Quarterly Financial Report for the quarter ended December 31, 2021

Introduction

This quarterly 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. This quarterly report should be read in conjunction with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B).

The Canadian Northern Economic Development Agency (CanNor) works with partners to advance economic development in Canada's territories. The Agency supports, invests in and advocates for national, territorial and community level economic development; fosters growth and innovation; contributes to building capacity; and invests in foundational economic development projects in the territories. In addition, through the Northern Projects Management Office the Agency coordinates federal participation in the territorial environmental review processes and maintains the Crown consultation record for major projects.

Further details on CanNor's authorities, mandate and program activities may be found in the Departmental Plan and the Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CanNor's spending authorities granted by Parliament and those used by the Agency consistent with the Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B), for the 2021-2022 fiscal year. The authority of Parliament is required before moneys 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.

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.

As part of the departmental performance reporting process, CanNor prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year to date (YTD) results

Risks and Uncertainties

While the North presents opportunities for economic development, growth and innovation, factors including its vast and remote geography, lack of infrastructure, connectivity challenges, the cost and access to energy, and shortage of skilled labour all contribute to a challenging operating environment. These factors create additional challenges for businesses and can also prevent Northerners from fully benefiting from economic development opportunities.

CanNor's key risks and response strategies are published in the Departmental Plan:

• Limited Economic Diversification – A high degree of reliance on the public service and resource development sectors have resulted in limited diversification and an increased vulnerability to the cyclical changes in commodity prices.
• Infrastructure Deficit – Higher capital and operating costs compared to southern Canada and the challenges of distance and geography have resulted in a core infrastructure deficit, including connectivity, and constrained opportunities for northern economic development which impact the effectiveness of CanNor's programming.
• Labour Market – Due to the shortage of a local skilled workforce, northern employers across sectors rely on workers from outside of the territories. This shortage also increases the competition for the limited local talent pool. At the same time, there are Northerners who could help address these shortages provided that they have access to skills training, including post-secondary education.
• COVID-19 Impact – As the rollout of the COVID-19 vaccine continues, certain industries (such as tourism) have suffered, and continue to suffer, disproportionately due to the pandemic and the resurgence of COVID-19 variants in some areas. The lasting effects upon these and other sectors post-vaccine remains unknown.

Significant Changes in Relation to Operations, Personnel and Programs

There are no significant changes in relation to operations, personnel and programs for this reporting period, not already disclosed in the quarter ended June 30, 2021.

Approved by: