in occupational and second language training.

Rentals expenditures have increased by $2.2M ($16.4M – $14.2M) compared to the same quarter last year. The variance is mainly due to the Squamish Nation’s prepayment of an annual amount under a lease on a portion of Capilano Indian Reserve as well as adjustments related to this prepayment amount.

Transfer payments expenditures have increased by $23.2M ($36.5M - $13.3M) compared to the same quarter last year. The increase is mainly due to the timing of payments submitted for initiatives such as Protecting Canada’s Nature, Parks & Wild Spaces, Clean Growth and Climate Change and Youth Employment and Skills Strategy.

Revenue collections have decreased by $4.4M ($9.8M - $14.2M) compared to the same quarter last year. The variance is mainly due to the timing of collection related to the multi-year agreement with NAV Canada for the provision of meteorological services.

Risks and Uncertainties

ECCC is primarily funded through voted parliamentary spending authorities for operating expenditures, capital expenditures, and transfer payments as well as statutory authorities. The Department is also partially funded through vote-netted revenues. ECCC’s planned spending reflects approved funding by Treasury Board and Parliament.

ECCC’s ability to deliver results for Canadians is influenced by a wide range of internal and external factors such as the increasing frequency of severe weather events, and the expectation to consult and collaborate with federal, provincial, territorial, Indigenous, and other partners to address common environmental challenges. In its financial management, the Department considers these factors and their potential impact related to the department’s financial plan.

Due to the COVID-19 pandemic, ECCC has prioritized the support of critical services, while a large proportion of its employees have been asked to work remotely. ECCC has reviewed its policies and procedures to determine and implement necessary adjustments in the short term to support the delivery of services. A prioritization planning exercise took place to adjust deadlines for key milestones and deliverables, as required, and to better position the Department to adjust quickly to new operational realities. 

The department is required to manage its operations and programs with reduced financial authorities as only 9/12 of the supply for 2020-21 Main Estimates has been approved by Parliament. The remaining supply is expected to be approved in December 2020.

ECCC will continue to closely monitor its operating environment in order to reallocate resources to key priorities and ensure that resources are being managed effectively to deliver results.

Significant changes in relation to operations, personnel and programs

The following major changes in relations to operations, personnel and programs occurred during the first quarter:

Approved by:


(the original version was signed by)

T. Christine Hogan,
Deputy Minister
Gatineau, Canada
Date: August 26, 2020


(the original version was signed by)

Carol Najm,
Chief Financial Officer        
Gatineau, Canada
Date: August 26, 2020

Statement of Authorities (unaudited) – Table 1

Fiscal year 2020-21 (in thousands of dollars)
- Total available for use for the year ending March 31, 2021* Used during the quarter ended June 30, 2020 Year to date used at quarter end

Vote 1 – Net Operating expenditures

643,736

194,076

194,076

Vote 5 – Capital expenditures

67,345

5,100

5,100

Vote 10 – Grants and contributions

622,411

36,464

36,464

Budgetary Statutory – Employee Benefit Plans

95,747

23,937

23,937

Budgetary Statutory – Climate Action Support Payments (Climate Action Incentive Fund)

109,148

0

0

Budgetary Statutory – Minister’s Salary and Motor Car Allowance

89

22

22

Total Budgetary authorities

1,538,476

259,599

259,599

Non-Budgetary authorities

-

-

-

Total authorities

1,538,476

259,599

259,599

* The funding available for ECCC use reflects 9/12ths of the 2020-21 Main Estimates. Full supply for the 2020-21 Main Estimates is expected in December 2020. Authorities for Supplementary Estimates will follow later this year.

Statement of Authorities (unaudited) – Table 2

Fiscal year 2019-20 (in thousands of dollars)
- Total available for use for the year ending March 31, 2020* Used during the quarter ended June 30, 2019 Year to date used at quarter end

Vote 1 – Net Operating expenditures

842,682

192,431

192,431

Vote 5 – Capital expenditures

101,960

4,282

4,282

Vote 10 – Grants and contributions

787,709

13,269

13,269

Budgetary Statutory – Employee Benefit Plans

95,294

23,620

23,620

Budgetary Statutory – Minister’s Salary and Motor Car Allowance

88

22

22

Budgetary Statutory – Spending of proceeds from the disposal of surplus Crown assets

0

19

19

Total Budgetary authorities

1,827,733

233,643

233,643

Non-budgetary authorities

-

-

-

Total authorities

1,827,733

233,643

233,643

* The funding available for use includes the 2019-20 Main Estimates.

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

Fiscal year 2020-21 (in thousands of dollars)
-
Planned expenditures for the year ending March 31, 2021* Expended during the quarter ended June 30, 2020 Year to date used at quarter end

Expenditures:

 

Personnel

591,984

190,740

190,740

Transportation and communications

34,753

871

871

Information

5,063

487

487

Professional and special services

147,788

17,546

17,546

Rentals

25,604

16,379

16,379

Repair and maintenance

13,755

776

776

Utilities, materials and supplies

32,373

4,150

4,150

Acquisition of land, buildings and works

793

18

18

Acquisition of machinery and equipment

29,533

2,003

2,003

Transfer payments

731,559

36,464

36,464

Public debt charges

419

0

0

Other subsidies and payments

5,619

-67

-67

Total gross budgetary expenditures

1,619,243

269,367

269,367

Less Revenues netted against expenditures:

 

Revenues

80,767

9,768

9,768

Total Revenues netted against expenditures:

80,767

9,768

9,768

Total net budgetary expenditures

1,538,476

259,599

259,599

* The funding available for ECCC use reflects 9/12ths of the 2020-21 Main Estimates. Full supply for the 2020-21 Main Estimates is expected in December 2020. Authorities for Supplementary Estimates will follow later this year.

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

Fiscal year 2019-20 (in thousands of dollars)
- Planned expenditures for the year ending March 31, 2020* Expended during the quarter ended June 30, 2019 Year to date used at quarter end

Expenditures:

 

Personnel

715,918

179,746

179,746

Transportation and communications

35,617

8,310

8,310

Information

6,712

772

772

Professional and special services

213,909

19,810

19,810

Rentals

32,753

14,187

14,187

Repair and maintenance

28,537

1,259

1,259

Utilities, materials and supplies

41,783

5,454

5,454

Acquisition of land, buildings and works

1,065

76

76

Acquisition of machinery and equipment

42,102

2,638

2,638

Transfer payments

787,709

13,269

13,269

Other subsidies and payments

4,137

2,276

2,276

Total gross budgetary expenditures

1,910,242

247,797

247,797

Less Revenues netted against expenditures:

 

Revenues

82,509

14,154

14,154

Total Revenues netted against expenditures:

82,509

14,154

14,154

Total net budgetary expenditures

1,827,733

233,643

233,643

* The funding available for use includes the 2019-20 Main Estimates.

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