Health Canada Quarterly Financial Report - For the quarter ended September 30, 2023

Introduction
Basis of presentation
Highlights of fiscal quarter and fiscal year-to-date results
Risks and uncertainties
Significant changes in relation to operations, personnel and programs
Statement of authorities (unaudited)
Departmental budgetary expenditures by standard object (unaudited)

Introduction

Health Canada is the federal department responsible for helping Canadians maintain and improve their health. In keeping with the Department's commitment to making this country's population among the healthiest in the world as measured by longevity, lifestyle and effective use of the public health care system, its main responsibilities are as a regulator, a service provider, a catalyst for innovation, a funder, and an information provider. Health Canada administers the Canada Health Act which embodies national principles to ensure a universal and equitable publicly-funded health care system. A summary of Health Canada's programs may be found in Part II of the Main Estimates.

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by the Treasury Board, and should be read in conjunction with the Main Estimates and Supplementary Estimates A.

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

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 and Supplementary 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.

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 fiscal quarter and fiscal year-to-date results

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities provided in the Main Estimates and Supplementary Estimates A for fiscal year 2023-24, as well as budget adjustments approved by Treasury Board up to September 30, 2023.

A. Significant changes to authorities

The following graph provides a comparison of net budgetary authorities available for spending at the end of each quarter of the current and previous fiscal years.

Figure 1. Text version below. — **Figure 1. Comparison of net budgetary authorities as at June 30 and September 30 of fiscal years 2022-23 and 2023-24 (in millions of dollars)**

The following table provides a comparison of total authorities available by vote at the end of the second quarter of the current and previous fiscal years.

**Comparison of authorities available for spending for the year as at September 30 of fiscal years 2022-23 and 2023-24**
Authorities available (in millions of dollars)	2022-23	2023-24	Variance
Vote 1 - Operating expenditures	1,281	1,105	(176)
Vote 5 - Capital expenditures	21	33	12
Vote 10 - Grants and contributions	2,502	5,489	2,987
Statutory	1,954	427	(1,527)
Total authorities	5,758	7,054	1,296

Authorities available for spending in fiscal year 2023-24 were $7,054 million at the end of the second quarter as compared with $5,758 million at the end of the second quarter of 2022-23, representing a net increase of $1,296 million, or 23%. This variance is primarily attributable to the following increases:

$2,630.5 million in funding to improve health care for Canadians (Budget 2023);
$479.6 million in funding to develop a national strategy for high-cost drugs for rare diseases;
$355.1 million in funding for the implementation of the interim Canada Dental Benefit Plan and payments pursuant to the Dental Benefit Act;
$131.1 million in funding for the renewal of the federal framework for the legalization and regulation of cannabis in Canada; and,
$69.9 million in funding to improve mental health supports and services.

These increases in authorities are partially offset by the following decreases:

$1,786.3 million in statutory authority for expenditures in relation to COVID-19 tests;
$500.0 million in funding to support emergency measures related to the pandemic;
$36.7 million in funding related to Canada Health Infoway;
$22.5 million in funding to support innovative approaches to COVID-19 testing; and,
$20.0 million in funding for Safe Restart Agreements.

The fluctuations in authorities available for spending are most notable in the following standard objects: Transfer payments; Utilities, materials and supplies; Professional and special services; Personnel; and Other subsidies and payments.

B. Significant changes in year-to-date expenditures

The following graph provides a comparison of net budgetary authorities available for spending and year-to-date expenditures by quarter for the current and previous fiscal years.

Figure 2. Text version below. — **Figure 2. Comparison of net budgetary authorities and year-to-date expenditures for the quarters ended June 30 and September 30 of fiscal years 2022-23 and 2023-24 (in millions of dollars)**

The following table provides a comparison of year-to-date spending by vote at the end of the second quarter of the current and previous fiscal years.

**Comparison of year-to-date expenditures for the quarter ended September 30 of fiscal years 2022-23 and 2023-24**
Year-to-date expenditures (in millions of dollars)	2022-23	2023-24	Variance
Vote 1 - Operating expenditures	478	486	8
Vote 5 - Capital expenditures	2	4	2
Vote 10 - Grants and contributions	246	299	53
Statutory	650	325	(325)
Total year-to-date expenditures	1,376	1,114	(262)

At the end of the second quarter of 2023-24, total budgetary expenditures were $1,114 million compared with $1,376 million reported for the same period of 2022-23, representing a decrease of $262 million, or 19%.

Year-to-date net operating expenditures have increased by $8 million or 2% when compared to the second quarter of 2022-23. The increase is a result of several significant and offsetting factors:

$11.1 million increase in Professional and special services primarily due to fluctuation in amount and timing of payments for audit and evaluation services and emergency management services provided by Public Health Agency of Canada under the Shared Services Partnership agreement, and current year expenditures for program administrative services provided by Canada Revenue Agency under the interim Canada Dental Benefit plan;
$7.0 million increase in Personnel expenditures due to increase in salaries and wages following current year updates to the rates of pay for multiple public servant classification groups; and,
$10.2 million increase in revenues, which results in a decrease in net operating expenditures. This variance reflects timing difference in invoicing for regulatory revenues from the Drug and Medical Devices administrative programs and revenue for hosting services provided to Indigenous Services Canada and Patented Medicine Prices Review Board for a financial system platform (SAP).

There was an increase in Vote 10 - Grants and contributions year-to-date expenditures of $53 million or 22%, primarily a result of several offsetting factors including timing of payments made to recipients and changes in amount of funding available. Significant variances from the prior year are as follows:

$33.2 million increase in contributions to Canada Health Infoway resulting from additional funding from Budget 2023;
$12.6 million increase in contributions to the Terry Fox Research Institute;
$10.0 million increase in contributions to the Canadian Institute for Health Information;
$8.7 million increase in contributions to the Canadian Agency for Drugs and Technologies in Health; and,
$15.3 million decrease in contributions to Canadian Partnership Against Cancer.

Statutory year-to-date expenditures have decreased by $325 million or 50% from $650 million in 2022-23 to $325 million in 2023-24, primarily as a result of the following offsetting factors:

$569.7 million decrease in statutory spending for expenditures for Utilities, materials and supplies and Professional and special services in relation to COVID-19 tests; and,
$243.1 million increase in statutory spending for payments to recipients and advance payments to Canada Revenue Agency through an administrative arrangement to provide payments to recipients under the interim Canada Dental Benefit Plan.

C. Quarterly variances

The following graph presents a comparison of quarterly spending by quarter and by fiscal year.

Figure 3. Text version below. — **Figure 3. Comparison of quarterly expenditures for the quarters ended June 30 and September 30 of fiscal years 2022-23 and 2023-24 (in millions of dollars)**

Expenditures in the second quarter of fiscal year 2023-24 were $500 million compared with $821 million for the second quarter of 2022-23, representing a decrease of $321 million or 39% in quarterly spending.

The decrease in quarterly spending is primarily due to the following offsetting factors:

$375.0 million decrease in statutory expenditures for Utilities, materials and supplies and Professional and special services for expenditures in relation to COVID-19 tests;
$28.8 million increase in grants and contributions, mainly due to timing differences in payments made to recipients and changes in amount of funding available, notably an increase in contributions to Canada Health Infoway offset by decreases in contributions to Canadian Partnership Against Cancer and Terry Fox Research Institute; and,
$17.2 million increase in Personnel expenditures due to increases in salaries and wages and related cost for employee benefit plans following current year updates to the rates of pay for multiple public servant classification groups, paid during the second quarter.

The quarterly expenditures reported by standard object include an accounting reclassification of $125.3M in advance payments from Other subsidies and payments to Transfer payments to reflect the disbursement by Canada Revenue Agency to recipients for benefit payments during the quarter, under the interim Canada Dental Benefit plan.

Risks and uncertainties

Health Canada operates in a complex and dynamic environment, facing several challenges as it works to deliver results for Canadians. Many of these challenges – such as the overdose crisis, public health events like the COVID-19 pandemic, global supply chain issues, and climate change – are beyond the sole control of the Department and involve working collaboratively with federal partners, provinces and territories (P/Ts), Indigenous organizations, industry and international regulators.

Health Canada regulates health products and controlled substances, and supports innovation, digital health solutions and information sharing in Canada's health system to help Canadians maintain and improve their health. The Department also provides national leadership to foster sustainable health care systems that ensure access for Canadians to appropriate and effective health care. These systems are facing numerous challenges in terms of sustainability, access to services, and service delivery. Although health care delivery is primarily under P/T jurisdiction with funding administered via the Canada Health Transfer, the Department plays an important role in supporting P/Ts with their health care and health system priorities by advancing the Government's Working Together to Improve Health Care for Canadians plan, which provides new funding to P/Ts to support shared priorities.

Health Canada's priorities continue to focus on how government investments can protect the health and safety of Canadians. As such, there are corporate and program risks related to the rapid delivery of government commitments, programs and services. As per its Risk Management Policy, the Department uses a consistent approach to risk management, and maintains a comprehensive and up-to-date Corporate Risk Profile, to support risk-based decision-making.

The Department closely monitors its environment and operations to manage its corporate risks, ensure appropriate mitigation strategies are in place, and allocates and reallocates resources, as required. Sound risk management also supports effective service delivery, better project management, an increase in value for money, and ultimately better results for Canadians.

Health Canada manages risks and uncertainty through effective engagement across the organization with agile and sound governance structures, as well as long-term planning. The executive-level committee on Finance, Investment Projects and Transformation recommends overall direction for financial management and control, and ensures alignment of investments with departmental strategies and transformation initiatives.

In this post-pandemic environment, Health Canada will closely monitor departmental risks associated with health and system challenges that were exacerbated by COVID-19 and ensure additional mitigation strategies are being put in place for future health emergencies, such as those linked to climate change events.

Significant changes in relation to operations, personnel and programs

On September 8, 2023, the Oral Health Branch (OHB) was created at Health Canada, bringing together Health Canada's Dental Care Task Force and the Office of the Chief Dental Officer from the Public Health Agency of Canada. The OHB is led by Assistant Deputy Minister, Lynne René de Cotret.

There have been no other significant changes in relation to operations, personnel and programs during this quarter.

Approved by:

Original signed by Stephen Lucas
Stephen Lucas
Deputy Minister
Ottawa, Canada
Date: November 20, 2023

Original signed by Serena Francis
Serena Francis
Assistant Deputy Minister and Chief Financial Officer
Ottawa, Canada
Date: November 15, 2023

Statement of authorities (unaudited)

**Fiscal year 2023-24** (in thousands of dollars)
Authority	Total available for use for the year ending March 31, 2024*	Used during the quarter ended September 30, 2023	Year-to-date used at quarter-end
Vote 1 - Operating expenditures	1,104,588	319,751	486,108
Vote 5 - Capital expenditures	32,797	3,421	4,129
Vote 10 - Grants and contributions	5,489,125	128,614	299,353
(S) Contributions to employee benefit plans	129,543	32,386	64,772
(S) Minister of Health - Salary and motor car allowance	189	40	87
(S) Collection agency fees	5	5	5
(S) Spending of proceeds from the disposal of surplus Crown assets	265	-	-
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act	51,463	14,068	14,089
(S) Payments related to the Dental Benefit Act	243,093	-	243,093
(S) Payments for expenses in relation to COVID-19 tests	2,855	1,775	2,855
Total authorities	7,053,923	500,060	1,114,491
* Includes only Authorities available for use and granted by Parliament at quarter-end (S) – Statutory Vote

**Fiscal year 2022-23** (in thousands of dollars)
Authority	Total available for use for the year ending March 31, 2023*	Used during the quarter ended September 30, 2022	Year-to-date used at quarter-end
Vote 1 - Operating expenditures	1,281,077	298,814	477,416
Vote 5 - Capital expenditures	21,366	1,851	2,360
Vote 10 - Grants and contributions	2,501,521	99,824	246,235
(S) Contributions to employee benefit plans	112,317	28,079	56,158
(S) Minister of Health - Salary and motor car allowance	93	46	92
(S) Collection agency fees	46	21	46
(S) Spending of proceeds from the disposal of surplus Crown assets	567	313	447
(S) Spending of revenues pursuant to section 4.2 of the Department of Health Act	51,463	15,666	20,366
(S) Payments for expenses in relation to COVID-19 tests	1,789,123	376,770	572,550
Total authorities	5,757,573	821,384	1,375,670
* Includes only Authorities available for use and granted by Parliament at quarter-end (S) – Statutory Vote

Departmental budgetary expenditures by standard object (unaudited)

**Fiscal year 2023-24** (in thousands of dollars)
Standard object	Planned expenditures for the year ending March 31, 2024	Expended during the quarter ended September 30, 2023	Year-to-date used at quarter-end
Expenditures:
Personnel	1,009,510	300,557	508,763
Transportation and communications	17,373	2,110	4,225
Information	38,294	3,428	5,067
Professional and special services	278,706	71,896	115,304
Rentals	19,301	5,137	13,132
Repair and maintenance	16,401	3,968	5,863
Utilities, materials and supplies	44,332	4,834	6,445
Acquisition of land, buildings and works	1,228	43	43
Acquisition of machinery and equipment	46,703	6,859	8,445
Transfer payments	5,732,217	253,931	462,174
Other subsidies and payments	84,327	(123,261)	82,954
Total gross budgetary expenditures	7,288,392	529,502	1,212,415
Less revenues netted against expenditures:
Rights and privileges	61,617	1,814	6,682
Services of a non-regulatory nature	34,300	4,130	14,421
Services of a regulatory nature	132,853	18,767	72,090
Services to other government departments	5,699	4,731	4,731
Total revenues netted against expenditures	234,469	29,442	97,924
Total net budgetary expenditures	7,053,923	500,060	1,114,491

**Fiscal year 2022-23** (in thousands of dollars)
Standard object	Planned expenditures for the year ending March 31, 2023	Expended during the quarter ended September 30, 2022	Year-to-date used at quarter-end
Expenditures:
Personnel	888,152	283,309	489,614
Transportation and communications	7,069	1,780	2,667
Information	27,443	5,171	6,980
Professional and special services	140,115	69,790	117,033
Rentals	13,517	7,367	11,893
Repair and maintenance	9,774	2,888	5,053
Utilities, materials and supplies	2,351,976	376,891	570,183
Acquisition of land, buildings and works	2,575	44	69
Acquisition of machinery and equipment	28,616	4,530	10,083
Transfer payments	2,501,521	99,824	246,235
Other subsidies and payments	3,967	2,361	3,589
Total gross budgetary expenditures	5,974,725	853,955	1,463,399
Less revenues netted against expenditures:
Rights and privileges	55,297	1,415	6,603
Services of a non-regulatory nature	31,815	14,287	16,723
Services of a regulatory nature	124,341	16,869	64,403
Services to other government departments	5,699	-	-
Total revenues netted against expenditures	217,152	32,571	87,729
Total net budgetary expenditures	5,757,573	821,384	1,375,670

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2023-11-24

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