Question Period Note: Public Accounts of Canada 2022-2023

Why has the Innovation, Science and Economic Development Canada (ISED) portfolio lapsed a total of $2.5 billion for fiscal year 2022–23, as reported in the Public Accounts of Canada?

• The Government of Canada takes the stewardship of all public funds very seriously, and Innovation, Science and Economic Development Canada has made excellent progress towards achieving its objectives.

• Most of the lapsed funding reported in Public Accounts is required to deliver on the Innovation, Science and Economic Development Canada portfolio’s commitments, including legally binding agreements already signed.

• The majority of the funding is simply being carried over to future years when it will be spent.

• Of the total lapse, 1% was returned to the fiscal framework because it was not needed.

The Public Accounts of Canada are prepared annually by the Receiver General for Canada and were tabled by the President of the Treasury Board on October 24, 2023. They present Canada’s financial statements, including:
• revenues and expenses;
• assets and liabilities;
• other analyses;
• operations broken down by department; and,
• Ministers’ office expenditures, including travel expenditures, for the 2022-23 fiscal year.

Total Voted Authorities available for use for the Innovation, Science and Economic Development Canada (ISED) Portfolio were $10.7 billion in 2022-23, of which $8.3 billion was spent, leaving a lapse of $2.5 billion. Of this lapse, $2.4 billion has been carried over to future years to ensure better alignment between the funding and spending profiles.

Operating
The current Operating budget lapse for the portfolio is $80.8 million. Of this lapse, $73.6 million was carried over to 2023-24. The remaining $7.2 million was returned to the fiscal framework. Lapsing operating funds is normal and an expected part of the budgetary process where the funding approved by Parliament for departments and agencies is a ‘’maximum’’ ceiling. It is considered prudent financial management to spend less than the total budget approved to respect the appropriation acts.

Grants and Contributions
The current Grants and Contribution budget lapse for the portfolio totals $2.207 billion, of which $2.082 billion pertains to ISED. Of the Portfolio total lapse, $2.156 billion has been requested to be reprofiled to future years. Only $50.8 million will be returned to the fiscal framework. There are several financial uncertainties associated with ISED's large and complex Grants and Contributions programs, which largely influence spending patterns. More recently, there have been significant challenges faced by recipients, including securing partner funding, labour shortages, construction and supply delays and other external factors. These issues have had a direct impact on their ability to deliver projects and spend as planned, resulting in the need to realign some program funding profiles across fiscal years.

Capital
The majority of the $184 million Capital budget lapse will be carried over to future years. Only $0.6 million will be returned to the fiscal framework.

Losses
Media interest across all departments normally focusses on the number of items reported as lost, not located or damaged. In the 2022-23 Public Accounts of Canada, ISED is reporting $25,000 in losses or damage of public property, compared to $51,000 in 2021-22. Losses reported under public property include items that could not be located at the time of the submission of the Public Accounts to the Receiver General for Canada.

For ISED, 60 items were lost or damaged in 2022-23, compared to 64 in 2021-22. This includes the loss of 22 desktop, laptop and tablet computers, and 7 smartphones; compared to the loss of 29 desktop, laptop and tablet computers, and 19 smartphones in 2021-22. No security breaches were reported with regard to these losses. ISED follows Government of Canada processes for acting quickly to identify, record, report and, whenever possible, recover losses.

Debt Write-offs
Information regarding amounts written off the departmental accounts will also be presented in Volume III. This year, $86 million in uncollectable debt was written off compared to $68 million in the previous year. The vast majority of these write-offs are attributable to the Canada Small Business Financing Act (CSBFA) where financial institutions can make term loans to small businesses to purchase or improve real property, equipment or leaseholds. The share of losses under this act is 85% government and 15% lender.

Departments write off debts only when they are truly uncollectable. Before the write-off occurs, every reasonable effort is made to collect the debt and all possible avenues are explored. In the vast majority of cases, the amounts that are written off do not represent debt that is forgiven, nor does the write-off affect the right of the Crown to enforce collection at any time in the future.

Ministers’ expenditures
Ministers’ office expenditures in 2022-23 were $5.5 million, an increase of $1.5 million from the $4 million in expenditures in 2021-22. Ministerial budgets spending is guided by the Treasury Board Policies for Minister’s Offices.

• Departments are permitted to automatically carry forward up to 5% of their operating budget and 20% of their capital budget to the next fiscal year.

• Departments can also reprofile Capital and Grants and Contribution funding to future years above the carry forward entitlement upon approval by the Department of Finance.

• Typically, these reprofiles relate to Grants and Contribution funding.

• The Public Accounts, which also present the audited financial statements for the 2022-23 fiscal year that ended on March 31, 2023, are generated using Treasury Board Secretariat established reporting mechanisms.