Public Safety Canada Quarterly Financial Report
For the quarter ended June 30, 2018

1.0 Introduction

This quarterly financial report for the period ending June 30, 2018 has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by Treasury Board.  The report should be read in conjunction with the Main Estimates as well as Equality and Growth a Strong Middle Class (Budget 2018). 

This quarterly financial report has not been subject to an external audit or review.  However, it has been reviewed by the Departmental Audit Committee prior to approval by senior officials.

Information on the mandate, roles, responsibilities and programs of Public Safety Canada can be found in the 2018-19 Departmental Plan and the 2018-19 Main Estimates.

1.1 Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities table 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 Budget 2018 for the 2018-19 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 annually approved limits through Appropriation Acts or through legislation in the form of statutory spending authority for specific purposes.

Public Safety Canada uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis, as do the expenditures presented in this report.

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

The following graph provides a comparison of the net budgetary authorities and expenditures as of June 30, 2018 and June 30, 2017 for the Department’s combined:

• Vote 1: Operating Expenditures;
• Vote 5: Grants and Contributions;
• Statutory Votes:
• Employee Benefit Plans; and
• Minister’s Salary and Car Allowance. 

Note: The 2018-19 Budget 2018 amounted to $3,127K. Public Safety’s appropriations have increased to $1,164,876K as of June 30, 2018. The 2017-18 SEA was $4,496K.

2.1 Significant Changes to Authorities

For the period ending June 30, 2018, the authorities provided to the Department include Main Estimates and Budget 2018.  The 2017-18 authorities for the same period included Main Estimates and Supplementary Estimates (A).  The Statement of Authorities table presents a net increase of $107.8 million (10.2 percent) compared to those of the same period of the previous year (from $1,057.1 million to $1,164.9 million).

Operating Expenditures authorities have increased by $13.7 million (10.7 percent) (from $127.5 million to $141.1 million) mainly due to:

• An increase of $4.7 million for negotiated salary adjustment;
• An increase of $2.5 million in funding level for the Government Operations Centre (GOC) Accommodations Project (Budget 2016);
• An increase of $1.8 million for the creation of the Memorial Grant Program for First Responders;
• An increase of $1.8 million for the Implementation of an initiative to build capacity to address drug impaired driving in Canada;
• An increase of $1.7 million in funding level for the ongoing Phase II of Canada’s Cyber Security Strategy, which will introduce actions to secure cyber systems outside of the Government of Canada;
• An increase of $1.7 million in funding level to enhance the Passenger Protect Program (PPP) (Budget 2018);
• An increase of $1.5 million in funding level in support Canada's 2018 G7 Presidency in Charlevoix, Quebec (Budget 2018) (horizontal item); and
• An increase of $1.1 million for the implementation of Canada’s new legal framework to strictly regulate and restrict access to cannabis.

These increases are offset by the following decreases:

• A decrease of $2.4 million for new funding to explore options for the potential deployment of a public safety broadband network in Canada (Budget 2015); and
• A decrease of $0.7 million for one-year renewal of funding for the Investment Canada Act (ICA) National Security Review (NSR) Program.

Grants and Contributions (G&C) authorities have increased by $93.3 million (10.2 percent) (from $914.5 million to $1,007.9 million) mainly due to:

• An increase of $77.5 million in funding level in support Canada’s 2018 G7 Presidency;
• An increase of $21.6 million for the creation of the Memorial Grant Program for First Responders;
• An increase of $21.1 million in additional contribution funding for the First Nations Policing Program;
• An increase of $20.3 million for the National Disaster Mitigation Program, aimed at reducing the impacts of natural disasters on Canadians;
• An increase of $17.3 million for the Implementation of an initiative to build capacity to address drug impaired driving in Canada;
• An increase of $2.0 million for the creation of the office for community outreach and countering radicalization to violence;
• An increase of $1.1 million in support of addressing the needs of vulnerable offenders in the federal correctional system;
• An increase of $1.0 million in additional funding for the Security Infrastructure Program in support of the Safer Communities Initiative;
• A net increase of $0.9 million for other initiatives of lesser value; and
• An increase of $0.8 million to implement the Strategy to prevent and address gender based-based violence.

These increases are offset by the following decrease:

• A decrease of $70.3 million for non-discretionary requirements to address existing and future obligations under the Disaster Financial Assistance Arrangements program.

Budgetary Statutory authorities have increased by $0.8 million (5.2 percent) in 2018-19 mostly as a result of the Employee Benefit Plan (EBP) costs associated with the change in the Department budgetary requirements for salary and EBP.

2.2 Significant Variances from Previous Year Expenditures

First Quarter Expenditures

Compared to the previous year, expenditures used during the quarter ended June 30, 2018 have decreased by $11.2 million (11.7 percent) (from $96.0 million to $84.8 million) as reflected in the Departmental Budgetary Expenditures by Standard Object table.

• Personnel expenditures have increased by $2.4 million (8.6 percent) mainly due to:
  • An increase of $2.4 million in expenditures as a result of addressing staffing gaps and commencing new programs.

• Other operating expenditures have increased by $0.4 million (10.6 percent) mainly due to:
• An increase of $0.3 million for information technology services;
• An increase of $0.3 million for office space rental; and
• An increase of $0.1 million in Other Subsidies and payments due to salary overpayments and salary advances recorded as non-personnel expenditures in 2017-18.

Offset by the following decreases:

• A decrease of $0.3 million in acquisition of machinery and equipment mainly for informatics equipment and parts.

• Transfer payments expenditures have decreased by $13.8 million (21.2 percent) mainly due to:
• A decrease of $13.4 million in expenditures for the First Nations Policing Program;
• A decrease of $1.0 million for supporting the Canadian Red Cross' wildfire relief efforts in 2017 in British Columbia;
• A decrease of $1.0 million in payments in support of the Search and Rescue New Initiatives Fund; and
• A decrease of $0.7 million for other expenditure variances of lesser value.

Offset by the following increases:

• An increase of $1.3 million in expenditures for the Grant Program to National Voluntary Organization;  and
• An increase of $1.0 million in expenditures for National Flagging System.

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, on behalf of the Government of Canada, to rapidly respond to emerging threats and ensure the safety and security of Canadians. The Department’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 government-wide or central agency 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.  

Disaster Financial Assistance Arrangements

The Disaster Financial Assistance Arrangements (DFAA) contribution program presents a greater level of uncertainty than other Public Safety Canada (PS) grants and contributions programs given that it represents a significant portion of the PS budget and that it is subject to unforeseen events. The DFAA contribution program was established in 1970 to provide a consistent and equitable mechanism for federal sharing of provincial and territorial costs for natural disaster response and recovery where such costs would place an undue burden on a provincial or territorial economy.

There are currently 74 natural disasters for which Orders-in-Council have been approved, authorizing the provision of federal financial assistance under the DFAA, and for which final payments have not yet been made.

Public Safety’s total outstanding share of liability under the DFAA in regards to these 74 events is $1.96 billion as of June 30, 2018, the majority of which is expected to be paid out over the next five years.

The following are the most significant events within Public Safety Canada’s DFAA liability:

• Manitoba 2011 Spring Flood ($453.8 million);
• Alberta 2013 June Flood ($339.8 million);
• Quebec 2017 Spring Flood ($246.5 million);
• British Columbia 2017 July Wildfires ($186.4 million);
• Alberta 2016 Wildfires ($118.6 million); and
• Manitoba 2014 June Rainstorm ($117.1 million).

Phoenix Pay Modernization Project

In April 2016, PS moved to the new Phoenix federal public service pay system. In transitioning to the new pay system, large backlogs and delays at the centralized Pay Centre have led to a significant increase in pay-related issues reported by employees.

To support employees at highest risk, the Department continues to work on a range of issues that falls within the department’s scope of control to support employees who are experiencing difficulties with their pay, including: providing emergency salary advances, analyzing and resolving integration issues between the department’s Human Resource Management System and the Phoenix pay system. Issues affecting PS employees and the measures the Department is able to take to help mitigate them have been discussed with the unions at local and national level management consultation committees. At these meetings, union representatives have been engaged to ensure that employees’ perspectives are shared with Management.  

The Department is closely monitoring pay transactions to identify and address over and under payments in a timely manner and continues to apply ongoing mitigating controls which were implemented in 2016.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

• On April 16, 2018, the Deputy Minister and the Associate Deputy Minister announced that Ellen Burack was appointed to the position of Assistant Deputy Minister, Community Safety and Countering Crime Branch effective on May 7, 2018.

5.0 Approval by Senior Officials

Approved as required by the Policy on Financial Resource Management, Information and Reporting:

Malcolm Brown
Deputy Minister
Public Safety Canada
Ottawa (Canada)
Date: August 17, 2018

Caroline Weber
Chief Financial Officer and Assistant Deputy Minister
Corporate Management Branch
Public Safety Canada
Ottawa (Canada)
Date: August 15, 2018

6.0 Statement of Authorities (unaudited)

7.0 Departmental budgetary expenditures by Standard Object (unaudited)

Date modified:

2018-08-29