Public Safety Canada Quarterly Financial Report
For the quarter ended June 30, 2019

1.0 Introduction

This quarterly financial report for the period ending June 30, 2019 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 Investing in the Middle Class (Budget 2019).

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 2019-20 Departmental Plan and the 2019-20 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 2019 for the 2019-20 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, 2019 and June 30, 2018 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. 

Comparison of Budgetary Authorities, Year to Date Expenditures and Quarterly Expenditures as of June 30, 2019 and June 30, 2018

Note: Public Safety Canada’s appropriations have decreased to $912,506K as of June 30, 2019. The Treasury Board (TB) Vote 5 allotment to the Canadian Red Cross is in support of the 2019 flood recovery efforts across Canada. Main Estimates exclude non-approved Budget Implementation Vote (BIV) items as of June 30, 2019 (Protecting Canada’s Critical Infrastructure from Cyber Threats and Protecting Community Gathering Places from Hate Motivated Crimes).

2.1 Significant Changes to Authorities

For the period ending June 30, 2019, the authorities provided to the Department include the 2019-20 Main Estimates and Budget 2019 approved items. The 2018-19 authorities for the same period included the Main Estimates and Budget 2018 approved items. The Statement of Authorities table presents a net decrease of $252.4 million (21.7 percent) compared to those of the same period of the previous year (from $1,164.9 million to $912.5 million).

Operating Expenditures authorities have decreased by $3.8 million (2.7 percent) (from $141.1 million to $137.3 million) mainly due to:

• A decrease of $8.5 million relating to a transfer to the Communications Security Establishment related to establishing the Canadian Centre for Cyber Security;
• A decrease of $3.0 million in funding level for Phase II of Canada's Cyber Security Strategy;
• A decrease of $1.7 million relating to one-year funding in 2018-19 for the Enhanced the Passenger Protect Program (Budget 2018) (horizontal initiative);
• A decrease of $1.5 million relating to the completion of the Canada's 2018 G7 Presidency initiative (horizontal initiative);
• A decrease of $1.2 million in funding level relating to the Government Operations Centre (GOC) Accommodations Project (Budget 2016);
• A decrease of $1.2 million relating to negotiated salary adjustments; and
• A decrease of $1.1 million relating to one-year funding for Critical Infrastructure Security (Budget 2018).

These decreases are offset by the following increases:

• An increase of $2.8 million to establish the Take Action Against Gun and Gang Violence initiative (horizontal initiative);
• An increase of $2.3 million for the implementation of the Strengthening Canada's Anti-Money Laundering initiative (Budget 2019);
• An increase of $2.0 million in support of the Ensuring Better Disaster Management Preparation and Response initiative (Budget 2019);
• An increase of $1.8 million for the implementation of the First Nation & Inuit Policing Facilities initiative (horizontal initiative);
• An increase of $1.6 million in support of the Protecting Canada’s National Security initiative (Budget 2019);
• An increase of $1.3 million for the implementation of the Protecting Children from Sexual Exploitation Online initiative (Budget 2019);
• An increase of $1.2 million to establish the initiative to enhance the National Security Framework;
• An increase of $1.0 million in support of the Addressing the Opioid Crisis initiative (Budget 2018); and
• A net increase of $0.4 million for various initiatives of lesser value.

Grants and Contributions (G&C) authorities have decreased by $248.7 million (24.7 percent) (from $1,007.9 million to $759.2 million) mainly due to:

• A net decrease of $255.7 million regarding the Disaster Financial Assistance Arrangements (DFAA) program. This is due to a decrease of $410.7 million in funding levels and offset by new funding of $155.0 million (Budget 2019 - Ensuring Better Disaster Management Preparation and Response initiative);
• A decrease of $77.5 million relating to the completion of the Canada’s 2018 G7 Presidency initiative (horizontal initiative); and
• A decrease of $1.3 million in funding level pertaining to the Building Capacity to Address Drug Impaired Driving initiative (horizontal initiative).

These decreases are offset by the following increases:

• An increase of $25.0 million for a one-time endowment to support Avalanche Canada;
• An increase of $20.9 million to establish the Take Action Against Gun and Gang Violence initiative (horizontal initiative);
• An increase of $13.1 million for the implementation of the First Nation & Inuit Policing Facilities initiative (horizontal initiative);
• An increase of $10.1 million in funding level for the First Nations Policing Program;
• An increase of $3.3 million to address post-traumatic stress injuries among public safety officers (Budget 2018);
• An increase of $3.1 million for the implementation of the Protecting Children from Sexual Exploitation Online initiative (Budget 2019);
• An increase of $2.6 million in funding level for the creation of the office for community outreach and countering radicalization to violence (Budget 2016);
• An increase of $2.5 million in support of the Canadian Red Cross’ relief recovery efforts in response to the 2019 floods across Canada; 
• An increase of $1.5 million in support of the Canada’s Tobacco Strategy initiative (Budget 2018) (horizontal initiative);
• An increase of $1.4 million in funding level in support of addressing the needs of vulnerable offenders in the federal correctional system;
• An increase of $1.0 million in support of the Strengthening Emergency Readiness in Canada through Public Awareness initiative  (Budget 2019 - Ensuring Better Disaster Management Preparation and Response initiative);
• An increase of $0.7 million in support of the strategy to prevent and address gender-based violence (Budget 2017) (horizontal initiative); and
• A net increase of $0.6 million for other initiatives of lesser value.

Budgetary Statutory authorities have increased by $89.4K (0.6 percent) in 2019-20 mostly due to the new Minister of Border Security and Organized Crime Reduction salary and car allowance.

2.2 Significant Variances from Previous Year Expenditures

First Quarter Expenditures

Compared to the previous year, expenditures used during the quarter ended June 30, 2019 have increased by $7.3 million (8.6 percent) (from $84.8 million to $92.0 million) as reflected in the Departmental Budgetary Expenditures by Standard Object table.

• Personnel expenditures have increased by $2.4 million.
• Other operating expenditures have increased by $0.2 million.
• Transfer payments expenditures have increased by $4.7 million (9.1 percent) mainly due to:
  • An increase of $7.9 million in payments for the First Nations Policing Program;
  • An increase of $5.0 million related to an increase in payments for the Memorial Grant Program for First Responders;
  • An increase of $2.5 million for a payment to the Canadian Red Cross to support 2019 floods recovery efforts across Canada;
  • An increase of $1.9 million related to payments for the National Human Trafficking Hotline initiative;
  • An increase of $1.8 million in payments for the First Nation and Inuit Policing Facilities initiative;
  • An increase of $0.8 million in payments for Countering Radicalization to Violence initiative;
  • An increase of $0.6 million in payments in support of the Search and Rescue New Initiatives Fund; and
  • A net increase of $0.6 million for other expenditures variances of lesser value.

• Offset by the following decreases:
  • A decrease of $10.3 million related to an interim payment in 2018-19 in support of the 2015 wildfires in British Columbia for the DFAA program; and
  • A decrease of $6.1 million due to the timing of payments relating to the National Crime Prevention Strategy initiative.

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 66 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 66 events is $2.5 billion as of June 30, 2019, 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:

• Alberta 2013 June Flood ($668 million);
• Manitoba 2011 Spring Flood ($439 million);
• British Columbia 2017 July Wildfires ($203 million);
• Quebec 2017 Spring Flood ($179 million); and
• Alberta 2016 Wildfires ($156 million).

Updates to the DFAA liability are completed twice a year. Since the last update presented in the December 30th, 2018 Quarterly Financial Report, the DFAA liability has increased by $100 million from $2.4 billion in the third quarter of 2018-19 to $2.5 billion in the first quarter of 2019-20. Variations in the DFAA liability are mainly attributable to:

• Increases in business cases for costs incurred by Provinces and Territories in unusual circumstances and for which the DFAA Guidelines are silent or ambiguous.  Such costs could be adjacent to response and recovery efforts and may include temporary housing sites, emergency relief payments to natural disaster evacuees, psychological support services;
• Increases for newly approved Orders in Council, which authorize funding for recently occurred natural disasters for which Provinces and Territories required the federal sharing of costs;
• Increases in funding for disaster mitigation measures that aim to eliminate or reduce the impacts and risks of hazards through proactive measures taken before an emergency or disaster occurs; and offset by
• Decreases for payments issued under the existing obligation. 

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 pay issues in a timely manner, continues to apply mitigation measures which were implemented in 2016, and is currently assessing the design and operating effectiveness of key payroll controls.

4.0 Significant Changes in Relation to Operations, Programs and Personnel

• Gina Wilson was appointed Deputy Minister of Public Safety Canada effective May 6, 2019.
• On June 18, 2019, the Deputy Minister and the Associate Deputy Minister announced that Patrick Amyot was appointed to the position of Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch effective on June 24, 2019.

5.0 Approval by Senior Officials

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

Gina Wilson
Deputy Minister
Public Safety Canada
Ottawa (Canada)
Date: August 19, 2019

Patrick Amyot, CPA, CMA
Chief Financial Officer Public Safety Canada
Ottawa (Canada)
Date: August 19, 2019

6.0 Statement of Authorities (unaudited)

(1) Includes only authorities available for use and granted by Parliament at quarter end.

(1) Includes only authorities available for use and granted by Parliament at quarter end.

7.0 Departmental budgetary expenditures by Standard Object (unaudited)

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

(1) Includes only planned expenditures against authorities for use and granted by Parliament at quarter end.

Date modified:

2019-08-29