Departmental Performance Report
for the period ending March 31, 2013

Departmental Human Resource Trend (Full-Time Equivalents – FTEs)

Expenditure Profile Explanation

The change in spending between 2009 and 2012 is primarily due to the completion of stimulus funding from Canada's Economic Action Plan 2009. Changes in planned spending are due to:

• grants and contributions programs for which current funding ends in 2013–14 or 2014–15;
• the Department's implementation of measures announced in Budget 2011 and in Budget 2012.

In Budget 2012, the Government announced plans to reduce the federal deficit and return to fiscal balance over the medium term. In response, long-term financial affordability and a commitment to ensuring the Department is able to continue to deliver its mandate and its core activities have been a key focus of all financial decisions.

As a result, Industry Canada's savings are centered on three main areas, and do not affect direct services to Canadians:

• reducing administrative expenditures by improving efficiencies;
• reducing expenditures by consolidating program and office functions; and
• refocusing and realizing efficiencies in research and analysis functions while maintaining adequate capacity for targeted policy development.

In 2012–13, the Department achieved savings of $49.2 million. These savings increase to $65.2 million for 2013–14 and will result in ongoing savings of $79.5 million by 2014–15. The savings will largely come from changes in the amount of repayable contributions that the Department accesses through Supplementary Estimates. Details regarding ongoing savings are available in the supplementary data on Budget 2012 implementation.

In response to changes announced in Budget 2011 and in Budget 2012, Industry Canada has carefully managed all staffing decisions, including controls on those in revenue generating organizations. The Department began implementing these changes up-front in 2012–13. The strategic decision was made to identify all affected employees in the first year so that they would be well positioned to find jobs before the market became saturated. This measure resulted in lower-than-planned full-time equivalent (FTE) use.

For additional information related to the departmental spending presented above, see the Analysis of Programs and Sub-Programs by Strategic Outcome section.

Estimates by Vote

For information on Industry Canada's organizational Votes and statutory expenditures, please see the Public Accounts of Canada 2013 (Volume II). An electronic version of the Public Accounts 2013 is available on the Public Works and Government Services Canada website.

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Contribution to the Federal Sustainable Development Strategy

The Federal Sustainable Development Strategy (FSDS) outlines the Government of Canada's commitment to improving the transparency of environmental decision making by articulating its key strategic environmental goals and targets.

Industry Canada ensures that consideration of these outcomes is an integral part of its decision-making processes. Industry Canada contributes to two of the four FSDS themes as denoted by the visual identifiers and associated Programs below. These symbols can be found throughout the report and identify areas where efforts are contributing to the FSDS.

Theme I: Addressing Climate Change and Air Quality

Theme IV: Shrinking the Environmental Footprint—Beginning with Government

Industry Canada's contributions to the FSDS are components of the following programs and are further explained under Analysis of Programs and Sub-Programs by Strategic Outcome:

Science, Technology and Innovation Capacity

Industrial Research and Development Financing

Industrial Competitiveness and Capacity

Community Economic Development

Internal services

During 2012–13, Industry Canada updated its Strategic Environmental Assessment (SEA) guide and strengthened its management accountability system. The Department's SEA complies with the 2010 Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, which requires that departments consider how policy, plan or program proposals support the goals and targets of the Federal Sustainable Development Strategy. In 2012–13, the Department conducted 42 preliminary scan SEAs.

For more information on Industry Canada's activities to support sustainable development, and on the results of SEAs and Industry Canada's SEA process, please consult the Industry Canada website.

For further information on the Federal Sustainable Development Strategy, please consult the Environment Canada website.

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Analysis of Programs and Sub-Programs by Strategic Outcome

• Strategic Outcome: The Canadian marketplace is efficient and competitive
  • Program: Marketplace Frameworks and Regulations
    • Sub-Program: Trade Measurement
    • Sub-Program: Bankruptcy and Insolvency
    • Sub-Program: Federal Incorporations
    • Sub-Program: Investment Review
    • Sub-Program: Intellectual Property
    • Sub-Program: Internal Trade Secretariat
  • Program: Spectrum, Telecommunications and the Online Economy
    • Sub-Program: Spectrum Management and Telecommunications
    • Sub-Program: Electronic Commerce
  • Program: Consumer Affairs
  • Program: Competition Law Enforcement
• Strategic Outcome: Advancements in science and technology, knowledge, and innovation strengthen the Canadian economy
  • Program: Science, Technology and Innovation Capacity
    • Sub-Program: Government Science and Technology Policy Agenda
    • Sub-Program: Science and Technology Partnerships
  • Program: Information and Communication Technologies Research and Innovation
  • Program: Industrial Research and Development Financing
    • Sub-Program: Automotive Innovation
    • Sub-Program: Aerospace Innovation
    • Sub-Program: Strategic Aerospace and Defence Initiative
    • Sub-Program: Technology Partnerships Canada
• Strategic Outcome: Canadian businesses and communities are competitive
  • Program: Small Business Research, Advocacy and Services
    • Sub-Program: Canada Small Business Financing
    • Sub-Program: Canada Business Network
    • Sub-Program: Small Business Internship
    • Sub-Program: Small Business Growth and Prosperity
  • Program: Industrial Competitiveness and Capacity
    • Sub-Program: Industry-Specific Policy and Analysis
    • Sub-Program: Shipbuilding Capacity
    • Sub-Program: Industrial and Regional Benefits
  • Program: Community Economic Development
    • Sub-Program: Community Futures
    • Sub-Program: Northern Ontario Development
    • Sub-Program: Computers for Schools
    • Sub-Program: Community Internet Access
    • Sub-Program: Economic Development Initiative for Official Language Minority Communities
• Internal Services

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Analysis of Programs and Sub-Programs by Strategic Outcome (continued)

Strategic Outcome: The Canadian marketplace is efficient and competitive

Industry Canada fosters competitiveness by developing and administering economic framework policies that promote competition and innovation, support investment and entrepreneurial activity, and instil consumer, investor and business confidence. Progress towards achieving this outcome was accomplished in 2012–13 through the following programs and sub-programs:

• Program: Marketplace Frameworks and Regulations
  • Sub-Program: Trade Measurement
  • Sub-Program: Bankruptcy and Insolvency
  • Sub-Program: Federal Incorporations
  • Sub-Program: Investment Review
  • Sub-Program: Intellectual Property
  • Sub-Program: Internal Trade Secretariat
• Program: Spectrum, Telecommunications and the Online Economy
  • Sub-Program: Spectrum Management and Telecommunications
  • Sub-Program: Electronic Commerce
• Program: Consumer Affairs
• Program: Competition Law Enforcement

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Program – Marketplace Frameworks and Regulations

Description

Industry Canada is responsible for the oversight and regulation of a number of aspects of the Canadian marketplace, including bankruptcy, foreign direct investment, federal incorporation, intellectual property and trade measurement. To deliver on its mandate, Industry Canada, through this Program, administers framework statutes, regulations, policies and procedures; develops, sets, and assures compliance with standards; performs reviews; and holds meetings with a variety of stakeholders. Overall, the Program benefits Canadians by ensuring the integrity of the marketplace.

Financial Resources – Marketplace Frameworks and Regulations ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
52.3	49.6	206.7	30.3	19.3

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
1,836	1,685	151

Expected Results and Performance Indicators of Marketplace Frameworks and Regulations

Expected Results	Performance Indicators	Targets	Actual Results
Regulatory time frames and service standards are met	Average percentage of regulatory timeframes or service standards met	80%	97.6%
Canadian marketplace frameworks and regulations are effective by international standards	Canada's rank among G7 nations in effectiveness of marketplace frameworks and regulations for starting a business, impact of rules on foreign investment, and intellectual property	1st	2nd

Performance Analysis and Lessons Learned – Marketplace Frameworks and Regulations

Industry Canada continued to focus on improving efficiency and competitiveness in the marketplace by modernizing administrative processes and undertaking legislative and regulatory initiatives.

In 2012–13, Industry Canada met or exceeded service standards or regulatory timeframes an average of 97.6 percent of the time across the five areas in this Program, an improvement compared to 2011–12 (95 percent).

Canada's overall second place score for the effectiveness of its marketplace frameworks and regulations is based on an average of its rankings on three OECD and World Bank indicators, and remains unchanged from 2011–12. In 2012–13, Canada ranked 1st on the Starting a Business indicator, 2nd on the Business Impact of Rules on the foreign direct investment (FDI) indicator, and 3rd on the Intellectual Property Protection indicator.

As anticipated in the 2012–13 Report on Plans and Priorities, Industry Canada continued its work to implement the Fairness at the Pumps Act, making significant progress on the development of proposed regulations necessary to implement mandatory measuring device inspection frequencies and administrative monetary penalties under the Electricity and Gas Inspection Act and the Weights and Measures Act.

Fiscal year 2012–13 also saw changes to the Investment Review framework, including the Investment Canada Act.

The Total Authorities figure for this program includes Canadian Intellectual Property Office's (CIPO) unused authority of $163.1 million, which takes into account the operating surpluses that CIPO, an organization within the Department that is funded entirely from the revenues it generates, has accumulated in its revolving fund since its creation in 1994, as well as amounts deposited in the Consolidated Revenue Fund (CRF), which the organization requires to finance its balance sheet activities (i.e., deferred revenues). The intent is never to spend the accumulated surplus portion in a single year but to draw on it as required to fund capital investments or when expenses exceed revenues.

The difference between Planned and Actual Spending under Marketplace Frameworks and Regulations is partly the result of net income from operations generated by CIPO being higher than expected. For further information, please refer to the sub-program section below.

Sub-Program – Trade Measurement

Description

Measurement Canada, a special operating agency, ensures the integrity and accuracy of goods and services bought and sold on the basis of measurement in Canada. It protects Canadians against financial loss due to inaccurate measurement and maintains consumer and business confidence in measurement-based financial transactions (trade measurement) by ensuring that devices (e.g., scales, gas pumps, and electricity and natural gas meters) used in Canada meet legislative standards for accuracy and performance. Measurement Canada investigates measurement practices in the Canadian marketplace and compels institutions to take corrective actions when unfair practices are found.

Financial Resources – Trade Measurement ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
29.8	29.8	–

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
353	275	78

Expected Results and Performance Indicators of Trade Measurement

Expected Results	Performance Indicators	Targets	Actual Results
Accurate trade measurement in Canada	Percentage of marketplace monitoring inspections where devices are found to be measuring accurately	80%	88%
	Percentage of Measurement Canada product and surveillance audits which confirm authorized service providers' competencies to conduct inspections on the agency's behalf	90%	97%

Performance Analysis and Lessons Learned – Trade Measurement

Industry Canada, through Measurement Canada, exceeded the performance targets for both indicators, by eight and seven percent, respectively.

Overall, 88 percent of the devices inspected through a marketplace monitoring program were in compliance with the rules on accuracy. This result is unchanged from 2011–12. However, improvements were seen in some sectors, including the forestry, mining, livestock and poultry, dairy, and food and beverage manufacturing sectors.

Industry Canada actively monitored the competency of the authorized service providers and recognized technicians who perform inspections on Measurement Canada's behalf, finding that 97 percent of those audited are performing inspections and applying legislative requirements correctly. This improvement over the previous year may be attributed to enhancements to Measurement Canada business processes and a strong commitment to oversight.

The difference between Planned and Actual FTEs reflects difficulties in finding candidates, as well as internal reallocations made during the year to better align human resources with the Department's strategic outcomes and programs.

Sub-Program – Bankruptcy and Insolvency

Description

For the benefit of investors, lenders and consumers and in the public interest, the Office of the Superintendent of Bankruptcy supervises the administration of estates and matters under the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act. It provides leadership in protecting the integrity of the bankruptcy and insolvency system by maintaining an efficient and effective insolvency regulatory framework; promoting awareness of the rights and responsibilities of the stakeholders; ensuring trustee and debtor compliance with the legislative and regulatory framework through the supervision of debtors and of trustees administering estates; and being an integral source of information on Canadian insolvency matters.

Financial Resources – Bankruptcy and Insolvency ($ millions)

Planned Spending Footnote 1 2012–13	Actual Spending Footnote 2 2012–13	Difference 2012–13
Footnotes Footnote 1 Planned Net Spending. Please see the Performance Analysis and Lessons Learned – Bankruptcy and Insolvency section for further explanation. Return to footnote 1 referrer Footnote 2 Actual Net Spending. Please see the Performance Analysis and Lessons Learned – Bankruptcy and Insolvency section for further explanation. Return to footnote 2 referrer
5.7	6.9	(1.2)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
368	372	(4)

Expected Results and Performance Indicators of Bankruptcy and Insolvency

Expected Results	Performance Indicators	Targets	Actual Results
Estates are supervised and administered in accordance with insolvency legislation	Percentage of trustees with a satisfactory compliance rating: A or B on a range of A–D	85%	93%
	Percentage of debtors with surplus income who completed payments to the estate as required	75%	91%

Performance Analysis and Lessons Learned – Bankruptcy and Insolvency

Industry Canada, through the Office of the Superintendent of Bankruptcy (OSB), exceeded the performance targets for both indicators by eight and sixteen percent, respectively.

As in 2011–12, satisfactory compliance was achieved by 93 percent of trustees at the end of 2012–13, confirming that they comply with the bankruptcy and insolvency regulatory framework. This high level of compliance contributes to public confidence in the Canadian insolvency system.

Required payments to the estate were made by 91 percent of debtors who had surplus income in 2012–13, an increase of nine percent over the previous year. Successful mediation sessions conducted by the OSB contributed to this increase. Surplus income paid by debtors results in payments to creditors and contributes to maintaining public confidence in the integrity of the insolvency system.

An evaluation of the OSB mandatory counselling program was completed in 2012–13. It found that mandatory counselling addresses a continued need by contributing to the rehabilitation of debtors and helping them avoid future financial difficulties. Debtors found the counselling sessions useful and, following these sessions, were generally more aware of sound financial practices and changed their behaviour. Evidence suggests that debtors who cited the overuse of credit as a reason for their financial difficulties were less likely to be repeat filers after counselling. The evaluation recommended developing and collecting additional data to further measure the effectiveness of mandatory counselling, examining the current model of mandatory counselling to see if options could be provided to better address the needs of the various debtor groups, and exploring ways of facilitating access to tools and products for delivery of the program. For more information on the evaluation and the management response and action plan, please refer to the report available on the Industry Canada website.

The Office of the Superintendent of Bankruptcy (OSB) is a revenue generating program. The information reflected in the financial resources table above is net of revenue, and represents mainly the employee benefit plan (EBP) costs associated with this program.The Actual spending on EBP can vary from the planned spending as a result of a different utilization of the plan by employees than originally estimated by Treasury Board Secretariat.

Sub-Program – Federal Incorporations

Description

This Program allows Canadians and businesses to incorporate at the federal level in accordance with Canada's laws, such as the Canada Business Corporations Act, the Canada Corporations Act, the Boards of Trade Act and the Canada Cooperatives Act (with the exception of financial institutions). It also issues and registers official documents under the Great Seal of Canada. The Program's main lines of business include incorporation and related services (such as amalgamation or corporate charter amendments), the dissolution of corporations, rulings on the use of corporate names, the collection and dissemination of information on federal companies, and compliance and enforcement activities related to the statutes it administers. The Program's activities mostly affect Canadian businesses, not-for-profit organizations and other corporate entities.

Financial Resources – Federal Incorporations ($ millions)

Planned Spending Footnote 3 2012–13	Actual Spending Footnote 4 2012–13	Difference 2012–13
Footnotes Footnote 3 Planned Net Spending. Please see the Performance Analysis and Lessons Learned – Federal Incorporation section for further explanation. Return to footnote 3 referrer Footnote 4 Actual Net Spending. Please see the Performance Analysis and Lessons Learned – Federal Incorporation section for further explanation. Return to footnote 4 referrer
1.4	2.0	(0.6)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
74	84	(10)

Expected Results and Performance Indicators of Federal Incorporations

Expected Results	Performance Indicators	Targets	Actual Results
Federally incorporated companies are compliant with corporate laws and regulations	Percentage of federally incorporated corporations that comply with statutory filing requirements	80%	89%
Businesses have timely access to incorporations and information services	Percentage of published Corporations Canada service standards that are met or exceeded	90%	97%
Corporations Canada key services are available/delivered to businesses electronically	Percentage of transactions for key services completed online	80%	98% certificates 94% annual returns

Performance Analysis and Lessons Learned – Federal Incorporations

In 2012-13, 89 percent of federal corporations complied with annual filing requirements, an increase of five percentage points over 2011–12. The improvement in performance correlates with the implementation of an improved reminder process, built into Corporations Canada's information technology system.

Published service standards were met or exceeded 97 percent of the time, which amounts to an increase of one percent over 2011–12.

Online services provide access to faster service and lower fees for businesses seeking incorporation and filing annual returns. The percentage of transactions completed online improved in 2012–13: 98 percent of certificates of incorporation and 94 percent of annual returns were completed online, exceeding the target. This is an increase of 0.8 percent and 1.3 percent, respectively, over 2011–12, reflecting the business and legal communities' continued increased use of online tools over the years. In 2012–13, the Department began to develop online services that will allow federal not-for-profit corporations to incorporate, file annual returns and update their corporate information online. As a first step, online filing of annual not-for-profit corporate returns was launched in January 2013.

As was planned in the 2012–13 RPP, in March 2013, Industry Canada launched improvements to the self-serve online company name search system, Newly Updated Automated Name Search (NUANS). These improvements will enable more corporate law regulators to implement a self-serve option for their clients. As a result, the Government of the Northwest Territories adopted the system, bringing the number of jurisdictions using this joint administrative tool to 10.

Industry Canada completed an evaluation of Corporations Canada in 2013, which confirmed that the organization operates with low barriers to business, ensures compliance with legislation, and provides for strong corporate governance in support of entrepreneurship. The evaluation recommended expanding online and e-filing services. For more information on the evaluation and the management response and action plan, please refer to the report available on the Industry Canada website.

Federal Incorporations is a vote net revenue program, i.e., it has a special revenue spending authority from Parliament which allows the department to use revenue from the sale of products or services to finance directly related expenditures. The information reflected in the financial resources table above is net of revenue, and represents mainly the employee benefit plan (EBP) costs associated with this program. The Actual spending on EBP can vary from the planned spending as a result of a different utilization of the plan by employees than originally estimated. For more information on revenues, refer to the Respendable Revenue table.

Additional funding was received in Supplementary Estimates for royalties collected for the NUANS system, which provides a one-stop name search service to the Canadian business community.

The difference between Planned and Actual FTEs mainly reflects internal reallocations made during the year to better align human resources with the Department's strategic outcomes and programs.

Sub-Program – Investment Review

Description

The purpose of the Investment Canada Act is to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security. This Program implements the provisions of the Act by ensuring that the Minister of Industry has the information needed to determine whether an investment is likely to be of net benefit to Canada or whether there are reasonable grounds to believe that an investment could be injurious to national security. This is accomplished by processing notifications filed by investors and completing reviews of transactions under the Act.

Financial Resources – Investment Review ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
1.2	1.7	(0.5)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
10	12	(2)

Expected Results and Performance Indicators of Investment Review

Expected Results	Performance Indicators	Targets	Actual Results
Timely processing of foreign investment notifications and applications for review filed by foreign investors under the Investment Canada Act	Median time required to certify notifications	5 days	3 days
	Median time required to process applications	70 days	70 days

Performance Analysis and Lessons Learned – Investment Review

Industry Canada certified as complete 664 notifications of foreign investments for acquisitions below the regulatory thresholds for review or for the establishment of new businesses, improving the median time required from five days in 2011–12 to three days in 2012–13. For investments above the thresholds, 18 applications for review were processed and approved by the Minister of Industry. A median time of 70 days was achieved in 2012–13. This constitutes an improvement from the previous year's result of 74 days, despite the larger, more complex investment transactions under review.

In 2012–13, several changes were made to the Investment Canada Act and the investment review framework. In particular, in December 2012, the Government clarified the assessment process for investments by state-owned enterprises (SOE), revised the guidelines for SOEs, and announced its intention to retain the current net benefit review threshold for World Trade Organization (WTO) SOE investors, while maintaining plans to progressively increase the threshold for other WTO investors to $1 billion in enterprise value.

Legislative changes passed in 2009 progressively raise the review threshold for WTO investors or vendors (other than Canadians) to $1 billion over a four-year period, and change the basis of the threshold from asset value to enterprise value. The regulations related to the threshold were published for comment in the Canada Gazette Part I, Vol. 146, No. 22 on June 2, 2012.

In addition, changes were made earlier in the year which provide the Minister of Industry with a greater ability to publish information on the review process, while preserving commercial confidences. The amendments also promote investor compliance with undertakings by authorizing the Minister to accept security, when offered by an investor, for payment of any penalties ordered by a court for a contravention of the Investment Canada Act. Formal mediation procedures were introduced in the Act in May, as an alternative to litigation.

The difference between Planned and Actual FTEs mainly reflects the increase in workload for 2012–13.

Sub-Program – Intellectual Property

Description

This Program administers Canada's system of intellectual property (IP) rights, namely patents, trademarks, copyrights, industrial designs and integrated circuit topographies. The Canadian Intellectual Property Office (CIPO) grants and registers IP rights, legally recognizing certain endeavours of originality and creativity. It also disseminates information related to these rights to businesses, educational institutions and Canadians. CIPO's role is to ensure that IP contributes to an acceleration of Canadian economic development and that the benefits of the IP system accrue to Canadians. This program is entirely financed through a revolving fund and is fully cost recovered from client fees. Its clients include foreign and Canadian applicants for IP protection, users of IP information and the Canadian business community.

Financial Resources – Intellectual Property ($ millions)

Planned Spending Footnote 5 2012–13	Actual Spending Footnote 6 2012–13	Difference 2012–13
Footnotes Footnote 5 Planned Net Spending. Please see the Performance Analysis and Lessons Learned – Intellectual Property section for further explanation. Return to footnote 5 referrer Footnote 6 Actual Net Spending. Please see the Performance Analysis and Lessons Learned – Intellectual Property section for further explanation. Return to footnote 6 referrer
10.9	(10.4)	21.3

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
1,031	942	89

Expected Results and Performance Indicators of Intellectual Property

Expected Results	Performance Indicators	Targets	Actual Results
Footnotes Footnote 7 Where submission date is the equivalent to the date a file is received at CIPO for Industrial Design and Trade-mark files and is equivalent to the Request for Examination date for Patent files Return to footnote 7 referrer Footnote 8 The results presented are generated by the World Intellectual Property Organization (WIPO) and are for the 2011 calendar year only. Results for 2012 will be presented in the next DPR once data is available in late 2013. Return to footnote 8 referrer
Timely administration of intellectual property rights	Average number of days taken from first submission date to completion date of intellectual property files Footnote 7	Industrial Design Files: 410 days	Industrial Design Files: 292 days
		Patent Files: 1,530 days	Patent Files: 1,390 days
		Trade-mark: 825 days	Trade-mark: 824 days
Use of intellectual property by Canadians Footnote 8	Number of domestic Canadian Intellectual Property filings	25,530	26,881
	Number of international Canadian Intellectual Property filings	27,890	33,699

Performance Analysis and Lessons Learned – Intellectual Property

CIPO met or exceeded each of its performance targets for the administration of intellectual property rights in Canada in 2012–13. This improved performance is attributable to successful recruitment efforts and a continued commitment to lower turnaround times.

There were 26,881 domestic intellectual property filings in 2011^{Footnote 8} (4,754 patent filings, 21,337 trade-mark filings, and 790 industrial design filings), a 4.0 percent increase over 2010.

There were 33,699 international Canadian intellectual property filings in 2011^{Footnote 8} (19,518 patent filings, 12,781 trade-mark filings, and 1,400 industrial design filings), 6.3 percent higher than the number filed in 2010.

As was stated in the 2012–13 Report on Plans and Priorities, the Copyright Modernization Act received Royal Assent in June 2012. Among other things, the amended Act provides Canadian copyright owners with updated rights and protections to better address the challenges and opportunities of the Internet in line with international standards, and mandates a parliamentary review of the Copyright Act every five years. In October 2012, the Minister of Industry announced that certain sections and subsections would come into force on the day on which the World Intellectual Property Organization (WIPO) Copyright Treaty, or the WIPO Performances and Phonograms Treaty, come into force for Canada. Implementation of other elements, including the notice and notice regime, remained to be determined at year end.

In November 2012, regulations were published that exempt microSD memory cards from levies under the private copying regime.

In March 2013, the Minister of Industry joined the Minister of Public Safety to introduce the Combating Counterfeit Products Act. This new legislation would protect Canadian consumers, Canadian manufacturers and retailers, as well as the Canadian economy, from the health and economic threats presented by counterfeit goods coming into Canada.

CIPO is a revenue generating organization with a revolving fund. The figures in the financial resources table above represent the net spending for CIPO, which is the difference between expenses and revenues. The negative figure for Actual Spending means that revenues exceeded expenses in 2012–13. For more information on revenues, refer to the Respendable Revenue table.

The difference between Planned and Actual Spending is the result of two main factors. Net income from operations generated by CIPO was $11.5 million higher than planned (revenues from operations were $149 million and the associated expenses were $137.5 million). In addition, the expected payout of the employee termination liability did not materialize, since expired collective agreements either remained unsigned or were signed too late for payouts to occur by March 31. This combination of factors led to a $21.3 million difference which will be added to CIPO's unused authority for use in future years. The difference between Planned and Actual FTEs arose due to attrition and because some planned staffing did not occur.

Sub-Program – Internal Trade Secretariat

Description

The Agreement on Internal Trade (AIT) is an intergovernmental trade agreement signed by Canadian First Ministers, that came into force in 1995. The purpose of the AIT is to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services and investment within Canada and to establish an open, efficient and stable domestic market. The Internal Trade Secretariat provides administrative and operational support to the Committee on Internal Trade, to its Chair and to other committees or working groups established under the AIT or by the committee. It works closely with government officials to ensure the effective implementation of the AIT. The Secretariat supports the Committee on Internal Trade in preparing the reports, compiling and disseminating information from parties and ensuring appropriate support for the dispute resolution process. As a neutral third party, the Secretariat has facilitated ongoing negotiations to broaden and deepen the scope of the AIT. The work requires close and continuous contact with federal, provincial and territorial governments to facilitate the smooth and effective operation of the committees and working groups. The Secretariat plays an important role in assisting parties to fully implement the AIT, to pursue negotiations mandated by the AIT and to meet their outstanding obligations under the AIT. All parties share the Secretariat's operating costs. The federal government's share of the Secretariat's budget is 50 percent, which is paid by Industry Canada through a grant.

Financial Resources – Internal Trade Secretariat ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
0.6	0.3	0.3

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
–	–	–

Expected Results and Performance Indicators of Internal Trade Secretariat

Expected Results	Performance Indicators	Targets	Actual Results
The Internal Trade Secretariat provides high-quality administrative support to the Committee on Internal Trade	Average score out of 10 of stakeholder satisfaction with the services provided by the Internal Trade Secretariat on federal stakeholder interviews	8 out of 10 performance rating	This indicator was not evaluated in 2012-13. The previous result was 10 out of 10.

Performance Analysis and Lessons Learned – Internal Trade Secretariat

The last evaluation of the Internal Trade Secretariat (ITS) was conducted in March 2011, and found that there is a continued need for the Secretariat.

The change in Actual Spending results from internal efficiencies achieved by the ITS.

Program – Spectrum, Telecommunications and the Online Economy

Description

This Program enables Canadians to benefit from a globally competitive digital economy that drives innovation, productivity and future prosperity. This includes developing and administering domestic regulations, procedures and standards that govern Canada's radiocommunication and telecommunications industries. The Program sets legislative and policy frameworks to encourage competition and private sector investment in world-class digital infrastructure, confidence in the online marketplace, and greater adoption of digital technologies by business. The Program maximizes the public benefits of spectrum by managing it efficiently and effectively, and promotes global telecommunications through the development of international treaties and agreements. International online trade and commerce is facilitated through participation in international bilateral and multilateral forums.

Financial Resources – Spectrum, Telecommunications and the Online Economy ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
85.5	88.7	127.1	126.2	(37.5)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
673	657	16

Expected Results and Performance Indicators of Spectrum, Telecommunications and the Online Economy

Expected Results	Performance Indicators	Targets	Actual Results
Canada's radiocommunication and telecommunications infrastructure and online economy are governed by an effective policy and regulatory framework	Percentage of Canadian radiocommunication and telecommunications objectives/proposals represented in international agreements, standards and negotiations at international forums	90%	90%
	Percentage of Canadians buying and selling online	43% Buying (All internet users at home)	Data will be available for the 2013–14 DPR
		15% Selling (All Canadians aged 16 and over)	Data will be available for the 2013–14 DPR

Performance Analysis and Lessons Learned – Spectrum, Telecommunications and the Online Economy

As indicated in the 2012–13 RPP, Industry Canada engaged in a number of consultations to ensure that the radiocommunication and telecommunication policy and regulatory framework remains effective. These consultations covered the E-Commerce Protection Regulations under Canada's anti-spam legislation; the use of parts of the D Block (700 MHz upper band) for public safety communications; the use of spectrum for backhaul (communication between a central core network and distributed base stations); and the policy for spectrum licence transfers, which will provide industry with greater clarity on how licence transfer requests are received. Industry Canada also published decisions regarding the use of spectrum white space for certain non-broadcasting purposes, and of the L Band for aeronautical mobile telemetry, used by Canada's aerospace industry for aircraft testing. The Department also revised the Framework for Mandatory Roaming and Antenna Tower and Site Sharing.

In an effort to help foster more competition in the telecommunications sector, particularly the wireless sector, Industry Canada continued its consultations on the format for upcoming spectrum auctions, publishing decisions for the 700 MHz—Mobile Broadband Services and 2500 MHz—Broadband Radio Service auctions.

On the international front, the Department completed negotiations on cross-border radio frequency sharing arrangements with the United States. As a result, Canadian licensees can use spectrum along the Canada-U.S. border without interference. Three Mutual Recognition Agreements (MRAs) were signed and/or ratified with Vietnam, Mexico, and Israel to facilitate the import and export of telecommunication products. Canadian manufacturers selling to these markets can have their products tested and certified in Canada for the purpose of compliance with regulatory requirements of the importing country.

The Department also conducted market surveillance activities to ensure that telecommunication equipment entering the Canadian marketplace met Industry Canada's standards. Two hundred and twenty-eight audits were conducted, and 62 instances of non-compliance were addressed.

Industry Canada participated in negotiations on treaty revisions to the International Radio Regulations at the 2012 World Radiocommunciation Conference, where Canada's objectives concerning provisions for some satellite communications issues were met. The Department also participated in the 2012 World Conference on International Telecommunications to revise the International Telecommunications Regulations. While some Canadian objectives for this negotiation were met, Canada did not sign the Final Acts. Industry Canada will continue to engage domestic stakeholders from the private sector, technical community, academia and civil society, and international partners, to ensure that our telecommunication and Internet interests and priorities are properly advanced and protected.

The increases in Total Authorities and Actual Spending are related to one-time additional funding received in Supplementary Estimates for the payment of a settlement agreement under Spectrum Management and Telecommunications operations.

Actual Spending also includes in-year costs related to compensation adjustments and pay list requirements to meet legal obligations of the employer (e.g., parental leave).

Sub-Program – Spectrum Management and Telecommunications

Description

The goal of this Program is to ensure the orderly and secure evolution of Canada's radio spectrum and telecommunications infrastructure through the development of a coherent regulatory framework, promotion of competition, establishment of sufficient regulation, enforcement of domestic and international requirements, and negotiation and promotion of international standards and treaties. This provides Canadian industries with the favourable conditions they need to develop, introduce and market leading technologies and services. The radio spectrum is a finite resource and can accommodate only a limited number of simultaneous users. Management of the radio spectrum requires careful planning to maximize its value for public and private services. This is achieved through the development and implementation of operational policies, procedures, processes, technical standards and international treaties. The Program also provides for an assessed annual contribution to the International Telecommunication Union (ITU), in which Canada participates as a Member State. Canada participates in ITU meetings to influence the Union's direction and decision making in support of Canadian interests. Another goal of this Program, which has the lead role for emergency telecommunications in Canada, is to make telecommunications services accessible to Canadians and to ensure that the public derives maximum benefit from their use.

Financial Resources – Spectrum Management and Telecommunications ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
81.0	120.2	(39.2)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
636	626	10

Expected Results and Performance Indicators of Spectrum Management and Telecommunications

Expected Results	Performance Indicators	Targets	Actual Results
Canadians have timely access to radio frequency spectrum	Percentage of licence applications completed within service standards	90%	96.5%
	Percentage of radiocommunication interference investigations completed within service standards	90%	97%

Performance Analysis and Lessons Learned – Spectrum Management and Telecommunications

In order to ensure that Canadians have timely access to radio frequency spectrum, Industry Canada continued work on the efficient management of this finite resource. The target for the percentage of licence applications completed within service standards was exceeded at 96.5 percent (31,105 applications), with an average processing time of 28 days. The percentage of radiocommunication interference investigations completed within service standards was 97 percent (619 investigations), with an average response time of 34.8 days.

The Spectrum Application Modernization—Commercial Software Implementation project will allow the Department to modernize its approach for the management of the telecommunication spectrum. As anticipated in the 2012–13 RPP, Industry Canada began replacing the legacy Spectrum Management IT System by approving the final design and establishing the contract for the new system, expected to be in place in November 2013. The new system will provide new ways of issuing and managing radiocommunication licences in real time.

In March 2012, Industry Canada proposed amendments to the Telecommunications Act to remove foreign ownership restrictions on Canadian telecommunications service providers that hold less than a 10 percent share of the total Canadian telecommunications market based on revenue. Relaxing those rules will reduce investment barriers for smaller telecommunications companies and new entrants by allowing them to secure more foreign capital. The proposed amendments came into effect on June 29, 2012.

The Department also developed and implemented rules for the upcoming auctions of the 700 MHz and 2500 MHz frequency bands. Auctioning these bands will support new mobile services in the Canadian marketplace, as well as promote sustained competition, robust investment and the availability of advanced wireless services for all Canadians, including those in rural areas.

In March 2013, the Commercial Mobile Spectrum Outlook was published, providing stakeholders with an overview of Industry Canada's overall approach and planned activities for spectrum over the next five years. With this publication, the Government of Canada is opening a new dialogue with spectrum users, licence holders and other stakeholders.

The increase in Actual Spending under this Sub-program is mainly related to one-time funding received in Supplementary Estimates for the payment of a settlement agreement.

Sub-Program – Electronic Commerce

Description

This Program strengthens Canadians' confidence in the marketplace by protecting individual privacy and curbing Internet threats. The successful integration of e-business into the Canadian economy is dependent on the level of trust and confidence businesses and consumers have in the digital environment. This Program clarifies marketplace rules through the development of legal and policy frameworks in the areas of privacy protection, online security and appropriate Internet content and removes barriers to the use of e-commerce in conjunction with the private sector. To improve market efficiency, the program promotes the conduct of e-business across all sectors of the economy and helps facilitate online trade and commerce internationally through the sharing of best practices and international benchmarking.

Financial Resources – Electronic Commerce ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
7.7	6.0	1.7

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
37	31	6

Expected Results and Performance Indicators of Electronic Commerce

Expected Results	Performance Indicators	Targets	Actual Results
Privacy and security of personal information and Internet-based trade and commerce are protected	Percentage of Canadian businesses that are aware of their responsibilities and compliance obligations under Canada's privacy laws	65%	Data will be available for the 2013–14 DPR
	Percentage of Canadians using the Internet	86%	Data will be available for the 2013–14 DPR

Performance Analysis and Lessons Learned – Electronic Commerce

The Canadian Businesses and Privacy-Related Issues survey is a biennial survey. As the next release is expected in March 2014, results information for this Sub-program is not available for this report. The Canadian Internet Use Survey 2012 results will be released in the fall of 2013. These indicators will be revised in the next reporting period.

As projected in the 2012–13 RPP, Industry Canada continued to strengthen Canadians' confidence in the online marketplace by taking steps to protect individual privacy and curb online threats. The Department contributed to the cyber security of Canada's telecommunication infrastructure by continuing to collaborate with the relevant industries to increase security. In collaboration with telecommunications service providers, work on the development of cyber security best practices began.

Industry Canada also continued to implement measures in support of the digital economy, accelerate adoption of digital technologies, to promote trust and confidence in the online marketplace and to foster a globally competitive information and communications technology (ICT) sector based on a modern legislative framework, a robust digital infrastructure and a digitally skilled workforce. During 2012–13, Industry Canada managed a federal-provincial and territorial Broadband Working Group in response to the recognition of the need for a shared approach to broadband for Canadians. Further initiatives that support the ICT sector were announced in Budget 2012, such as continued support for Canada's ultra high-speed research network, CANARIE.

The change in Actual Spending is mainly related to the transfer of funds to the Canadian Radio-Television and Telecommunications Commission for hosting the Spam Reporting Centre.

Program – Consumer Affairs

Description

This Program gives consumers a voice in the development of government policies and enables them to be effective marketplace participants. It is part of the Department's consumer affairs role under the Department of Industry Act, which directs the Minister to promote the interests and protection of consumers. Through research and analysis on marketplace issues, the Program supports both policy development and the intergovernmental harmonization of consumer protection rules and measures. It contributes to effective consumer protection through collaboration with provincial and territorial consumer protection agencies under Chapter 8 of the Agreement on Internal Trade and with other governments through the Organisation for Economic Co-operation and Development's Consumer Policy Committee. Industry Canada, through this program, identifies important consumer issues and develops and disseminates consumer information and awareness tools. These consumer protection information products and tools are developed either by the program itself or in collaboration with other consumer protection agencies. Finally, the Program provides financial support to not-for-profit consumer and voluntary organizations through the Contributions Program for Non-profit Consumer and Voluntary Organizations. The purpose of this support is to encourage the organizations to reach financial self-sufficiency and to assist them in providing meaningful, evidence-based input to public policy in the consumer interest.

Financial Resources – Consumer Affairs ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
4.6	4.5	4.8	4.6	(0.1)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
22	20	2

Expected Results and Performance Indicators of Consumer Affairs

Expected Results	Performance Indicators	Targets	Actual Results
Policymakers are aware of consumer issues in the Canadian marketplace	Number of instances per year where consumer research and/or analysis contributes to consumer policy discussions	3	4
	Number of instances per year where research and analysis performed by consumer organizations supported by the OCA's Contributions Program for Non-Profit Consumer and Voluntary Organizations contribute to policy discussions or media coverage	12	14
Citizens are aware of consumer issues in the Canadian marketplace	Number of visitors accessing information products on websites managed by the Office of Consumer Affairs (OCA)	1.65 million	1.08 million

Performance Analysis and Lessons Learned – Consumer Affairs

In 2012–13, consumer policy research and analysis contributed to policy discussions in four major instances. Joint analysis supported federal, provincial and territorial consumer agencies' discussions on improving analysis of consumer complaints data. Industry Canada research formed the starting point for a Workshop on growing a university-based consumer policy network. Industry Canada also conducted analysis that contributed to standards development both domestically and internationally, on issues ranging from enhancing consumer participation in standards development to guidelines for businesses dealing with vulnerable and disadvantaged consumers, regulatory compliance management systems, and cross-border trade in second-hand consumer goods.

Through the Consumer Measures Committee (CMC), Industry Canada also examined strategies to maximize the benefits that can be realized from the CMC Cooperative Enforcement Agreement on Consumer-Related Measures. A working group also began an examination of best practices in enforcing legislation pertaining to debt collection services.

There were 14 instances of research and analysis performed by consumer organizations supported by the Contributions Program for Non-Profit Consumer and Voluntary Organizations which contributed to policy discussions or media coverage, including references in legislative committees of the Parliament of Canada, in the Superior Court of Québec, in official consultative processes and in federal working groups.

In 2012–13, there were 1,078,272 visitors to the consumer information products on websites managed by Industry Canada. Factors contributing to the declining trend were changes to the corporate website and to the schedule for the introduction of anti-spam regulations.

Industry Canada developed two new online tools for Canadian consumers, a Rent or Buy a Home calculator and a Mobile Protection Toolbox. The latter helps build awareness of Canada's anti-spam legislation, as does a new infographic that identifies key warning signs of spam. The Canadian Consumer Handbook, which provides federal-provincial-territorial consumer information for Canadians, was updated with two new sections: Group Buying and Timeshares.

As also noted in the 2012–13 RPP, the Department continued active participation in the development of guidelines and standards on consumer e-commerce, including through the OECD Committee on Consumer Policy and the International Organization for Standardization (ISO).

Financial and human resources for this program were utilized as planned in 2012–13.

Program – Competition Law Enforcement

Description

The objectives of this Program are to maintain and encourage competition to achieve a number of objectives, including promoting the efficiency and adaptability of the Canadian economy and protecting competitive markets. This Program also promotes equitable opportunities for businesses to participate in the Canadian economy to provide consumers with competitive prices and product choices. The Competition Bureau, an independent law enforcement agency, is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act. It seeks to ensure that businesses and individuals conform with the legislation under its jurisdiction through negotiated settlements, consent agreements and, where appropriate, prosecuting anti-competitive conduct through litigated proceedings. It protects competitive markets by detecting, disrupting and deterring anti-competitive conduct. The Competition Bureau encourages reliance on market forces. It provides advice to government legislators and policy-makers and intervenes and/or makes representations before federal and provincial boards, commissions and tribunals to encourage competition as a means of achieving policy or regulatory objectives.

Financial Resources – Competition Law Enforcement ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned SpendingFootnote 9 2012–13	Total Authorities (available for use) 2012–13	Actual SpendingFootnote 10 (authorities used) 2012–13	Difference 2012–13
Footnotes Footnote 9 Planned Net Spending. Please see the Performance Analysis and Lessons Learned – Competition Law Enforcement section for further explanation. Return to footnote 9 referrer Footnote 10 Actual Net Spending. Please see the Performance Analysis and Lessons Learned – Competition Law Enforcement section for further explanation. Return to footnote 10 referrer
47.5	47.1	50.8	49.7	(2.6)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
431	370	61

Expected Results and Performance Indicators of Competition Law Enforcement

Expected Results	Performance Indicators	Targets	Actual Results
Footnotes Footnote 11 Target will be revisited in 2014-15 to ensure that it is appropriate for this new indicator. Return to footnote 11 referrer
Reduction in anti-competitive behaviour	Estimated dollar savings per annum to consumers from Bureau actions that stop anti-competitive activity	515 millionFootnote 11	130 million

Performance Analysis and Lessons Learned – Competition Law Enforcement

As anticipated in the 2012–13 RPP, Industry Canada, through the Competition Bureau, continued to maintain and encourage competition, including promoting the efficiency and adaptability of the Canadian economy, and protecting competitive markets.

The ongoing investigation of the retail gasoline sector in the Province of Québec resulted in eight individuals and one company pleading or being found guilty in 2012–13 of fixing the price of gasoline at the pump in four local markets in Québec.

A Consent Agreement was reached addressing concerns regarding BCE Inc.'s proposed acquisition of Astral Media Inc. The agreement requires significant divestitures that will preserve choice for consumers and ensure continued and effective competition in the supply of English and French pay and specialty television programming services in Canada.

In December 2012, the Competition Bureau commenced legal proceedings against Direct Energy Marketing Limited and Reliance Comfort Limited Partnership, two companies that rent water heaters to residential customers in Ontario. Following an investigation, it was determined each company engaged in practices that intentionally suppress competition and restrict consumer choice.

Efforts continued to reduce false or misleading advertising in the marketplace, in particular electronic representations directed at Canadian consumers and businesses. For example, following a five-month investigation, legal proceedings against Bell, Rogers Communications Inc., TELUS Corporation and the Canadian Wireless Telecommunications Association commenced, for alleged misleading advertising that promotes costly "premium texting services". The Bureau is seeking full customer refunds and a total of $31 million in administrative monetary penalties.

The Competition Bureau did not meet the expected target for the estimated dollar savings per annum to consumers from actions that stop anti-competitive activity, as a number of files with high volumes of commerce were still before the courts at year-end. The methodology for this performance indicator was revised for 2012–13 to capture the work of the Bureau's four enforcement branches. As a result, there is no trend information available at this time.

The Competition Bureau is a revenue generating program. The information reflected in the financial resources table above is net of revenue. For more information on revenues, refer to the Respendable Revenue table.

The difference between Planned and Actual FTEs is a result of the Department's implementation of changes announced in Budget 2012.

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Analysis of Programs and Sub-Programs by Strategic Outcome (continued)

Strategic Outcome: Advancements in science and technology, knowledge, and innovation strengthen the Canadian economy

Industry Canada invests in science and technology to generate knowledge and equip Canadians with the skills and training they need to compete and prosper in the global, knowledge-based economy. These investments help ensure that discoveries and breakthroughs take place here in Canada and that Canadians realize the associated social and economic benefits. This is accomplished through the following programs and sub-programs:

• Program: Science, Technology and Innovation Capacity
  • Sub-Program: Government Science and Technology Policy Agenda
  • Sub-Program: Science and Technology Partnerships
• Program: Information and Communication Technologies Research and Innovation
• Program: Industrial Research and Development Financing
  • Sub-Program: Automotive Innovation
  • Sub-Program: Aerospace Innovation
  • Sub-Program: Strategic Aerospace and Defence Initiative
  • Sub-Program: Technology Partnerships Canada

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Program – Science, Technology and Innovation Capacity

Description

This Program supports the Minister of Industry and the Minister of State (Science and Technology) in their science, technology and innovation responsibilities. It sets the strategic direction for the policies and programs that support and stimulate research, development and innovation in Canada. In collaboration with portfolio partners, other government departments and external stakeholders from the private and public sectors, the Program fosters an environment that is conducive to innovation and promotes scientific excellence.

Financial Resources – Science, Technology and Innovation Capacity ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
336.6	350.6	418.2	415.9	(65.3)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
49	77	(28)

Expected Results and Performance Indicators of Science, Technology and Innovation Capacity

Expected Results	Performance Indicators	Targets	Actual Results
Canada's science and technology capacity is developed	Canada's rank among G7 countries in Higher Education Expenditure on R&D (HERD) as a percentage of gross domestic product	1st	1st
Researchers are attracted to Canada, and retained	Total full-time equivalent researchers in Canada	140,000	149,100 (2010 figure)
	Total full-time equivalent researchers in Canada per thousand total employment	8.3	8.6

Performance Analysis and Lessons Learned – Science, Technology and Innovation Capacity

In 2011, Canada ranked first among G7 countries in Higher-Education Expenditures on Research and Development (HERD) expressed as a share of Gross Domestic Product (GDP), ahead of second-place Germany and third-place United Kingdom and France. The latest figures on employment in research and development (R&D) are for 2010. In that year, the number of full-time equivalent researchers stood at 149,100. This number is higher than the five-year average (148,800). Also in 2010, Canada had 8.6 total researchers per thousand total employment. This ratio is similar to that of the previous year and slightly below the five-year average (8.7).

As anticipated in the 2012–13 RPP, Industry Canada continued to advance horizontal coordination on science and technology policies, programs, activities and investments within the federal government by working to address key issues in the federal science, technology and innovation (ST&I) community, with a stronger emphasis on support for business-led innovation. The Department supported portfolio partners on horizontal initiatives, such as the Genomic Research and Development Initiative (GRDI), the Arctic agenda, nanotechnology, and medical isotopes. The S&T Cluster is another cross-departmental initiative centered on the science.gc.ca portal. The Cluster's purpose is to popularize science and technology information from the Government of Canada and to encourage collaboration among science-based departments and agencies.

These initiatives helped improve Canada's performance in science and technology, knowledge, and innovation.

The increases in Total Authorities and Actual Spending are due to new funding received in Supplementary Estimates from Budget 2012 for CANARIE, the Canadian Institute for Advanced Research and Genome Canada, as well as deferred funding from the previous fiscal year for the completion of the Knowledge Infrastructure Program. Further information can be found under the Science and Technology Partnerships Sub-program section of this report.

The difference between Planned and Actual FTEs mainly reflects internal reallocations from the Technology Partnerships Canada Sub-program to the Science and Technology Partnerships Sub-program.

Sub-Program – Government Science and Technology Policy Agenda

Description

This Program supports science, technology and innovation (ST&I) and aims to improve Canada's research and development capacity and excellence by developing and formulating policy frameworks to position ST&I in the context of broader government policy. It also develops specific policies and programs to support highly qualified people, the direct and indirect costs of higher education research, and research infrastructure. This is accomplished through partnerships with various stakeholders, including other government departments (particularly science-based departments and agencies); through consultation with private sector stakeholders, universities and colleges and their associations and provincial governments; and through international forums and collaborative relationships. This Program also supports the activities of the Science, Technology and Innovation Council (STIC). STIC is an independent advisory body that provides the Government of Canada, through the Minister, with external policy advice on ST&I issues. STIC regularly produces national reports measuring Canada's ST&I performance against international standards of excellence. STIC's advice helps inform government policy development and decision making.

Financial Resources – Government Science and Technology Agenda ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
6.8	6.2	0.6

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
49	45	4

Expected Results and Performance Indicators of Government Science and Technology Policy Agenda

Expected Results	Performance Indicators	Targets	Actual Results
Consultation and collaboration with the federal science and technology (S&T) community and other key players on S&T	Number of federal science-based departments and agencies involved in the implementation of the S&T strategy	20	22
	Number of external organizations consulted to advance Canada's S&T agenda	20	20
	Number of S&T Advisory Committee meetings and range of topics discussed	3	4
Broader understanding of science underpinning S&T policy	Number of Council of Canadian Academies Reports underway that provide a basis for S&T policy	7	17

Performance Analysis and Lessons Learned – Government Science and Technology Policy Agenda

Industry Canada continued to strengthen investment in Science and Technology (S&T), as outlined in the Government of Canada's S&T Strategy, Mobilizing Science and Technology to Canada's Advantage, with a focus on building a sustainable competitive advantage domestically and through international collaboration. In 2012–13, continuous review and discussion of progress was assured through formal interdepartmental interactions among the 22 science-based departments and agencies, as well as central agencies, the granting councils and regional development agencies participating in the Assistant Deputy Minister Committee on Science and Technology. The committee met on four occasions in 2012–13, focusing primarily on the results of studies conducted by the Canadian Council of Academies and on the Review of Aerospace and Space Programs and Policies. Industry Canada met with more than 20 external stakeholder organizations, such as large and small companies, heads of major science initiatives, and organizations representing the higher education sector, to discuss emerging issues and gather knowledge and insights that inform policy advice and advance Canada's S&T agenda. Consultation and collaboration with the federal S&T community allow the government to focus on horizontal policy coordination, leading to a more coherent approach to S&T policy development.

In 2012–13, the Council of Canadian Academies (CCA) worked on 17 assessments within their funding agreement with the Government of Canada, four of which were published in 2012–13. This exceeded the expected target due to the referral of several important assessment topics to the CCA. These evidence-based, independent and objective assessments on key science issues help inform public policy development.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Science and Technology Partnerships

Description

This Program supports the effective and efficient implementation of science and technology programs delivered by the Department and its portfolio partners. This involves working closely with the federal granting councils within the Industry Portfolio (the Natural Sciences and Engineering Research Council of Canada and the Social Sciences and Humanities Research Council of Canada) and managing the federal contributions and grants to centres of excellence and organizations including the Canada Foundation for Innovation, the Canadian Institute for Advanced Research, CANARIE Inc., the Council of Canadian Academies, Genome Canada, the Trudeau Foundation, the Perimeter Institute for Theoretical Physics, the Institute for Quantum Computing, and the Ivey Centre for Health Innovation and Leadership.

Financial Resources – Science and Technology Partnerships ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
343.9	409.7	(65.8)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
–	32	(32)

Expected Results and Performance Indicators of Science and Technology Partnerships

Expected Results	Performance Indicators	Targets	Actual Results
Science and technology (S&T) partnerships between industry and academia are created and sustained	Value in dollars of cash and in-kind industrial and other contributions leveraged through granting councils' S&T industry partnership programs for which Industry Canada sits on governance bodies	1:1	1:2.2
	Number of companies involved in granting councils' S&T industry partnership programs for which Industry Canada sits on governance bodies	160	292
Federal programs are in place to attract and retain highly qualified students and researchers	Number of students and researchers supported through granting councils' S&T "people advantage" programs for which Industry Canada sits on governance bodies	3,460	3,088

Performance Analysis and Lessons Learned – Science and Technology Partnerships

Industry Canada is a member of the governance bodies for the Centres of Excellence for Commercialization and Research, the Business-led Centres of Excellence, and Automotive Partnerships Canada. These granting council programs attracted a total of $2.20 in-cash and in-kind contributions for every dollar of federal funding, exceeding the target. The improving trend reflects the particular success of the Centres of Excellence for Commercialization and Research program at attracting significant industry contributions. A total of 292 companies were involved in these programs. The improving trend reflects the increasing success of these programs in building effective research partnerships between universities and industry.

A total of 3,088 students and researchers were supported in 2012–13 through the granting councils' "people advantage" programs: Vanier Canada Graduate Scholarships, Banting Post Doctoral Fellowships, the Canada Research Chairs, the Canada Excellence Research Chairs, and the Industrial Research and Development Internships (IRDI). These results are approximately 10 percent short of the targets due to a number of factors specific to each program, such as lower acceptance rates or delays in nominations under scholarship and research chair programs.

Budget 2012 allocated $62 million for CANARIE Inc., along with a three-year renewal of its mandate.

The OECD Grants Program under this Sub-program was evaluated in 2012–13. The Program provides Industry Canada with the necessary grant authority and source of funds to share in funding OECD research projects which advance the departmental policy and research agenda. The evaluation found that the Program has allowed Canada's influence on OECD committees and projects to increase through the provision of voluntary contributions. The Program has been administered efficiently and economically as it uses existing reference levels and does not impose a significant time burden on departmental resources. Overall, the evaluation did not find any major issues with the OECD Grants Program, and as a result no recommendations were made. For additional information on the evaluation, please refer to the report available on the Industry Canada website.

The increase in Actual Spending for this Sub-program is mainly related to fluctuations in grants and contributions programs. Deferred funding from 2011–12 to 2012–13 was approved to allow final payments for projects under the Economic Action Plan for the Knowledge Infrastructure Program. The funding was accessed via Supplementary Estimates. A portion of the funding announced in Budget 2012 to support advanced research at universities and other leading research institutions was also accessed in Supplementary Estimates for payments to CANARIE Inc., Genome Canada and the Canadian Institute for Advanced Research. Actual Spending also includes a new contribution to Mitacs Inc. to support industrial research and development internships. Although funding to Mitacs Inc. was announced in Budget 2012, the contribution was funded internally from existing reference levels.

The difference between Planned and Actual FTEs mainly reflects internal reallocations from the Technology Partnerships Canada Sub-program to the Science and Technology Partnerships Sub-program.

Program – Information and Communication Technologies Research and Innovation

Description

Through the Communications Research Centre, this Program conducts research on advanced telecommunications and information technologies to ensure an independent source of advice for public policy and to support the development of new products and services for the information and communication technologies (ICT) sector. Research projects involve a combination of in-house activities, tasks performed for other government departments on a cost-recovery basis, and partnerships with industrial and academic organizations. The research performed provides insight into future technologies, which assists Industry Canada in developing telecommunications policies, regulations and program delivery; improves other government departments' ICT-related decision making; and closes the innovation gap by transferring new technologies to Canadian industry.

Financial Resources – Information and Communication Technologies Research and Innovation ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
36.6	36.6	48.3	47.6	(11.0)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
369	301	68

Expected Results and Performance Indicators of Information and Communication Technologies Research and Innovation

Expected Results	Performance Indicators	Targets	Actual Results
Industry Canada policy-making and program development sectors are provided with the scientific information they need to make well-informed decisions on new communications technologies	Number of new and emerging communications technologies for which the Communications Research Centre Canada (CRC) has provided advice/input to Industry Canada for policy, standard and regulation development and for contributions to international forums (i.e., International Telecommunication Union)	10	12
Canadian government departments and agencies (National Defence, Canadian Radio-television and Telecommunications Commission, Canadian Space Agency) are provided with the information they need to make well-informed decisions on new communications technologies	Level of funding received from other federal government departments to conduct research and testing on communications technologies	$7 million	$6.7 million
Canadian telecommunications companies realize industrial and economic benefits from CRC intellectual property and technology transfer	Intellectual Property revenue and contracting-in money received by the CRC	$2 million	$1.8 million

Performance Analysis and Lessons Learned – Information and Communication Technologies Research and Innovation

In 2012–13, the Communications Research Centre (CRC) provided advice to policy, regulatory and standards bodies on 12 new and emerging technologies related to topics ranging from spectrum auctions to emerging solutions for spectrum congestion, and on how they impact industry, public safety and defence wireless communications.

A total of $6.7 million was received from other government departments to conduct research. The majority came from the Department of National Defence for its sponsored research projects. The balance was for research conducted on behalf of Natural Resources Canada, the Canadian Space Agency, Correctional Services Canada, and the Communications Security Establishment Canada. A total of $1.8  million was received in intellectual property (IP) revenue and from conducting research under contract for private sector entities. The variance in performance reflects the fact that targets were set before the Department realigned and refocused activities at CRC on conducting research to support regulatory needs, which has resulted in exceeding this target and less contracting-in revenue. With the expiry of key patents, as well as the refocusing of research towards regulatory needs, it is anticipated that intellectual property and contracting-in revenues will decline over time.

The increases in Total Authorities and Actual Spending for this Program reflect funds reallocated during the year to maintain infrastructure and operational requirements at the Shirley's Bay Campus. The CRC also accessed through Supplementary Estimates royalties that had been collected in the previous year from its intellectual property. For more information on CRC revenues, refer to the Respendable Revenue table. Actual Spending also includes funding received for costs related to compensation adjustments and pay list requirements to meet legal obligations of the employer (e.g., parental leave).

In addition to changes announced in Budget 2011, the difference between Planned and Actual FTEs is mainly a result of the Department's implementation of changes announced in Budget 2012.

Program – Industrial Research and Development Financing

Description

This Program helps Canadian businesses increase research and development (R&D) activities by investing in innovative projects through such measures as repayable contributions. Agreements normally specify which funding will come from the federal government and which from other sources. Projects are chosen based on their ability to generate strategic R&D investment, develop new technologies, and maximize Canadian innovation capacity and expertise.

Financial Resources – Industrial Research and Development Financing ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
403.2	483.0	430.7	349.2	133.8

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
131	79	52

Expected Results and Performance Indicators of Industrial Research and Development Financing

Expected Results	Performance Indicators	Targets	Actual Results
Investment in leading-edge R&D in targeted Canadian industries	Dollar value of disbursements to firms for R&D activities	$370.3 million	$335.3 million
	Dollar(s) of investment leveraged per dollar of Industry Canada investments in R&D projects	$2.00	$3.57

Performance Analysis and Lessons Learned – Industrial Research and Development Financing

In 2012–13, Industry Canada disbursed a total of $335.29 million to firms for research and development (R&D) activities. This includes $199.1 million through the Strategic Aerospace and Defence Initiative (SADI) and $15.7 million through Technology Partnerships Canada (TPC) in contributions funding. This represents an increase from the amount of contributions disbursed in 2011–12 in support of R&D under these programs, which totalled $184.6 million combined.

Industry Canada disbursed $54.5 million to firms for R&D activities in the automotive sector. Automotive Innovation Fund (AIF) recipients are still feeling the effects of project delays stemming from the economic downturn of 2008–09, which resulted in timelines being revised. These revised timelines caused a shift in forecast expenditures. Unspent funds have been re-profiled for 2013–14 and 2014–15.

In 2012–13, the CSeries Program disbursed $65.995 million.

In 2012–13, a total of $3.57 of private sector dollars of investment was leveraged for every dollar invested by Industry Canada in R&D projects through these programs, in line with the previous year's result of $3.59. AIF leveraged $5.21, SADI leveraged $1.97, TPC leveraged $1.70, and CSeries leveraged $5.70 per dollar of Industry Canada investment. These investments have contributed to economic activity and employment in the assembly and supplier ecosystem, and in the broader economy; to the development and commercialization of new products including advanced materials and emissions technologies (including the reduction of greenhouse gas emissions); and to advanced/expanded flexible manufacturing processes and facilities. All of these activities strengthen science and technology, knowledge and innovation in the Canadian economy.

The difference between Planned and Actual Spending reflects lower spending by the Technology Partnerships Canada (TPC), Strategic Aerospace and Defence Initiative (SADI) and Automotive Innovation Fund Sub-programs. Further information can be found in the respective Sub-program sections of this report.

The difference between Planned and Actual FTEs is due to internal reallocation of human resources from the Technology Partnerships Canada Sub-program to the Science and Technology Partnerships Sub-program, and the Department's implementation of the changes announced in Budget 2012.

Sub-Program – Automotive Innovation

Description

The Automotive Innovation Fund was put in place to support the production of innovative, greener and more fuel-efficient vehicles by contributing to strategic, large-scale research and development (R&D) projects in the automotive sector. It provides support in the form of repayable contributions to automotive-related companies to fund transformative, innovative activities related to automotive engineering, R&D and manufacturing modernization to position the Canadian industry to lead in producing the cars of the future. This Program also supports Canada's environmental agenda in advancing R&D and innovation to increase automobile fuel efficiency and reduce greenhouse gases, thereby contributing to meeting the objectives of Canada's Clean Air Agenda and new fuel consumption regulations. Through this Program, Industry Canada considers funding proposals that provide for private sector investment in Canada of more than $75 million over five years.

Financial Resources – Automotive Innovation ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
109.4	55.8	53.6

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
6	4	2

Expected Results and Performance Indicators of Automotive Innovation

Expected Results	Performance Indicators	Targets	Actual Results
Enhanced capacity for the development of innovative, more fuel-efficient technologies in the Canadian automotive industry	Number of projects focusing on innovative fuel-efficient technologies and processes	4	5
Leveraged leading-edge research and development in the Canadian automotive industry	Dollars of private sector investment leveraged per dollar of Automotive Innovation Fund investment	$5.00	$6.19

Performance Analysis and Lessons Learned – Automotive Innovation

In 2012–13, Industry Canada, through the Automotive Innovation Fund (AIF), supported five projects focusing on innovative fuel-efficient technologies and processes. The increase in the number of projects reflects Project Lexus, an initiative to increase the production volume of the Lexus RX350 and to start production of the RX450h hybrid in Cambridge, Ontario. An average of $6.19 of private sector investment was leveraged per AIF investment dollar, which represented a total of $391.7 million on the $54.5 million disbursed. This Program continues to be one of Canada's main levers to encourage investments in automotive innovation. Since 2008, the AIF has generated up to $1.7 billion in private sector investments.

Industry Canada completed an evaluation in 2012 to assess the performance, as well as the ongoing relevance, of the AIF. The evaluation confirmed the need for a program that contributes to the Canadian automotive sector's ability to make targeted investments in research and development, leading to more fuel-efficient vehicles, as well as to implement innovative flexible manufacturing processes so as to better respond to changing consumer demand. The recommendations suggested developing service standards and ensuring that the AIF's rate of contribution (i.e., as a proportion of the total project value) continues to reflect Program objectives. For additional information on the evaluation and the management response and action plan, please refer to the report available on the Industry Canada website.

Actual Spending under this Sub-program was significantly lower than planned, as automotive companies encountered operational challenges caused by the last recession. The AIF was authorized to reprofile a portion of its unused 2012–13 funds to 2013–14 and 2014–15 to provide the AIF with necessary funding to support project activity timelines in the years to come.

Sub-Program – Aerospace Innovation

Description

This Program supports the research and development of new technologies for the next generation of fuel-efficient and safe commercial aircraft by encouraging and leveraging private sector investment. It enhances and maintains the technological base and capabilities of Canadian aerospace firms and encourages the growth of the Canadian pool of highly-qualified personnel in the commercial aircraft industry. To achieve this purpose, the Program provides conditionally repayable contributions that support the research and development of new technologies within Canada.

Financial Resources – Aerospace Innovation ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
66.1	66.1	-

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
2	1	1

Expected Results and Performance Indicators of Aerospace Innovation

Expected Results	Performance Indicators	Targets	Actual Results
Highly qualified positions in the aerospace research and development field are created	Number of R&D positions maintained and created as a result of this program	1,300	2,266
New technologies and processes are developed and implemented in the commercial aerospace industry	Number of technologies and processes developed and implemented	1	1

Performance Analysis and Lessons Learned – Aerospace Innovation

As of December 31, 2012, a total of 2,266 research and development (R&D) positions had been maintained and created since the beginning of the Sub-program, compared to 1,958 as of December 31, 2011. As projects supported by this Sub-program reach maturity, the number of positions created will begin to slow down and eventually decline.

Continued development of new processes, designs, materials and technologies is contributing to improved aircraft performance in the commercial aerospace industry.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Strategic Aerospace and Defence Initiative

Description

The Strategic Aerospace and Defence Initiative (SADI) encourages the development of innovative products and services; enhances the competitiveness of Canadian aerospace, defence, space and security (A&D) firms; and fosters collaboration among research institutes, universities, colleges and the private sector. SADI is a component of the Government's science and technology strategy, which aims to mobilize science and technology to Canada's competitive advantage. The Program acts as a catalyst for new A&D investments by providing repayable contributions to Canadian A&D companies for strategic industrial research and pre-competitive development. SADI accepts applications on an ongoing basis. Projects are selected following a rigorous review, which includes financial, technical and market criteria. The Program is partially financed with funds that were previously allocated to Technology Partnerships Canada (TPC) and repayments received from TPC and SADI projects.

Financial Resources – Strategic Aerospace and Defence Initiative ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
263.6	205.5	58.1

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
31	38	(7)

Expected Results and Performance Indicators of Strategic Aerospace and Defence Initiative

Expected Results	Performance Indicators	Targets	Actual Results
Research and development (R&D) investment in innovative and competitive aerospace, defence, space and security firms	Dollars of research and development investment leveraged per Strategic Aerospace and Defence Initiative (SADI) dollar invested	$2.00	$1.97
Collaborative partnerships in research and development between research institutes, universities, colleges and the private sector	Percentage of approved funding tied to projects that have a collaborative element	100%	90%

Performance Analysis and Lessons Learned – Strategic Aerospace and Defence Initiative

R&D investment leveraged per SADI dollar disbursed since the Program's inception is $1.97 ($992 million leveraged from $504 million disbursed to date). The result is lower than the $2.12 achieved last year but the trend is consistent with amounts leveraged in the previous two years; a total of $1.96 and $1.95 had been leveraged per SADI contribution dollar in 2010–11 and 2009–10 respectively.

Over the R&D phase of each SADI project, all companies are expected to collaborate with a post-secondary institution. The Program is on track to meeting its target; to date, 90 percent of projects have achieved this result.

This Program was part of the Auditor General audit on Transfer Payments to the Aerospace Industry, which concluded that Industry Canada is managing its aerospace programs in a sound manner. The Auditor General's report also made recommendations in areas where the Department can improve. The Department agreed with the findings and is committed to continual improvement related to this Program.

This Sub-program did not spend the full amount originally planned due to program demand. In addition, a portion of the funds for this Sub-program were reprofiled from 2012–13 to 2013–14 to accommodate changes in cash flow requirements related to approved projects. A portion of funding was also reallocated in 2012–13 to support a contribution to Mitacs Inc. for industrial research and development internships.

 

Sub-Program – Technology Partnerships Canada

Description

The Technology Partnerships Canada (TPC) Program provided repayable contributions to businesses in all regions of Canada to stimulate industrial research and pre-competitive development in aerospace and defence, environmental, life sciences and information and communications technologies, and advanced manufacturing industries. The Program leverages investment in projects that produced a wide range of economic, social and environmental benefits for Canadians. As of December 31, 2006, TPC no longer accepted applications for new projects. However, the Department continues to manage existing projects that make up TPC's $3.5 billion portfolio. This involves reviewing project status, paying eligible claims, and receiving repayments.

Financial Resources – Technology Partnerships Canada ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
43.9	21.8	22.1

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
92	36	56

Expected Results and Performance Indicators of Technology Partnerships Canada

Expected Results	Performance Indicators	Targets	Actual Results
Research and development disbursements in the aerospace, defence, environmental and enabling technology industries	Dollars of research and development investment leveraged per Technology Partnerships Canada dollar disbursed	$2.00	$1.70
New and innovative products, services and processes are commercialized by Canadian businesses	Percentage of projects that have successfully completed their work phase resulting in the commercialization of new products, services and processes	72%	70%

Performance Analysis and Lessons Learned – Technology Partnerships Canada

For each Technology Partnerships Canada (TPC) contribution dollar disbursed in 2012–13, a total of $1.70 of R&D investment was leveraged. As contribution agreements have different sharing ratios (30% on average at the portfolio level), the amount leveraged in a given year fluctuates based on the sharing ratio of individual claims. The lower-than-target leverage amount for 2012–13 is due to claims paid at a higher sharing ratio than the previous year.

R&D investment leveraged per TPC dollar disbursed since the program's inception is $2.33.

At the end of 2012–13, 70 percent of the projects were commercializing new products, services and processes, on track to reaching the program end target of 72 percent.

TPC disbursements in 2012–13 did not reach the anticipated level due to program demand. As both SADI and TPC are funded from the same appropriation, fluctuation in actual disbursements automatically leads to a reallocation of funding from TPC to SADI.

Analysis of Programs and Sub-Programs by Strategic Outcome (continued)

Strategic Outcome: Canadian businesses and communities are competitive

Industry Canada encourages business innovation and productivity because businesses generate jobs and create wealth. Promoting economic development in communities encourages the development of skills, ideas and opportunities across the country. Specifically, the Department supports these objectives through the following programs and sub-programs:

• Program: Small Business Research, Advocacy and Services
  • Sub-Program: Canada Small Business Financing
  • Sub-Program: Canada Business Network
  • Sub-Program: Small Business Internship
  • Sub-Program: Small Business Growth and Prosperity
• Program: Industrial Competitiveness and Capacity
  • Sub-Program: Industry-Specific Policy and Analysis
  • Sub-Program: Shipbuilding Capacity
  • Sub-Program: Industrial and Regional Benefits
• Program: Community Economic Development
  • Sub-Program: Community Futures
  • Sub-Program: Northern Ontario Development
  • Sub-Program: Computers for Schools
  • Sub-Program: Community Internet Access
  • Sub-Program: Economic Development Initiative for Official Language Minority Communities

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Program – Small Business Research, Advocacy and Services

Description

The Department's work in this Program area is aimed at enhancing the growth and competitiveness of small business and encouraging entrepreneurship. Through this Program activity, Industry Canada raises awareness across government of the challenges facing small businesses; provides knowledge and expertise on small and medium-sized enterprises (SME) in a number of areas, including statistics, entrepreneurship, financing, innovation and growth firms; recommends policy options; delivers programs that help support SMEs and entrepreneurial activity across Canada; and provides advice and support related to the Business Development Bank of Canada.

Financial Resources – Small Business Research, Advocacy and Services ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
133.5	136.0	82.9	81.5	54.5

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
140	116	24

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
New small and medium-sized enterprises are created	Number of small and medium-sized enterprise entries	10,000	Not Available
Small and medium-sized enterprises are identified as growing	Percent of small and medium-sized enterprises that self-identify their business phase as growth	45%	62%

Performance Analysis and Lessons Learned – Small Business Research, Advocacy and Services

According to the Survey on Financing and Growth conducted in 2011, 62 percent of SMEs experienced growth in sales of at least one percent over the period 2009–11, and 76 percent expected to grow their sales by at least one percent over the 2012–2014 period. Industry Canada's efforts to support SMEs contributed to their growth and increased their competitiveness in the Canadian marketplace.

Industry Canada continued to engage existing and new partners through the Canada Business Network (CBN) to enhance and deliver integrated business information that meets business needs and reflects economic and information trends. Online service delivery was improved by publishing 31 guest blogs and implementing user feedback tools. There were 50,000 more visits to the Canada Business website in 2012–13 compared to the previous year. The Department also supported BizPaL rollout in Nunavut and in 72 municipalities across Canada. BizPaL is an online service that simplifies the business permit and licensing process for entrepreneurs, businesses, governments, and third-party business service providers by offering access to federal, provincial/territorial and municipal government information in one place.

Industry Canada officials provided small business policy advice to officials both within Industry Canada and other government departments in 2012–13. For example, the Department made progress on the 10-year legislative review of the Business Development Bank of Canada (BDC), which is expected to be tabled in Parliament in 2013–14. The review will assess the BDC's current and potential role in key areas, such as globalization, innovation and access to financing.

The differences between Planned Spending, Total Authorities, and Actual Spending under this Program are mainly due to fewer claims under the Canada Small Business Financing Program. The Department adjusted the authorities through the estimates process in-year to better align expenses with claims. Further information can be found in the Sub-program section of this report.

The difference between Planned and Actual FTEs results from internal reallocation of human resources between Sub-programs, such as from Small Business Growth and Prosperity to Internal Services, and the Department's implementation of the changes announced in Budget 2012.

Sub-Program – Canada Small Business Financing

Description

The Canada Small Business Financing Program is designed to help Canadian small and medium-sized enterprises (SME) access financing that would not otherwise be available or would only be available under less favourable terms. It is a loan loss-sharing program delivered in partnership with financial institutions. To be eligible for this Program, SMEs must be for-profit businesses with revenues of less than $5 million per year. Under the Program, financial institutions can make term loans on real property, leasehold improvements and equipment. In the event that a registered loan defaults, the government pays 85 percent of the net eligible losses. This is a national program operating in all provinces and territories.

Financial Resources – Canada Small Business Financing ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
106.9	56.6	50.3

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
36	33	3

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Small and medium-sized enterprises that would not otherwise be able to access financing can do so with government support	Number of loans registered with the program	8,000	6,201
	Value of loans registered with the program	$1 billion	$910.2 million
	Percentage of Canada Small Business Financing loan recipients who would not have otherwise obtained a loan otherwise, or would have obtained a loan under less favourable conditions	75%	80–85% (2010 most recent figure available)

Performance Analysis and Lessons Learned – Canada Small Business Financing

In 2012–13, under the Canada Small Business Financing Program (CSBFP), small businesses received 6,201 loans totalling $910.2 million. This reduction is due in part to the increased use of commercial lines of credit and credit cards by small businesses, and an increasing number of lenders reaching their maximum liability limit on claims paid for given lending periods. Internal factors such as program design and the administrative burden on lenders and borrowers using the Program are also contributing to the decline.

As planned, proposed amendments to the regulations underlying this Sub-program were pre-published in the Canada Gazette, Part 1 on October 13, 2012. These proposals would enhance the availability of asset-based financing to small businesses, particularly start-ups; reduce the administrative burden of the Program and make it easier to use; and mitigate the risks to the Government of Canada by improving fraud detection and deterrence. Also in 2012–13, a new IT system was implemented to process loan registrations and fees electronically: as of March 31, 2013, almost 30 percent of all loans are registered using this system.

The difference between Planned and Actual Spending reflects a drop in claims received and payments made for defaulted loans, driven by the economic recovery and by some financial institutions reaching their limit on claims for losses on such loans.

Sub-Program – Canada Business Network

Description

The Canada Business Network (CBN) provides potential Canadian entrepreneurs and existing small businesses with one-stop access to government information on programs, services and regulations as well as business-related tools. By integrating information from federal, provincial and territorial governments into one convenient service, CBN helps small businesses save time and make informed business decisions that can help them start, succeed and grow. The service is offered through the Internet, through toll-free telephone at 1-888-576-4444 and through 13 service centres located across Canada. The Program is managed by five lead departments and agencies: Industry Canada (for national activities and in Ontario), the Canadian Northern Economic Development Agency (in the Northern Territories), Western Economic Diversification Canada (in the Western Provinces), the Atlantic Canada Opportunities Agency (in the Atlantic Provinces) and the Economic Development Agency of Canada for the Regions of Québec (in Québec). The program is delivered in collaboration with the provinces and territories and some not-for-profit entities. Each lead department or agency has its own Program Alignment Architecture and associated performance measures.

Financial Resources – Canada Business Network ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
5.6	5.8	(0.2)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
34	39	(5)

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Small business and potential entrepreneurs access government information on business-related programs, tools, and services	Number of client interactions on all Canada Business Network content delivered through the national web channel	1.5 million	2.25 million
	Number of assisted client interactions through Canada Business Network regional presence in Ontario	68,580 telephone calls and emails to the Business Info Line	78,872
Information provided by Canada Business Network is useful to business clients	Percentage of clients that indicate they found Canada Business Network services and information useful	50%	65%

Performance Analysis and Lessons Learned – Canada Business Network

Industry Canada, through the Canada Business Network (CBN) Sub-program, assists businesses by providing information on relevant government services, programs and regulations. In 2012–13, Industry Canada made website and content improvements based on changes in website user needs, economic and information trends, as well as feedback and usability testing, which resulted in increased awareness of the CBN website, with 2.25 million interactions in 2012–13, an increase of 2.4 percent over the previous year. Online usage of social media also trended upward, reflecting the usefulness of CBN content. A record high on Twitter™ was attained in 2012–13 with the addition of 16,172 followers, in addition to an increase of Facebook™ likes by 559, more than doubling the number of followers and likes. Through enhancements made to the BizPaL service in 2012–13, users were able to find the information they needed in an average of 3.8 minutes, an improvement compared to the 6.4 minutes it would take to conduct the same search in previous years. Personal service also increased, reflected in the number of telephone calls and emails to the Business Info Line (BIL). Of the 78,872 BIL interactions, 21,132 were handled by Canada Business Ontario, which represents an increase of 4,521 interactions from last fiscal year. Overall satisfaction with CBN website information was 65 percent in 2012–13.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Small Business Internship

Description

The Small Business Internship Program provides small and medium-sized enterprises (SME) with financial support to employ a post-secondary student intern to assist them in their adoption of information and communication technologies (ICT). The Program, delivered in collaboration with Canadian small businesses, post-secondary institutions and non-government organizations, offers post-secondary students hands-on experience working on e-commerce projects under the mentorship and coaching of entrepreneurs.

Financial Resources – Small Business Internship ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
3.5	2.9	0.6

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
4	2	2

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Post-secondary students are more employable after developing enhanced e-business skills	Percentage of participating students who report increased employability	100%	100%
Small and medium sized enterprises improve their use of e-business	Percentage of small and medium-sized enterprises who report improvements to their use of e-business	100%	99.5%

Performance Analysis and Lessons Learned – Small Business Internship

In 2012–13, all students who responded to the Small Business Internship Program (SBIP) Student Intern Post-Internship Survey reported that their internship was successful in making them more employable, and firms reported improvements to their use of e-business.

While the Small Business Internship Program ended on March 31, 2013 , ongoing youth internship funding and opportunities are available through the Skills Link portion of the Youth Employment Strategy delivered by Service Canada.

Financial resources were utilized as planned in 2012–13.

Sub-Program – Small Business Growth and Prosperity

Description

Through advocacy, evidence-based research and analysis, stakeholder consultations, surveys and policy development, this Program ensures that the government is better informed on small business issues, including the importance of entrepreneurship and small businesses to Canada's economy, the challenges small businesses face in terms of growth and prosperity, and the strategies for reducing their paperwork burden when complying with government requirements and obligations. This Program also supports the Canadian Youth Business Foundation, a not-for-profit organization that provides loans and mentorship to young Canadian entrepreneurs who would not typically receive financial assistance from traditional lending institutions. Stakeholder consultations include the Advisory Committee on Small Business and Entrepreneurship, which is mandated to provide the government, through the Minister of State (Small Business and Tourism), with information, advice and recommendations on issues facing small businesses in Canada, particularly improving business access to federal programs and information.

Financial Resources – Small Business Growth and Prosperity ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
20.1	16.3	3.8

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
66	42	24

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Senior government decision makers are aware of small business perspectives and issues facing small and medium-sized enterprises	Number of briefings given to senior government decision makers	95	126
Young entrepreneurs have access to financing to establish and grow their businesses	Number of loans issued by Canadian Youth Business Foundation as a result of Industry Canada funding	493	498
	Value of loans issued by Canadian Youth Business Foundation as a result of Industry Canada funding	$7.1 million	$6.3 million

Performance Analysis and Lessons Learned – Small Business Growth and Prosperity

Industry Canada provided the Canadian government with information on small business issues in order to assist officials in their decision making. In 2012–13, the Department provided 126 briefings as part of its efforts to ensure that policymakers are aware of the small business perspective.

The Department also ensured that young entrepreneurs have access to financing in order to establish and grow their businesses through the support of the Canadian Youth Business Foundation (CYBF). While the number of loans remained relatively stable, the decline in the value of loans in 2012–13 stems from applicant profiles and the nature and context of the loans being requested, the amount of start-up capital required, and the shared risk model with co-funding partners.

The differences between Planned and Actual, in both spending and FTEs, are mainly due to internal reallocations made during the year to better align resources with the Department's Strategic Outcomes and Programs.

Program – Industrial Competitiveness and Capacity

Description

This Program focuses on helping Canadian industries to improve their industrial competitiveness and capacity for innovation and to adapt to the ever-changing economic landscape, including external shocks. To support industries, this Program develops expertise on Canadian firms and sectors through research and analysis and engagement with associations, governments and leading firms; applies this expertise to develop and contribute to policy, legislation and regulations; collaborates with the private sector on industry development; attracts investment and promotes Canadian expertise; and invests in private sector initiatives that are aimed at maximizing productivity and facilitating access to capital.

Financial Resources – Industrial Competitiveness and Capacity ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
53.3	53.1	51.0	44.1	9.0

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
282	244	38

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Canadian industries have the capacity to prepare for and respond to risks and opportunities in domestic and global markets	Canada's ranking among G7 countries for "Value chain breadth"	6th	7th
	Canada's ranking among G7 countries for "Firm-level technology absorption"	5th	5th
Industry perspective is considered in policy, legislation, regulations and agreements	Number of collaborative policy projects focused on industry competitiveness and adaptability	31	53

Performance Analysis and Lessons Learned – Industrial Competitiveness and Capacity

In 2012–13, Industry Canada was effective in engaging with stakeholders to develop collaborative policies that reflect industry perspectives.

As noted in the 2012–13 RPP, as part of the Government of Canada's Seven-Point Plan, Industry Canada tabled its first report on Canadian Industrial Participation in the F–35 Joint Strike Fighter Program in December 2012. The Department's engagement with JSF prime contractors and their key suppliers helped Canadian firms secure new business valued at $3 million in this significant global value chain.

Industry Canada focused on developing the research and analysis required to respond to the Review of Aerospace and Space Programs and Policies, which was published in November 2012. This research supported significant policy development based on a newly developed statistical profile of industries. This advance work allowed the Government to provide a substantial initial response to the Review in Budget 2013.

The Department also continued to provide expert policy advice based on analysis of key industrial sectors, including aerospace, automotive, information and communication technologies, and manufacturing. Its contribution to improving the understanding of the fundamental challenges facing advanced manufacturing in Canada supported actions taken in Budget 2013 for the support of that important sector.

The difference between Planned and Actual Spending reflects spending changes in 2012–13 under the Structured Financing Facility Program. Further information can be found in the Sub-program section of this report. In addition to changes announced in Budget 2012, the difference between Planned and Actual FTEs is mainly a result of the Department's implementation of changes announced in Budget 2011.

Sub-Program – Industry-Specific Policy and Analysis

Description

This Program provides both government and industry with intelligence, analysis and advice on industry's capacity to adapt to the continually evolving economic environment. Departmental officials monitor trends and business issues affecting innovation and competitiveness in targeted industries and track international economic and policy developments to determine their effects on Canadian industries. This expertise is used to advise stakeholders on key issues and policies that are relevant to the competitiveness of targeted industries and their positions within globalized markets and value chains. Through this Program, the Department brings an industry perspective to government decision making and, in turn, a government perspective back to industry. In collaboration with partners such as industry associations and other government departments, Industry Canada develops value chain studies, research papers, statistical reports and other such products, which are disseminated to enable informed decision making. This Program also promotes the adoption and adaptation of new and emerging technologies and skills for business processes and supports strategic research and development, marketing and investment activities.

Financial Resources – Industry-Specific Policy and Analysis ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
37.4	35.4	2.0

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
253	218	35

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Decision makers in government and industry have access to information on trends and issues affecting the competitiveness of Canadian industries	Percentage of requests, from stakeholders for information, advice or expertise on industrial competitiveness, to which the program responded	100%	100%
	Number and type of knowledge products developed to analyze trends, risks and opportunities affecting the competitiveness of targeted Canadian industries that were disseminated to stakeholders	252	368

Performance Analysis and Lessons Learned – Industry-Specific Policy and Analysis

In 2012–13, Industry Canada was able to meet all requests for comprehensive analysis and advice on industrial competitiveness, based on its continuous monitoring and examination of key sectors, including aerospace, automotive, information and communication technologies, manufacturing, pharmaceuticals, biopharmaceuticals, environmental and clean energy, tourism, consumer products, textiles and apparel, and business services. This work contributed to the announcement of initiatives, such as the Advanced Manufacturing Fund, and the renewal of fiscal measures, such as the Accelerated Capital Cost Allowance tax measure, in Budget 2013. Tracking the financial health of key firms, developments in key technologies, and the outlook for major platforms and their inputs is essential for the Department to anticipate emerging issues.

The Department also led the implementation of the Federal Tourism Strategy (FTS) by working with partners to fulfill commitments made under the strategy. Regular meetings of the FTS Steering Committee, including formal tourism industry engagement, guided, developed and maintained an integrated forward-looking tourism agenda that is responsive to market conditions and demands.

Financial resources under this Sub-program were utilized as planned in 2012–13. The difference between Planned and Actual FTEs is mainly due to the Department's implementation of the changes announced in Budget 2011.

Sub-Program – Shipbuilding Capacity

Description

This Program helps ensure that shipbuilding capacity exists for federal marine procurement and maintenance requirements in keeping with the Buy Canada procurement policy. Eligible products are new vessels and offshore marine structures or existing vessels and offshore marine structures undergoing major refurbishment, conversion or other major modification in Canadian shipyards. Financing is provided to applicants, lenders or lessors, who will receive a non-repayable contribution to reduce the applicant's interest or leasing costs. Subject to limitations, this support can be up to 15 percent of the purchase price paid to the Canadian shipyard for the construction or modification of an eligible vessel or offshore marine structure.

Financial Resources – Shipbuilding Capacity ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
12.2	5.2	7.0

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
1	1	–

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Demand for new builds, conversions, refits and modifications in Canadian shipyards is created and met	Number of applications received	1	5
	Number of contribution agreements approved	1	2

Performance Analysis and Lessons Learned – Shipbuilding Capacity

Continued interest in the Structured Financing Facility (SFF) Program resulted in five applications for financing received in 2012–13, exceeding its performance targets. Two contribution agreements were approved for a shipyard on Isle-aux-Coudres in Québec.

The difference between Planned and Actual spending reflects changes in program demand.

Sub-Program – Industrial and Regional Benefits

Description

The Industrial and Regional Benefits (IRB) Policy provides the framework for leveraging federal defence and security procurements to generate long-term industrial and regional development within Canada. The IRB Policy ensures that Canadian companies can derive benefits from federal procurements through the creation of new business opportunities or investments in research and development, technology commercialization or business development activities. Under the IRB Policy, prime contractors that are awarded major federal defence and security contracts are required to generate new business activity in the Canadian economy in an amount equal to the value of the contract. The investments must be in advanced technology sectors across Canada and can be either directly or indirectly related to the procured item. The IRB Policy is the Canadian version of the industrial participation policies practised in over 100 countries.

Financial Resources – Industrial and Regional Benefits ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
3.5	3.5	–

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
28	25	3

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Prime contractors benefiting from federal procurement contracts reinvest in the Canadian economy	Dollar value of prime contractor investment in the Canadian economy	$2 billion	$1.24 billion
Business relationships are created between Canadian suppliers and prime contractors	Number of transactions that generate relationships between prime contractors and Canadian companies	125	195
Industrial and Regional Benefits transactions are reviewed, approved and reported on in a timely manner	New business transactions that are examined and assessed annually as a percentage of total applications received	90%	94%

Performance Analysis and Lessons Learned – Industrial and Regional Benefits

The lower than anticipated dollar value of prime contractor investment was due to the pace of the procurement process as a whole. Current forecasts are based on the number of projects that are in the pre-contract stages of the procurement process. These contracts have not yet been finalized and work is yet to begin. The Department anticipates an increase in the dollar value of prime contractor investment over time.

The higher number of transactions that generated relationships between prime contractors and Canadian companies is related to an increase in the number and size of contracted procurements with IRB obligations.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Program – Community Economic Development

Description

This Program advances the economic development of Northern Ontario communities in the same manner that regional development agencies support similar activities in other regions of Canada. Its main goal is to strengthen the Northern Ontario economy by providing financial support, through contribution agreements, for economic and community development projects led by the private, not-for-profit and public sectors. This Program also helps to increase public access to the Internet, provide schools with greater access to computers, and improve information technology skills and learning in community groups and communities across Canada.

Financial Resources – Community Economic Development ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
75.7	73.0	79.6	76.8	(3.8)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
126	117	9

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Targeted businesses and organizations in northern Ontario create economic growth	Number of northern Ontario businesses and organizations created, expanded or maintained	1,445	1,555

Performance Analysis and Lessons Learned – Community Economic Development

In 2012-13, Industry Canada succeeded in increasing the uptake of federal government program offerings by Northern Ontario SMEs and organizations. Through its leadership with the federal governance structure for the Ring of Fire mining development, the Department helped address development challenges and opportunities. Outreach efforts to promote Northern Ontario business to prime contractors in the defence and security sector were undertaken and included coordinating SME information events, facilitating participation of regional stakeholders at the CANSEC defence trade show, and assisting companies with their Controlled Good Program applications. As a result, over 80 Northern Ontario companies are actively pursuing business opportunities in the defence sector. Extensive outreach conducted by Industry Canada staff through a memorandum of understanding (MOU) with the Federal Economic Development Agency for Southern Ontario (FedDev) resulted in $7.1 million being invested in Community Infrastructure Improvement Fund projects in Northern Ontario.

As projected in the 2012–13 RPP, Industry Canada also improved the delivery of its programs in community economic development, including the Northern Ontario Development Program (NODP), the Community Futures Program (CFP) and the Economic Development Initiative (EDI). New performance measurement strategies for both CFP and NODP were implemented to strengthen Industry Canada's ability to track and report on project outcomes, improve data quality and produce performance reports used in decision making.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Community Futures

Description

The Community Futures (CF) Program is a national program delivered by FedNor in rural Northern Ontario and by the regional development agencies in the rest of Canada. The CF Program provides financial support to small and medium-sized enterprises through 24 Community Futures Development Corporations (CFDCs) located throughout rural Northern Ontario. The Program's objectives are to foster economic stability, growth and job creation; help create diversified and competitive local rural economies; and help build economically sustainable communities. CFDCs are incorporated, not-for-profit, community-based development organizations, each governed by a local volunteer board of directors. They offer a variety of products and services to support small business growth and community economic development, such as access to capital; strategic community planning and socio-economic development; support for community-based projects and special initiatives; and business information, planning and support services. FedNor provides financial contributions to support the ongoing operations of individual CFDCs through either one- or three-year agreements.

Financial Resources – Community Futures ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
8.9	9.0	(0.1)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
6	5	1

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Targeted rural northern Ontario businesses attract investors	Ratio of funds from the Community Futures Program to investments raised from other sources	1:1.6	1:1.9
Targeted rural northern Ontario businesses create jobs	Number of jobs created and maintained in Northern Ontario through Community Futures investments	1,900	1,716

Performance Analysis and Lessons Learned – Community Futures

In 2012-13, Industry Canada helped leverage $1.90 from other sources for every program dollar invested by the Community Futures Program. This result exceeded the expected level of performance and highlights the success of this program in leveraging funds from other sources, including owner's equity and other third-party investments in small and medium-sized businesses in rural Northern Ontario. Program investments also created or maintained 1,716 jobs in Northern Ontario during this period. While this result did not meet the target set for 2012–13, it is in line with the five-year average (1,735 jobs per year).

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Northern Ontario Development

Description

The Northern Ontario Development Program (NODP) is administered by FedNor. The NODP's objective is to promote economic development, economic diversification, job creation and sustainable, self-reliant communities in Northern Ontario. This is achieved by providing financial support, through transfer payments, to small and medium-sized enterprises and not-for-profit organizations, including municipalities, municipal organizations, community development organizations and research institutions, in three priority areas: community economic development; business growth and competitiveness; and innovation.

Financial Resources – Northern Ontario Development ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
48.5	43.5	5.0

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
104	95	9

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Targeted rural northern Ontario businesses attract investors	Ratio of funds from Northern Ontario Development Program contributions to investments raised from other sources	1:3	1:3
Targeted rural northern Ontario businesses create jobs	Number of jobs created and maintained in Northern Ontario through Northern Ontario Development Program investments	1,184	1,628

Performance Analysis and Lessons Learned – Northern Ontario Development

In 2012–13, Industry Canada leveraged $3.00 from other sources such as community economic development organizations, businesses, municipalities, the provincial government, industry associations and First Nations, for every dollar invested by the NODP. This result is an increase from the $2.60 that was leveraged for every dollar invested in the previous year. These investments promote economic development, business growth and competitiveness and innovation in Northern Ontario.

Results concerning the number of jobs created and maintained through the efforts of the Program cannot be compared with previous years, as the indicator for 2012-13 is based on an updated methodology and improvements to data collection that allow the Program to more accurately capture this performance data. A total of 1,628 jobs were created and maintained in Northern Ontario based on the new methodology.

The difference between Planned and Actual Spending under this Sub-program is a result of the Department's implementation of changes announced in Budget 2012. Human resources were used as planned.

Sub-Program – Computers for Schools

Description

Through this Program, surplus computers donated by federal, provincial and territorial government departments, private companies and private donors are refurbished through contribution agreements with licensed delivery agents. Once refurbished, they are distributed to schools, libraries, not-for-profit learning organizations and Aboriginal communities across Canada. Through a national partnership-based network, the program continues to meet an ongoing demand for computers in Canadian learning organizations, ensuring that more young Canadians have access to the benefits of a knowledge-based economy and society. This Program also supports work experience internships for youth at the post-secondary level. Youth interns with the requisite skills are given the opportunity to work on innovative information and communication technologies projects in the context of computer refurbishment workshop activities. These projects enable participants to develop practical work experience in such areas as computer repair, refurbishment and software testing; to cultivate skills such as: teamwork, time management and administration; and to perform other activities related to managing a computer refurbishment workshop.

Financial Resources – Computers for Schools ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
8.0	8.0	–

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
6	6	–

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Schools, libraries, not for profit learning organizations and Aboriginal communities receive refurbished computers	Number of refurbished computer units delivered annually	65,000	74,988
Youth interns gain work experience in the information and communication technologies field	Number of youth interns hired by fiscal year	250	275

Performance Analysis and Lessons Learned – Computers for Schools

In 2012–13, strong demand for computers and a greater number of equipment donations allowed more young people to be hired to complete requests, and helped the Computers for Schools program exceed its targets for that year. Although targets were exceeded, there was a slight decline in refurbished computers distributed compared to the previous year.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

Sub-Program – Community Internet Access

Description

This Program provides work experience for youth on projects related to information and communication technologies and applications. The Program also provides financial support for access to satellite bandwidth based on existing agreements under the Broadband Canada program; no new applications are accepted.

Financial Resources – Community Internet Access ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
6.4	14.9	(8.5)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
7	7	–

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Canadians have public access to the Internet	Number of communities with at least one Community Access Program site	1,850	Not available
Youth interns gain work experience in the information and communications technologies field through placements/internships in Community Access Program sites	Number of youth interns hired by fiscal year	1,300	1,291

Performance Analysis and Lessons Learned – Community Internet Access

Youth internship at community access sites provided 1,291 young Canadians with work experience and information and communication technology (ICT) skills, making them more productive and competitive in the knowledge economy, while at the same time contributing to the development and use of ICT in the organizations to which they were assigned.

Funding for this Sub-program was received by means of Supplementary Estimates to assist youth in obtaining ICT skills through youth internships at community access sites. Human resources were used as planned.

Sub-Program – Economic Development Initiative for Official Language Minority Communities

Description

The Economic Development Initiative (EDI) is part of the Roadmap for Canada's Linguistic Duality Action Plan, announced in June 2008. The Roadmap aims to strengthen linguistic duality, reinforce Canada's national identity and provide economic benefits for all Canadians. Industry Canada is responsible for the horizontal and overall coordination of this initiative; sharing information and research with departments and regional development agencies; coordinating reporting and evaluation requirements; and organizing formal community consultations. EDI is a national initiative delivered by FedNor in Northern Ontario and delivered through RDA's in the rest of Canada. EDI's mandate in Northern Ontario is to address the specific economic development needs of the region and build upon regional successes to facilitate sustainable growth in official language minority communities. Sustainable growth is achieved by developing new business expertise through innovation, partnerships, the diversification of economic activities and increasing support for small businesses. To achieve this mandate, Industry Canada, through FedNor, provides financial support through transfer payments to not-for-profit organizations, including Francophone or bilingual organizations that benefit Northern Ontario and provide programs or services in French to the Francophone community. Funding is focused on two priority areas: community strategic planning and business economic development.

Financial Resources – Economic Development Initiative for Official Language Minority Communities ($ millions)

Planned Spending 2012–13	Actual Spending 2012–13	Difference 2012–13
1.4	1.5	(0.1)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
3	4	(1)

Expected Results and Performance Indicators of

Expected Results	Performance Indicators	Targets	Actual Results
Official Language Minority Communities businesses in Northern Ontario attract investors	Ratio of funds from Economic Development Initiative contributions to investments raised from other sources	1:1.3	1:0.5
Official Language Minority Communities businesses in Northern Ontario create jobs	Number of jobs created and maintained in Northern Ontario through Economic Development Initiative investments	71	69

Performance Analysis and Lessons Learned – Economic Development Initiative for Official Language Minority Communities

As the Economic Development Initiative (EDI) entered its final year, Industry Canada monitored and ensured the successful completion of its remaining 15 projects. Due to reduced cash flow needs on some of the projects, the Department was able to reallocate funds towards an additional project, increasing the total number of projects supported since EDI's launch in 2008 to 51.

The Department also contributed to the development of the Roadmap for Canada's Official Languages 2013–18: Education, Immigration, Communities, which was unveiled on March 28, 2013, following one of the largest consultations ever held on official languages.

Financial and human resources for this Sub-program were utilized as planned in 2012–13.

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Analysis of Programs and Sub-Programs by Strategic Outcome (continued)

Internal Services

Description

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services, Public Policy Services, Communications Services, Legal Services, Human Resources Management Services, Financial Management Services, Information Management Services, Information Technology Services, Real Property Services, Materiel acquisition services, and travel and other administrative services. Internal Services involve primarily only those activities and resources that apply across the Department, not those that are specific to a program.

Financial Resources – Internal Services ($ millions)

Total Budgetary Expenditures (Main Estimates) 2012–13	Planned Spending 2012–13	Total Authorities (available for use) 2012–13	Actual Spending (authorities used) 2012–13	Difference 2012–13
77.3	123.1	150.6	131.7	(8.6)

Human Resources (Full-Time Equivalent – FTE)

Planned 2012–13	Actual 2012–13	Difference 2012–13
1,336	1,173	163

Performance Analysis and Lessons Learned – Internal Services

Total Authorities in 2012–13 include supplementary funding, such as the operating budget carry forward, collective bargaining compensation adjustments, and the reimbursement of pay list shortfall received during the year from Treasury Board, which were not initially planned. Planned Spending includes projected repayments from former contribution programs, received as estimated during the year.

In addition to changes announced in Budget 2011, the difference between Planned and Actual FTEs is a result of the Department's implementation of changes announced in Budget 2012. There were also internal reallocations done in-year to better align human resources with the Department's Strategic Outcomes and Programs.

In 2012–13, prudent financial strategies guided senior management decisions, including a focus on effective implementation of the Budget 2012 changes described in this document. This management approach allowed the Department to realize fully its savings target of $49.2 million in 2012–13, and to be well positioned to achieve its ongoing savings target of $79.5 million by 2014–15. In addition, the Department reached its 2013–14 FTE target a full year ahead of schedule.

In 2012–13, Industry Canada initiated a People Management Transition Strategy designed to develop further the flexibility, adaptability and sustainability of its workforce in support of its mandate. The Department also increased efficiencies through a reorganization of functions and a more integrated management approach.

The Department also analysed and shared the results of the Public Service Employee Survey 2011 with all staff, along with a departmental action plan to address improvement areas and to better support staff. In addition, Industry Canada implemented improvements to the delivery of human resource services by providing managers with new tools and effective access to information and systems for various staffing and classification actions.

To continue building on its existing stewardship and accountability practices and to comply with new policy requirements in these areas, Industry Canada developed and implemented a five-year Investment Plan, and a Departmental Security Plan in support of the Policy on Government Security.

The Program and Services Board (PSB), a centre of excellence within Industry Canada that provides critical value-added oversight in procurement and in the selection, design and implementation of transfer payment programs, reviewed 61 procurement proposals and 75 grants and contributions proposals. The advice and recommendations provided by the PSB contributed to departmental programs achieving their objectives while at the same time providing corporate oversight.

Federal Sustainable Development Strategy (FSDS)

Industry Canada is a participant in the Federal Sustainable Development Strategy (FSDS) and contributes to the Greening Government Operations targets through the Internal Services Program. The Department contributes to the following target areas of Theme IV of the FSDS:

• Green Buildings
• Greenhouse Gas Emissions
• Surplus Electronic and Electrical Equipment
• Printing Unit Reduction
• Paper Consumption
• Green Meetings
• Green Procurement

For additional information on Industry Canada's Greening Government Operations activities, refer to the supplementary information tables

.

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Financial Statements Highlights and Financial Statements

The financial highlights presented within this DPR are intended to serve as a general overview of Industry Canada's financial position and operations and should be read in conjunction with the 2012-13 Departmental Financial Statements, which can be found on the Industry Canada website.

Financial Statements Highlights

The financial results are shaped by the three Strategic Outcomes and associated Internal Services that aim to help make Canadian industry more productive and competitive in the global economy, thus improving the economic and social well-being of Canadians.

Industry Canada
Condensed Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31, 2013

($ millions)	2012–13 Planned Results	2012–13 Actual	2011–12 Actual (Restated)Footnote 12	$ Change (2012–13 Planned and Actual)	$ Change (2012–13 Actual vs. 2011–12 Actual)
Footnotes Footnote 12 Please see Note 16 of the financial statements for further details. Return to footnote 12 referrer
Total expenses	1,414	1,148	1,522	267	(374)
Total revenues	224	222	218	2	5
Net cost from continuing operations	1,190	925	1,304	265	(379)
Net cost of transferred operations	–	–	10	–	(10)
Net cost of operations before government funding and transfers	1,190	925	1,314	265	(389)
Departmental net financial position	(443)	(458)	(624)	15	167

Planned Results

Planned Results are based on the Future-oriented Financial Statements presented in the 2012-13 Report on Plans and Priorities (RPP). The $267 million variance between 2012-13 planned results and actual expenses is mainly attributable to a decrease in transfer payments for programs such as the Canada Small Business Financing Program as a result of a drop in claims received and payments made for defaulted loans; as well as the Strategic Aerospace and Defence Initiative (SADI) due to lower program demand.

Expenses

Revenues

Industry Canada
Condensed Statement of Financial Position (Unaudited)
As at March 31, 2013

($ millions)	2012–13	2011–12	$ Change
Total net liabilities	809	1,170	(361)
Total net financial assets	254	451	(196)
Departmental net debt	554	719	(165)
Total non-financial assets	96	95	2
Departmental net financial position	(458)	(624)	167

Net Liabilities

Net Financial Assets

Department of Industry (033)

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of Industry Canada. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

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 fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of Industry Canada's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Industry Canada's Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that the financial information is reliable; that assets are safeguarded; and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout Industry Canada; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess the effectiveness of associated key controls and to make necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2013, was completed in accordance with the Policy on Internal Control, and the results and action plans are summarized in Industry Canada's Management Report on Internal Control over Financial Reporting for the fiscal year ending March 31, 2013.

The effectiveness and adequacy of Industry Canada's system of internal control is reviewed through the work of internal audit staff, who conduct periodic audits of different areas of Industry Canada operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which is required to review the departmental financial statements with management and all significant accounting estimates and judgments therein and advise the deputy head.

The financial statements of Industry Canada have not been audited.

Department of Industry (033) (continued)

Consolidated Statement of Financial Position (unaudited)
As at March 31
(in thousands of dollars)

	2013		2012
Contractual Obligations (note 11) Contingent Liabilities (note 12) The accompanying notes form an integral part of these financial statements.
Liabilities
Accounts payable and accrued liabilities (note 4)	$ 305,469		$ 635,171
Vacation pay and compensatory leave	23,262		23,938
Deferred revenue (note 5)	2,818,376		3,286,878
Allowance for loan guarantees (note 12)	290,693		314,969
Employee future benefits (note 6)	66,312		71,930
Other liabilities (note 7)	38,061		36,265
Total gross liabilities	3,542,173		4,369,151
Liabilities held on behalf of Government
Deferred revenue (note 5)	(2,733,646)		(3,199,551)
Total liabilities held on behalf of Government	(2,733,646)		(3,199,551)
Total net liabilities	808,527		1,169,600
Financial assets
Due from the Consolidated Revenue Fund	242,685		439,009
Accounts receivable and advances (note 8)	43,911		39,190
Loans receivable (note 9)	660,479		545,691
Total gross financial assets	947,075		1,023,890
Financial assets held on behalf of Government
Accounts receivable and advances (note 8)	(32,103)		(27,547)
Loans receivable (note 9)	(660,479)		(545,691)
Total financial assets held on behalf of Government	(692,582)		(573,238)
Total net financial assets	254,493		450,652
Departmental net debt	554,034		718,948
Non-financial assets
Prepaid expenses	401		582
Tangible capital assets (note 10)	95,994		94,102
Total non-financial assets	96,395		94,684
Departmental net financial position	$ (457,639)		$ (624,264)

John Knubley, Deputy Head
August 27, 2013

Acting Chief Financial Officer
August 26 2013

Ottawa, Canada

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

			2013		2012
					Restated (note 16)
The accompanying notes are an integral part of these financial statements.
Operating activities
	Net cost of operations before government funding and transfers		$ 925,271		$ 1,313,777
	Non-cash items:
		Amortization of tangible capital assets	(14,222)		(14,976)
		Net (loss) gain on disposal of tangible capital assets	100		(44)
		Loss on write-offs of tangible capital assets	(5)		(571)
		Adjustment to tangible capital assets	1,057		420
		Services provided without charge by other government departments (note 13)	(85,857)		(88,757)
	Variations in Statement of Financial Position:
		Increase in accounts receivable	165		48
		Increase (decrease) in prepaid expenses	(181)		27
		Decrease (increase) in accounts payable and accrued liabilities	329,702		(197,913)
		Decrease in vacation pay and compensatory leave	676		1,958
		Decrease (increase) in deferred revenue	2,597		(448)
		Decrease in allowance for loan guarantees	24,276		45,054
		Decrease in employee future benefits	5,618		20,322
		Increase in other liabilities	(1,796)		(1,526)
		Transfer of liabilities to other government departments (note 14)	-		(1,689)
Cash used in operating activities			1,187,401		1,075,682
Capital investing activities:
	Acquisitions of tangible capital assets		15,206		14,232
	Proceeds from disposal of tangible capital assets		(244)		(220)
Cash used in capital investing activities			14,962		14,012
Net cash provided by Government of Canada			$ 1,202,363		$ 1,089,694

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and Objectives

   The authorities for the programs for which Industry Canada is responsible are derived from the Department of Industry Act. Many other acts are under the responsibility of the Minister of Industry, and Treasury Board also defines other specific Industry Canada authorities.

   Industry Canada aims to help make Canadian industry more productive and competitive in the global economy, thus improving the economic and social well-being of Canadians through its three strategic outcomes, which are mutually reinforcing. Fostering competitiveness helps advance the marketplace by developing and administering economic framework policies that promote competition and innovation; support investment and entrepreneurial activity; and instill consumer, investor and business confidence. Investing in science and technology to generate knowledge and equip Canadians with the skills and training they need to compete and prosper in the global, knowledge-based economy helps ensure that discoveries and breakthroughs happen here in Canada, and that Canadians can realize the social and economic benefits. Promoting economic development in communities helps support business by encouraging the development of skills, ideas and opportunities across the country. Taken together, Industry Canada's strategic outcomes support growth in employment, income, productivity and sustainable development in Canada.

   Internal Services are groups of activities and resources that are administered to support the needs of programs and other corporate obligations of Industry Canada. Internal Services include only those activities and resources that apply across Industry Canada, not those provided specifically to a program.

   Industry Canada's activities are delivered at its headquarters in Ottawa as well as in the regions. There are five regional offices with service points located across Canada and an office for FedNor.

   Industry Canada has a number of transfer payment programs through which it provides grants and contributions to recipients in targeted groups and sectors. Each transfer payment program has specific objectives and expected results that support the achievement of Industry Canada's strategic objectives.

2. Summary of Significant Accounting Policies

   These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from the Canadian public sector accounting standards.

   Significant accounting policies are as follows:

   1. Parliamentary authorities — Industry Canada is financed by the Government of Canada   through Parliamentary authorities. Financial reporting of authorities provided to Industry Canada do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position are consistent with the amounts reported in the Future-Oriented Financial Statements included in the 2012–13 Report on Plans and Priorities.
      The future-oriented financial statements for 2012–13 have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in a $816,761,000 increase in net costs of operations before government funding and transfers. In addition, the future-oriented financial statements have also been reclassified to conform to the current year presentation.
   2. Consolidation — The consolidated financial statements include the accounts of Industry Canada and the Canadian Intellectual Property Office (CIPO) Revolving Fund. The accounts of this sub-entity have been consolidated with those of Industry Canada and, as a result, all inter-organizational balances and transactions have been eliminated.
   3. Net cash provided by Government — Industry Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Industry Canada is deposited to the CRF and all cash disbursements made by Industry Canada 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 Government.
   4. Amounts due from/to the CRF — These are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represents the net amount of cash that Industry Canada is entitled to draw from the CRF without further authorities to discharge its liabilities.
   5. Revenues

      Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

      Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred.

      Funds that have been received are recorded as deferred revenues, provided that Industry Canada has an obligation to other parties for the provision of goods, services or the use of assets in the future.

      Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

      Revenues that are non-respendable are not available to discharge Industry Canada's liabilities. While the Deputy Head is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, these are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction to the entity's gross revenues.

   6. Expenses

      Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

      Vacation pay and compensatory leave are accrued as the benefits are earned by 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, workers' compensation costs, and legal services are recorded as operating expenses at their estimated cost.

   7. Employee future benefits
      1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. Industry Canada's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Industry Canada'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. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.
   8. Accounts and loans receivable — These are stated at the lower of cost and net recoverable value. However, when the terms of the loans are concessionary, such as those provided with a low or no interest clause, they are recorded at their estimated present value. An unamortized discount is used to reduce the carrying value of the loans to amounts that approximate their net realizable value. A portion of the discount is recorded as revenue each year to reflect the change in the present value of the loans outstanding. Transfer payments that are unconditionally repayable are recognized as loans receivable. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain.
   9. Allowances for loan guarantees — An allowance for loan guarantees is recorded for potential losses on loan guarantees when it is likely that a payment will be made in the future to honour a guarantee and when the amount of the loss can be reasonably estimated.
      The allowance for losses on outstanding loan guarantees is based on forecasting models developed by program areas.
   10. Prepaid expenses — These include prepaid expenses, deferred charges and payments where, pursuant to a contract or contribution agreement, a payment is made before the completion of the work, delivery of the goods or rendering of the service.
   11. Contingent liabilities — Contingent liabilities are potential liabilities that 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.
   12. 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 at year-end. Gains and losses resulting from foreign currency transactions are included in the Statement of Operations and Departmental Net Financial Position.
   13. 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. Industry Canada 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 asset as follows:

       Tangible capital assets

       Asset Class	Amortization Period
       Buildings	15 to 30 years
       Works and infrastructure	30 years
       Machinery and equipment	3 to 10 years
       Vehicles	5 to 10 years
       Computer hardware	5 to 10 years
       Computer software	3 to 10 years
       Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

       Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.
   14. Measurement uncertainty — The preparation of these financial statements 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, the liability for employee future benefits and the useful life of tangible capital assets. Actual results could differ significantly 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. Parliamentary Authorities
   Industry Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, Industry Canada 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 authorities used

   	2013	2012
   		Restated (note 16)
   	(in thousands of dollars)
   Net cost of operations before government funding and transfers	$ 925,271	$ 1,313,777
   Adjustments for items affecting net cost of operations but not affecting authorities:
   Repayment of conditionally repayable contributions	154,459	134,979
   Services provided without charge by other government departments	(85,857)	(88,757)
   Provision for loan guarantees	25,094	46,105
   Write-offs/write-down	(5)	(571)
   Amortization of tangible capital assets	(14,222)	(14,976)
   Decrease in employee future benefits	5,619	19,271
   Adjustment of previous year's Accounts Payable	6,491	12,419
   Refund of prior year's expenditures	14,208	4,247
   Transfer payment adjustments	793	-
   Decrease (increase) in accrued liabilities	58,030	(59,930)
   Increase in vacation pay and compensatory leave	386	936
   Net (loss) gain on disposal and write-down of tangible capital assets	100	(44)
   Year-end accrual of transfer payments	124,639	(69,528)
   Revenue not available for spending	54,537	51,865
   Other	1,251	150
   Total items affecting net cost of operations but not affecting authorities	345,523	36,166
   Adjustments for items not affecting net cost of operations but affecting authorities:
   Increase in loans and advances	122,983	134,651
   Revenue available for spending	(51,689)	(52,500)
   Increase in allowance for vacation and compensatory leave	289	384
   Acquisitions of tangible capital assets	15,206	14,232
   Total items not affecting net cost of operations but affecting authorities	86,789	96,767
   Current year authorities used	$ 1,357,583	$ 1,446,710

   (b) Authorities provided and used

   		2013	2012
   		(in thousands of dollars)
   Authorities Provided:
   Vote 1 – Operating expenditures		$ 438,878	$ 441,380
   Vote 5 – Capital expenditures		16,902	15,611
   Vote 10 – Grants and contributions		794,947	750,346
   Statutory amounts		402,682	540,908
   		1,653,409	1,748,245
   Less:
   Authorities available for future years		175,769	165,310
   Lapsed authorities:	Operating expenditures	27,134	37,615
   	Capital expenditures	1,704	1,633
   	Grants and contributions	90,419	96,067
   	Proceeds from the disposal of crown assets	-	110
   	Other	800	800
   Current year authorities used		$ 1,357,583	$ 1,446,710

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

4. Accounts Payable and Accrued Liabilities

   The following table presents details of Industry Canada's accounts payable and accrued liabilities:

   Accounts Payable and Accrued Liabilities

   	2013	2012
   	(in thousands of dollars)
   Accounts payable to other government departments and agencies	$ 15,154	$ 16,698
   Accounts payable to external parties	188,185	384,654
   Year-end accrual – pending Budget Implementation Act	94,900	168,900
   Accrued salaries and wages	3,995	3,732
   Other external payables	135	57
   Total accounts payable	302,369	574,041
   Accrued liabilities	3,100	61,130
   Total accounts payable and accrued liabilities	$ 305,469	$ 635,171

   In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-13. As a result, the Department has recorded an obligation for termination benefits of $31.7 million in 2011-12 as part of accrued liabilities to reflect the estimated workforce adjustment costs. As of March 31, 2013 , a remaining balance of $2.9M is included in the accrued liabilities.

5. Deferred Revenue

   The majority of Industry Canada's deferred revenues result from the auction of radio licence frequencies. These revenues are recognized over a 10-year period. Another main source of deferred revenues comes from examination requests of intellectual property. These fees are charged in advance and recognized as revenue once the examination is completed.

   The Prime Minister's Awards account was established to record amounts deposited by external parties to be used in support of the Prime Minister's Awards for Teaching Excellence.

   Deferred Revenue

   	2013	2012
   	(in thousands of dollars)
   Opening balance	$ 3,286,878	$ 3,775,636
   Licence fees received	247,594	245,118
   Licence fees earned	713,499	734,325
   	(465,905)	(489,207)
   Fees for trademarks, patents and copyrights received	51,689	52,500
   Fees for trademarks, patents and copyrights earned	54,537	51,865
   	(2,848)	635
   Other services of a regulatory nature received	233	502
   Other services of a regulatory nature earned	502	203
   	(269)	299
   Prime Minister's awards received	50	100
   Prime Minister's awards disbursed	122	123
   	(72)	(23)
   Customer deposits received	80,286	76,779
   Customer deposits disbursed	79,694	77,241
   	592	(462)
   Gross closing balance	2,818,376	3,286,878
   Deferred revenues held on behalf of Government	(2,733,646)	(3,199,551)
   Net closing balance	$ 84,730	$ 87,327

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

6. Employee Future Benefits
   1. Pension benefits

      Industry Canada'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 2% per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits and they are indexed to inflation.

      Both the employees and Industry Canada contribute to the cost of the Plan. The 2012–13 expense amounts to $52,475,965 ($54,268,146 in 2011–12), which represents approximately 1.7 times (1.8 times in 2011–12) the contributions by employees.

      Industry Canada'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. Severance benefits

      Industry Canada provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

      As part of the collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid in full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

   Severence and pension benefits

   	2013	2012
   	(in thousands of dollars)
   Accrued benefit obligation – Beginning of year	$ 71,930	$ 92,252
   Transferred to other government departments (note 14)	-	(1,051)
   Subtotal	71,930	91,201
   Expense for the year	24,514	13,298
   Benefits paid during the year	(30,132)	(32,569)
   Accrued benefit obligation – End of year	$ 66,312	$ 71,930

7. Other Liabilities

   Other liabilities represent amounts received from third parties to be disbursed for a specified purpose. Activity during the year in these accounts is as follows:

   Other Liabilities

   	Opening Balance	Receipts	Payments	Closing Balance
   	(in thousands of dollars)
   Restitutions under the Competition Act	$         2	$         -	$         -	$         2
   Cost-sharing projects	1,005	632	494	1,143
   Securities in Trust, Bankruptcy and Insolvency Act	83	-	-	83
   Contra – Securities in Trust, Bankruptcy and Insolvency Act	(31)	-	-	(31)
   Unclaimed dividends and undistributed assets (BIA)	23,231	2,282	761	24,752
   Petro Canada Enterprises Inc. unclaimed shares	689	-	-	689
   Canada Business Corporations Act (CBCA)	9,206	90	61	92,235
   Winding-up and Restructuring Act	1,908	280	-	2,188
   Canada/Provinces Business Service Centre	172	-	172	-
   Total other liabilities	$ 36,265	$ 3,284	$ 1,488	$ 38,061

   Restitutions under the Competition Act — This account was established to facilitate judgments rendered under Article 52 of the Competition Act, and to account for monies received in trust for restitution and for subsequent payment.

   Cost-sharing Projects — Industry Canada partners with other governments and external organizations to deliver programs and services that contribute to an innovative economy. The account was established to record amounts deposited by these partners.

   Securities in Trust and Income from Securities in Trust, Bankruptcy and Insolvency Act — This account was established to record dividends paid on shares held by a bankrupt stockbroker on behalf of clients. As the shares were not registered in clients' names, dividends are paid to the last registered owner, in this case, the stockbroker. These dividends are forwarded to the Superintendent of Bankruptcy until such time as rightful owners are identified.

   Unclaimed Dividends and Undistributed Assets, Bankruptcy and Insolvency Act — This account represents amounts credited to the Receiver General in accordance with the provisions of the Act, pending distribution to creditors.

   Petro-Canada Enterprises Inc. unclaimed shares — This account was established to record the liability to shareholders who have not presented their shares for payment in accordance with Section 227 of the Canada Business Corporations Act.

   Unclaimed Dividends and Undistributed Assets, Canada Business Corporations Act — This account was established for the purpose of recording liabilities to creditors and shareholders who have not been located. The account is charged when funds are paid to them.

   Winding-up and Restructuring Act — This account records deposits credited to the Receiver General as a result of the final winding-up of the operations of a company, in accordance with sections 138 and 139 of the Winding-up and Restructuring Act, pending distribution to the persons entitled thereto.

   Canada/Provinces Business Service Centre — This account was established to record monies received from provinces under cost-sharing agreements for the Canada-Ontario Business Service Centre.

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

8. Accounts receivable and advances

   The following table presents details of Industry Canada's accounts receivable and advances balances:

   Accounts receivable and advances

   	2013	2012
   	(in thousands of dollars)
   Receivables from other government departments and agencies	$ 16,952	$ 12,290
   Accounts receivable from external parties	37,872	26,277
   Accrued receivables	18,983	23,685
   Employee advances	37	46
   Other receivables	227	45
   Total external	74,071	62,343
   Allowance for doubtful accounts on receivables from external parties	(30,160)	(23,153)
   Gross accounts receivables and advances	43,911	39,190
   Accounts receivable held on behalf of Government	(32,103)	(27,547)
   Net accounts receivable	$ 11,808	$ 11,643
9. Loans receivable

   The following table presents details of the Industry Canada's loans and unconditionally repayable contributions:

   Industry Canada's loans and unconditionally repayable contributions

   	2013	2012
   	(in thousands of dollars)
   Enterprise development loans	$    110,000	$    110,000
   Less: Unamortized discount loans	13,833	17,291
   Net Enterprise development loans	96,167	92,709
   Unconditionally repayable contributions	687,845	582,462
   Less: Unamortized discount	123,110	128,262
   Less: Allowance for doubtful loans and advances	423	1,218
   Net unconditionally repayable contributions	564,312	452,982
   Loans on expired loan guarantees	57,773	77,257
   Less: Allowance for doubtful loans	57,773	77,257
   Net loans on expired loan guarantees	-	-
   Gross loans receivable	660,479	545,691
   Loans held on behalf of Government	(660,479)	(545,691)
   Net loans receivable	$            -	$            -

   Enterprise development loans — These loans are made to manufacturing, processing or service industries in Canada in order to promote the establishment, improvement, growth, efficiency or international competitiveness of such industries, or to assist them in their financial restructuring. There is one interest-free loan outstanding, which is repayable at maturity on April 1, 2017.

   Unconditionally repayable contributions — Loans have been made to various recipients under several programs managed by Industry Canada, including the Strategic Aerospace Defence Initiative (SADI), Technology Partnerships Canada (TPC), the Defence Industries Productivity Program (DIPP) and the Automotive Innovation Fund (AIF). All have different repayment terms and maturity dates that are included in the individual agreement. The unamortized discount on unconditionally repayable contributions is calculated by applying the 25% rule on an individual loan basis.

   Loans on expired loan guarantees —Industry Canada guarantees loans to small business enterprises under the Small Business Loans Act, the Canada Small Business Financing Act, the Capital Leasing Pilot Project and other loan guarantee payments net of recoveries.

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

10. Tangible Capital Assets

    Tangible Capital Assets (in thousands of dollars)

    (in thousands of dollars)	Cost					Accumulated Amortization					Net Book Value
    Capital Asset Class	Opening balance	Acquisitions	Adjustments  Footnote 31	Disposals and write-offs	Closing balance	Opening balance	Amortization	Adjustments	Disposals and write-offs	Closing balance	2013	2012
    Footnotes Footnote 31 Adjustments include assets under construction of $11,487,281 that were transferred to the other categories upon completion of the assets Return to footnote 31 referrer
    Land	$ 1,441	$ -	$ -	$ -	$ 1,441	$ -	$ -	$ -	$ -	$ -	$ 1,441	$ 1,441
    Buildings	46,946	22	5,914	-	52,882	26,394	2,756	-	-	29,150	23,732	20,552
    Works and infrastructure	8,700	20	2,643	-	11,363	5,302	947	-	-	6,249	5,114	3,398
    Machinery and equipment	65,631	1,270	1,576	6,267	62,210	47,654	3,717	(373)	5,974	45,024	17,186	17,977
    Vehicles	11,611	216	32	1,088	10,771	8,392	1,134	13	1,063	8,476	2,295	3,219
    Computer hardware	33,584	739	165	6,197	28,291	31,164	768	56	6,177	25,811	2,480	2,420
    Computer software	41,782	193	1,888	47	43,816	34,970	3,715	-	47	38,638	5,178	6,812
    Assets under construction	31,933	12,746	(11,487)	91	33,101	-	-	-	-	-	33,101	31,933
    Leasehold Improvements	36,214	-	302	-	36,516	29,864	1,185	-	-	31,049	5,467	6,350
    Total	$ 277,842	$ 15,206	$ 1,033	$ 13,690	$ 280,391	$ 183,740	$ 14,222	$ (304)	$ 13,261	$ 184,397	$ 95,994	$ 94,102

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

11. Contractual Obligations

    The nature of Industry Canada's activity results in some large multi-year contracts and obligations whereby Industry Canada will be committed to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

    Contractual Obligations

    	2014	2015	2016	2017	2018 and thereafter	Total
    	(in thousands of dollars)
    Transfer payments	$ 411,019	$ 203,586	$ 84,976	$ 54,943	$ 30,732	$ 785,256
    Other Goods and services	45,309	8,413	6,007	1,094	1,003	61,826
    Total	$ 456,328	$ 211,999	$ 90,983	$ 56,037	$ 31,735	$ 847,082

12. Contingent Liabilities

    Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

    1. Claims and litigation

       Claims have been made against Industry Canada in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Industry Canada has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to nil (nil in 2011-12) at March 31, 2013.

    2. Loan guarantees

       Industry Canada has guaranteed the following debts:

    Loan guarantees

    	Authorized Limit		Loan Guarantee Outstanding Balance
    	(in thousands of dollars)
    Enterprise Development Program	$ 1,200,000		$         212
    Small Business Loans Act (SBLA)	1,838,292		73
    Canada Small Business Financing Act (CSBFA)	1,897,664		720,075
    Capital Leasing Pilot Project	15,661		203
    Regional Aircraft Credit Facility	1,500,000		120,189

    An allowance of $290,693,505 has been recorded for estimated losses on outstanding loan guarantees ($314,969,073 in 2011–12). The expenses related to loan guarantees are reported under “Other transfers” in note 15 for segmented Statement of Operations information.

    Enterprise Development Program —Loans are made to Canadian manufacturers and members of the service industry for the purpose of promoting the establishment, growth, efficiency and international competitiveness of Canadian industry. These loans to a person engaged or about to engage in manufacturing, processing or other commercial activity also foster the expansion of Canadian industry and of Canadian trade.

    Small Business Loans Act (SBLA) Program and Canada Small Business Financing Act (CSBFA) Program — Loans are made directly by approved lenders to small business enterprises, providing for sharing of each individual loan loss, if any, on the basis of 85% government, 15% lender, to an aggregate, per lending institution not exceeding the Minister's contingent liability, as stated in Section 5 of the SBLA and Section 6(2) of the CSBFA.

    The authorized limit represents the Crown's maximum liability incurred on the aggregate amount of loans made by the lender starting in April 1993 (SBLA) and April 1999 (CSBFA).

    The outstanding guarantee for loans made starting in April 1993 (SBLA) and April 1999 (CSBFA) is the lesser of the Crown's net liability (authorized limit less claims paid by the Crown) or 85% of the outstanding loan amounts of the lenders.

    Capital Leasing Pilot Project (CLPP) — Capital leases were made directly by approved lessors to small business enterprises, providing for sharing of each individual lease loss, if any, on the basis of 85% government, 15% lessor to an aggregate, per leasing institution, not exceeding the Minister’s contingent liability based upon the aggregate amount of leases registered per leasing institution, as stated in Section 7 of the CLPP.

    The authorized limit represents the Crown's maximum liability incurred on the aggregate amount of the capital leases having been entered into or transferred since the period starting in April 2002.

    The outstanding guarantee for capital leases entered into since April 2002 is the lesser of the Crown's net liability or 85% of the outstanding capital lease amounts of the lessors.

    Regional Aircraft Credit Facility — Industry Canada has extended loan guarantees on several Air Canada regional jets. Provisioning from the Canada Account Loss Provisioning Pool has been set aside by Finance Canada, manager of the funds. The loan guarantees began in the summer of 2005.

13. Related Party Transactions

    Industry Canada is related as a result of common ownership to all Government departments, agencies and Crown Corporations. Industry Canada enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, Industry Canada received services that were obtained without charge from other Government departments as disclosed below.

    1. Common services provided without charge by other government departments

       During the year, Industry Canada received services without charge from certain common service organizations, related to accommodations, legal services, the employer's contribution to the health and dental insurance plans, and workers' compensation coverage. These services provided without charge have been recorded in Industry Canada's Statement of Operations and Departmental Net Financial Position as follows:

       Common services provided without charge by other government departments

       	2013	2012
       	(in thousands of dollars)
       Accommodation	$  54,287	$  56,546
       Employer's contribution to the health and dental insurance plans	27,824	28,021
       Workers' compensation coverage	396	432
       Legal services	3,350	3,758
       Total	$ 85,857	$ 88,757

       The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada, and audit services provided by the Office of the Auditor General, are not included in Industry Canada's Statement of Operations and Departmental Net Financial Position.

    2. Administration of programs on behalf of other government departments

       Under a memorandum of understanding signed with the Department of National Defence (DND) on December 11, 1997, Industry Canada administers a program called Development, Test, and Evaluation and Technical Services Activities. During the year, Industry Canada incurred expenses of $2,049,835 ($4,636,778 in 2011–12) on behalf of DND. These expenses are reflected in the financial statements of DND and are not recorded in these financial statements.

    3. Other transactions with related parties

       Other transactions with related parties

       	2013	2012
       	(in thousands of dollars)
       Expenses – Other government departments and agencies	$ 123,487	$ 122,096
       Revenues – Other government departments and agencies	18,618	18,700

       Expenses and revenues disclosed in (c) exclude common services provided without charge, which are already disclosed in (a).

14. Transfers from/to other government departments

    Effective November 15, 2011, Industry Canada transferred responsibility for the Email, Data Centre and Network Services Unit and Support Unit to Shared Services Canada in accordance with Order-in-Council P.C 2011-1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, Industry Canada transferred the following assets and liabilities related to the Email, Data Centre and Network Services Unit and Support Unit to Shared Services Canada on November 15, 2011.

    Transfers from/to other government departments

    	2012
    	(in thousands of dollars)
    Assets
    Tangible capital assets (net book value) (note 10)	$ 2,518
    Total assets transferred	2,518
    Liabilities
    Vacation pay and compensatory leave	638
    Employee future benefits (note 6)	1,051
    Total liabilities transferred	1,689
    Adjustment to departmental net financial position	$   829

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

15. Segmented Information

    Presentation by segment is based on Industry Canada's program activity architecture. The presentation by segment is based on the same policies as described in the Summary of Significant Accounting Policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

    Segmented Information

    (in thousands of dollars)	The Canadian Marketplace is Efficient and Competitive	Advancements in Science and Technology, Knowledge, and Innovation Strengthen the Canadian Economy	Canadian Businesses and Communities Are Competitive	Internal Services	2013 Total	2012 Total Restated (note 16)
    Expenses
    Transfer payments
    Transfers to non-profit organizations	$ 2,036	$ 292,103	$ 42,071	$          -	$ 336,210	$ 319,492
    Transfers to other levels of government	-	(820)	-	-	(820)	232,003
    Transfer to Industry	-	47,943	20,206	-	68,149	134,736
    Other transfers	4,801	-	26,018	-	30,819	25,278
    Total transfer payments	6,837	339,226	88,295	-	434,358	711,509
    Operating expenses
    Salaries and employee benefits	280,505	52,263	55,189	116,716	504,673	568,088
    Professional and special services	49,371	6,717	9,728	24,481	90,297	85,641
    Accommodation	24,952	1,439	3,576	24,320	54,287	56,546
    Bad debt expense	14,752	15,956	874	-	31,582	4,363
    Amortization	6,563	5,395	466	1,798	14,222	14,737
    Rental	9,914	476	119	2,427	12,936	10,259
    Travel	6,687	532	1,624	1,708	10,551	12,245
    Furniture and equipment	4,997	1,128	422	3,561	10,108	11,939
    Utilities, materials and supplies	1,774	3,148	423	478	5,823	6,620
    Equipment repair and maintenance	3,005	988	107	1,278	5,378	9,921
    Communication	1,668	163	891	997	3,719	4,781
    Postage	919	30	114	471	1,534	1,615
    Damage and other claims against the crown	174	-	-	(230)	(56)	28,335
    Other operating expenses	(1,358)	1,129	12	95	(122)	(611)
    Expenses incurred on behalf of Government	(14,752)	(15,956)	(874)	-	(31,582)	(4,363)
    Total operating expenses	389,171	73,408	72,671	178,100	713,350	810,116
    Total expenses	396,008	412,634	160,966	178,100	1,147,708	1,521,625
    Revenues
    Radio spectrum licences	758,544	-	-	-	758,544	793,005
    Sales of services	223,573	13,554	51,037	4,244	292,408	291,419
    Revenue from fines	19,971	-	-	-	19,971	25,024
    Amortization of discounts	-	5,152	3,458	-	8,610	8,610
    Other revenue	444	278	(34)	23	711	1,115
    Revenues earned on behalf of Government	(795,175)	(8,164)	(54,453)	(15)	(857,807)	(901,443)
    Total revenues	207,357	10,820	8	4,252	222,437	217,730
    Net cost from continuing operations	$ 188,651	$ 401,814	$ 160,958	$ 173,848	$ 925,271	$ 1,303,895

Department of Industry (033) (continued)

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31 (continued)

16. Accounting Changes

    During a review of the departmental financial statements it was determined that an error in the methodology for calculating Revenues earned on behalf of Government had the effect of overstating the amount reported as earned on behalf of Government and understating those revenues controlled by the department by $51,864,761.71 (as reported on the Consolidated Statement of Operations and Departmental Net Financial Position). The net effect of this change on gross departmental revenues is nil.

    Comparative figures in these financial statements, which were reported in the prior year departmental statements, have been restated to reflect the change in calculation used to determine departmental revenues earned on behalf of Government.

    Statement of Financial Position

    (in thousands of dollars)	2012 As previously stated		Effect of change		2012 Restated
    Statement of Operations and Departmental Net Financial Position:
    Revenue
    Revenues earned on behalf of government	$ (953,308)		(51,865)		$ (901,443)
    Total revenues	165,865		51,865		217,730
    Net cost from continuing operations	1,355,760		(51,865)		1,303,895
    Net cost of operations before government funding and transfers	1,365,642		(51,865)		1,313,777
    Government funding and transfers
    Net cash provided by Government	1,141,559		(51,865)		1,089,694

17. Comparative information

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

Department of Industry (033) (continued)

Summary of the Assessment of Effectiveness of the Systems of Internal Control over Financial Reporting and the Action Plan of Industry Canada
For the fiscal year ending March 31, 2013

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting

1. Introduction

This document is attached to Industry Canada's Statement of Management Responsibility Including Internal Control over Financial Reporting for the 2012–13 fiscal year. This annex provides summary information on the measures taken by Industry Canada to maintain an effective system of internal control over financial reporting (ICFR). In particular, it provides summary information on the assessments conducted by Industry Canada as at March 31, 2013, including results and related action plans.

Detailed information on Industry Canada's authority, mandate and program activities can be found in the Departmental Performance Report (DPR) and Report on Plans and Priorities (RPP).

1.1 Service arrangements relevant to financial statements

The Department relies on other organizations for the processing of certain transactions that are recorded in its financial statements:

Common Arrangements:

• Public Works and Government Services Canada (PWGSC) centrally administers the payments of salaries and the procurement of goods and services as per Industry Canada's Delegation of Authority and provides accommodation services.
• Treasury Board Secretariat provides Industry Canada with information used to calculate various accruals and allowances, such as the accrued severance liability.
• Human Resources and Skills Development Canada (HRSDC) provides Industry Canada with coverage for workers' compensation.
• The Department of Justice provides general legal services for Industry Canada, along with information necessary for the contingent liability note to the financial statements for inclusion in the Public Accounts.
• Shared Services Canada (SSC) manages the responsibility for email, data centre and network services, including associated resources. The scope and responsibilities are addressed in the interdepartmental arrangement between Shared Services Canada and Industry Canada.

Specific Arrangements:

• The Department provides the Copyright Board of Canada, the Federal Economic Development Agency for Southern Ontario (FedDev), and Infrastructure Canada with the Integrated Financial and Materiel System (IFMS) platform and support to capture and report all financial transactions. Industry Canada further provides system platform support for FedDev for Contribution Management Information System (CMIS).
• Industry Canada also provides administrative support for the Copyright Board for recording financial transactions in the financial system. As a result, reliance is placed on the control procedures of Industry Canada, and;
• Industry Canada offers information technology and/or human resources management services to various departments and agencies, such as the Canada Industrial Relations Board and the Office of the Commissioner of Lobbying of Canada.

2. Control environment of Industry Canada relative to ICFR

Entity level controls put in place by Industry Canada's Senior Management set the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and are well equipped to exercise these responsibilities effectively in support of sound stewardship of public resources and reliable financial reporting.

The purpose of the key components of entity level controls at Industry Canada is to ensure solid governance and effective risk management at the corporate level, as well as the maintenance of other entity level controls to provide effective support for staff by raising awareness and providing appropriate knowledge, skills and tools. The ultimate objective is to manage risks while maintaining a responsive control environment for employees at all levels in support of innovation and continuous improvement.

2.1 Key positions, roles and responsibilities

Below are the Department's key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Position	Responsibilities
Deputy Minister	Industry Canada's Deputy Minister, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal controls. The Deputy Minister is supported by the Associate Deputy Minister in his role as accounting officer for the department.
Chief Financial Officer (CFO)	Industry Canada's CFO reports directly to the Deputy Minister and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR, including its annual assessment.
Senior Departmental Managers	Industry Canada's senior departmental managers in charge of program delivery are responsible for maintaining and reviewing the effectiveness of the system of ICFR that falls within their mandate.
Chief Audit Executive (CAE)	Industry Canada's CAE reports directly to the Deputy Minister and provides assurance through periodic internal audits that are instrumental in maintaining an effective system of ICFR.
Departmental Audit Committee (DAC)	The DAC is an advisory committee that provides objective views on Industry Canada's risk-management, control and governance frameworks. It is composed of three external members and was established in 2007. In this role, it provides views on the system of internal control, including the assessment and action plans.
Management Committee	The Management Committee is a committee comprised of the departmental sector heads and is chaired by the Deputy Minister. This committee is responsible for promoting management excellence as well as promoting effective people management strategies and the sound stewardship of Industry Canada's resources.

2.2 Key Measures Taken by Industry Canada

Industry Canada's control environment also includes a series of measures to equip its staff to manage risks well through raising awareness, providing appropriate knowledge and tools and developing skills.

Key measures include:

• An Office of Values and Ethics under the Deputy Head; a senior officer has been appointed as Values and Ethics champion;
• Industry Canada's code of conduct and values and ethics code are communicated to employees;
• A division under the CFO dedicated to quality assurance and internal control;
• Annual performance agreements with clearly identified financial management responsibilities;
• Training programs and outreach in core areas of financial management;
• Departmental policies tailored to Industry Canada's control environment;
• Regularly updated delegated authorities matrices;
• Documentation of main business processes and related key risk and control points to support the management and oversight of its system of ICFR;
• IT processing systems to achieve greater security, integrity, efficiency and effectiveness;
• An executive learning plan for key employees; and
• Electronic specimen signature cards for delegated financial signing authorities, housed within the departmental financial system.

3. Industry Canada assessment results during fiscal year 2012–13

The significant findings from the current year assessment are summarized below.

3.1 New or significantly amended key controls

In the current year, there were no significantly amended key controls in existing processes which required reassessment.

Operating effectiveness testing was conducted for one of two new significant Grants and Contributions programs: the Automotive Innovation Fund (AIF). No control deficiencies were noted. The second program, Bombardier CSeries, was delayed for testing to allow sufficient population data to accumulate. However, the program did sustain a walkthrough with no major issues identified for remediation. Bombardier CSeries and AIF will be tested for effectiveness in line with the departmental rotation testing schedule in section 4.2.

3.2 On-going monitoring program

Industry Canada completed its reassessment of grants and contributions and of operations (operating expenses and payroll) and is in the process of developing action plans. For the most part, the key controls performed as intended, with remediation required as follows:

Grants and Contributions

The following grants and contributions programs were tested for internal control compliance: Knowledge Infrastructure Program, FedNor, Industrial Technologies Office, National Access Program Directorate, One-time Payments^{Footnote 32}, Broadband Canada: Connecting Rural Canadians, and AIF.

• Overall, the results were positive with very few minor control issues being found. In the Industrial Technologies Office process, some controls within the repayment phase such as the verification of repayment information, were found to be inconsistent with documented controls.
• The Bombardier CSeries program received a walkthrough with no significant issues noted in the process.

Operating

The following operating processes were tested for internal control compliance: Operating expenses and payroll. Overall, key controls in these processes are functioning as intended, with the following exceptions:

• Minor control issues were found in the operating expenses process where it was noted that some delegations were not cancelled in a timely manner and some access was not being reviewed regularly.
• Minor control issues were found in the payroll process where some controls over cheque distribution were not functioning as intended and some overtime verification controls could not be validated.

Management action plans are developed by process owners based on testing results and recommendations. The action plans from current and previous fiscal years are followed-up on to ensure that remedial actions are taken by management. No material issues have arisen from the implementation of these action plans.

4. Industry Canada action plan

4.1 Progress during fiscal year 2012–13

Industry Canada conducted its ongoing monitoring as per its previous fiscal year's plan and reports results of this monitoring directly to management:

Previous year's rotational ongoing monitoring plan for current year	Status
Grants and Contributions Operating Expenses Payroll	Completed as planned, reported, and remedial actions started
Grants and Contributions (Bombardier CSeries)	Walkthrough completed but no effectiveness testing conducted. Ready for testing in 2013–14, in line with rotational plan.

4.2 Action plan for the next fiscal year (2013–14) and subsequent years

The department's focus is on ongoing monitoring, the full assessment cycle having been completed in previous years. Action plans from previous years will be followed-up on to ensure that remedial actions have been taken.

Only operating effectiveness testing is conducted in those areas subject to reassessment unless significant amendments have been made to key controls and design effectiveness testing may be necessary.

The 2013–14 risk assessment has scoped in revenue reported under the department's revolving fund, the Canadian Intellectual Property Office (CIPO), transfer payments made under the Canada Small Business Financing Program, and activities within the department's non-consolidated Specified Purpose Accounts. Over the next three fiscal years, these processes will be mapped for internal controls with the intention of joining them to the ongoing monitoring schedule.

The table below shows the department's rotational ongoing monitoring plan over the next three years. An annual risk-assessment is conducted each year to validate the high risk controls and to adjust the on-going monitoring plan as required.

Rotational Ongoing Operating Effectiveness Testing for Internal Control over Financial Reporting

Internal Control over Financial Reporting		Operating Effectiveness Testing Rotation
		2013-14	2014-15	2015-16
Entity level (tested once every 3 years)	Entity-level controls	No	yes	No
General computer controls (tested once every 3 fiscal years)	Enterprise systems	No	Yes	No
	Canada Small Business Financing Program (CSBFP) (Revenue system)	No	Yes	No
Business Processes
Grants and contributions (tested once each fiscal year)	Industrial Technologies Office	Yes	Yes	Yes
	National Access Program Directorate	Yes	Yes	Yes
	One-Time Payments	Yes	Yes	Yes
	Broadband Canada: Connecting Rural Canadians	Yes	Yes	Yes
	Automotive Innovation Fund	Yes	Yes	Yes
	FedNor	Yes	Yes	Yes
	Bombardier CSeries	Yes	Yes	Yes
	Canada Small Business Financing Program	N/A	N/A	Yes
Operating (tested once every 2 fiscal years)	Operating expenditures	No	Yes	No
	Capital expenditures	Yes	No	Yes
	Financial close & reporting	Yes	No	Yes
	Master data - vendors/customers	Yes	No	Yes
	Payroll	No	Yes	No
	Non-consolidated Specificied Purpose Accounts	N/A	Yes	No
Revenue (tested once every 2 fiscal years)	Competition Bureau	Yes	No	Yes
	Corporations Canada	Yes	No	Yes
	Communications Research Canada	Yes	No	Yes
	Office of the Superintendent of Bankruptcy	Yes	No	Yes
	Canada Small Business Financing Program	Yes	No	Yes
	Spectrum, Information Technologies and Telecommunications	Yes	No	Yes
	Canadian Intellectual Property Office	N/A	N/A	Yes

Footnotes

Footnote 32

The One-time Payments process covers transfer payments such as Genome Canada and Canada Foundation for Innovation.

Return to footnote 32 referrer

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