Public Safety Canada Quarterly Financial Report
For the quarter ended December 31, 2012

Table of contents

1.0 Introduction

This quarterly financial 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 Accounting Standard 1.3.  This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B), Eligible Paylist Expenditures for 2012-13 as well as the Main Estimates, Supplementary Estimates (B) for 2011-12.  No Supplementary Estimates (A) were tabled in the first quarter of 2011-12.  This quarterly financial report has not been subjected to an audit or review.

1.1 Authority, Mandate and Program Activities

Public Safety (PS) Canada plays a key role in discharging the Government's fundamental responsibility for the safety and security of its citizens.  The Department of Public Safety and Emergency Preparedness Act 2005 and the Emergency Management Act 2007 set out two essential roles for the Department:  (i) support the Minister's responsibility for all matters, except those assigned to another federal minister, related to public safety and emergency management, including national leadership; and (ii) coordinate the efforts of PS's Portfolio agencies, as well as provide guidance on their strategic priorities.

The Department provides strategic policy advice and support to the Minister of PS on a range of issues, including: national security, border strategies, countering crime and emergency management.  The Department also delivers a number of grant and contribution programs related to countering crime and emergency management.

Further information on the mandate, roles, responsibilities and program activities of PS can be found in the Report on Plans and Priorities and the Main Estimates.

1.2 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting (modified-cash).  The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament, or received from Treasury Board Central Votes, and those used by the Department consistent with the Main Estimates, the Supplementary Estimates (A) and (B) for the 2012-13 fiscal year.  This statement is also being presented using a special purpose financial reporting framework designed to meet the information needs concerning the use of spending authorities.

The authority of Parliament is required before funds can be spent by the Government.  Approvals are given in the form of annual limits provided 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 (FAA) 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 to be 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 departmental financial statements as presented through Part III of the estimates process.  However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report. 

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.  The Budget 2012 was tabled in Parliament on March 29, 2012 after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal year 2012-13, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update (ARLU), as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

1.3 Public Safety Canada Financial Structure

PS has a financial structure composed mainly of voted budgetary authorities that include Vote 1 – Operating Expenditures, Vote Netted Revenues and Vote 5 – Grants and Contributions, while the statutory authorities comprise the Contributions to employee benefit plans and Minister of PS – Salary and motor car allowance.

Over 70 percent of the Department's budget is devoted to delivering transfer payment programs related to countering crime and emergency preparedness.  The largest programs include payments made pursuant to the Disaster Financial Assistance Arrangements (DFAA), the First Nations Policing Program (FNPP), Financial Support to Provinces and Territories for 2011 Flood Mitigation Investments and programming related to the implementation of the National Crime Prevention Strategy (NCPS).  

2.0 Highlights of Fiscal Quarter and Fiscal Year-to-Date (YTD) Results

The numbers presented in the report are in accordance with the Government-Wide Chart of Accounts for Canada for 2012-13 and Treasury Board Accounting Standard (TBAS) 1.3.

The following graph provides a comparison of the budgetary authorities and expenditures as of December 31, 2012 and December 31, 2011 for the Department's combined Vote 1, Vote 5 and Statutory Votes. 

Comparison of the budgetary authorities and expenditures
Image Description

Starting from the left hand side, the “first” column in the graph indicates that the Department authorities are at $631.4 million for fiscal year 2012-13. The expenditures to date of $259.9 million reported at the end of the third quarter of the 2012-13 fiscal year are shown under the “second” column.   The expenditures of $74.0 million for the period ended December 31, 2012 (i.e. third quarter) are presented under the “third” column.  The fourth column in the graph depicts the 2011-12 authorities which were at $420.4 million at the end of December 2011.  The 2011-12 expenditures to date of $255.7 million are shown under the “fifth” column.  The PS' actual expenditures incurred in the third quarter of 2011-12 were $120.8 million and are shown under the “sixth” column of the graph.

2.1 Significant Changes to Authorities

For the period ending December 31, 2012, the authorities provided to the Department included the Main Estimates, the Supplementary Estimates (A) and (B), TB Central Votes (2011-12 Carry-Forward and Eligible Paylist Expenditures) whereas, the 2011-12 authorities for the same period are provided strictly through the Main Estimates, the Supplementary Estimates (B) and TB Central Votes (2010-11 Carry-Forward, Eligible Paylist Expenditures and Collective Agreements).  No Supplementary Estimates (A) was tabled in 2011-12.  The attached Statement of Authorities reflects a net increase of $211.0 million in PS's total authorities at December 31, 2012 compared to those of the previous year for the same period (from $420.4 million to $631.4 million).

This net increase in the authorities available for use is a combination of a decrease in Vote 1 – Operating Expenditures ($18.0 million), an increase in Vote 5 – Grants and Contributions ($228.2 million) and an increase in Budgetary Statutory Authorities ($0.8 million).

Vote 1 – Operating Expenditures

The Department's Vote 1 decreased by $18.0 million or 11.6%, mainly due to:

Vote 5 - Grants and Contributions (G&C)  

The Department's Vote 5 increased by $228.2 million or 90.8%, mainly due to:

Budgetary Statutory Authorities

The increase of $0.8 million in 2012-13 is related to the Employee Benefit Plans (EBP) costs associated with the change in the Department budgetary requirements for salary.  This does not represent a material change compared to 2011-12. 

2.2 Explanations of Significant Variances from Previous Year Expenditures

Although it is expected that spending would decrease as a result of savings identified as part of the Budget 2012 Spending Review, the total year-to-date (YTD) expenditures increased by $4.2 million or 1.6% in 2012-13, compared to 2011-12, from $255.7 million to $259.9 million.  This increase is mostly due to higher spending in Transfer Payments, which increased by $14.3 million or 9.5% from $150.0 million in 2011-12 to $164.2 million in 2012-13, offset by a decrease in Operating expenditures, which decrease by $10.7 million or 11.3% from $95.0 million in 2011-12 to $84.3 million in 2012-13.  For a detailed explanation of variances in expenditures in Quarters 1 and 2, please refer to the first and second quarterly report for 2012-13.  The cumulative effect of these variances, as well as the variances in the third quarter detailed below, explain the increase in YTD expenditures.

Compared to the previous year, the total expenditures in the third quarter, ending December 31, 2012, have decreased by $46.9 million, from $120.8 million to $73.9 million as per the Table of Departmental Budgetary Expenditures by Standard Object.  This represents a decrease of 38.8% against expenditures recorded for the same period in 2011-12.

This net decrease in spending is mostly related to a decrease in Vote 5 – Grants and Contributions ($47.0 million).  

Transfer Payments decreased by $47.0 million from $85.2 million in the third quarter of 2011-12 to $38.2 million as of December 31, 2012.  This decrease of 55.2% is mainly attributed to a $40.1 million decrease in spending under the Disaster Financial Assistance Arrangements program from $50.1 million in the third quarter of 2011-12 to $10.0 million in 2012-13, due to timing difference for $50.0 million payment for 2011 Manitoba Spring Flood paid in third quarter of 2011-12 and in first quarter of 2012-13, as well as a $10.0 million payment for 2011 Quebec Spring Flood in the third quarter of 2012-13.  The First Nations Policing Program (FNPP) decreased by $7.7 million from $22.7 million in the third quarter of 2011-12 to $15.0 million in 2012-13 due to timing difference as 2012-13 FNPP spending increased $10.5 million in the first two quarters compared to 2011-12.  The National Crime Prevention Strategy Program decreased $2.7 million from $11.2 million in the third quarter of 2011-12 to $8.5 million in 2012-13 due to delays in the approval process, delays in submission of proposals from proponents and lapses of signed agreements.  These decreases were offset by $2.7 million in spending for one-time Ex-Gratia payments to the families of passengers and crew members of Air India Flight 182, which were delivered by Service Canada who provide administrative support for the delivery of the Ex-Gratia payments in the third quarter of 2012-13.

3.0 Risks and Uncertainty

The Department's mandate spans from public safety and security, intelligence and national security functions, social interventions for youth-at-risk, to readiness for all manner of emergencies.  The Department is called to rapidly respond to emerging threats and ensure the safety and security of Canadians.  It's ability to deliver its programs and services is subject to several risk sources, such as, the rapidly changing asymmetrical threat environment, its ability to respond to natural or man-made disasters, government priorities, and central agency's or government-wide initiatives.  To deliver this mandate effectively, the collaboration of many departments and agencies, provincial and territorial governments, international partners, private sector and first responders is required.  Without the collaboration of all these partners, the Department is at risk in the delivery of its mandate and objectives, making the effectiveness of these relationships crucial.

PS continues to face pressures that have been previously identified.  Collectively these pressures have reduced the Department's funding base and its flexibility to reallocate funding to achieve expected results.    

In recognition of this tightening fiscal environment, PS examined all of its departmental program spending, balancing resource allocations against identified priorities by shifting from lower to higher priorities.  The Department continues to explore actions to mitigate and manage the impact of these efficiency measures on the organization and the delivery of corporate services.

4.0 Significant changes in relation to Operations, Programs and Personnel

4.1 Significant Changes in Relation to Operations

External Reporting

The President of Treasury Board approved changes to the Directive on the Management of Expenditures on Travel, Hospitality and Conferences in October 2012.  The objective of these changes is to enhance ministerial awareness of significant costs related to events that departments and agencies are organizing or attending and promote fiscal prudence.

Regional Transformation

An objective of the regional transformation is to strengthen the overall contribution of the Department's regional offices.  The new model will see better integration of the Department's work, which will allow it to better set priorities across the regions and deliver its work in a unified way.  In tandem, the Department is also focusing on adopting a Functional Management Model to enhance work across the Department, through a holistic, coordinated and consistent approach and by capitalizing on the Department's full capacity, including regions.

The consolidation of PS's regional offices was advanced in 2012-13, and included the formation of five regional headquarter offices and the staffing of five new Regional Director (EX-01) positions.  The consolidation and overall reduction of the number of PS regional offices is nearing completion.  The number of offices outside the NCR is being reduced from almost 30 two years ago to 15, and remaining office consolidation work is planned to be completed by the end of 2014-15.  These ongoing changes are an important element in establishing the Department's new regional presence while finalizing the regional transformation component of the 2009 Strategic Review.

Bringing our teams of regional employees together provides immediate and long term benefits for knowledge transfer, enhanced communications and learning opportunities and enhanced service delivery at the local level.  It provides new opportunities for collaboration, integration and efficiencies.  This also helps to support a new streamlined regional operations structure, decision-making and corporate service delivery while maximizing the use of regional staff to support departmental priorities.

Transformation of Pay Administration

The Consolidation of Pay Services Project was approved by Treasury Board Ministers in June 2009 as part of the Transformation of Pay Administration Initiative.  The Project will consolidate pay services from participating departments and agencies (organizations) that currently use, or are planning to use, the Government of Canada Human Resources Management System (PeopleSoft).  The Department's reference levels will be adjusted as pay services are progressively transferred to PWGSC.

The implementation strategy started in 2011-12.  One of the key components of the funding strategy is that work is transferred in a gradual, measured and deliberate manner, and that the amount of funds is proportionate to the number of accounts being serviced for the Project and the ongoing operations of PWGSC's CoE.  About 36% of the files have been transferred to Miramichi so far.  Another 16% is targeted to be transferred in March 2013 with the remainder expected to be transferred in September 2013.

Authorities in Vote 1 – Operating Expenditures totalling $0.6 million will gradually be transferred through Supplementary Estimates and ARLU processes over a three year period ending in 2013-14. A total of $0.4 million has been transferred to PWGSC's CoE through the 2012-13 Supplementary Estimates (A).

4.2 Significant Changes in Relation to Programs

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) Program was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial or territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

Since the inception of the program, the DFAA has been applied to over 180 events with a total federal payment to date of $2.18 billion.  From 1970 to 1995, the total amount of DFAA payments averaged approximately $10 million per fiscal year.  The 1996 Saguenay Flood, the 1997 Red River Flood and the 1998 Ice Storm resulted in large DFAA payments to affected provinces.  DFAA payments of over $1.1 billion were made for these three events.  Since 1996, DFAA payments have averaged $110 million per year.

There are currently over 60 natural disasters for which Orders-in-Council (OiCs) have been approved, authorizing the provision of federal financial assistance under DFAA, and for which final payments have not yet been made.  Much of this outstanding federal share results from recent natural disasters.  In 2010, there were an exceptional number of natural disasters for which provinces and territories requested federal financial assistance and the estimated federal share for these events alone is over $400 million.  There is a timing risk related to the receipt of a final payment request from provinces and territories, that the request may exceed the Department's appropriation at the time the request is received.

Taking into account all the expected DFAA final payments, the total estimated outstanding federal liability in the third quarter is currently $1.27 billion (to be paid out over the next 5 years).  The four most significant events, which represents over 50% of PS's liabilities, are the 2011 Manitoba Floods estimated at $347 million, the Saskatchewan 2007 Spring Summer Flood at $138 million, the 2010 Alberta June Rainstorm at $90 million and the 2010 Hurricane Igor that affected Newfoundland at $82 million.  The Department received $180 million additional funding in Supplementary Estimates (B).

The Department currently has access to $680 million, which amounts to about half of the DFAA obligation for the next 5 years. 

Disaster Mitigation Program

Following the unprecedented flooding in the spring and summer of 2011, the Financial Support to Provinces and Territories for 2011 Flood Mitigation Investments contribution program was created with $99.2 million in funding over three years as announced in Budget 2012.  More specifically, $50.2 million in funding (Vote 1 and Vote 5) has been received in 2012-13 Supplementary Estimates (B), however the Department will not be able to commit the full allocation this fiscal year and will be seeking to reprofile the funds through the 2013-14 Supplementary Estimates (B). 

Flood mitigation measures are intended to eliminate or reduce the impact of flooding–before it occurs–to protect lives, property, the environment and to reduce economic disruption. Examples of flood mitigation measures, which could be cost shared, are structural (e.g., raising dikes or installing culverts) and non-structural (e.g., flood plain mapping or risk assessments.)

The federal government will continue to work with provinces and territories on mitigation initiatives, recognizing that mitigation can lessen the impact of natural disasters on vulnerable communities and reduce the costs associated with these events.

Remembering Air India Flight 182

In addition to the four memorials erected, the federal Government has introduced the Kanishka Project and Air India Flight 182 Ex-Gratia Payment as a way to honour the memory of the victims.

  1. Kanishka Project:  On May 30, 2012, the Government of Canada announced the first round of funding, worth $1.1 million, awarded under the Kanishka Project.  The primary focus of this $10 million multi-year investment is to support research on terrorism and counter-terrorism, along with related activities to build knowledge and create a network of scholars and students that spans disciplines and universities.  A reprofile of $0.4 million ($0.2 million in O&M and $0.2 million in contributions) was approved from fiscal year 2012-13 to 2013-14.
  2. Air India Flight 182 Ex-Gratia Payment:  One-time Ex-Gratia payment to the families of passengers and crew members of Air India Flight 182 will be provided by PS in 2012-13 with funding in the amount of $7.9 million.  PS has secured the assistance of Service Canada to provide administrative support for the delivery of the Ex-Gratia payment.  Unspent funds of $1.3 million have been transferred to a special purpose allotment (SPA) called the Kanishka Project Research Initiative, which was reprofiled to fiscal year 2013-14.

4.3 Significant Changes in Relation to Key Personnel

Mr. François Guimont was appointed Deputy Minister of Public Safety Canada in November 2012.

5.0 Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

Public Safety Canada (PS) is doing its part to support the federal government's return to a balanced budget, reduce the deficit, and deliver on its commitments to Canadians.

The Department will achieve Budget 2012 savings of $24.7 million by fiscal year 2014-15 through organizational restructuring as well as by transforming some of its business activities, while also minimizing service reductions to priority policies and programs.

PS is well positioned to undertake these changes. The Department has developed action plans for all initiatives and is closely monitoring their implementation in order to ensure that all risks are mitigated. The initiatives arising from Budget 2012 will further enable PS to focus its resources on the Department's key priorities and core mandate, while at the same time ensuring we continue to build a safe and secure Canada.

Approval by Senior Officials:

François Guimont, Deputy Minister  
Ottawa, Ontario

Gary Robertson, Chief Financial Officer
Ottawa, Ontario

6.0 Statement of Authorities (unaudited)
(In thousand of dollars)
  Fiscal year 2012-2013 Fiscal year 2011-2012
Total available for use for the year ending March 31, 2013* Used during the quarter ended
December 31, 2012		 Year to date used at quarter end
December 31, 2012		 Total available for use for the year ending March 31, 2012* Used during the quarter ended
December 31, 2011		 Year to date used at quarter end
December 31, 2011
Vote 1 - Operating expenditures 136,790 31,956 84,304 154,747 31,999 95,031
 
Vote 5 - Grants and contributions 479,441 38,199 164,225 251,244 85,218 149,918
 
Budgetary statutory authorities 15,134 3,783 11,350 14,365 3,598 10,774
 
Total Authorities 631,364 73,938 259,879 420, 356 120,815 255,723

* Includes only authorities available for use and granted by Parliament at quarter-end

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

7.0 Departmental Budgetary Expenditures by Standard Object (unaudited)
(In thousand of dollars)
Fiscal year 2012-2013 Fiscal year 2011-2012
Planned expenditures for the year ending March 31, 2013* Expensed during the quarter ended December 31, 2012 Year to date used at quarter end December 31, 2012 Planned expenditures for the year ending March 31, 2012* Expensed during the quarter ended December 31, 2011 Year to date used at quarter end December 31, 2011
Gross Expenditures:
Personnel 105,879 27,364 80,267 103,789 28,132 86,272
Transportation and communications 8,237 1,042 2,474 11,857 1,457 3,836
Information 1,500 557 895 2,454 902 1,378
Professional and special services 26,025 4,824 8,086 33,126 3,284 9,132
Rentals 5,450 650 2,472 7,869 981 3,059
Repair and maintenance 1,566 1,385 1,905 1,235 421 892
Utilities, material and supplies 1,323 166 383 2,298 38 307
Acquisition of land, buildings and works 1,558 - - 233 - -
Acquisition of machinery and equipment 4,865 840 1,337 6,151 382 908
Transfer payments 480,190 38,199 164,225 251,244 85,218 149,918
Public debt charges - - - - - -
Other subsidies and payments 78 8 17 100 - 21
Minus: Funds available 2,808
Total budgetary expenditures 633,864 75,035 262,061 420,356 120,815 255,723
Less Revenues netted against expenditures**:
Interdepartmental Provision of Internal Support Services		 2,500 1,097 2,182 - - -
Total net budgetary expenditures 631,364 73,938 259,879 420,356 120,815 255,723

* Includes only authorities available for use and granted by Parliament at quarter-end
**Vote netted revenues (VNR) were approved through 2012-13 Supplementary Estimates (B). VNR in 2011-12 was not approved until 2011-12 Supplementary Estimates (C), as such was not included at the quarter ended December 31, 2011.

Note: Totals may not add and may not agree with details provided elsewhere due to rounding.

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