Office of Infrastructure of Canada
Quarterly Financial Report for the quarter ended December 31, 2017

Graph 1: Comparison of Authorities Available as of December 31, 2017 and December 31, 2016.

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Graph 2: Comparison of Total Expenditure as of December 31, 2017 and December 31, 2016.

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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 increased by $14.7 million, compared with the same quarter last year.

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.
• Personnel – Increase is related primarily to Phase 2 of the Investing in Canada Plan.
• Transportation and communications – Increase is due to an increase in travel related to new departmental programs.
• 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.

Overall, Infrastructure Canada has spent 33.1% of its current Total Authorities as of December 31, 2017, compared with 44.0% at the end of Q3 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 two years 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

Since the summer of 2017, INFC has been actively working with central agencies to ensure contribution program authorities better align to historical spending trends. Following the end of the third quarter, $2.8 billion of contribution authorities have been moved to a frozen allotment and will remain available for INFC's programs in future years.

Approval by Senior Officials

Approved by:

Signed at Ottawa, Canada.

Quarterly Financial Report
For the quarter ended December 31, 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 December 31, 2017
Departmental budgetary expenditures by Standard Object (unaudited)
Fiscal year 2017-2018

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