Future-Oriented Statement of Operations (Unaudited) - year ended March 31, 2018

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Departmental management is responsible for this Future-Oriented Statement of Operations, including responsibility for the appropriateness of the assumptions on which this statement was prepared. This statement is based on the best information available and the assumptions adopted as at January 4, 2017 and reflects the plans described in the Departmental Plan.

This Future-Oriented Statement of Operations has not been audited. 

Signed at Ottawa, ON
March 1, 2017

Infrastructure Canada Future–Oriented Statement of Operations (unaudited)
for the year ending March 31
(in thousands of dollars)

N/A	Forecast results 2016-17	Planned results 2017-18
Expenses
Public Infrastructure for a More Prosperous Canada	4,199,092	6,449,646
Internal Services	31,999	46,685
Total expenses	4,231,091	6,496,331
Revenues
Miscellaneous revenues	70	70
Revenues earned on behalf of government	(70)	(70)
Total revenues	0	0
Net cost of operations before government funding and transfers	4,231,091	6,496,331

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

1. Authority and Objectives

The Office of Infrastructure of Canada (INFC) was created in 2002 as a separate organization under Schedule I.1 of the Financial Administration Act. The applied name for this organization is Infrastructure Canada.

INFC is funded through annual and statutory appropriations received from the Parliament of Canada and is not taxable under the provisions of the Income Tax Act. INFC reports to the Minister of Infrastructure and Communities.

INFC was established to lead the Government of Canada's effort to address infrastructure challenges through strategic investments in provincial, territorial and municipal assets, engagement in key partnerships, and the development and implementation of sound policies. Order in Council P.C. 2004-325 authorizes the Minister of INFC to enter into transfer payment agreements and contracts related to infrastructure initiatives in Canada.

Order in Council P.C. 2014-144 transferred ministerial responsibility for the New Champlain Bridge Corridor Project and oversight of the Jacques Cartier and Champlain Bridges Incorporated (JCCBI) from the Minister of Transport to the Minister of Infrastructure and Communities (effective February 13, 2014). The enabling legislation for this project, the New Bridge for the St. Lawrence Act, was enacted on June 19, 2014.

Orders in Council P.C. 2015-1237 and P.C. 2015-1238 transferred responsibility for the Gordie Howe International Bridge Project, including oversight of the Windsor-Detroit Bridge Authority (WDBA), from the Minister of Transport to the Minister of Infrastructure and Communities (effective November 4, 2015). The WDBA is responsible for the procurement process for the design, construction, operation and maintenance for the new publicly-owned Gordie Howe International Bridge between Windsor, Ontario and Detroit, Michigan through a public-private partnership. The enabling legislation for this project, the Bridge to Strengthen Trade Act, was enacted on December 14, 2012.

Also effective on November 4, 2015, the Minister of Infrastructure and Communities was designated as the Minister responsible for federal matters relating to the Toronto Waterfront Revitalization Initiative.

Order in Council P.C. 2016-0105, appointed Jean-François Tremblay as the Deputy Minister of Infrastructure, effective March 14, 2016.

Order in Council P.C. 2016-0679, designated the Minister of Infrastructure, Communities and Intergovernmental Affairs, a member of the Queen's Privy Council for Canada, as the appropriate Minister for PPP Canada Inc.

Since 2014-15, INFC delivers its mandate under one strategic outcome and internal services in support of its activities as described below.

Public Infrastructure for a More Prosperous Canada: INFC's key business lines and initiatives are grouped into 6 programs which fall under this strategic outcome.

• Funding for Provincial-Territorial Priorities – providing predictable funding to each province and territory to enhance Canada's public infrastructure system. (Provincial-Territorial Infrastructure Base Fund).
• Permanent and Flexible Infrastructure Funding – providing long-term and predictable funding for municipalities for their infrastructure priorities (Gas Tax Fund).
• Investments in National Infrastructure Priorities – provides funding to infrastructure projects that advance the national priorities (New Building Canada Fund-National Infrastructure Component, Green Infrastructure Fund, Border Infrastructure Fund, Inuvik to Tuktoyaktuk Highway Fund, Public Transit Infrastructure Fund, Clean Water and Wastewater Fund, Asset Management Fund, and Capital Building for Climate Change Challenges Fund).
• Large-Scale Infrastructure Investments – providing funding for infrastructure projects of national, regional and/or local significance (New Building Canada Fund-Provincial Territorial Infrastructure Component-National and Regional Projects, Building Canada Fund–Major Infrastructure Component, Canada Strategic Infrastructure Fund, and Gordie Howe International Bridge project).
• Infrastructure Investments in Small Communities and Rural Areas – providing funding for infrastructure projects in small communities and rural areas to support local or and/or regional priorities and economies (New Building Canada Fund-Provincial-Territorial Infrastructure Component-Small Communities Fund, and Building Canada Fund-Communities Component).
• New Bridge for the St. Lawrence Corridor Project - In support of the Government of Canada's economic and safety priorities, this program ensures the overall delivery of the New Bridge for the St. Lawrence Corridor project in Montreal, Quebec.

Internal Services: Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of INFC. Internal Services include only those activities and resources that apply across INFC, not those provided specifically for a program.

2. Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Department Plan.

The information in the forecast results for fiscal year 2016-17 is based on actual results as at December 31, 2016 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2017-18.

The main assumptions underlying the forecasts are as follows:

• Infrastructure Canada sought a net decrease of $2.0 million in its authorities in the Supplementary Estimates (C), comprised of:
  • A decrease of $2.6 million in capital funding to be transferred to the Windsor Detroit Bridge Authority
  • An increase of $0.6 million in operating funding for the Gordie Howe International Bridge project.
• The planned/forecast spending for 2016-17 has been reduced by $828 million based on the anticipated cashflow requirements of contribution program recipients, and is moved to future years. This amount remains in INFC's reference levels, however, cannot be used in 2016-17.
• Increased funding approved in 2017-18 for Phase I of the Investing in Canada Plan programs (specifically the Public Transit Infrastructure Fund, and Clean Water and Wastewater Fund).
• The $500 million milestone payment for the New Champlain Bridge Corridor project is anticipated to be paid in 2017-18.
• Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical data adjusted to reflect current authorities.

These assumptions are adopted as at January 4, 2017.

3. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2016–17 and for 2017–18, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, INFC has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

• the timing and the amount of acquisitions and disposals of property, plant and equipment which may affect gains, losses and amortization expense;
• the implementation of new collective agreements;
• the rate at which recipients submit claims under Investing in Canada programs announced in Budget 2016, the New Building Canada Plan, and sunsetting programs;
• further changes to the contributions (and operating budgets) through approval of additional new infrastructure initiatives or technical adjustments later in the year;
• ongoing changes to the budgetary cycle and estimates process.

After the Departmental Plan is tabled in Parliament, INFC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Result Report.

4. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada's accounting policies in effect for fiscal year the 2016-17, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

1. Expenses

The department records expenses on an accrual basis.

Expenses for INFC's operations are recorded when goods are received or services are rendered including services provided without charge for accommodation, employer contributions to health and dental insurance plans, legal services and worker's compensation, which are recorded as expenses at their estimated cost. Vacation pay, compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.

Transfer payments are recorded as expenses when the recipients have met all the eligibility criteria and the transfers are authorized by March 31. In the case of transfers that do not form part of an existing program, the transfers are considered to be authorized when the government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, or for liabilities, including contingent liabilities and environmental liabilities to the extent the future event is likely to occur and a reasonable estimate can be made.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

2. Revenues

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Department's liabilities. Although the deputy head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of INFC's gross revenues.

5. Parliamentary Authorities

INFC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to INFC differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current, or future years. Accordingly, INFC has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to requested authorities
(in thousands of dollars)

N/A	Forecast results 2016-17	Planned results 2017-18
Net cost of operations before government funding and transfers	4,231,091	6,496,331
Adjustment for items affecting net cost of operations but not affecting authorities:	N/A	N/A
Amortization of tangible capital assets	(1,259)	(2,105)
Services provided without charge by other government departments	(6,347)	(6,751)
Decrease/(Increase) in vacation pay and compensatory leave	(820)	0
Decrease/(Increase) in employee future benefits	(632)	(16)
Refunds of previous years' expenditures	544	544
Total items affecting net cost of operations but not affecting authorities	(8,515)	(8,328)
Adjustment for items not affecting net cost of operations but affecting authorities:	N/A	N/A
Acquisition of tangible capital assets (Note 6)	69,681	523,660
Total items not affecting net cost of operations but affecting authorities	69,681	523,660
Requested authorities	4,292,258	7,011,663

b) Authorities requested
(in thousands of dollars)

N/A	Forecast Results 2016-17	Planned Results 2017-18
Authorities requested:
Vote 1: Operating expenditures	131,616	126,917
Vote 5: Capital expenditures	122,819	523,660
Vote 10: Contributions	3,017,422	4,282,963
Statutory amounts
Employee Benefit Plan	6,781	6,106
Gas Tax Fund	2,071,933	2,071,933
Minister's Salary and Car Allowance	84	84
Less:
Authorities available for future years
Lapsed: Operating	(70,125)	0
Lapsed: Capital	(53,138)	0
Lapsed: Contributions	(934,134)	0
Total authorities requested	4,292,258	7,011,663

6. Tangible Capital Assets

INFC has the New Champlain Bridge Corridor (NCBC) project, which is a Public-Private Partnership arrangement for a new bridge crossing the St. Lawrence, as well as a new l'Île-des-Soeurs Bridge, and reconstruction and widening of the federal portion of Autoroute 15 in Montreal, Quebec.

The NCBC project involves the acquisition of tangible capital assets that are not reflected in the Statement of Operations. The value of construction in progress is recognized as a construction in progress asset, as well as a corresponding construction in progress liability. These amounts are reflected on INFC's annual Statement of Financial Position, and Statement of Change in Departmental Net Debt.

During 2017-18, there is an anticipated $500M milestone payment for the New Champlain Bridge Corridor project. This payment, which is recognized on the Statement of Operations, will reduce the outstanding construction in progress liability.