Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended September 30, 2017

Graph 1: Comparison of Authorities Available as at September 30, 2017 and September 30, 2016.

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Graph 2: Comparison of Total Expenditure as of September 30, 2017 and September 30, 2016.

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Capital
The increase is related to the capitalization of certain costs related to the New Champlain Bridge Corridor, compared to last year.

The sources of significant year-over-year changes are as follows:

Operating Expenditures
Further details are provided later in this report, by standard object.

Contributions (Voted and Statutory)
Year-to-date Contributions (Voted and Statutory) expenditures as of the end of Q2 have decreased in comparison to last year.

Graph 3: Comparison of Contribution Expenditures (Voted and Statutory) as of September 30, 2017 and September 30, 2016.

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Significant changes in year-to-date contribution expenditures between September 2017 and September 2016 are as follows:

The sources of the significant year-over-year changes in program expenditures are summarized as follows:

• NBCF-PTIC-SCF - This increase relates to a relative increase in claims as more projects are approved and claims are received.
• Inuvik to Tuktoyaktuk Highway Fund - The decrease is related to advancing progress of the project.  Payments for the project are milestone based.
• BCF-MIC - This is an older program. The primary reason for the reduction is overall claims being lower compared to the same period last year.
• Net change – This is the net increase in contribution expenditures for nine other contribution programs where the individual program funds do not have a significant year-over-year change.

Departmental Budgetary Expenditures by Standard Object

The planned Departmental Budgetary Expenditures by Standard Object are set out in the table at the end of this report. Aggregate year-to-date expenditures in 2017-18 decreased by $111.9 million, compared with the same quarter last year. The largest dollar change was a reduction in Transfer Payments as explained above.

A breakdown of variances in year-to-date spending by standard object is below:

The source of significant year-over-year changes is summarized as follows:

• Professional and Special Services – Mostly due to an increase in costs related to a Memorandum of Understanding with the National Research Council of Canada for the update and development of Canada's Building Codes, standards and tools with the goal of achieving resilient and sustainable buildings and infrastructure.
• Transportation and Communications – Increase is due to an increase in travel.
• Acquisition of land, buildings and works – Decrease is related to land acquisition for the New Champlain Bridge Corridor and the Gordie Howe International Bridge projects that occurred last year.
• Transfer payment - Details are provided above.

Overall, Infrastructure Canada has spent 18.9% of its current Total Authorities as of September 30, 2017, compared with 27.2% at the end of Q2 of the previous fiscal year.

Risks and Uncertainties

In most cases, INFC funds projects via a Contribution Agreement or Integrated Bilateral Agreement between Canada and a Provincial/Territorial (PT) government. Those PT governments enter into their own agreements with municipalities, who are ultimately responsible for project management and construction of the infrastructure.

Most of INFC's programs are designed to flow federal funds to PTs after they have submitted their claims for actual costs incurred by a project. Only once INFC receives a claim can the funding flow to the PT in order to pay the federal share. It should be noted that the pace of the claims submitted to INFC does not match the economic activity on a project as spending can happen long before claims are received. For this reason, INFC relies on PTs and other partners to submit claims in a timely manner.

There are a variety of reasons that can explain the timing of claims being submitted, which in turn contribute to a variance between planned spending and actual spending profile. There is often a time lag between when the project was approved or announced to the actual start date of construction as infrastructure projects typically require a significant amount of upfront planning, design and procurement. Even after construction has started, sometimes project delays due to factors beyond the control of funding recipients such as, inclement weather or weather events, may delay the submission of claims. In other cases, partners may not have an immediate need or urgency to submit claims due to the financial planning within their own jurisdictions. In general, INFC encourages PTs to submit claims in a timely manner to ensure the flow of funding as planned. Parliamentary authority to spend typically expires at the end of the fiscal year. When claims are not submitted as expected in a given fiscal year as planned, INFC seeks to reprofile the authorities so that the funding committed to specific projects continues to be available in future years.

Over the last 18 months the department has been in a state of transformation. The introduction of new programs and responsibilities has resulted in structural changes to better support the delivery of new business lines, as well as required the department to move to more specialized skills and experience necessary for key positions. INFC is working to ensure it attracts and retains employees with the skill sets and experience necessary to fulfil the department's evolving mandate.

Significant Changes in Relation to Operations, Personnel and Programs

On September 25, 2017, Kelly Gillis replaced Jean-François Tremblay as Deputy Minister of Infrastructure and Communities.

On October 2, 2017, David Murchison became the new Assistant Deputy Minister, Policy and Results Branch.

Approval by Senior Officials

Approved by:

Signed at Ottawa, Canada.

Quarterly Financial Report
For the quarter ended September 30, 2017
Statement of Authorities (unaudited)
Fiscal year 2017-2018

Statement of Authorities (unaudited) (continued)
Fiscal year 2016-2017

Quarterly Financial Report
For the quarter ended September 30, 2017
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2017-2018

Departmental budgetary expenditures by Standard Object (unaudited) (continued)
Fiscal year 2016-2017