Quarterly Financial Report for the quarter ended September 30, 2024

Management statement for the quarter ending September 30, 2024

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board under the Treasury Board Directive on Accounting Standards: GC 4400 Departmental Quarterly Financial Report. It should be read in conjunction with the Main Estimates and Supplementary Estimates for the current year.

The quarterly report has not been subject to an external audit or review.

1.1 Canadian Transportation Agency mandate

The Canadian Transportation Agency (CTA) is an independent regulator and quasi-judicial tribunal with the powers of a superior court. It operates within the context of the very large and complex Canadian transportation system. The CTA's responsibilities are:

• To help ensure that the national transportation system runs efficiently and smoothly in the interests of all Canadians: those who work and invest in it; the producers, shippers, travellers, and businesses who rely on it; and the communities where it operates.
• To provide consumer protection for air passengers.
• To protect the human right of persons with disabilities to an accessible transportation network.

The CTA has specific powers assigned to it under the Canada Transportation Act:

• It is an economic regulator of modes of transportation under federal jurisdiction and develops and applies ground rules that establish the rights and responsibilities of transportation service providers and users and that level the playing field among competitors. These rules can be binding regulations, guidelines, or codes of practice.
• It is a tribunal that hears and resolves disputes like a court. It resolves disputes between transportation service providers and their clients or neighbours, using various tools from facilitation and mediation to arbitration and adjudication.

Further information on the CTA’s mandate, roles, responsibilities and programs can be found in Part III of the Estimates – Departmental Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the CTA's spending authorities granted by Parliament, and those used by the CTA consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2024-2025 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The CTA uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results

This section highlights the significant items that contributed to the net increase in resources available for the year, as well as actual expenditures for the quarter ended September 30.

2.1 Significant changes to authorities

As illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, the CTA’s total authorities available for use increased by $4,211,009, or 8.0%, from $52,872,347 as of September 30, 2023, to $57,083,356 as of September 30, 2024. The increase in authorities available for use is mainly attributable to the increase in temporary funding (approximately $4.1 million) received in 2024-2025, as announced in Budget 2023. This increase in temporary funding primarily aims to increase the CTA’s capacity to process air travel complaints.

2.2 Significant changes to expenditures

As illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, expenditures recorded to the end of the second quarter increased by $3,135,676, or 28.8% from the previous year, from $10,897,474 to $14,033,150 (see Table A: Variation in Departmental Expenditures by Standard Object).

Overall, the year-to-date expenditures at the end of the second quarter of 2024-2025 represent 45.9% of the annual planned expenditures, which is slightly greater than the second quarter (37.9%) of 2023-2024. This is primarily due to the ramp up of personnel in 2023-2024, as explained below.

Personnel: Upon the release of Budget 2023 on March 28, 2023, the CTA was able to initiate its planned staffing actions in order to increase its capacity to process air travel complaints. Due to the level of effort required to complete such actions, personnel expenditures only started to increase near the end of the first quarter of 2023-2024. Personnel expenditures during the second quarter of 2024-2025 have increased by $3,549,345 in comparison to the second quarter of 2023-2024 mainly because the staff is now fully in place and salary rates have increased due to the renewal of various collective agreements.

Professional and special services: In comparison to the previous fiscal year, the $403,986 decrease in expenditures during the second quarter of 2024-2025 is mainly attributable to the following:

1. In 2023-2024, the CTA invested additional funds in the professional development of its employees and incurred non-recurring training expenditures (e.g. leadership training for the CTA’s management team).
2. Certain expenditures incurred in 2023-2024 were related to projects that came to an end in late 2023-2024.
3. Finally, as part of meeting the Government of Canada’s commitment to reducing spending by $14.1 billion over the next five years, the CTA has reduced its spending on professional and special services in 2024-2025.

Rentals: In comparison to the previous fiscal year, the increase of $125,460 in rentals expenditures is mainly due to a timing difference in the settlement of invoices received for the rental of application software and due to a higher number of application software licenses as a result of the increase in staff complement.

With respect to all other budgetary expenditures by Standard Object, overall expenditures are similar to those of the previous fiscal year. Any difference is primarily attributable to the period in which the purchases were settled.

3. Significant changes in relation to operations, personnel, and programs

There have been no significant changes in relation to the CTA's operations, personnel, or programs over the last quarter.

4. Risks and uncertainties

Air travel complaint volumes: In recent years, the CTA has experienced a significant and continuous increase in air travel complaints. Although the CTA has been provided with additional temporary funding in 2024-2025 to deal with more air travel complaints, the volume of incoming complaints continues to increase, is difficult to predict, and makes planning for case processing wait times and providing accurate information to the public a challenge. To mitigate this risk, the CTA will continue to monitor the situation and invest in its systems, data, and analysis, as well as invest in continuous improvement activities in order to maximize the efficiency and consistency of the complaint resolution process.

Sunsetting temporary funds: Budget 2023 announced that the CTA would receive $75.9 million over three years, starting in 2023-2024, to increase its capacity to process air travel complaints. The CTA over the last two years has and continues to receive twice the number of complaints it anticipated. With the temporary funding coming to an end in fiscal year 2025-2026, the CTA continues to aggressively seek efficiencies and will pursue long-term funding options in order to ensure the delivery of its mandate in an effective and timely manner.

Employee retention: As a significant portion of the CTA's budget is temporary, it is making the hiring and retention of new staff a challenge, as term and contract positions are less appealing than indeterminate positions for prospective candidates. There is an ongoing risk of increased turnover in staff which could impact the rate at which expenditures are incurred and ultimately, the CTA's overall financial situation and capacity to deliver outcomes. Increased staff turnover leads to a greater allocation of time and resources to staffing and training activities, causing a decrease in the CTA’s productivity levels.

Approval by Senior Officials

Approved by:

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Statement of Authorities (unaudited)

Departmental Budgetary Expenditures by Standard Object (unaudited)