Section II: Expenditure Overview

Actual Expenditures

Budgetary Financial Resources (dollars)

2015–16 Main Estimates	2015–16 Planned Spending	2015–16 Total Authorities Available for Use	2015–16 Actual Spending (authorities used)	Difference (actual minus planned)
2,214,476,711	2,214,476,711	1,715,634,089	1,335,178,669	(879,298,042)

Human Resources (Full-Time Equivalents [FTEs])

2015–16 Planned	2015–16 Actual	2015–16 Difference (actual minus planned)
3,832	3,936	104

Budgetary Performance Summary

Budgetary Performance Summary for Programs and Internal Services (dollars)

Programs and Internal Services	2015–16 Main Estimates	2015–16 Planned Spending	2016–17 Planned Spending	2017–18 Planned Spending	2015–16 Total Authorities Available for Use	2015–16 Actual Spending (authorities used)	2014–15 Actual Spending (authorities used)	2013–14 Actual Spending (authorities used)
1.1 Market Access and Diversification	48,685,006	48,685,006	43,993,476	28,361,877	90,964,090	75,927,073	61,566,240	59,733,334
1.2 Innovation for New Products and Processes	83,438,001	83,438,001	96,074,981	55,536,596	92,394,682	93,375,233	71,707,214	94,093,063
1.3 Investments in Natural Resource Sectors	54,230,114	54,230,114	62,900,219	65,272,906	67,692,074	68,270,162	60,589,504	65,333,593
1.4 Statutory Programs – Atlantic Offshore*	1,181,938,140	1,181,938,140	743,336,158	761,960,697	347,989,273	347,989,273	837,746,067	795,884,721
2.1 Energy-Efficient Practices and Lower-Carbon Energy Sources	253,978,461	253,978,461	183,336,817	133,361,992	258,837,128	211,012,423	291,745,439	314,652,883
2.2 Technology Innovation	126,472,078	126,472,078	115,838,434	108,270,795	143,292,764	143,620,407	151,832,220	155,738,548
2.3 Responsible Natural Resource Management	193,117,981	193,117,981	29,619,508	28,958,607	410,119,888	121,598,627	267,570,932	282,047,031
3.1 Protection for Canadians and Natural Resources	58,672,639	58,672,639	57,808,743	49,858,500	73,440,885	73,709,947	65,692,439	65,535,095
3.2 Landmass Information	71,155,143	71,155,143	75,092,662	51,156,481	83,529,098	74,110,670	78,469,116	73,828,231
Internal Services	142,789,148	142,789,148	184,517,755	137,682,086	147,374,207	125,564,854	162,499,616	184,198,094
Total	2,214,476,711	2,214,476,711	1,592,518,753	1,420,420,537	1,715,634,089	1,335,178,669	2,049,418,787	2,091,044,593

^* Statutory Programs — Atlantic Offshore: As per the various Atlantic Offshore Accords, the Government of Canada receives royalties for offshore oil and gas production and subsequently pays an equal amount to the provinces of Nova Scotia and Newfoundland and Labrador.

Departmental Spending Trend

The overall $879 million difference between the 2015-16 Planned Spending of $2,214 million and actual spending of $1,335 million is attributed to a $499 million reduction in authorities and $380 million in unspent funding.

The $499 million reduction in authorities is explained by the following:

Decreases due to:

• Reduced authority for statutory payments under the Atlantic Offshore Accord Acts due to reduced oil prices, lower currency exchange rate (CAD/USD) and, reduced commodity prices and production in the offshore area; and,
• Various transfers to other government departments.

Increases due to:

• Additional funding received through Supplementary Estimates for the Nuclear Legacy Liabilities Program (NLLP), the Federal Infrastructure Initiative, the renewal of the Targeted Geoscience Initiative, the Soldier Settlement Board mineral rights, defining the outer limits of Canada’s continental shelf in the Arctic Ocean, and the renewal of the Major Project Management Office (MPMO) horizontal initiative;
• Various transfers from other government departments; and,
• The receipt of the operating budget carry forward.

The $380 million in unspent funding is explained by the following:

• Funds frozen and not available for spending as a result of a government decision to implement the restructuring of AECL’s nuclear laboratories by transferring the funding and responsibilities related to NLLP and the Port Hope Area Initiative (PHAI) from NRCan to AECL;
• Funding being moved into future years for the Gunnar Mine Remediation;
• Unspent funds in the Operating vote being carried forward to next year, mainly to cover unfunded collective bargaining increases;
• Unspent funds in the Capital vote being carried forward to next year, mainly for the Federal Infrastructure Initiative; and
• Unspent funds in the Grants and Contributions vote, mainly pertaining to the ecoENERGY for Biofuels program (due to lower than anticipated production by biofuel companies) and the ecoENERGY Renewable Power program (due to lower incentive payouts based on lower production levels).

Departmental Spending Trend

Text version

The table below illustrates the departmental spending trend, in dollars, for the period 2011-12 to 2016-17.

	2013-14	2014-15	2015-16	2016-17	2017-18	2018-10
Sunset Programs - Anticipated	0	0	0	132,062	367,842	38,133
Statutory	847,351	893,906	401,521	796,717	814,225	858,139
Voted	1,243,694	1,155,512	933,657	795,802	606,196	559,667
Total	2,091,045	2,049,419	1,335,179	1,724,581	1,788,263	1,455,939

For 2013-14, 2014-15 and 2015-16, the figures represent actual expenditures as reported in the Public Accounts. NRCan’s spending profile remains steady from 2013-14 to 2014-15 and drops significantly in 2015-16, mainly as a result of the Statutory Atlantic Offshore Accounts, the transfer of responsibility over NLLP and PHAI to AECL and reduced spending pertaining to the ecoENERGY for Biofuels and the ecoENERGY Renewable Power programs, as well as less severance pay costs recovered from Treasury Board (TB). These reductions were slightly offset by the implementation of the Federal Infrastructure Initiative.

When comparing planned spending to actual expenditures, costs recovered from TB are recorded as an expense by the Department even though they were not part of the Department’s Planned Spending. These costs include parental benefits, severance pay, and vacation credits payable upon termination; they apply throughout Section III of this document and they contribute, in part, to the financial variance between the actual expenditures and planned spending.

The increase between 2015-16 actual expenditures and 2016-17 planned spending is mainly attributed to the Statutory Atlantic Offshore Accounts projected increase; offset by the transfer of responsibility over NLLP and PHAI and the sunsetting of the clean energy envelope.

For 2016-17 to 2018-19, the figures represent total planned spending for the fiscal year, which reflects approved funding by TB to support the Departmental strategic outcomes. Planned spending in Voted authorities from 2016-17 to 2018-19 is declining, mainly as a result of reduced funding profile for major initiatives (e.g., ecoENERGY for Renewable Power), and sunsetting programs, including the following:

Major initiatives sunsetting in 2016-17 are:

• Federal Infrastructure Budget 2015 announcement;
• Forest Innovation Program and Expanding Market Opportunities, which were extended to 2017-18 through Budget 2015 but funding has not yet been included in planned spending for 2017-18;
• ecoENERGY for Biofuels; and
• Wind Power Production Incentive.

Major initiatives sunsetting in 2017-18 are:

• Investments in Forest Industry Transformation; and
• World Class Prevention, Preparedness and Response Regime.

Statutory authorities from 2016-17 to 2018-19 are likely to increase, mainly as a result of the Atlantic Offshore Accounts. Statutory payment obligations under these accords are largely driven by oil and gas prices, production levels and anticipated corporate income taxes related to offshore operations. The increase was based on the Department's economic modeling forecasts prepared in the fall of 2015 when the 2016-17 Report on Plans and Priorities was developed.

The Sunset Programs Anticipated for 2016-17 to 2018-19 mostly reflect announcements in Budget 2015 or Budget 2016 that are not yet reflected in voted level for those years but are provided to give a more reasonable picture of the future of the Department.

Expenditures by Vote

For information on NRCan’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2016.^xiii

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2015-16 Actual Spending With the Whole-of-Government Framework ^xiv(dollars)

Program	Spending Area	Government of Canada Outcome	2015–16 Actual Spending
1.1 Market Access and Diversification	Economic Affairs	Strong Economic Growth	75,927,073
1.2 Innovation for New Products and Processes	Economic Affairs	Strong Economic Growth	93,375,233
1.3 Investment in Natural Resource Sectors	Economic Affairs	Strong Economic Growth	68,270,162
1.4 Statutory Programs – Atlantic Offshore	Economic Affairs	Strong Economic Growth	347,989,273
2.1 Energy-Efficient Practices and Lower-Carbon Energy Sources	Economic Affairs	A Clean and Healthy Environment	211,012,423
2.2 Technology Innovation	Economic Affairs	A Clean and Healthy Environment	143,620,407
2.3 Responsible Natural Resource Management	Economic Affairs	A Clean and Healthy Environment	121,598,627
3.1 Protection for Canadians and Natural Resources	Social Affairs	A Safe and Secure Canada	73,709,947
3.2 Landmass Information	Social Affairs	A Safe and Secure Canada	74,110,670

Total Spending by Spending Area (dollars)

Spending Area	Total Planned Spending	Total Actual Spending
Economic affairs	-	1,061,793,198
Social affairs	-	147,820,617
International affairs	-	-
Government affairs	-	-

Financial Statements and Financial Statements Highlights

Financial Statements

The Department’s consolidated financial statements are available on the NRCan website.^xv

Financial Statements Highlights

The financial statements highlights are intended to provide a general overview of the Department’s operations and financial position.

The financial statement highlights presented in this section are drawn from NRCan’s consolidated financial statements and have been prepared in accordance with Treasury Board accounting policies, which are based on Canadian public sector accounting standards and are therefore different from reporting on the use of authorities, reflected in Section I and II of this report. Reconciliation between the net cost of operations and the authorities used is set out in Note 3 of the Department’s consolidated financial statements.

Condensed Statement of Operations (unaudited)
For the Year Ended March 31, 2016 (dollars)

Financial Information		2015–16 Planned Results	2015–16 Actual	2014–15 Actual	Difference (2015–16 actual minus 2015–16 planned)	Difference (2015–16 actual minus 2014–15 actual)
Total expenses		2,190,166,694	1,373,162,269	2,100,576,784	(817,004,425)	(727,414,515)
Total revenues		35,079,370	30,836,347	25,896,040	(4,243,023)	4,940,307
Net cost of operations before government funding and transfers		2,155,087,324	1,342,325,922	2,074,680,744	(812,761,402)	(732,354,822)

*Transferred operations are included in the total expenses as it relates to the transferred responsibilities of the NLLP and the Historic Waste Program to AECL which became effective on September 13, 2015.

The 2015-16 Planned Results are derived from the amounts presented in the Department’s 2015-16 Consolidated Future-Oriented Statement of Operations ^xv and included in NRCan’s 2015-16 Report on Plans and Priorities. The planned results were based on several assumptions and information known at that time.

Total expenses between 2015-16 actual of $1,373 million and 2015-16 planned results of $2,190 million represent $817 million, or 37 percent of overestimated expenses. This is mainly attributable to a $847 million decrease in Atlantic Offshore Statutory programs in continuing operations mainly due to decreased oil prices, lower production levels and a lower currency rate.

The planned net revenues of $35 million were based on historical data. The actual net revenues were $31 million in 2015-16 compared to $26 million in 2014-15, for a net increase of $5 million.

Difference between 2015-16 and 2014-15 actuals

Total expenses were $1,373 million in 2015-16 compare to $2,101 million in 2014-15 for a net decrease of $727 million, or 53 percent. This net decrease is mainly explained by:

• A $513 million decrease in Atlantic Offshore Statutory Programs mainly due to decreased oil prices, lower production levels and lower currency rate and a $79 million decrease in ecoENERGY for Biofuels Program under Energy-Efficient Practices and Lower Carbon Energy Sources as a result of terminated projects and proponents producing less.
• A $105 million decrease in total expenses for transferred operations from $124 million in 2015-16 to $229 million in 2014-15 is due to the transfer of responsibilities from NLLP and the Historic Waste Program to the AECL as of September 2015. Therefore 2015-16 had only 6 months of operating costs compared to 12 months in 2014-15.

The chart presenting NRCan’s actual expenses by type for 2016 is available on the NRCan website.

Condensed Statement of Financial Position (unaudited)
As at March 31, 2016 (dollars)

Financial Information	2015–16	2014–15	Difference (2015–16 minus 2014–15)
Total net liabilities	432,291,969	1,579,823,467	(1,147,531,498)
Total net financial assets	257,773,468	378,181,969	(120,408,501)
Departmental net debt	174,518,501	1,201,641,498	(1,027,122,997)
Total non-financial assets	272,387,642	267,355,166	;5,032,476
Departmental net financial position	97,869,141	(934,286,332)	1,032,155,473

Total net liabilities were $432 million in 2015-16, compared to $1,580 million in 2014-15, for a decrease of $1,148 million or 73 percent. This variance is mainly attributable to:

• A decrease of $984 million in environmental liabilities and a $40 million in accounts payable and accrued liabilities related to the transfer to the AECL for the NLLP and the Historic Waste Program; and
• A decrease of $120 million in accounts payable and accrued liabilities mainly explained by a decrease of $47 million related to transfer payments under the Atlantic Offshore Statutory Programs.

Total net financial assets were $258 million in 2015-16, compared to $378 million in 2014-15, for a net decrease of $120 million or 32 percent. This variance is attributable to the decrease in the account Due from Consolidated Revenue Fund (CRF) of $120 million, which represents the net amount of cash the Department is entitled to draw from the CRF without further appropriations.  The decrease is mainly due to the decrease in accounts payable and accrued liabilities at year-end.

The overall difference between the total net liabilities and total net financial assets are then reflected in the Departmental net debt.

Total non-financial assets, which include prepayments, inventory and tangible capital assets were $272 million in 2015-16, compared to $267 million in 2014-15 for a net increase of $5 million.  This variance is mainly due to the increase in tangible capital assets due to additional funding received for the Federal Infrastructure Initiative offset by a decrease in prepayments due to the transfer of responsibilities of the NLLP to AECL.

The total non-financial assets are then subtracted from the Departmental net debt to reflect the Departmental net financial position