ARCHIVED - Transport Canada

• Previous Page
• Table of Contents
• Next Page

This page has been archived.

Section iii – Supplementary Information

3.1   Organizational Information

Since the Portfolio was established in February 2006, steps have been taken to maximize synergies and increase coordination of activities. Since August 2006, Transport Canada and Infrastructure Canada have been managed by a single Deputy Minister. A joint committee of the two departments was established to design the Government of Canada’s Building Canada Plan. A number of similar joint planning initiatives were also introduced to facilitate the integration of the various components of the Portfolio.

3.2   Departmental Organization Chart

At Transport Canada headquarters, an Associate Deputy Minister and six Assistant Deputy Ministers – Policy (2), Programs, Corporate Services, Safety and Security (2) – report to the Deputy Minister, in addition to Corporate Management, comprised of the Communications Group and Departmental General Counsel (functional reporting). Five Regional Directors General – Atlantic, Quebec, Ontario, Prairie and Northern, and Pacific – also report directly to the Deputy Minister. Each of these organizational heads is accountable for the management of his/her organization and for the delivery of results associated with the Program Activities as set out in the Program Activity Architecture.

3.3   Financial Tables

3.3.1    Table 1:  Comparison of Planned to Actual Spending (including FTEs)

($ thousands)
Program Activity	2005-2006 Actual	2006-2007 Actual	2007–2008
			Main Estimates	Planned Spending	Total Authorities	Actual
Policies, Rulemaking, Monitoring and Outreach in support of a safe and secure transportation system	485,906	499,315	632,856	641,525	663,420	566,177
Policies, Programs and Infrastructure in support of a market-based framework	333,826	145,797	101,192	101,459	198,063	123,998
Policies and Programs in support of sustainable development	55,144	56,615	124,979	125,013	242,318	145,529
Canadian Air Transport Security Authority 1	428,766	441,068	-	-	-	-
Bridge Corporation Limited 1	31,288	32,307	-	-	-	-
Marine Atlantic Inc. 1	70,233	82,080	-	-	-	-
VIA Rail Canada Inc. 1	169,001	169,001	-	-	-	-
Total	1,574,165	1,426,183	859,027	867,997	1,103,801	835,704
Less: Non-respendable revenue	(76,128)	(137,287)	(33,186)	(33,186)	(142,589)	(142,589)
Plus:  Cost of services received without charge	59,718	68,531	-	59,668	64,401	64,401
Total Departmental Spending	1,557,755	1,357,427	825,841	894,479	1,025,613	757,516
Full-time Equivalents	4,873	4,854	5,090	5,090	5,090	5,043

Due to rounding, columns may not add to total shown.

1. Crown Corporations were moved outside of Transport Canada’s Program Activity Architecture to stand as separate entities within the Ministry. This explains, in large part, the year over year decline in actual spending.

2. The decreased net spending from 2006-2007 to 2007-2008 ($590 million) is due to: an increase in operating expenditures ($39.5 million), an increase in capital spending ($1.4 million), an increase in transfer payments ($86.2 million) and a decrease in vote-netted revenues ($6.8 million).

3.3.2    Table 2:  Voted and Statutory Items

Vote or Statutory Item	Truncated Vote or Statutory Wording	2007-08 ($ thousands)
		Main Estimates	Planned Spending	Total Authorities	Actual
1	Operating expenditures	318,413	325,083	359,523	304,312
5	Capital expenditures	73,260	73,260	82,833	72,695
10	Grants and Contributions	313,145	315,445	514,663	316,324
(S)	Minister of Transport Canada – Salary and motor car allowance	75	75	74	74
(S)	Contributions to employee benefit plans	68,658	68,658	65,928	65,928
(S)	Payments to Canadian National Railway Company in respect of the termination of the collection of tolls on the Victoria Bridge, Montreal and for the rehabilitation work on the roadway portion of the Bridge	3,300	3,300	2,505	2,505
(S)	Payments in respect of the St. Lawrence Seaway agreements	26,900	26,900	18,931	18,931
(S)	Northumberland Strait Crossing subsidy payment	55,276	55,276	54,897	54,897
(S)	Spending of proceeds from the disposal of surplus Crown assets	-	-	4,409	-
(S)	Refunds of amounts credited to revenues in previous years	-	-	38	38
	Total	859,027	867,997	1,103,801	835,704

Due to rounding, columns may not add to total shown.
(S):  Statutory

3.3.3   Table 16: Transport Canada Financial Statement

Statement of Management Responsiblity

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with departmental management.  These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements.  Some of the information in the financial statements is based on management’s best estimates and judgment and gives due consideration to materiality.  To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department’s financial transactions.  Financial information submitted to the Public Accounts of Canada and included in the department’s Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds.  Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the department.

The financial statements of the department have not been audited.

_________________________________ Louis Ranger, Deputy Minister Ottawa, Canada August 8th, 2008

_____________________________________ André Morency, Chief Financial Officer Ottawa, Canada August 8th, 2008

---

Statement of Operations (Unaudited) For the Year Ended March 31
(in thousands of dollars)

---

Statement of Financial Position (Unaudited) At March 31
(in thousands of dollars)

	2008	2007 (restated)
Assets
Financial assets
Accounts receivable and advances (Note 7)	41,344	33,683
Loans receivable (Note 8)	11,915	11,316
Rent receivable (Note 9)	56,752	64,073
Investments (Note 10)	52,792	52,792
Total financial assets	162,803	161,864
Non-financial assets
Prepaid expenses	1,500	1,419
Inventory	58,392	53,854
Tangible capital assets (Note 11)	2,953,669	3,087,333
Total non-financial assets	3,013,561	3,142,606
Total	3,176,364	3,304,470
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities (Note 12)	996,441	650,810
Vacation pay and compensatory leave	25,854	29,372
Deferred revenue	3,923	3,664
Employee severance benefits (Note 13)	81,653	79,432
Lease obligation for tangible capital assets (Note 14)	653,829	668,565
Environmental and contingent liabilities (Note 15)	204,877	227,227
Total liabilities	1,966,577	1,659,070
Equity of Canada (Note 16)	1,209,787	1,645,400
Total	3,176,364	3,304,470
Contingent liabilities (Note 15) Contractual obligations (Note 17) The accompanying notes form an integral part of these financial statements.

---

Statement of Equity of Canada  (Unaudited) At March 31
(in thousands of dollars)

	2008	2007 (restated)
Equity of Canada, beginning of year	1,645,400	1,792,872
Net cost of operations	(908,043)	(914,445)
Current year appropriations used (Note 4)	835,705	701,655
Revenues not available for spending	(74,440)	(66,369)
Refund of previous year’s expenditures	(1,896)	(425)
Change in net position of the Consolidated Revenue Fund (Note 4)	(351,339)	63,581
Services received without charge from other government departments (Note 18)	64,400	68,531
Equity of Canada, end of year	1,209,787	1,645,400
The accompanying notes form an integral part of these financial statements.

---

Statement of Cash Flow (Unaudited) For the Year Ended  March 31
(in thousands of dollars)

	2008	2007 (restated)
Operating activities
Net cost of operations	908,043	914,445
Non-cash items
Amortization of tangible capital assets	(169,822)	(182,113)
Services received without charge	(64,400)	(68,531)
Loss on disposal and write-down of tangible capital assets	(20,032)	(72,023)
Allowance for environmental and contingent liabilities	22,349	(49,326)
Prior years’ work-in-progress expensed	(15,086)	(3,630)
Employee severance benefits	(2,221)	(5,717)
Other	-	12,377
Variations in Statement of Financial Position
Increase (decrease) in financial assets	939	35,669
Increase (decrease) in inventory and prepaid expenses	4,619	(3,356)
Increase (decrease) in other liabilities	(342,371)	8,774
Cash used by operating activities	322,018	586,569
Capital investment activities
Principal repayment of tangible capital leases	14,736	14,095
Acquisitions of tangible capital assets	95,319	113,727
Transfer of TGA with no monetary impact	(19,945)	(8,747)
Proceeds from disposal of tangible capital assets	(4,098)	(7,202)
Cash used by capital investment activities	86,012	111,873
Financing activities
Net cash provided by Government of Canada	(408,030)	(698,442)
The accompanying notes form an integral part of these financial statements.

---

1. Authority and objectives

Transport Canada is a department of the Government of Canada named in Schedule 1 of the Financial Administration Act and reports to Parliament through the Minister of Transport, Infrastructure and Communities.

Transport Canada is responsible for the transportation policies, programs and goals set by the Government of Canada, which are supported through the following departmental programs:

• Infrastructure:  Contributes to Canada’s international competitiveness, productivity, and overall quality of life in urban, rural or remote areas through strategic investments in areas that directly support federal priorities, improving governance of transportation infrastructure providers, divestiture of federal assets to parties that are better placed to manage them, continued support to federally-dependent facilities and landlord of substantial land assets.
• Safe and secure transportation:  Promotes the safety of Canada’s transportation system consisting of the air, marine, rail, and road modes of transportation through policy development, rule-making, monitoring and enforcement and outreach activities to ensure the protection of people from accidents and exposure to dangerous goods, enable the efficient flow of people and goods, and protect the environment from pollution.
• Sustainable development:  Develops and implements programs and policies in support of sustainable development to protect the natural environment and to achieve a more sustainable transportation system in Canada.

Transport Canada delivers its programs and services under numerous legislative and constitutional authorities including the Department of Transport Act, Canada Transportation Act, Aeronautics Act, Canada Marine Act, Canada Shipping Act, Navigable Waters Protection Act, Railway Safety Act, Transportation of Dangerous Goods Act, Motor Vehicle Safety Act, Canadian Air Transport Security Authority Act and Marine Transportation Security Act.

---

2. Summary of significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

1. Parliamentary appropriations – Transport Canada is financed by the Government of Canada through Parliamentary appropriations.  Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements.  Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament.  Note 4 provides a high-level reconciliation between the bases of reporting.
2. Net Cash Provided by Government – Transport Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by the department is deposited to the CRF and all cash disbursements made by the department are paid from the CRF.  The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
3. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the department.  It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
4. Revenues:
   • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
   • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
   • Revenues that have been received but not yet earned are recorded as deferred revenues.
5. Expenses – These are recorded when the underlying transaction or expense occurred subject to the following:
   • Grants are recognized in the year in which the conditions for payment are met.  In the case of grants, which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.
   • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
   • Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
   • Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, worker's compensation, and legal services are recorded as operating expenses at their estimated cost.
6. Employee future benefits
   • Pension benefits: Eligible employees participate in the Public Service Pension Plan administered by the Government of Canada.  The department’s contributions to the plan are charged to expenses in the year incurred and represent the total departmental obligation to the plan.  Current legislation does not require the department to make contributions for any actuarial deficiencies of the plan.
   • Severance benefits: Employees are entitled to severance  benefits, as provided for under labour contracts or conditions of employment.  These benefits are accrued as employees render the services necessary to earn them.  The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
7. Accounts receivables from external parties are stated at amounts expected to be ultimately realized; a provision is made for external receivables where recovery is considered uncertain.
8. Loans receivable are recorded at cost.  They are written down to their net present value to reflect concessionary terms using market rates at the time of the loans.  Loan discounts are amortized over the term of the loans.  A provision is made for loans where recovery is considered uncertain.
9. Investments in Crown corporations are recorded at cost.  If there is a permanent impairment in value, an allowance is recorded to reduce the carrying value of the investment to a nominal amount.
10. Contingent liabilities – Contingent liabilities are potential liabilities, which may become actual liabilities when one or more future events occur or fail to occur.  To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded.  If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
11. Environmental liabilities – Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites.  Based on management’s best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs.  If the likelihood of the department’s obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.
12. Inventories – Inventories consist of spare parts, material, supplies and publications held by the Department.  Inventories, other than serialized inventory items or rotable parts, are valued at average cost.  Serialized inventory items and rotable parts are valued on a specific cost basis.  A serialized inventory itemis consumable inventory, which has a serial number and is required to be tracked for airworthiness purposes.  A rotable partis a part that is not fully consumed during use and where part or all of the economic value is restored through refurbishment after use.  Rotable parts are returned to stock for future consumption after refurbishment.  Inventories with no further service potential are valued at the lower of cost or net realizable value.
13. Foreign currency transactions – Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions.  Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect on March 31, 2008.  Losses resulting from foreign currency transactions are included in miscellaneous expenses on the statement of operations.
14. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The department does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

    Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the assets as follows:

    
    

    Asset type	Amortization period
    Confederation Bridge	100 years
    Buildings and works:
    Buildings	20 to 40 years
    Works and Infrastructure	10 to 40 years
    Machinery and equipment:
    Machinery and equipment	5 to 20 years
    Informatics hardware	3 to 5 years
    Informatics software	3 years
    Vehicles:
    Ships and boats	10 to 20 years
    Aircraft	6 to 20 years
    Motor vehicles	6 to 35 years
    Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement
    Work-in-progress	Once in service, in accordance with asset type
    Leased tangible capital assets	According to the useful life of the asset if a bargain purchase offer exists or over the term of the lease

    
    
15. Measurement uncertainty – The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements.  At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.  The most significant items where estimates are used are contingent liabilities, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets.  Actual results could significantly differ from those estimated.  Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

---

3. Correction of error

In 2007-2008, Transport Canada identified tangible capital assets not recorded that had been donated to them. Consequently, the comparative financial statements presented for the year ended March 31, 2007 have been restated.  The effect of this adjustment is presented below:

2006-2007 (in thousands of dollars )	As previously stated	Effect of the adjustment	Restated amount
Statement of Financial Position
Tangible capital assets	3,063,410	23,923	3,087,333
Statement of Operations
Infrastructure revenues	352,726	23,923	376,649
Statement of Equity of Canada
Equity of Canada, end of year	1,621,477	23,923	1,645,400
Statement of Cash Flow
Net cost of operations	938,368	(23,923)	914,445
Acquisitions of tangible assets	89,804	23,923	113,727

---

4. Parliamentary appropriations

Transport Canada receives most of its funding through annual Parliamentary appropriations.  Items recognized in the statement of operations and the statement of financial position in one year may be funded through Parliamentary appropriations in prior, current or future years.

Accordingly, the department has different net results of operations for the year on a government funding basis than on an accrual accounting basis.  The differences are reconciled in the following tables:

a. Reconciliation of net cost of operations to current year appropriations used

2008		2007
(in thousands of dollars)
Net cost of operations	908,043	914,445
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Amortization of tangible capital assets	(169,822)	(182,113)
Services provided without charge	(64,400)	(68,531)
Revenues not available for spending	74,440	66,369
Allowance for environmental and contingent liabilities	22,349	(49,326)
Loss on disposals and write-downs of tangible capital assets	(20,032)	(72,023)
Prior years’ asset under construction expensed	(15,086)	(3,630)
Variation in vacation pay and compensatory leave	3,518	(1,776)
Employee severance benefits	(2,221)	(5,717)
Justice Canada legal fees	-	(6,455)
Refunds of previous years' expenditures	1,896	425
Other	-	12,377
	738,685	604,045
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add (Less):
Variation in prepaid expenses	81	(265)
Variation in inventory	4,538	(3,091)
Acquisitions of tangible capital assets	95,319	113,727
Transfer of tangible capital assets with no monetary impact	(19,945)	(8,747)
Repayment of lease obligation for tangible capital assets	14,736	14,095
Other	2,291	(18,109)
	97,020	97,610
Current year appropriations used	835,705	701,655

b. Appropriations provided and used

	2008	2007
	(in thousands of dollars)
Appropriations provided
Vote 1 – Operating expenditures	359,523	301,080
Vote 5 – Capital expenditures	82,834	79,124
Vote 10 – Transfer payments	514,664	297,173
Statutory amounts	146,782	146,853
	1,103,803	824,230
Less:
Appropriations available for future years	(3,040)	(1,369)
Lapsed appropriations: Operating	(265,058)	(121,206)
Current year appropriations used	835,705	701,655

c. Reconciliation of net cash provided by Government to current year appropriations used

	2008	2007
(in thousands of dollars)
Net cash provided by Government	408,030	698,442
Revenues not available for spending	74,440	66,369
Refunds of previous years' expenditures	1,896	425
	484,366	765,236
Change in net position in the Consolidated Revenue Fund
Justice Canada legal fees	-	(6,455)
Variation in financial assets	(939)	(35,669)
Variation in liabilities	345,889	(10,550)
Proceeds of disposal – Capital assets	4,098	7,202
Other adjustments	2,291	(18,109)
	351,339	(63,581)
Current year appropriations used	835,705	701,655

---

5. Expenses

The following table presents details of expenses by category:

2008		2007
(in thousands of dollars)
Other levels of governments within Canada	149,242	165,452
Individuals	67,947	741
Industry	66,646	46,282
Non-profit organizations	45,110	38,183
Other countries and international organizations	182	130
Total transfer payments	329,127	250,788

Salaries and employee benefits	487,983	486,951
Amortization of tangible capital assets	169,822	182,113
Professional and special services	136,384	192,938
Equipment repair and maintenance	59,954	36,362
Interest on lease obligation for tangible capital assets	40,659	40,161
Travel and relocation	36,328	35,932
Accommodation	25,699	25,560
Net loss on disposal of tangible capital assets	20,032	60,315
Utilities, materials and supplies	18,285	19,808
Telecommunications	7,638	7,470
Information services – communications	7,060	9,244
Payments in lieu of property taxes	6,907	6,958
Rentals	5,956	5,227
Miscellaneous	4,096	6,283
Postage	3,490	3,584
Pollution control	1,814	1,152
Damage and other claims against the Crown	191	1,427
Total operating expenses	1,032,298	1,121,485
Total expenses	1,361,425	1,372,273

---

6. Revenues

The following table presents details of revenues by category:

	2008	2007 (restated)
(in thousands of dollars)
Sales of goods and services:
Airport rent	287,805	295,181
Rentals and concessions	42,770	26,788
Monitoring and enforcement revenues	40,391	36,010
Aircraft maintenance and flying services	34,548	34,369
Transport facilities user fees	14,165	14,155
Miscellaneous	17,942	35,078
Pollution control revenues	14,511	14,108
Interest	642	642
Research and development	608	1,497
Total revenues	453,382	457,828

---

7. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

2008		2007
(in thousands of dollars)
Accounts receivable from other government departments	17,358	17,602
Accounts receivable from external parties	27,057	25,440
Advances to employees	304	335
	44,719	43,377
Less:  Allowance for doubtful accounts on external accounts receivable	(3,375)	(9,694)
Total accounts receivable and advances	41,344	33,683

---

8. Loans receivable

2008		2007
(in thousands of dollars)
Saint. John Harbour Bridge Authority	22,647	22,647
Canadian Airport Authorities	24,330	24,330
Victoria Harbour	2,408	2,451
St. Lawrence Seaway Management Corporation	168	168
	49,553	49,596
Less:
Valuation allowance	(20,604)	(20,604)
Discounts on loans	(17,034)	(17,676)
Total Loans	11,915	11,316

1. Saint. John Harbour Bridge Authority
   
   The loan receivable from the Saint. John Harbour Bridge Authority consists of consolidated non-interest bearing advances made in connection with the financing, construction and operation of a toll bridge across the harbour of Saint. John, New Brunswick.  Additional non-interest bearing advances may be made in years when the operating and financing costs of the toll bridge exceeds its revenues.  When the revenue for the year exceeds the operating and financing costs, the Saint. John Harbour Bridge Authority will remit the excess funds to Transport Canada on an annual basis to repay the debt.  A discount of $13,478,000 has been recorded to reflect the concessionary nature of the loan.
   
2. Canadian Airport Authorities.
   
   Loans totalling $24,330,000 to Canadian Airport Authorities relate to the transfer of chattels and consumable stock to individual authorities upon transfer of the management, operation and maintenance responsibilities to the authority under the National Airports Policy.  The loans receivable portfolio consists of 13 non-interest bearing loans to Canadian Airport Authorities issued in the years from 1997 to 2003, with prescribed annual repayment terms.  The loans are recorded at their discounted net present values using market interest rates at the time of the loans.  On May 9, 2005 the Government of Canada announced it would adopt a new rent relief policy for federally owned airports and in addition to the rent reductions, the government announced it would forgive outstanding chattel payments.  As a result, an allowance of $20,604,000 for the full amount of the chattel loans was recorded.
   
3. Victoria Harbour
   
   The Victoria Harbour long-term receivable relates to the sale of a parcel of Victoria Harbour land for $2,578,469.  The receivable has prescribed annual repayment terms and is recorded at its discounted net present value of $1,423,000 using the market interest rate at the time of sale.  A payment of $42,720 was received in fiscal year 2007-08 ($85,440 in 2006-07).
   
4. St-Lawrence Seaway Management Corporation
   
   The St-Lawrence Seaway Management Corporation loan portfolio account was established by subsection 80(1) of the Canada Marine Act.  The loan portfolio is managed in accordance with an agreement between Transport Canada and the St-Lawrence Seaway Management Corporation.  The loan has prescribed monthly repayment terms with an annual interest rate of 7 per cent.  The loan is secured by title on the property and partial discharge on the individual lots may be granted in the amount of $6,000.  To date, three of the four loans have made full discharge.  The mortgagor is in negotiations with Transport Canada and Justice Canada with respect to the remaining loan, which was repayable March 2004.

---

9. Rent receivable

The National Airport System (NAS) consists of Canadian airports considered essential to air transportation in Canada, including 3 airports owned by Territorial Governments.  Transport Canada has leased all of these airports under long-term operating agreements with Canadian Airport Authorities (21) and a municipal government (1).

In fiscal year 2003-04, Transport Canada entered into lease amendments with nine of the Canadian Airport Authorities, which provided for deferral of a portion of the airport rent payable by the Airport Authorities to Transport Canada for the 2003 to 2005 lease years.  The total rent deferred for 2003 to 2005 is payable to Transport Canada over ten years beginning in the 2006 lease year.  Repayments of $7,321,000 were received in fiscal year 2007-08 ($6,855,000 in 2006-07).  Rent receivable was $56,752,000 at March 31, 2008 ($64,073,000 at March 31, 2007).

---

10. Investments

2008		2007
(in thousands of dollars)
Royal Canadian Mint	40,000	40,000
Via Rail Canada Inc.	9,300	9,300
Parc Downsview Park Inc.	2,492	2,492
Ridley Terminals Inc.	1,000	1,000
Total Investments	52,792	52,792

1. Royal Canadian Mint
   
   As a result of Government restructuring in 2006-07, the Royal Canadian Mint was transferred from the Canada Revenue Agency to Transport Canada.  The investment of $40,000,000 is divided into 4,000 shares of  $10,000 each.
   
2. Via Rail Canada Inc
   
   In fiscal year 1979-80, a non-budgetary authority was granted to Transport Canada to purchase common shares of Via Rail Canada Inc. to be valued at $100 per share for a total value of $9,300,000.
3. Parc Downsview Park Inc
   
   Investment in Parc Downsview Park Inc. for the purpose of allowing the completion of the transfer of lands from the department of National Defence to Parc Downsview Park Inc.
4. Ridley Terminals Inc
   
   On November 1, 2000, the shares of Ridley Terminals Inc. owned by Canada Ports Corporation were transferred to the Crown under the administration of Transport Canada at $90,000,000.  Due to concerns regarding the viability of Ridley Terminals Inc., for prior years, the investment in Ridley Terminals Inc has been written-down by $89,000,000 for a nominal value of $1,000,000 in Transport Canada’s financial statements.

---

11. Tangible capital assets

(in thousands of dollars)
	Cost					Accumulated Amortization				2008 Net book value	2007 Net book Value (restated)
	Opening balance (restated)	Acquisitions	Transfer	Disposals and write-offs	Closing balance	Opening balance	Amortization	Disposals and write-offs	Closing balance
Land (1)	221,923	22,945	-	20,005	c224,863	-	-	-	-	224,863	221,923
Buildings and works (2)	3,877,886	127	30,310	40,452	3,867,871	2,171,782	116,643	24,482	2,263,943	1,603,928	1,706,104
Machinery and equipment (3)	180,180	921	13,138	5,815	188,424	112,800	20,209	5,724	127,285	61,139	67,380
Vehicles	784,904	7,157	22,547	25,967	788,641	559,782	23,377	19,703	563,456	225,185	225,122
Leasehold improvements	14,166	633	473	-	15,272	6,680	1,405	-	8,085	7,187	7,486
Assets under construction	121,015	63,536	(66,468)	16,831	101,252	-	-	-	-	101,252	121,015
Confederation Bridge	818,820	-	-	-	818,820	80,517	8,188	-	88,705	730,115	738,303
TOTAL	6,018,894	95,319	-	109,070	6,005,143	2,931,561	169,822	49,909	3,051,474	2,953,669	3,087,333
Amortization expense for the year ended March 31, 2008 is $169,822 (2007 - $182,113). (1) Includes land for 23 National Airports with a net book value of $158,658 (2007 - $131,743). (2) Includes building and works for 23 National Airports with a net book value of $847,383 (2007 - $941,913). (3) Includes machinery and equipment for 23 National Airports with a net book value of $783 (2007 - $294).

1. National Airport System assets
   
   The National Airport System (NAS) assets recorded above consist of the land, buildings, works and infrastructures of 23 Canadian airports.
   
   Transport Canada has leased all of these airports under long-term operating agreements with Canadian Airport Authorities (21) and a municipal government (1).  These agreements are in accordance with the federal National Airports Policy, the Public Accountability Principles for Canadian Airport Authorities and the Fundamental Principles for the Creation and Operations of Canadian Airport Authorities, which, in part, entails the transfer of the management, operations and maintenance of certain airports in Canada to Canadian Airport Authorities.
   
   Transport Canada has the right to terminate the operating agreements and assume the responsibility for the management, operation and maintenance of the airport if the leased airports are not operated in accordance with the terms of the respective operating agreements and the Policies and Principles referred to above.

---

12. Accounts payable and accrued liabilities

2008		2007
(in thousands of dollars)
Payables to third parties	803,640	523,294
Payables to other government departments	159,338	60,231
Accrued salaries	18,765	17,200
Other	14,698	50,085
Total accounts payable and accrued liabilities	996,441	650,810

---

13. Employee Benefits

1. Pension benefits: The department’s employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada.  Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service, times the average of the best five consecutive years of earnings.  The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.
   
   Both the employees and the department contribute to the cost of the plan.  The 2007-08 expense amounts to $59,750,000 ($57,385,000 in 2006-07), which represents approximately 2.1 times (2.2 times in 2006-07) the contributions by employees.
   
   The department’s responsibility with regard to the plan is limited to its contributions.  Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan’s sponsor.
2. Employee severance benefits: The department provides severance benefits to its employees based on eligibility, years of service and final salary.  These severance benefits are not pre-funded.  Benefits will be paid from future appropriations.  Information about the severance benefits, measured as at March 31, is as follows:

	2008	2007
(in thousands of dollars)
Accrued benefit obligation, beginning of year	79,432	73,716
Expense for the year	9,323	13,080
Benefits paid during the year	(7,102)	(7,364)
Accrued benefit obligation, end of year	81,653	79,432

---

14. Lease obligations for tangible capital assets

Under the Northumberland Strait Crossing Act, the Government of Canada entered into a long-term capital lease arrangement in 1992 and is obligated to pay an annual subsidy of $41,900,000 to the Strait Crossing Finance Inc., a wholly owned corporation of the Province of New Brunswick, for the construction of the Confederation Bridge.  The annual payments made by Transport Canada are due on April 1 and will be used to retire $661,000,000 of 4.5 per cent real rate bonds issued in October 1993 by Strait Crossing Finance Inc. to finance the construction of the bridge.  Annual payments made by Transport Canada began in 1997 and will continue until 2033.  At such time, the ownership of the bridge will be transferred to the Government of Canada.

On April 1, 2007, an annual payment in the amount of $54,897,000 (2007 - $54,265,000) was made.  This payment represents payment of principal in the amount of $14,736,000 (2007 – $14,095,000) and interest expense of $40,161,000 (2007 - $40,170,000).

The department has recorded a capital lease obligation of $653,829,000 as of March 31, 2008 ($668,565,000 at March 31, 2007), based on the present value for the future subsidy payments using an interest rate of 6.06% (2007 – 6.06%).

Future minimum annual lease payments are as follows:

Maturing year
(in thousands of dollars)
2008-2009		56,066
2009-2010		54,158
2010-2011		54,977
2011-2012		55,807
2012-2013 and thereafter		1,323,929
Total future minimum lease payments		1,544,937
Less: imputed interest (6.06%)		891,108
Balance of obligations under leased tangible capital assets		653,829

---

15. Contingent liabilities

1. Contaminated sites
   
   Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where Transport Canada is obligated or likely to be obligated to incur such costs.  The department has identified approximately 616 sites (568 sites in 2007) where such action is possible and for which a liability of $204,327,000 ($186,815,000 in 2007) has been recorded.  The department has estimated additional clean-up costs of $145,328,000 ($139,108,000 in 2007) that are not accrued, as these are not considered likely to be incurred at this time.  Transport Canada’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites.  These liabilities will be accrued by the department in the year in which they become known.
2. Claims and litigation
   
   Claims have been made against Transport Canada in the normal course of operations.  Legal proceedings for claims totaling approximately $213,664,000 were still pending at March 31, 2008.  Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur.  To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.  An amount of $550,000 has been recorded in the financial statements as of March 31, 2008 ($40,412,000 in 2007).
   
   Transport Canada is named as a defendant in a claim for $55,258,000 filed by the Mohawks of Akwesasne.  The action was first initiated in 1976 for unlawful expropriation and breach of fiduciary duty regarding the expropriation of land in the 1950's for the construction of the St Lawrence Seaway and of the Seaway International Bridge.  The outcome of this claim is not determinable at this time.  No accrual for this contingency has been made in the financial statements.

---

16. Restricted equity of Canada

The department includes in its revenues and expenses certain transactions that legislation requires be earmarked for expenses relating to specified purposes.  The department has two such accounts:

a. The Ship-Source Oil Pollution Fund

The Ship-Source Oil Pollution Fund (Fund) was established pursuant to section 702 of the Canada Shipping Act, to record levy tonnage payments for oil carried by ships in Canadian waters.  Maritime pollution claims, the fee of the fund administrator, and related oil pollution control expenses, are financed out of the Fund.

2008		2007
(in thousands of dollars)
Restricted Ship-source Oil Pollution:
Opening balance	363,783	350,843
Revenues for the year	14,463	14,092
Expenses for the year	(1,814)	(1,152)
Closing balance	376,432	363,783

b. Fines for transport of dangerous goods

The Fines for Transport of Dangerous Goods account was established pursuant to the Transportation of Dangerous Goods Act 1992 and related regulations to record fines levied by courts.

2008		2007
(in thousands of dollars)
Restricted - Fines for Transport of Dangerous Goods:
Opening balance	615	599
Revenues	48	16
Expenses	-	-
Closing balance	663	615
Restricted equity of Canada	377,095	364,398

---

17. Contractual obligations

The nature of Transport Canada’s activities results in some large multi-year contracts and obligations whereby the department is committed to making future payments when the services are performed and goods are received.  Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)	2008-09	2009-10	2010-11	2011-12	2012-13 Thereafter	Total
Transfer payments	180,638	68,602	34,488	30,229	143,441	457,398
Tangible capital assets	17,380	4,000	-	-	-	21,380
Other goods and services	17,985	5,950	4,107	4,047	2,378	34,467
Software maintenance agreements	879	-	-	-	-	879
Operating leases	1,629	836	416	424	143	3,448
Other	763	212	212	212	638	2,037
Total	219,274	79, 600	39,223	34,912	146,600	519,609

---

18. Related party transactions

Transport Canada is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations.  The department enters into transactions with these entities in the normal course of business and on normal trade terms.  Also, during the year, Transport Canada received services, which were obtained without charge from other Government departments as presented below.

During the year Transport Canada received without charge from other departments, accommodation, the employer’s contribution to the health and dental insurance plans, worker's compensation, and legal services.  These services without charge have been recognized in the department’s Statement of Operations as follows:

2008		2007
(in thousands of dollars)
Accommodation	25,699	25,560
Contributions covering employer's share of employees' insurance premiums	27,561	30,631
Worker's compensation	3,757	3,802
Legal services	7,383	8,538
Total	64,400	68,531

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge.  The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the department 's Statement of Operations.

---

19. Comparative information

Comparative figures have been reclassified to conform to the current year’s presentation.

3.3.4 Electronic Tables

The following tables were submitted electronically. The electronic tables can be found on the Treasury Board Secretariat’s website at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp.

Table 4:  Sources of Re-spendable and Non-Respendable Revenue

Table 6 A:  2007-08 User Fee Reporting – User Fees Act

Table 6 B:  2007-08 External Fee Reporting: Policy on Service Standards for External Fees

Table 9:  Details on Transfer Payment Programs (TPPs)

Table 11 A-B:  Horizontal Initiatives

Table 12:  Sustainable Development Strategy

Table 13:  Response to Parliamentary Committees and External Audits

Table 14:  Internal Audits and Evaluations

Table 15:  Travel Policies

• Previous Page
• Table of Contents
• Next Page