Analysis of trends in spending and human resources

From: Employment and Social Development Canada

This section presents an overview of the Department’s financial and human resource expenditures for the 2017 to 2018 fiscal year compared with previous years.

This section contains the following subsections:

• Actual expenditures
• Expenditures by vote
• Alignment of Spending With the Whole-of-Government Framework
• Government of Canada spending and activities
• Financial statements and financial statements highlights

Actual expenditures

Departmental spending trend

ESDC expenditures on programs and services total $125.6 billion, of which $118.4 billion, or more than 94%, directly benefits Canadians through Employment Insurance (EI), the Canada Pension Plan (CPP), Old Age Security and other statutory transfer payment programs. Departmental expenditures were $2.4 billion in voted grants and contributions and $2.2 billion for Employment Insurance Part II.

Description of figure 2

	2017–18 Actual Spending
	(in millions of dollars)	Percentage
Old Age Security / Guaranteed Income Supplement / Allowance	50,613.2	40.2%
Canada Pension Plan (CPP)	44,460.3	35.4%
Employment Insurance (EI)	19,714.9	15.7%
Universal Child Care / Canada Student Loans / Other Statutory Payments	3,607.1	2.9%
Gross Operating Expenditures	3,457.3	2.8%
Voted Grants & Contributions	2,396.0	1.9%
Other - Passport Services, Workers' Compensation and EI/CPP charges	1,380.1	1.1%
Consolidated Total	125,628.9	100.0%

Description of figure 3

Employment and Social Development Canada - Gross expenditures

Budgetary
Net Operating Costs	1,374.5
Add Recoveries in relation to:
Canada Pension Plan	332.6
Employment Insurance Operating Account	1,440.6
Workers' Compensation	134.7
Passport Services	162.7
Other	12.2
Add Recoveries subtotal	2,082.8
Gross Operating Costs	3,457.3
Voted Grants and Contributions	2,396.0
Total Gross Expenditures	5,853.3
Other – Workers' Compensation and EI/CPP Charges and Recoveries	1,380.1

Description of figure 4

Fiscal year	Total	Voted*	Statutory
2015–16	122,843,712,094	4,058,896,841	118,784,815,253
2016–17	122,754,820,080	4,544,346,847	118,210,473,233
2017–18	125,628,936,421	5,311,593,549	120,317,342,872
2018–19	132,192,657,884	4,918,775,896	127,273,881,988
2019–20	138,363,247,896	4,427,102,845	133,936,145,051
2020-21	144,448,902,303	3,383,372,421	141,065,529,882

ESDC usually shows a constant increase in its Departmental Spending trend. As noted in the graph above, the growth is attributable to Statutory spending. ESDC is responsible for the direct delivery of programs such as OAS, the CPP, EI and other statutory transfer payments. Those programs can be affected by variances in the average number of beneficiaries and variances in the average benefit rates. This is the case for the OAS/GIS and CPP programs. For EI, spending can be influenced by many factors such as the number of eligible individuals establishing claims for EI benefits which varies with the economy, the benefit rates or new measures implemented. The combined effect of those programs explains the main increase in Statutory spending overall.

In 2017–18, the total actual expenditures were $2.9 billion higher than in 2016─17. This is the result of an increase of $2.1 billion in statutory payments and an increase of $767.2 million in voted expenditures.

Statutory payments have followed their usual trend in 2017–18. There have been increases to OAS/GIS payments ($2.4 billion) and to CPP benefits (close to $2.0 billion) caused by the aging population and the changes in average monthly benefits. The 2017-18 average monthly rate for OAS basic pension was $558.28, $9.28 more than the average rate from 2016–17. There was also an increase for the average number of beneficiaries from 5.8 million to 6.0 million for fiscal year 2017–18.

In 2017–18, these increases were offset by a decrease of $2 billion to the Universal Child Care Benefit (UCCB) program. Budget 2016 introduced the Canada Child Benefit (CCB). The UCCB was replaced by the CCB and this change came into effect on July 1, 2016.

Statutory increases were also offset by a decrease of $996 million to EI benefits. This decrease can largely be explained by a decrease in regular benefits attributable to a decline in the unemployment rate from 6.9% to 6.1% and a decrease in average weekly benefits.

Other statutory programs show variances throughout the years (increase of $534 million for 2017–18 compared to 2016–17) and they are mainly the Canada Student Loans, the Canada Education Savings Grant and the Canada Learning Bond.

Overall increases and decreases to voted expenditures result mainly from variances in grants and contributions spending as well as from write-offs of irrecoverable debts owed to the Crown for directly financed Canada Student Loans in years 2015–16 to 2017–18. The increase in grants and contributions from 2016–17 to 2017–18 is mainly due to the new transfer agreements with provinces and territories to support Early Learning and Child Care (ELCC) ($399.7 million), Aboriginal Skills and Employment Training Strategy (ASETS) ($36.5 million), Skills and Partnership Fund ($26.3 million) and the Youth Employment Strategy ($33.1 million) as the result of additional investments which were announced in Budget 2016 and 2017.

The planned spending decrease to voted expenditures indicates the fact that the Department will need to request funding to renew large initiatives such as Early Learning and Child Care, the Canada Job Fund, the Homelessness Partnering Strategy and funding associated with the Youth Employment Strategy.

Budgetary performance summary for Programs and Internal Services (dollars)*

Programs and Internal Services	2017–18 Main Estimates	2017–18 Planned spending	2018–19 Planned spending****	2019–20 Planned spending****	2017–18 Total authorities available for use	2017–18 Actual   spending (authorities used)	2016–17 Actual spending (authorities used)***	2015–16 Actual   spending (authorities used)***
Program 1.1: Service Network Supporting Government Depart-ments	61,037,812	61,037,812	Not Applicable	Not Applicable	64,868,610	63,558,379	57,983,719	55,566,034
Program 1.2: Delivery of Services for Other Government of Canada Programs	178,192,378	178,192,378	Not Applicable	Not Applicable	198,352,674	164,695,524	127,104,037	133,440,054
Program 2.1: Skills and Employ-ment	2,600,702,386	24,578,109,363	Not Applicable	Not Applicable	22,693,239,959	22,619,945,850	23,467,649,089	21,794,776,029
Program 2.2: Learning	2,969,076,593	2,969,076,593	Not Applicable	Not Applicable	3,475,845,843	3,466,838,080	2,850,167,430	2,489,519,001
Program 3.1: Labour	285,484,779	285,484,779	Not Applicable	Not Applicable	262,225,033	262,029,434	253,469,223	251,871,310
Program 4.1: Income Security	52,144,690,865	97,929,274,126	Not Applicable	Not Applicable	96,068,368,839	96,051,202,359	91,631,984,510	87,042,524,292
Program 4.2: Social Develop-ment	311,001,403	311,001,403	Not Applicable	Not Applicable	712,793,002	695,357,869	2,239,757,375	8,961,100,867
Subtotal	58,550,186,216	126,312,176,454	0	0	123,475,693,960	123,323,627,495	120,628,115,383	120,728,797,587
Program Internal Services	754,615,282	754,615,282	Not Applicable	Not Applicable	945,421,313	925,244,171	876,667,336	892,479,726
Other Costs**	0	1,278,598,510	Not Applicable	Not Applicable	1,339,323,486	1,380,064,755	1,250,037,361	1,222,434,781
Vote-Netted Revenues	(1,881,945,883)	0	0	0	0	0	0	0
Sub-total	(1,881,945,883)	1,278,598,510	Not Applicable	Not Applicable	1,339,323,486	1,380,064,755	1,250,037,361	1,222,434,781
Total	57,422,855,615	128,345,390,246	132,192,657,884	138,363,247,896	125,760,438,759	125,628,936,421	122,754,820,080	122,843,712,094

• Budgetary expenditures include respendable revenues since respendable revenues are mainly related to administrative cost charged to Canada Pension Plan and Employment Insurance Operating Account which are part of ESDC operations.
• **Other costs include administrative costs of other government departments charged to the Employment Insurance Operating Account and the Canada Pension Plan. It also includes Employment Insurance doubtful accounts and recoveries from other government departments, mainly related to Worker's Compensation Costs and Passport Services delivery.
• ***Actuals have been reinstated to be presented as per the PAA 2015-16.
• ****ESDC's planned spending for 2018-19 and 2019-20 are presented in the Departmental Plan 2018-19 as per a new approved DRF.
• For information on the ESDC’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2018. ^{Footnote 1}

The overall increase in spending of $2.8 billion from 2015–16 actual spending to 2017-18 actual spending can mainly be explained by increases to Canada Pension Plan and Old Age Security benefits caused by the aging population and changes in the average monthly benefits.

The increase from 2015–16 actual spending to 2017–18 actual spending for Delivery of Services for Other Government of Canada Programs is mainly explained by the increase in volume related to the delivery of Passport services, the increase in salary due to collective agreement and the National Accommodation Program all now being captured under Delivery of Services for Other Government of Canada Programs instead of Internal Services in the 2017-18 fiscal year.

Under Skills and Employment, the difference in spending between the 2015–16 and the 2017-18 actual spending is mainly due to higher Employment Insurance benefits. As for the variance in financial resources between planned spending 2017-18 and actual spending 2017-18, the difference is mostly attributable to a decline in the 2017-18 unemployment rate projection from 6.8% to the actual 2017-18 unemployment rate of 6.1%, which resulted in a decline in the annual EI regular benefit growth rate.

Under the Learning program, the overall increase in spending from 2015-16 actual spending to 2017-18 actual spending is a result of increases to the Canada Student Loans and Grants and Canada Apprentice Loans Program, and of more people taking advantage of the Canada Education Savings Grant and the Canada Learning Bond, due, in part, to various initiatives to increase awareness and take-up of these education savings incentives.

The variances related to Labour from year to year are mostly attributable to changes in Wage Earner Protection Program and Federal Workers’ Compensation payments.

The overall increase under Income Security from 2015-16 actual spending to 2017-18 actual spending can be explained by increases in the number of beneficiaries and the average monthly benefits payments for Old Age Security ($5.1 billion) and the Canada Pension Plan ($3.7 billion).

In Social Development, the significant decrease from 2015–16 actual spending to 2017-18 actual spending is a result of the Budget 2016 introduction of the Canada Child Benefit that came into effect on July 1, 2016 and replaced the Universal Child Care Benefit. The same reason applies to the variances that exist when comparing 2015-16 actual spending and 2016-17 actual spending. As for the difference between planned spending and actual spending in 2017-18, it is due to the introduction of the new Early Learning and Child Care transfer agreements implemented during 2017-18, for which actual spending was close to $400 million.

The overall increase between 2015–16 and 2017-18 actual spending for Internal Services can be explained by the recording of temporary costs for overpayments in relation with Phoenix pay issues as well as retroactive payments for earnings to employees in relation with collective agreements signed. Special purpose real property and office accommodation retrofits have been charged to programs and not to Internal Services which offsets the increase mentioned above. This reallocation was done as per the revised Guide issued by Treasury Board Secretariat on recording and reporting Internal Services expenditures that was effective April 1, 2016.

The variance of $130 million in actual spending under Other Costs from fiscal year 2016-17 to 2017-18 is mainly related to increased charges from Other Government Departments to the CPP Account.

Actual Human Resources

Human resources summary for Programs and Internal Services (full time equivalents)

Programs and Internal Services	2015–16 Actual full-time equivalents*	2016–17 Actual full-time equivalents*	2017–18 Planned full-time equivalents	2017–18 Actual full-time equivalents	2018–19 Planned full-time equivalents**	2019–20 Planned full-time equivalents**
Program 1.1: Service Network Supporting Government Departments	399	330	389	325	Not available	Not available
Program 1.2: Delivery of Services for Other Govern-ment of Canada Programs	1,977	1,849	2,238	1,991	Not available	Not available
Program 2.1: Skills and Employment	9,053	9,722	9,120	10,254	Not available	Not available
Program 2.2: Learning	323	324	348	346	Not available	Not available
Program 3.1: Labour	645	647	638	651	Not available	Not available
Program 4.1: Income Security	4,381	4,801	4,506	5,076	Not available	Not available
Program 4.2: Social Development	289	309	364	349	Not Available	Not available
Subtotal	17,067	17,982	17,603	18,992	Not available	Not available
Program Internal Services	3,943	3,843	4,218	4,114	Not available	Not available
Internal Services Sub-total	3,943	3,843	4,218	4,114	Not available	Not available
Total	21,010	21,825	21,821	23,106	22,187	18,076

• *Actuals have been reinstated to be presented as per the PAA 2015-16.
• ** ESDC’s planned FTEs for 2018-19 and 2019-20 are presented in the Departmental Plan 2018-19 as per a new approved DRF

Human Resources Summary for Programs and Internal Services

There is an overall increase of 2,096 in FTEs from 2015–16 to 2017–18 actuals. This can be explained by the following areas within Employment and Social Development Canada.

Under Skills and Employment, the overall increase of 1,201 FTEs from the 2015–16 actual FTEs to the 2017-18 actual FTEs is mainly due to Employment Insurance (EI) measures to address increased EI workload and other EI-related needs. As for the variance between planned FTEs in 2017–18 and actual FTEs in 2017–18, the difference is due to the fact that the requests for additional funding for EI measures and FTEs were done after Planned FTE amounts were determined.

Under Income Security, the overall increase of 695 FTEs from 2015–16 actual FTEs to 2017–18 actual FTEs can essentially be explained by the spending of additional funds and FTEs to address CPP and OAS workload. As for the variance between planned FTEs in 2017–18 and actual FTEs in 2017–18, the difference reflects the fact that the requests for such additional funding and FTEs were done after planned FTE amounts were determined. These requests were mainly for additional investments in processing-related activities to ensure that seniors have timely access to OAS benefits.

Under Internal Services, there is an increase of 171 FTEs from 2015-16 actual FTEs to 2017-18 actual FTEs. This increase is mainly attributable to the increased responsibilities of the Strategic and Service Policy Branch to advise on strategic and horizontal policy in support of ESDC’s mandate and the establishment of new initiatives, such as the creation of the new ESDC - Innovation Lab as well as the new Chief Data Officer function.

Expenditures by vote

For information on ESDC’s organizational voted and statutory expenditures, consult the Public Accounts of Canada 2018 ^{Footnote 2}

Alignment of Spending With the Whole-of-Government Framework

Alignment of Fiscal 2017-18 Actual Spending with the Whole-of-Government Framework ^{Footnote 3} (dollars)

Strategic Outcomes	Programs	Spending Areas	Government of Canada Outcomes	2017–18 Actual Spending
Strategic Outcome 1: Government-wide Service Excellence	Program 1.1: Service Network Supporting Government Departments	Government Affairs	A transparent, accountable and responsive federal government	63,558,379
	Program 1.2: Delivery of Services for Other Government of Canada Programs	Government Affairs	A transparent, accountable and responsive federal government	164,695,524
Strategic Outcome 2: A skilled, adaptable and inclusive labour force and an efficient labour market	Program 2.1: Skills and Employment	Economic Affairs	Income security and employment for Canadians	22,619,945,850
	Program 2.2: Learning	Economic Affairs	An innovative and knowledge-based economy	3,466,838,080
Strategic Outcome 3: Safe, fair and productive workplaces and cooperative workplace relations	Program 3.1: Labour	Economic Affairs	A fair and secure marketplace	262,029,434
Strategic Outcome 4: Income security, access to opportunities and well-being for individuals, families and communities	Program 4.1: Income Security	Economic Affairs	Income security and employment for Canadians	96,051,202,359
	Program 4.2: Social Development	Social Affairs	A diverse society that promotes linguistic duality and social inclusion	695,357,869
Total Spending by Spending Area (dollars)
Economic Affairs				122,400,015,723
Social Affairs				695,357,869
International Affairs				0
Government Affairs				228,253,903

Government of Canada spending and activities

Information on the alignment of Employment and Social Development Canada’s spending with the Government of Canada’s spending and activities are available in the GC InfoBase ^{Footnote 4}.

Financial statements and financial statements highlights

The financial highlights are intended to serve as a general overview of Employment and Social Development Canada’s financial position and operations.

The following condensed consolidated financial statements are prepared in accordance with the Government’s accounting policies, which are based on Canadian public sector accounting standards and are therefore different from reporting on the use of authorities, reflected in the rest of this report. Reconciliation between authorities used and the net cost of operations is set out in Note 3 of the Department’s consolidated financial statements.

These consolidated financial statements include the transactions of the Employment Insurance Operating Account, a sub-entity under the control of Employment and Social Development Canada (ESDC). The accounts of this sub-entity have been consolidated with those of ESDC and all inter-organizational balances and transactions have been eliminated. The Canada Pension Plan (CPP) is excluded from ESDC’s reporting entity because it is managed by both the Government of Canada and the provinces. Changes to the Canada Pension Plan require the agreement of at least two-thirds of the provinces, representing at least two-thirds of the population of all the provinces.

Financial Statements

Employment and Social Development Canada’s consolidated financial statements (unaudited) for the year ended March 31, 2018, are available on the departmental website.

Financial Statements Highlights

Condensed Statement of Operations (unaudited) for the year ended March 31, 2018 (dollars)

Financial information	2017–18 Planned results1	2017–18 Actual results	2016–17 Actual results	Difference (2017–18 Actual results minus 2017–18 Planned results)	Difference (2017–18 Actual results minus 2016–17 Actual results)
Total expenses	81,959,260,962	80,346,429,318	79,381,986,648	(1,612,831,644)	964,442,670
Total revenues	22,188,802,897	22,126,746,081	23,057,177,694	(62,056,816)	(930,431,613)
Net cost of operations before government funding and transfers	59,770,458,065	58,219,683,237	56,324,808,954	(1,550,774,828)	1,894,874,283

• (1) The unaudited departmental future-oriented statement of operations can be found on ESDC’s website ^{Footnote 5}.

Expenses by major program activity

Description of figure 5

Actual over Planned

The 2017-18 expenses were $1,612.8 million lower than planned. The variance is mainly attributable to

• the improvement of the economy resulting in less demand for employment insurance (EI) benefits than expected;
• lower than expected average monthly benefits for Old Age Security (OAS) and Guaranteed Income Supplement (GIS); and
• fewer OAS beneficiaries than expected slightly offset by more GIS beneficiaries than expected.

Actual Year over Year

Total expenses for the 2017-18 year amounted to $80,346.4 million, an increase of $964.4 million over the previous year’s total expenses of $79,382.0 million. The increase in expenses is mostly attributable to:

• an increase of $2,447.7 million in Income Security expenses mainly due to the increase in the eligible population for OAS and the GIS, caused by the growing aging population and the increase in the maximum monthly benefit amount;
• a decrease of $770.9 million in Skills and Employment expenses mainly due to the improvements in labour market conditions resulting in a decrease in regular EI benefits;
• an increase of $717.9 million in Learning expenses mainly due to expanded eligibility and increases in the amounts available through the Canada Student Grants Program beginning August 2016; and
• a decrease of $1,538.2 million in Social Development expenses mainly due to the elimination of the Universal Child Care Benefit program in July 2016.

Description of figure 6

Employment Insurance	21,613,969
Other revenues	512,777

Actual over Planned

The 2017-18 revenues were $62.1 million lower than planned. The variance is mainly attributable to the total EI insurable earnings being lower than planned due to lower than expected growth in wages.

Actual Year over Year

Total revenues for the 2017-18 year amounted to $22,126.7 million, a decrease of $930.4 million over the previous year's total revenues of $23,057.1 million. The majority of this decrease can be explained by a decrease in the EI premium rate in 2017.

Condensed Statement of Financial Position (unaudited) as of March 31, 2018 (dollars)

Financial information	2017–18	2016–17	Difference (2017–18 minus 2016–17)
Total net financial assets	20,973,227,188	19,423,599,715	1,549,627,473
Total net liabilities	3,157,716,228	2,759,089,800	398,626,428
Departmental net debt	17,815,510,960	16,664,509,915	1,151,001,045
Total non‑financial assets	229,670,093	246,384,354	(16,714,261)
Departmental net financial position	18,045,181,053	16,910,894,269	1,134,286,784

Description of figure 7

Accounts receivable and advances	4,953,991
Loans receivable	16,019,236
Other assets	229,670

Total assets (including financial and non-financials assets) amounted to $21,202.9 million as at March 31, 2018, an increase of $1,532.9 million over the previous year's total assets of $19,670.0 million. The increase in assets is mainly attributable to:

• An increase of $634.2 million in Accounts receivable and advances is mostly due to an increase in EI premiums receivable from the Canada Revenue Agency that is in line with the premium rate increase in 2018, and an increase in OAS benefit repayments receivable, which is due to more pensioners over age 65 remaining in the workforce; and
• an increase of $935.6 million in loans receivable mostly caused by an excess of new Canada Student Loans disbursed over the total amount of repayments received.

Description of figure 8

Due to Consolidated Revenue Fund	577,854
Due to Canada Pension Plan	31,864
Accounts payable and accrued liabilities	2,172,627
Vacation pay and compensatory leave	80,326
Designated Amount Fund-Trust Account	82,978
Government Annuities Account	134,646
Employee future benefits	77,421

Total liabilities amounted to $3,157.7 million as at March 31, 2018, an increase of $398.6 million over the previous year's total liabilities of $2,759.1 million. The increase in liabilities is mostly due to timing of year-end payments.