Public Safety Canada Quarterly Financial Report
For the quarter ended September 30, 2013

1.0 Introduction

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 Accounting Standard 1.3. This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates (A) for 2013-14 and 2012-13, as well as Canada’s Economic Action Plan 2012 (Budget 2012).

1.1 Authority, Mandate and Program

Public Safety 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 Public Safety’s Portfolio agencies, as well as provide guidance on their strategic priorities.

The Department provides strategic policy advice and support to the Minister of Public Safety 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 of Public Safety 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 and the Supplementary Estimates (A) for the 2013-14 fiscal year.  This quarterly report has been prepared 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.

As part of the departmental performance reporting process, Public Safety prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. 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 2013-14, the changes to departmental authorities were reflected in the 2013-14 Main Estimates tabled in Parliament.

The quarterly financial report has not been subject to an audit or review.

1.3 Public Safety Canada Financial Structure

Public Safety 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 (EBP) and Minister of Public Safety – Salary and motor car allowance.

Over 75 percent of the Department’s budget is devoted to delivering transfer payment programs related to countering crime and emergency management.  The largest programs include payments made pursuant to the Disaster Financial Assistance Arrangements (DFAA), the First Nations Policing Program (FNPP), the programming related to the National Crime Prevention Strategy (NCPS) and the Financial Support to Provinces and Territories for 2011 Flood Mitigation Investments.  

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 2013-14 and Treasury Board Accounting Standard (TBAS) 1.3.

The following graph provides a comparison of the net budgetary authorities and expenditures as of September 30, 2013 and September 30, 2012 for the Department’s combined Vote 1, Vote 5 and Statutory Votes.

Image Description

Starting from the left hand side, the “first” column in the graph indicates that the Department authorities are at $670.9 million for fiscal year 2013-14. The year-to-date expenditures of $67.3 million reported at the end of the first quarter of the 2013-14 fiscal year are shown under the “second” column. The “third” column in the graph depicts the 2012-13 authorities which were at $395.6 million at the end of June 2012. The 2012-13 year-to-date expenditures of $121.5 million are shown under the “fourth” column.

2.1 Significant Changes to Authorities

For the period ending September 30, 2013, the authorities provided to the Department included the Main Estimates and the Supplementary Estimates (A), whereas the 2012-13 authorities for the same period are provided through the Main Estimates, the Supplementary Estimates (A) and Treasury Board Central Votes for Eligible Paylist Expenditures and Operating Budget Carry-Forward.  The Statement of Authorities presents a net increase of $268.8 million in Public Safety’s total authorities at September 30, 2013 compared to those of the previous year for the same period (from $402.2 million to $670.9 million).

This net increase in the authorities available for use is a combination of a decrease in Vote 1 – Operating Expenditures ($10.7 million), an increase in Vote 5 – Grants and Contributions ($278.7 million) and an increase in Budgetary Statutory Authorities ($0.8 million).

Vote 1 – Operating Expenditures

The Department’s Vote 1 decreased by $10.7 million or 8.0%, mainly due to:

• An increase of $2.5 million for the implementation of national security and emergency management initiatives under the Beyond the Border: a shared vision for perimeter security and economic competitiveness;
• An increase of $1.2 million for Collective Bargaining increases that pertain to the following classifications: Economics and Social Science Services (EC), Education and Library Services (EB), Program and Administration (PA) and the Personnel Administration Group (PE);
• A decrease of $6.6 million for the Operating Budget Carry-Forward (OBCF). No Operating Budget Carry-Forward was received by the Department in the second quarter of 2013-14. However, an OBCF of $3.9 million maybe received by the Department in a subsequent quarter.
• A decrease of $6.0 million as a result of the saving measures announced in Budget 2012; (of note, details on the implementation of incremental and savings measures announced in Budgets 2012 are found in the Budget 2012 Implementation section)
• A decrease of $0.6 million for the reimbursement of Eligible Paylist Expenditures. No Eligible Paylist Expenditures were received by the Department in the second quarter of 2013-14.
• A decrease of $0.3 million for an incremental transfer of funding to Public Works and Government Services Canada to consolidate all federal government pay administration services into one Centre of expertise in Miramichi, New Brunswick;
• A decrease of $0.2 million due to the sunsetting of evaluation funding for measures to address contraband tobacco;
• A decrease of $0.2 million due to a transfer to Security Intelligence Review Committee to consolidate the review functions for the Canadian Security Intelligence Service into a single organization;
• A decrease of $0.1 million to strengthen the security of federal cyber systems; and
• A decrease of $0.1 million for a transfer to the Privy Council Office for costs to support the Business Transformation and Renewal Strategy.

Vote 5 - Grants and Contributions (G&C)  

The Department’s Vote 5 increased by $278.7 million or 110.6%, mainly due to:

• An increase of $230.0 million to supplement Public Safety’ existing reference levels for the Disaster Financial Assistance Arrangements contribution program to address anticipated payments to Provinces and Territories of $1.1 billion for events approved up to March 31, 2013.
• An increase of $41.0 million due to funding transferred to the Royal Canadian Mounted Police (RCMP) for the First Nations Community Policing Service in the first quarter of2012-13, but as of the end of September this transfer has not yet been effected for 2013-14.
• An increase of $38.0 million in financial support to Provinces and Territories for 2011 Flood Mitigation Investments;
• An increase of $1.8 million for the Kanishka Project initiative mainly resulting from a reprofile of unused funds in 2012-13 under Ex-Gratia payments to the families of the victims of Air India Flight 182;
• A decrease of $14.8 million as a result of the sunsetting of a two year temporary funding arrangement for the sustainability of agreements under the First Nations Policing Program, net of funding received for the compensation, benefit and salary increases of the RCMP officers working for the Program;
• A decrease of $9.2 million as a result of savings measures announced in Budget 2012; (of note, details on the implementation of incremental and savings measures announced in Budgets 2012 is found in the Budget 2012 Implementation section)
• A decrease of $7.9 million due to the sunsetting of funds for the Ex-Gratia payments to the families of the victims of Air India Flight 182; and
• A decrease of $0.2 million due to a contribution for RADARSAT – Major Crown Project made from the Safer Communities Initiative (National Crime Prevention Strategy).

Budgetary Statutory Authorities

The increase of $0.8 million in 2013-14 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 2012-13.

2.2 Explanations of Significant Variances from Previous Year Expenditures

The total year-to-date (YTD) expenditures increased by $163.6 million, or 87.5 percent, in 2013-14, compared to 2012-13, from $187.0 million to $350.6 million. This increase is mostly due to higher spending in Transfer Payments, which increased by $160.0 million or 127.0% from $126.0 million in 2012-13 to $286.0 million in 2013-14. For a detailed explanation of variances in expenditures in the first quarter, please refer to the Quarterly Financial Report for the quarter ended June 30, 2013. The cumulative effect of these variances, as well as the variances in the second quarter detailed below, explain the increase in YTD expenditures.

Compared to the previous year, the total expenditures in the second quarter, ending September 30, 2013, have increased by $217.8 million, from $65.5 million to $283.3 million as per the table of Departmental Budgetary Expenditures by Standard Object. This represents an increase of 332.5% against expenditures recorded for the same period in 2012-13.

This increase in spending is a combination of an increase in Vote 1 – Operating Expenditures ($2.5 million), an increase in Vote 5 – Grants and Contributions ($215.0 million), as well as a minor increase in Budgetary Statutory Authorities ($0.2 million).

For the most part, the increase in spending in the second quarter of 2013-14 is explained by the Transfer Payment increase of $215.0 million, or 607.8 percent, compared to those of the previous year for the same period (from $35.4 million to $250.4 million). This increase represents 98.3 percent of the total variance in the expenditures expended during the second quarter of 2012-13 and 2013-14. The increase in mainly attributed to a $200 million payment for the 2011 Manitoba Spring Flood and a $19 million payment for the 2011 Saskatchewan Spring Summer Flood paid in the second quarter of 2013-14 under the Disaster Financial Assistance Arrangements program. There was also an increase in expenditures of $5.0 million for the First Nations Policing Program. These increases were offset by decreases in expenditures paid during the second quarter of 2012-13 of $6.6 million under the Biology Casework Analysis Contribution Program and $3.1 million in spending for one-time Ex Gratia payments to families of passengers and crew members of Air India Flight 182.

Personnel expenditures, which include expenditures related to employee benefit plans (EBP) and the Minister’s salary and car allowance, have increased by $3.0 million, or 11.9 percent, compared to those of the previous year for the same period (from $25.4 million to $28.5 million). This increase represents 1.4 percent of the total variance in the expenditures expended during the second quarter of 2012-13 and 2013-14. The increase is mainly attributable to a $1.0 million variance attributable to Pay at Risk expenditures incurred in the first quarter of 2012-13 that were applied against the Payables at Year End (PAYE) in the second quarter of the same fiscal year and as a result of the timing creates a year-over-year variance in the second quarter of 2013-14. Other factors are increases in salary and wages expenditures in the second quarter of 2013-14 of $0.8 million for acting pay, $0.4 million for termination allowances and severance pay, $0.3 million for severance pay and termination benefits as a result of newly signed collective agreements, and $0.2 million for expenditures related to EBP and the Minister’s salary and car allowance.

Other Operating expenditures have increased by 0.6 million, or 12.7 percent, compared to those of the previous year for the same period (from $4.7 million to $5.3 million). This increase represents 0.3 percent of the total variance in the expenditures expended during the second quarter of 2012-13 and 2013-14. The increase is mainly attributed to the timing differences in payments for legal services provided by Justice Canada which increased by $0.3 million in the second quarter of 2013-14. Furthermore, the Department has taken measures to spread out its spending over the year which also contributed to the increase in Other Operating spending.

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 are 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.

Fiscal Restraint

Public Safety 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.

As in the past, the Operating Budget Carry Forward (OBCF) has been used to offset the pressures in the operating vote and to address a number of important sustainability issues. The Department’s eligible OBCF shows a decrease in year over year comparison. It is anticipated that the 2013-14 OBCF will be reduced to 40.1 percent of the amount received in 2012-13. In addition, the Department is also facing a potential litigation pressure in 2013-14 related to the Canadian Firearms Program.

In recognition of this tightening fiscal environment, Public Safety 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.

Natural Disaster Response and Recovery

Provinces and territories (P/Ts) have primary responsibility for responding to, and managing the consequences of, emergencies within their jurisdictions. However, P/Ts may request financial assistance from the Government of Canada when response and recovery costs exceed what they may reasonably be expected to bear on their own.

For this reason, Public Safety is allocated a base reference level of $100 million annually for Disaster Financial Assistance Arrangements (DFAA) payments. As required, Public Safety may come forward annually to request incremental funding from the Supplementary Estimates process if existing reference levels are insufficient to meet P/T requests for payments.

The Government of Canada is anticipating $1.1 billion to P/Ts for events approved up to March 31, 2013. To address this significant obligation, in March 2013 Treasury Board Ministers approved $700 million over four years to supplement Public Safety’ existing reference levels of $400 million. An amount of $230 million was approved in the first quarter of 2013-14 through the 2013-14 Supplementary Estimates (A).

The Department of Finance approved a reprofile in the amount of $100 million from 2016-17 approved funding to 2013-14. Funding has been requested to supplement the existing funding in order to issue a $200 million advance payment to the Province of Manitoba for the severe 2011 floods in 2013-14.

More recently, to address the anticipated payments to P/Ts of $3 billion in financial assistance for approved disasters since April 2013, which includes the preliminary cost estimates of $2.8 billion (2013-14 to 2022-23) for the recent severe flooding in southern Alberta, Public Safety is seeking $2.1 billion incremental funding over five years. Of this amount, $589 million is being sought through the Supplementary Estimates process to make advance payments to eligible Provinces and Territories under this program. Public Safety will seek the remaining $0.9 billion through a future Estimates process to cover the payment obligations to the P/Ts.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

4.1 Significant Changes in Relation to Operations

Reducing travel costs through the use of technology

In keeping with the Government’s commitment to implement new measures to return to balanced budgets and to make government more efficient, Economic Action Plan 2013 announced a number whole-of government initiatives to modernize government administration by improving service delivery and achieving efficiencies. One of these initiatives is to reduce travel costs through the use of technology.

Economic Action Plan 2013 implements measures to reduce departmental travel costs by $42.7 million, or 5 percent, and to boost productivity by using modern alternatives to travel.

Public Safety is committed to controlling costs related to travel.  As a result of cost containment measures announced in earlier budgets, coupled with the implementation of departmental strategies and tools that reinforce the use of lower cost alternatives and focus departmental expenditures on core mandates, Public Safety’ spending trend shows a steady decrease in year over year comparison.

Public Safety’ share of the government-wide travel cost reduction initiative is $0.2 million ongoing starting in 2013-14. The reduction will be achieved by freezing the funds in the current fiscal year as part of the Supplementary Estimates process and by a reduction of future reference levels through the Annual Reference Level Update (ARLU) process.

New Directive on Travel, Hospitality, Conference and Event Expenditures

The President of the Treasury Board recently approved amendments to the Directive on Travel, Hospitality, Conference and Event Expenditures (Directive) effective August 1, 2013.

For costs covered by the Directive, the amendment reinforces the use of lower cost alternatives, focus departmental expenditures on core mandates and restricts approval authorities to the Senior Departmental Manager (SDM) level. The Directive also defines restrictive conditions under which further delegations of approval authority below the SDM level can occur.

Pursuant to the implementation of the amended Directive, there was a requirement in the second quarter of 2013-14 to update Public Safety’ departmental authority instruments, as well as a number of related procedures and forms. In order to ensure the successful implementation of these changes and full understanding of the impacts of the amended Directive, Communiqués and Information Sessions addressing the changes and related impacts have been sent or held in the second quarter of 2013-14.

Consolidation of Pay Services

In August 2010, the Government of Canada announced that it would be consolidating its pay services to a Public Service Pay Centre (Pay Centre). To this effect, Public Works and Government Services Canada received Treasury Board approval to consolidate pay services into a single region located in Miramichi, New Brunswick.

The Consolidation of Pay Services Project will gradually transfer pay administration services to the Centre of Expertise (CoE) for departments using the Government of Canada Human Resources Management System (PeopleSoft) over a five-year period starting in January 2012.

The consolidation will be done over a period of five years in four waves, in which Wave 1 started in January 2012 and ends with Wave 4 beginning in fiscal year 2015-16.

Public Safety’ transfer of accounts to the new CoE was undertaken as part of Wave 1 of the Project, and completed on September 9th, 2013. As a result, Public Safety’s Compensation Services Unit was closed permanently as of this date.

4.2 Significant Changes in Relation to Programs

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution 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 200 events with a total federal payment to over 2.5 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.  Between 1996 and 2012, DFAA payments averaged $118 million per year. Annual DFAA payments are expected to exceed $600 million per year over the next five years.

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 the outstanding federal share results from recent natural disasters, which is expected. More recently, the anticipated payments to provinces and territories is $3 billion for events approved since April 2013, which includes the preliminary cost estimates of $2.8 billion for the recent severe flooding in southern Alberta. 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 at the end of the second quarter was $3.9 billion, the majority of which is expected to be paid out over the next five years. The four most significant events represent over 85% of Public Safety’s current liabilities. They are the Alberta 2013 June Flood estimated at $2.8 billion, the Manitoba 2011 Spring Flood at $253 million, the Saskatchewan 2011 Spring Flood at $178 million, and the Alberta 2010 June Rainstorm at $90 million. The Department will be seeking $589 million in additional funding in the third quarter of fiscal year 2013-14 through the Supplementary Estimates process.

Lac Mégantic, Quebec

In response to the train derailment in Lac-Mégantic, Quebec on July 6, 2013, the Government of Canada committed on July 22, 2013, $25 million for immediate response and recovery needs from Public Safety to help support the longer-term economic recovery and rebuilding of this community and this region. However, existing departmental programs could not be used.

In order to provide federal assistance to the Province of Quebec to address the costs associated with this non-natural disaster, Public Safety received the approval of the Terms and Conditions for a new one-time contribution program entitled Financial assistance to the Province of Quebec for response and recovery costs from the explosion following the train derailment in Lac Mégantic, Quebec, and will be seeking $25 million through the Supplementary Estimates process.

First Nations Policing Program

The federal government will maintain funding for policing agreements with First Nation and Inuit communities under the First Nations Policing Program (FNPP) for the next five years. Budget 2013 announced an additional $33 million over two years to support these communities. Public Safety will seek $15.9 million of this additional funding for fiscal year 2013-14 through the Supplementary Estimates process.

The FNPP supports professional, dedicated and culturally responsive policing services to First Nation and Inuit communities. FNPP funding supplements existing funding and policing services provided by provinces and territories.

Currently, funding provided under the FNPP supports 163 policing agreements, which represent approximately 1,250 professionally trained and dedicated police officers working in some 400 First Nation and Inuit communities, serving a total population of over 338,000.

4.3 Significant Changes in Relation to Key Personnel

Effective July 9, 2013, the Honorable Vic Toews retired from politics and as a result stepped down as the Minister of Public Safety.

On July 15, 2013, the Prime Minister appointed the Honourable Steven Blaney as the new Minister of Public Safety. Minister Blaney comes to Public Safety from Veterans Affairs Canada and is the Member of Parliament for Lévis-Bellechasse, Quebec.

With the transfer of Mr. Gary Robertson, CMA in June 2013 to the position of Associate Assistant Deputy Minister of National Cyber and Security Branch, Mr. Mark Perlman, CMA joined the Department as its new Chief Financial Officer, and as the new Assistant Deputy Minister of the Corporate Management Branch in September 2013. Mr. Perlman was recently the Deputy Assistant Commissioner and Agency Comptroller, Finance and Administration Branch at the Canada Revenue Agency.

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 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.

The Department is achieving Budget 2012 savings of $15.8 million in 2013-14. Vote 1 - Operating Expenditures saving measures account for $6.0 million, Vote 5 - Grants and contributions account for $9.2 million and the Statutory Vote - Employee Benefit Plans account for the remaining $0.5 million.

Public Safety is well positioned to undertake these changes. The Department has developed action plans for each initiative and is currently monitoring to ensure it meets its financial obligations. The initiatives arising from Budget 2012 will further enable Public Safety 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.

The printed version signed by:

6.0 Statement of Authorities (unaudited)

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

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)

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

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

Date modified:

2018-01-31